Case Study Of Aramit Cement Limited

Profitability ratios are functions of both the industry and a company’s position within the industry. The boundaries are set by the operating characteristics of the industry, within these boundaries profitability ratios are determined by a player’s relative position. Gross profit margin should stay constant or increase because cost of goods sold should be a constant percentage of sales or should decrease as the company’s price increases and/or volume discounts. Gross profit margin was slightly favorable stable at 28%. The horizontal analysis information showed that sales had been averagely increased by 26% from 2001 to 2003.However the operating cost had been averagely increased by 27%.

This report provides an analysis and evaluation of the current and forecasted profitability, liquidity and financial stability of Alliance Concrete. Methods of analysis include forecasting the income statement and balance sheet to calculate financial ratios and profitability ratios. The key drivers for the income statement was management’s assumption about the sales environment surrounding Alliance Concrete. All calculations can be found on the attached document. Results of data analyzed show that Alliance Concrete is experiencing sales decline, profitability decline, but is relatively financially stable for the most part. The report finds the prospects of the company in its current

Aget should also divide the market in different segments. Every segment probably wants a different kind of cement, but probably also a different kind of service. So Aget has to give the right service to the right segment of the market. So it’s important that they adjust their service for their different costumers. Aget should also look for new kind of cement. By investing in research and development in order to be one step ahead of the competition. This all will lead to a good customer relationship and customer loyalty.

Operating Profit Margin (OPM) – this ratio gives the Sainsbury’s management a lot of important information about the firm profitability, mainly with respects to cost control. A high operating profit margin means that a company has a good cost control or/ and that sales are increasing faster than costs, which is the objective of every company. Sainsbury’s operating profit margin increased in 2014 by 0.43% to 4.21% (2013, 3.78%). This means that every £1 of sale earns a profit of 0.0421 pence in 2014 and 0.0378 in 2013. Sainsbury’s increased in profit margin beats rival Tesco which has seen its operating profit margin at 4.14%, 3.76% respectively.

To calculate profit maximization one may first calculate profit, which is Profit = Total Revenue – Total Costs. The following graph illustrates the organization’s steady growth in profitable business, but declining profit maximization:

The decision of profitability is accomplished by the managers of the company. The objective is done according the strength or weakness of the financial statement prepared by management accounting. It helps the responsibility takers. Those are managers to make a suitable condition that maximizes the benefit of the organization. From this profit is the shareholders get wealth through dividends and improvement of share price. The buyers of

The profitability ratios measure a company’s performance by the rate how profitable the corporate on the basis of its revenue and invested capital. Various types of profitability ratios that calculated by comparison of the balance sheet and income statement data are useful in relation to sales level and investment. In this case, some ratios will be discussed for comparative performance.

• India is among the largest cement producer as well as consumer in the world led by the enormous growth in the infrastructure and construction sector for the last two decades

Profitability analysis: Profitability ratios show firm’s overall efficiency and performance. It is used to assess a business's ability to generate earnings as compared to its expenses and other relevant costs incurred during a specific period of time. The objective of this analysis is to detect consistency in the earnings of the firm. Under this following analysis is

Firstly, exogenous factors over which the business has little control over. Secondly, the growth of the markets into which it sells. The competitive intensity of the business and the average profitability of the industry in which it operates is the final category.

Profitability plays a vital role in the survival of the company in the competitive market. High profitability helps the company not only in its growth but will also reward the investors with greater return. Performance and profitability is one among the major areas of concern for the management.

Information of profitability is required for stakeholders to invest in the business. It also gives the information on the growth of the business over a period of time.

First and foremost I wish to reiterate my thanks to Raheem Shabi, senior lecturer in Ethames Graduate School for his guidance and advices throughout the assignment.

We would like to thank all those who have helped us in the elaboration and preparation of this work especially our module lecturer Mr. Dev Mootien for his theoretical concepts.

Growth rate and relative market share are not the only indicators of profitability. This model ignores and overlooks other indicators of profitability.