CHAPTER 4 RATIO ANALYSIS AND COMPARISON OF GLASSLINE VESSELS AND ITS ALLIED COMPANIES IN INDIA

CHAPTER 4 RATIO ANALYSIS AND COMPARISON OF GLASSLINE VESSELS AND ITS ALLIED COMPANIES IN INDIA 4.1 INTRODUCTION Ratio analysis is one of the techniques of financial analysis where ratios are used as a yardstick for evaluating the financial condition and performance of a firm. Analysis and interpretation of various accounting ratios gives a skilled and experienced analyst, a better understanding of the financial condition and performance of the firm than what he could have obtained only through a perusal of financial statements. The most important task of a financial manager is to interpret the financial information in such a manner that it can be well understood by the people, who are not well versed in financial information figures. The technique, by which it is so done, is known as 'Ratio Analysis.' The point to be noted is that a ratio reflecting a quantitative relationship helps to form a qualitative judgment. A comparative study of the relationships between various items of financial statements reveals the profitability, liquidity, solvency as well as the overall position of the concern. As ratios are simple to calculate and easy to understand, there is tendency to employ them profusely. The absolute accounting figures reported in these financial statements do not provide a meaningful understanding of the performance and financial position of the concern. An accounting figure conveys meaning when it s related to some other relevant information. Ratios are useful indication of the progress position and prospects of a business unit in which the many parties are interested in different ways. Meaning Ratios are relationships expressed in mathematical terms between figures, which are connected with each other in some manner. Obviously, no purpose will be served by comparing two sets of figures, which are not at all connected with each other. Moreover, absolute figures are also unfit for comparison. 'Ratio' is relationship between two or more variable expressed in, 1. Percentage, 2. Rate 3. Proportion. 61

Ratio analysis is an important technique of financial analysis. It depicts the efficiency or short-fall of the organization in the form of trend analysis. 4.2 STANDARDS OF COMPARISON A single ratio in itself does not indicate favorable or unfavorable financial condition. It should be compared with some standard. Standards of comparison may consist of: 1. Time Series Analysis / Past Ratios Past ratios are the ratios calculated from the past financial statements of the same firm. By comparing current years ratios with past ratio the improvement or deterioration in firm's performance over the period can be studied. It is also known as Time Series Analysis. 2. Cross-sectional Analysis / Competitor's Ratios Competitor s Ratios are ratios of some selected firms, especially the most progressive competitor, at the same point in time. By comparing firm s ratios with competitor's ratios the firm s financial position in respect to competitors can be known. 3. Industry Analysis / Industry Ratios Industry Ratios are the ratios of industry to which the firm belongs. By comparing firms ratios with industry average ratios the firm's position vis a vis other firms in the industry can be understood. 4. Proforma Analysis / Projected Ratios Projected Ratios are the ratios developed by using the projected financial statements of the firm. The comparison of current or past ratios with future ratios indicates the firm's relative strength and weaknesses in the past and in the future. 4.3 PRECAUTIONS TO BE TAKEN WHILE USING RATIOS 1. Standard for Comparison Ratios have meaning only if they are compared with some standards. Usually it is recommended that ratios should be compared with industry average, but industry average data is not easily available in India. Even while comparing ratios with the past ratios forecast may not be correct since several factors like market conditions, management policies etc. may affect the future operations. 62

2. Price Level Changes Financial analysis based on accounting ratios will give misleading results if the effects of changes in price level are not taken into account. The accounting data, presented in financial statements is assumed to remain constant. In fact, prices change over years which affect accounting earnings. Therefore, financial statements should be adjusted as per price level changes. For this current purchasing power and current cost accounting are quite helpful. 3. Historical Data The ratios indicate what has happened in the past because it is calculated on the basis of historical financial statements. Analysts are more interested in future and these ratios may not necessarily reply the firm's financial position and performance in future. 4. Ratios Alone Are Not Adequate Ratios are only indicators, they cannot be considered as the final regarding financial position of the business. Other things also have to be seen. A high current ratio not necessarily mean sound liquidity position if most of current assets comprise outdated stocks. 5. Window Dressing Window dressing means manipulation of accounts in a way so as to conceal vital facts and present financial statements in a way to show better position than what it actually is. In this case ratios cannot indicate true situation the quality of ratios depends on accuracy of accounts. 4.4 IMPORTANCE OF RATIO ANALYSIS The ratio analysis is the most powerful tool of the financial analysis. It is a quantitative technique for assessing the financial health of a unit from the accounting data. It helps to describe the significant relationship between two comparable figures in the financial statements with the help of Ratios, one can determine. a. The ability of the firm to meet its current obligations. b. The extent to which the firm has used its long term solvency by borrowing funds. c. The efficiency with which the firm is utilizing its various assets in generating sales revenue. d. The overall operating efficiency and performance of the firm. 63

It has been realized that the short term and long term financial position and the profitability of the firm are tested in every kind of financial analysis, the emphasis would differ. Some ratios are more important in one kind of analysis while other ratios are important in a different kind of analysis. Management has to protect the interests of all concerned parties, creditors, owners etc. They have to ensure some minimum operating efficiency and keep the risk of the firm at minimum level. Their survival depends upon their operating performance from time to time management used Ratio Analysis to determine the firm s financial strengths and weaknesses, and accordingly takes actions to improve the firm's position. 4.5 LIMITATIONS OF RATIO ANALYSIS The ratio analysis is a very useful tool to evaluate the financial position and performance of a business. The following are some of the limitations of the ratio analysis. a. It is difficult to find out a proper basis of comparison. Usually, it is recommended that ratio should be compared with the industry average. But the industry averages are not equally available. b. The situations of two companies are never the same. Similarly, the factors influencing the performance of a company in one year may change in another year. Thus, comparison of the ratios of two companies becomes difficult. c. The interpretation and comparison of ratios are also rendered invalid by the changing value of money. The accenting figures, presented in a financial statement, one expressed in a monetary unit which is assumed to remain constant, in fact, prices changes over years and as a result assets acquired at different dates will be expressed at different rupees in the balance sheet. This makes comparison meaningless. d. In practice, the difference in the definitions of items in the balance sheet and the income statement make the interpretation of ratios difficult. e. The ratios calculated at a point of time are less informative and defective as they suffer from short term changes. f. The basis to calculate ratios are historical financial statements. The financial analysis is more interested in what happens in future, while the ratios, indicate what happened in the past. The management has information about the company's future plans and policies and therefore is able to predict future happening to a certain extent. But the 64

outside analyst has to rely on the past ratios, which may not necessarily reflect the firm's financial position and performance in future. 4.6 TYPES OF RATIO ANALYSIS Several ratio s calculated from the accounting data can be grouped into various classes according to the financial activity or function to be evaluated. The parties which generally undertake financial analysis all short and long term creditors, owners and management short term auditors main interest in liquidity position or the short term solvency of the firm. Long term auditors on the other hand, all are more interested in the long term solvency and profitability and the analysis of the firms performance. They have to profit the interest of all parties and see that the firm grows profitably. Ratio analysis is a widely used tool of financial analysis. It is defined as the systematic use of ratio to interpret the financial statement, so that the strength and weakness of a firm as well as its historical performance and current financial conditions can be determined. The term ratio refers to the numerical or quantitative relationship between two items. A ratio is calculated by dividing one items of relation with other. Several ratio's calculated from the accounting data can be grouped into various classes according to the financial activity or function to be evaluated. In the view of the requirement of the various users of ratio we may classify term in to the following four important categories. A. Liquidity Ratio B. Activity Ratio C. Profitability Ratio D. Capital Structure Ratio A. LIQUIDITY RATIO The important of adequate liquidity in the sense of ability meet current or short term obligation when they become due to for payment can hardly be over stressed. In fact, liquidity is a pre-requisite for the very survived of the firm. The short creditors of the firm are interested in the short term solvency as liquidity of a firm. These ratios indicate the position of liquidity. A firm should ensure that it does not suffer from lack of liquidity and also it does not have excess liquidity lack of liquidity loads will result in poor credit worthiness. A very high degree liquidity is also had idle asset earn 65

nothing. Firms fund will be unnecessarily lied up as current assets. Therefore it is necessary to stick proper balance between high liquidity and lack of liquidation. 1. Current Ratio The ratio is used to assess the firm s ability to meet its short-term liabilities on time. It is generally believed that 2:1 ratio shows a comfortable working capital position. However this rule should not be taken as a hard & fast rule, because ratio that is satisfactory for one company may not be satisfactory for other. It means that current assets of an organization should, at least be twice of its current liabilities. The higher the ratio, the better it is. Current Ratio = Current Assets Current Liabilities Current Assets = Cash & Bank Balance + Stock + Debtors + Bills Receivable + Prepaid Expenses + Investments readily convertible into cash + Loans and Advances Current Liabilities = Creditors + Bills Payable + Bank Overdraft + Unclaimed Dividend + Provision for Taxation + Proposed Dividend] Table 4.1: Current Ratio of selected Glassline Companies Year GMM SGEL NILE Ratio Indices Ratio Indices Ratio Indices 1996 1.41 100.00 1.21 100.00 1.03 100.00 1997 1.49 105.67 1.15 95.04 2.89 280.58 1998 1.43 101.42 1.29 106.61 3.84 372.82 1999 1.39 98.58 1.28 105.79 3.49 338.83 2000 1.76 124.82 1.17 96.69 3.19 309.71 2001 2.00 141.84 1.10 90.91 2.91 282.52 2002 1.63 115.60 0.97 80.17 2.06 200.00 2003 1.64 116.31 0.92 76.03 1.74 168.93 2004 1.62 114.89 0.93 76.86 1.67 162.14 2005 1.35 95.74 0.94 77.69 1.49 144.66 2006 1.32 93.62 0.96 79.34 1.46 141.75 2007 1.42 100.71 1.02 84.30 1.46 141.75 2008 1.60 113.48 1.08 89.26 1.49 144.66 2009 1.78 126.24 1.09 90.08 1.34 130.10 2010 2.01 142.55 1.05 86.78 1.25 121.36 Source: Annual Reports of selected Glassline Companies from 1996 to 2010. 66

Chart 4.1: Current Ratio of selected Glassline Companies 4.50 Current Ratio 4.00 3.50 3.00 2.50 2.00 1.50 GMM SGEL NILE 1.00 0.50 0.00 It is realized from the table 4.1 and chart 4.1 that the current ratio was showing increasing trend during 1996-2001 and 2005-2010 for GMM. The same pattern was also seen in SGEL. NILE shows increasing pattern during 1996-2000 and then decreasing trend was seen during 2001-2010. In NILE highest current ratio was appeared in 1998-99. Overall NILE is better than other companies. 67

Table 4.2: Current Ratio of selected Allied Companies Year AWL BBL CUMI CG ELECON ESSAR GEE JSPL REMI SAIL Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In 1996 1.33 100.00 1.29 100.00 1.40 100.00 1.39 100.00 1.45 100.00 1.29 100.00 1.47 100.00 - - 1.30 100.00 1.19 100.00 1997 1.26 94.74 1.32 102.33 1.36 97.14 1.35 97.12 1.45 100.00 1.03 79.84 1.46 99.32 - - 2.08 160.00 1.15 96.64 1998 1.20 90.23 1.34 103.88 1.42 101.43 1.30 93.53 1.41 97.24 0.86 66.67 1.30 88.44 - - 0.97 74.62 1.22 102.52 1999 1.11 83.46 1.33 103.10 1.59 113.57 1.31 94.24 1.40 96.55 0.92 71.32 1.31 89.12 1.69 100.00 0.63 48.46 1.23 103.36 2000 1.23 92.48 1.28 99.22 1.70 121.43 1.33 95.68 1.51 104.14 0.97 75.19 1.31 89.12 1.84 108.88 0.46 35.38 1.01 84.87 2001 1.22 91.73 1.22 94.57 1.46 104.29 1.18 84.89 1.57 108.28 0.83 64.34 1.27 86.39 1.77 104.73 0.37 28.46 0.80 67.23 2002 1.08 81.20 1.18 91.47 1.22 87.14 1.08 77.70 1.51 104.14 0.79 61.24 1.30 88.44 1.48 87.57 0.31 23.85 0.70 58.82 2003 1.12 84.21 1.12 86.82 1.19 85.00 1.15 82.73 1.37 94.48 1.03 79.84 1.29 87.76 1.17 69.23 0.42 32.31 0.66 55.46 2004 1.20 90.23 1.17 90.70 1.29 92.14 1.13 81.29 1.37 94.48 1.35 104.65 1.25 85.03 1.03 60.95 0.77 59.23 0.75 63.03 2005 1.53 115.04 1.31 101.55 1.36 97.14 1.15 82.73 1.25 86.21 1.41 109.30 1.19 80.95 1.10 65.09 1.00 76.92 0.99 83.19 2006 1.78 133.83 1.37 106.20 1.36 97.14 1.29 92.81 1.20 82.76 1.38 106.98 0.99 67.35 1.03 60.95 1.15 88.46 1.18 99.16 2007 1.59 119.55 1.38 106.98 1.31 93.57 1.26 90.65 1.22 84.14 1.09 84.50 0.98 66.67 0.88 52.07 1.08 83.08 1.36 114.29 2008 1.66 124.81 1.51 117.05 1.28 91.43 1.22 87.77 1.23 84.83 0.91 70.54 1.37 93.20 1.11 65.68 1.03 79.23 1.60 134.45 2009 1.94 145.86 1.76 136.43 0.96 68.57 1.29 92.81 1.25 86.21 0.94 72.87 1.58 107.48 1.25 73.96 0.92 70.77 1.72 144.54 2010 2.20 165.41 1.72 133.33 0.81 57.86 1.34 96.40 1.22 84.14 0.86 66.67 1.53 104.08 1.00 59.17 0.97 74.62 1.77 148.74 Source: Annual Reports of selected Allied Companies from 1996 to 2010. Table 4.2 shows the current ratios of selected allied companies in last fifteen years. On an average, current ratio of CUMI and ELECON companies are better than other allied companies. All companies showed flat trend throughout the study period. In 2010, AWL reported the highest current ratio in comparison to other selected allied companies. 68

Table 4.3: Comparison of Current Ratio between Glassline Companies H 0 : There is no significant difference in mean current ratio between selected companies H 1 : There is significant difference in mean current ratio between selected companies Descriptive Statistics 95% Confidence Company N Mean Std. Interval for Mean Std. Error Deviation Lower Upper Bound Bound GMM 15 1.5900.22071.05699 1.4678 1.7122 SGEL 15 1.0773.12337.03185 1.0090 1.1457 NILE 15 2.0873.91613.23654 1.5800 2.5947 Total 45 1.5849.67918.10125 1.3808 1.7889 ANOVA test Source of variation Sum of Squares df Mean Square F p-value Between Groups 7.651 2 3.826 12.707.000 Within Groups 12.645 42.301 Total 20.297 44 The table 4.3 shows mean current ratio of selected companies. The descriptive table shows that mean value of this ratio was higher in NILE company followed by GMM and SGEL. To check the statistical difference in these mean values researcher had applied ANOVA test. In ANOVA table, applying this test corresponding F-value and its p-values were obtained. F-value was 12.707 and p-value was 0.000. As p-value in above table was less than 0.05, above null hypothesis was rejected and concluded that there is a significant difference in mean Current Ratio between selected companies. 2. Quick Ratio The measure of absolute liquidity may be obtained by comparing only cash and bank balance as well as readily marketable securities with liquid liabilities. This is a very exacting standard of liquidity and it is satisfactory if the ratio is 0.5: 1. It is computed by dividing the value of quick assets by liquid liabilities. Here, quick assets do not include 69

both stock and debtors, because payments from debtors would not generally be received immediately when liquid liabilities are to be paid. Thus the quick assets comprise only cash balance, bank balance and readily marketable securities only. Some writers call this ratio as Absolute Liquidity Ratio, (or Absolute Cash Ratio). Quick Ratio = Quick Assets Liquid Liabilities Table 4.4: Quick Ratio of selected Glassline Companies Year GMM SGEL NILE Ratio Indices Ratio Indices Ratio Indices 1996 0.19 100.00 0.02 100.00 0.11 100.00 1997 0.10 54.57 0.03 145.71 0.07 67.97 1998 0.66 349.59 0.05 277.72 0.14 126.74 1999 0.22 118.60 0.06 304.78 0.11 104.29 2000 0.22 117.90 0.10 496.31 0.10 90.11 2001 0.24 126.52 0.11 552.35 0.13 116.99 2002 0.22 119.07 0.16 827.03 0.11 99.51 2003 0.57 304.19 0.14 732.38 0.13 113.93 2004 0.07 39.30 0.15 749.62 0.08 73.86 2005 0.04 23.50 0.14 688.91 0.11 97.40 2006 0.05 27.99 0.37 1908.94 0.11 98.82 2007 0.07 37.30 0.33 1671.73 0.09 82.56 2008 0.04 23.08 0.15 740.11 0.13 118.38 2009 0.07 34.76 0.20 1017.24 0.11 97.63 2010 0.09 46.38 0.16 828.57 0.04 34.67 Source: Annual Reports of selected Glassline Companies from 1996 to 2010. 70

Chart 4.2: Quick Ratio of selected Glassline Companies 0.7 Quick Ratio 0.6 0.5 0.4 GMM 0.3 0.2 SGEL NILE 0.1 0 It reveals from the table 4.4 and chart 4.2 that the quick ratio of GMM was showing increasing trend during 1996-2003 and after that it was decreasing. In SGEL, the quick ratio was showing increasing trend during 1996-2007 and after that it was declined. NILE shows flat pattern during study period. NILE shows better performance of quick ratio as compared to other companies and hence it is better. 71

Table 4.5: Quick Ratio of selected Allied Companies Year AWL BBL CUMI CG ELECON ESSAR GEE JSPL REMI SAIL Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In 1996 0.19 100.00 0.19 100.00 0.42 100.00 0.00 100.00 0.04 100.00 0.04 100.00 0.13 100.00 - - 1.06 100.00 0.13 100.00 1997 0.61 314.48 0.18 97.44 0.33 78.93 0.11 3187.09 0.04 104.43 0.04 119.99 0.10 76.53 - - 1.92 180.53 0.06 43.59 1998 0.39 199.89 0.09 46.75 0.50 118.25 0.00 69.08 0.03 70.78 0.07 191.54 0.11 86.07 0.08 100.00 0.68 63.83 0.12 88.11 1999 0.18 92.33 0.09 48.00 0.36 86.61 0.00 50.64 0.02 52.69 0.03 97.95 0.20 150.00 0.06 67.59 0.06 5.64 0.07 53.65 2000 0.22 113.30 0.10 56.12 0.33 77.77 0.00 37.91 0.15 360.59 0.05 145.86 0.06 41.93 0.09 105.18 0.04 3.43 0.08 60.91 2001 0.21 110.45 0.11 58.92 0.19 44.91 0.11 3247.74 0.03 74.96 0.03 92.83 0.06 48.21 0.10 118.46 0.02 1.73 0.14 102.71 2002 0.72 373.30 0.10 55.45 0.37 87.66 0.10 2806.68 0.03 83.95 0.02 68.91 0.21 160.31 0.11 132.74 0.01 1.17 0.09 65.96 2003 0.23 120.00 0.08 42.25 0.30 72.43 0.12 3565.15 0.03 63.83 0.04 105.02 0.05 37.50 0.07 83.18 0.18 16.85 0.11 85.70 2004 0.22 113.91 0.08 43.46 0.35 83.24 0.11 3205.51 0.03 63.67 0.07 203.49 0.99 743.36 0.09 107.56 0.06 6.10 0.46 346.36 2005 1.87 972.45 0.32 169.31 0.17 40.55 0.17 4856.82 0.06 134.12 0.25 722.06 0.24 178.34 0.05 60.16 0.06 5.51 1.28 962.90 2006 0.76 395.34 0.09 50.00 0.33 77.97 0.20 5577.35 0.12 283.32 0.29 831.03 0.08 59.63 0.07 79.01 0.12 11.54 1.19 892.53 2007 0.18 93.73 0.09 47.48 0.39 93.98 0.15 4326.88 0.05 124.18 0.13 357.04 0.49 368.72 0.54 655.12 0.07 6.93 1.78 1336.48 2008 0.29 148.02 0.06 31.94 0.21 49.63 0.40 11369.22 0.02 55.73 0.12 350.02 0.47 354.96 0.13 153.20 0.06 5.82 2.15 1613.68 2009 0.28 146.54 0.09 45.85 0.38 91.73 0.38 10835.37 0.15 363.73 0.20 568.56 0.27 199.27 0.02 25.15 0.04 3.32 2.38 1783.28 2010 0.55 287.63 0.08 41.17 0.06 14.12 0.10 2819.50 0.10 244.24 0.41 1161.11 0.14 102.87 0.02 22.25 0.13 12.09 2.05 1540.00 Source: Annual Reports of selected Allied Companies from 1996 to 2010. Table 4.5 shows the quick ratios of selected allied companies in last fifteen years. On an average, quick ratio of SAIL showed best performance among all allied companies and hence SAIL is the best company among selected allied companies. All other companies showed almost flat trend throughout the study period. 72

Table 4.6: Comparison of Quick Ratio between Glassline Companies H 0 : There is no significant difference in mean quick ratio between selected companies. H 1 : There is significant difference in mean quick ratio between selected companies. Descriptive Statistics 95% Confidence Company N Mean Std. Interval for Mean Std. Error Deviation Lower Upper Bound Bound GMM 15 0.19 0.18 0.04 0.08 0.29 SGEL 15 0.14 0.09 0.02 0.08 0.19 NILE 15 0.10 0.02 0.00 0.09 0.11 Total 45 0.14 0.12 0.01 0.10 0.18 ANOVA test Source of variation Sum of Squares df Mean Square F p-value Between Groups 0.055 2 0.027 1.787 0.180 Within Groups 0.643 42 0.015 Total 0.697 44 The table 4.6 shows mean quick ratio of selected companies. The descriptive table shows that mean value of this ratio was higher in GMM company followed by SGEL and NILE. To check the statistical difference in these mean values researcher had applied ANOVA test. In ANOVA table, applying this test corresponding F-value and its p-values were obtained. F-value was 1.787 and p-value was 0.180. As p-value in the table was more than 0.05, above null hypothesis was accepted and concluded that there is no significant difference in mean quick ratio between selected companies. 3. Liquidity Ratio A variant of current ratio is the liquid ratio or quick ratio which is designed to show the amount of cash available to meet immediate payments. It is obtained by dividing the liquid assets by liquid liabilities. 73

Liquid assets are obtained by deducting stock in trade from current assets. Stock is not treated as a liquid asset because it cannot be readily converted into cash as and when required. The current ratio of a business does not reflect the true liquid position. if its current assets consist largely of stock in trade. The liquid liabilities are obtained by deducting bank overdraft from current liabilities. Bank overdraft is not included in liquid liabilities because bank overdraft is not likely to be called on demand and is treated as a sort of permanent mode of financing. Hence, it is not treated as a quick liability. Liquid Ratio = Liquid Assets Liquid Liabilities Table 4.7: Liquid Ratio of selected Glassline Companies Year GMM SGEL NILE Ratio Indices Ratio Indices Ratio Indices 1996 0.68 100.00 0.55 100.00 1.66 100.00 1997 3.25 479.35 0.33 60.50 3.18 191.00 1998 5.11 752.56 0.52 94.68 2.71 163.14 1999 3.68 542.52 0.79 143.68 2.20 132.53 2000 2.17 319.64 0.97 177.25 2.25 135.55 2001 2.16 317.75 1.44 263.02 2.15 129.24 2002 1.34 196.81 1.05 191.99 2.28 136.98 2003 1.62 239.22 1.17 214.01 2.07 124.24 2004 1.18 173.49 0.86 156.97 1.07 64.18 2005 1.17 171.94 0.75 136.79 0.74 44.45 2006 1.49 218.99 1.42 258.21 1.51 90.81 2007 1.28 189.23 1.39 253.10 1.32 79.20 2008 1.33 196.45 1.28 232.28 1.13 67.77 2009 1.11 162.86 0.85 154.20 0.79 47.54 2010 1.49 219.19 0.60 108.80 0.66 39.51 Source: Annual Reports of selected Glassline Companies from 1996 to 2010. 74

Chart 4.3: Liquidity Ratio of selected Glassline Companies 6 Liquidity Ratio 5 4 3 GMM SGEL 2 NILE 1 0 It reveals from the table 4.7 and chart 4.3 that the liquidity ratio of GMM was showing decreasing trend throughout the study period. In SGEL, the liquidity ratio was showing overall increasing trend during study period. But NILE showed decreasing pattern during study period. SGEL shows better performance of liquidity ratio as compared to other companies and hence it is better. 75

Table 4.8: Liquidity Ratio of selected Allied Companies Year AWL BBL CUMI CG ELECON ESSAR GEE JSPL REMI SAIL Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In 1996 1.73 100.00 1.47 100.00 2.43 100.00 1.65 100.00 1.12 100.00 1.15 100.00 3.07 100.00 - - 1.11 100.00 1.07 100.00 1997 3.93 226.87 1.75 119.21 3.24 133.45 1.87 113.06 1.30 116.20 1.15 100.03 2.82 91.84 - - 2.22 199.44 1.05 98.22 1998 1.55 89.51 1.10 74.70 3.97 163.51 1.87 113.11 1.27 113.64 0.70 60.68 3.93 128.30 2.63 100.00 1.56 140.57 1.11 103.72 1999 1.26 72.64 1.19 81.25 3.95 162.68 1.51 91.71 1.43 127.34 1.13 98.62 3.13 102.17 3.06 116.32 0.73 65.95 1.12 104.99 2000 1.43 82.68 1.06 72.26 3.79 156.17 1.25 76.03 1.58 141.25 0.81 70.33 2.15 70.08 2.11 80.39 0.59 53.35 0.75 70.50 2001 1.15 66.57 1.15 78.16 4.09 168.56 1.26 76.09 1.70 151.99 0.70 61.27 2.43 79.19 2.46 93.72 0.53 47.89 0.79 73.91 2002 1.22 70.10 1.02 69.17 3.14 129.49 1.19 72.11 1.38 123.03 0.48 41.76 2.73 89.11 1.96 74.59 0.39 35.35 0.65 60.92 2003 1.11 64.09 0.82 55.98 5.68 234.11 1.18 71.48 1.27 113.30 1.17 101.70 2.45 79.89 1.41 53.71 0.50 44.99 0.79 73.78 2004 1.02 58.80 0.89 60.40 5.47 225.42 1.24 75.42 0.90 80.79 1.09 94.57 4.16 135.63 2.07 78.87 0.68 61.01 1.18 109.93 2005 2.65 152.98 1.67 113.28 5.03 207.17 1.28 77.52 0.96 85.76 1.48 129.06 1.49 48.65 1.46 55.54 1.03 92.27 2.12 197.73 2006 2.34 135.09 2.06 139.97 5.20 214.27 1.36 82.70 1.27 113.38 0.97 84.09 2.48 80.97 1.43 54.20 1.19 107.16 1.81 169.61 2007 1.59 91.89 1.93 131.05 4.04 166.28 1.34 81.08 1.76 157.17 0.62 53.92 2.77 90.39 2.17 82.40 0.88 79.22 2.54 237.71 2008 1.91 110.35 1.53 104.25 2.39 98.63 1.36 82.52 1.69 151.19 0.56 49.03 4.51 147.17 1.59 60.61 0.77 69.50 3.04 284.18 2009 1.58 91.04 1.65 112.33 2.54 104.60 1.32 80.29 1.49 132.77 0.97 83.98 3.88 126.52 1.57 59.67 0.55 49.90 3.19 298.03 2010 2.29 132.27 1.54 104.80 2.02 83.18 1.29 78.42 1.58 141.04 1.23 106.76 2.56 83.38 2.10 79.73 0.84 76.01 2.75 256.86 Source: Annual Reports of selected Allied Companies from 1996 to 2010. Table 4.8 shows the liquidity ratios of selected allied companies in last fifteen years. On an average, liquidity ratio of GEE and SAIL showed increasing pattern whereas all other companies showed almost flat trend throughout the study period. Thus GEE and SAIL are better than other selected allied companies. 76

Table 4.9: Comparison of Liquidity Ratio between Glassline Companies H 0 : There is no significant difference in mean liquidity ratio between selected companies. H 1 : There is significant difference in mean liquidity ratio between selected companies. Descriptive Statistics 95% Confidence Company N Mean Std. Interval for Mean Std. Error Deviation Lower Upper Bound Bound GMM 15 1.93 1.19 0.30 1.27 2.59 SGEL 15 0.93 0.35 0.09 0.73 1.12 NILE 15 1.71 0.76 0.19 1.29 2.13 Total 45 1.52 0.93 0.13 1.24 1.80 ANOVA test Source of variation Sum of Squares df Mean Square F p-value Between Groups 8.376 2 4.188 5.875 0.006 Within Groups 29.939 42 0.713 Total 38.315 44 The table 4.9 shows mean liquidity ratio of selected companies. The descriptive table shows that mean value of this ratio was higher in GMM followed by NILE and SGEL. To check the statistical difference in these mean values researcher had applied ANOVA test. In ANOVA table, applying this test corresponding F-value and its p-values were obtained. F-value was 5.875 and p-value was 0.006. As p-value in above table was less than 0.05, above null hypothesis was rejected and concluded that there a is significant difference in mean liquidity ratio between selected companies. B. ACTIVITY OR EFFICIENCY RATIO Funds of creditors and owners are invested in various assets to generate sales and profit. The better the management of assets, better the amount of sales. Activity ratio is also called as turnover ratio assets management ratio. They are called turnover ratio because they indicates the speed with which assets are being converted or turned over in to 77

involves a relationship between sales and assets generally reflects that assets are managed well. 1. Debtors Turnover Ratio Ratio of net credit sales to average trade debtors is called debtors turnover ratio. It is also known as receivables turnover ratio. This ratio is expressed in times. Accounts receivable is the term which includes trade debtors and bills receivables. It is a component of current assets and as such has direct influence on working capital position (liquidity) of the business. Perhaps, no business can afford to make cash sales only thus extending credit to the customers is a necessary evil. But care must be taken to collect book debts quickly and within the period of credit allowed. Otherwise chances of debts becoming bad and unrealizable will increase. How effective or efficient is the credit collection? To provide answer debtors turnover ratio or receivable turnover ratio is calculated. Debtors Turnover Ratio = Net Credit Sales Debtors + Bills Receivables Figure of trade debtors for this purpose should be gross i.e. provision for bad and doubtful debts should not be deducted from the amount of debtors. Receivables collection period (also known as average collection period) is calculated and supplemented with the receivables turnover ratio to help better understanding and communication. Normally higher the debtors turnover ratio better it is. Higher turnover signifies speedy and effective collection. Lower turnover indicates sluggish and inefficient collection leading to the doubts that receivables might contain significant doubtful debts. Receivables collection period is expressed in number of days. It should be compared with the period of credit allowed by the management to the customers as a matter of policy. Such comparison will help to decide whether receivables collection management is efficient or inefficient. 78

Table 4.10: Debtors Turnover Ratio of selected Glassline Companies Year GMM SGEL NILE Ratio Indices Ratio Indices Ratio Indices 1996 9.71 100.00 45.14 100.00 6.02 100.00 1997 5.67 58.39 14.65 32.45 6.56 108.97 1998 3.05 31.41 9.09 20.14 7.59 126.08 1999 3.41 35.12 6.76 14.98 7.75 128.74 2000 3.50 36.05 4.72 10.46 6.69 111.13 2001 4.22 43.46 4.31 9.55 10.47 173.92 2002 5.16 53.14 4.48 9.92 11.42 189.70 2003 8.43 86.82 6.32 14.00 9.02 149.83 2004 9.01 92.79 6.95 15.40 9.42 156.48 2005 8.47 87.23 8.23 18.23 13.37 222.09 2006 8.34 85.89 7.55 16.73 9.86 163.79 2007 6.56 67.56 7.76 17.19 8.35 138.70 2008 5.91 60.87 6.38 14.13 11.48 190.70 2009 6.10 62.82 6.57 14.55 15.82 262.79 2010 6.22 64.06 11.48 25.43 18.49 307.14 Source: Annual Reports of selected Glassline Companies from 1996 to 2010. 79

Chart 4.4: Debtors Turnover Ratio of selected Glassline Companies 50 Debtors Turnover Ratio 45 40 35 30 25 20 15 GMM SGEL NILE 10 5 0 It is realized from the table 4.10 and chart 4.4 that in GMM, debtors turnover ratio was increased during 1998-2004 and decreased in 2005-2010. The almost similar pattern was seen in SGEL. NILE shows increasing pattern throughout the study period i.e. 1996-2010. In NILE highest ratio was appeared in 2010. Overall NILE is better than other companies. 80

Table 4.11: Debtors Turnover Ratio of selected Allied Companies Year AWL BBL CUMI CG ELECON ESSAR GEE JSPL REMI SAIL Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In 1996 32.94 100.00 4.29 100.00 6.87 100.00 3.49 100.00 3.49 100.00 1.21 100.00 3.57 100.00 - - 2.00 100.00 8.20 100.00 1997 27.97 84.91 3.54 82.52 6.58 95.78 2.94 84.24 2.71 77.65 2.75 227.27 3.45 96.64 - - 18.40 920.00 7.14 87.07 1998 15.79 47.94 3.51 81.82 5.70 82.97 2.95 84.53 2.30 65.90 3.66 302.48 3.99 111.76 - - 3.75 187.50 7.54 91.95 1999 11.99 36.40 3.03 70.63 4.76 69.29 2.99 85.67 2.83 81.09 3.47 286.78 2.96 82.91 4.86 100.00 2.11 105.50 7.91 96.46 2000 13.13 39.86 2.85 66.43 4.70 68.41 2.75 78.80 2.88 82.52 4.18 345.45 2.60 72.83 2.95 60.70 0.43 21.50 8.70 106.10 2001 16.86 51.18 2.86 66.67 5.05 73.51 2.50 71.63 2.75 78.80 4.39 362.81 2.25 63.03 3.91 80.45 0.40 20.00 9.32 113.66 2002 19.13 58.08 2.51 58.51 4.81 70.01 3.45 98.85 2.47 70.77 4.42 365.29 2.23 62.46 4.59 94.44 2.12 106.00 10.16 123.90 2003 28.74 87.25 3.22 75.06 4.82 70.16 3.51 100.57 2.90 83.09 11.36 938.84 3.51 98.32 6.70 137.86 4.59 229.50 12.63 154.02 2004 24.14 73.28 3.76 87.65 4.99 72.63 3.68 105.44 2.60 74.50 11.86 980.17 6.03 168.91 7.39 152.06 4.17 208.50 15.04 183.41 2005 43.59 132.33 4.07 94.87 5.30 77.15 4.16 119.20 3.76 107.74 15.11 1248.76 10.04 281.23 12.75 262.35 7.63 381.50 18.52 225.85 2006 29.81 90.50 4.12 96.04 5.64 82.10 4.60 131.81 3.09 88.54 13.55 1119.83 13.09 366.67 12.18 250.62 5.89 294.50 17.25 210.37 2007 21.10 64.06 4.46 103.96 5.98 87.05 4.99 142.98 2.79 79.94 16.43 1357.85 10.37 290.48 12.58 258.85 4.95 247.50 18.82 229.51 2008 17.08 51.85 4.11 95.80 5.85 85.15 4.84 138.68 2.11 60.46 26.26 2170.25 14.22 398.32 20.13 414.20 5.94 297.00 17.15 209.15 2009 13.72 41.65 3.70 86.25 5.01 72.93 5.03 144.13 2.14 61.32 33.09 2734.71 13.18 369.19 24.90 512.35 5.53 276.50 16.04 195.61 2010 14.57 44.23 4.19 97.67 5.00 72.78 5.01 143.55 2.28 65.33 25.92 2142.15 9.23 258.54 15.56 320.16 6.03 301.50 13.46 164.15 Source: Annual Reports of selected Allied Companies from 1996 to 2010. Table 4.11 shows the debtors turnover ratios of selected allied companies in last fifteen years. During the study period of fifteen years, AWL showed highest debtors turnover ratio among all selected allied companies. JSPL, ESSAR and SAIL showed an increasing trend throughout the study period. 81

Table 4.12: Comparison of Debtors Turnover Ratio between Glassline Companies H 0 : There is no significant difference in mean debtors turnover ratio between selected companies. H 1 : There is significant difference in mean debtors turnover ratio between selected companies. Descriptive Statistics 95% Confidence Company N Mean Std. Interval for Mean Std. Error Deviation Lower Upper Bound Bound GMM 15 6.2507 2.16113.55800 5.0539 7.4475 SGEL 15 10.0260 10.08018 2.60269 4.4438 15.6082 NILE 15 10.1540 3.53474.91266 8.1965 12.1115 Total 45 8.8102 6.41443.95621 6.8831 10.7373 ANOVA test Source of variation Sum of Squares df Mean Square F p-value Between Groups 147.528 2 73.764 1.863.168 Within Groups 1662.848 42 39.592 Total 1810.375 44 Table 4.12 shows mean debtors turnover ratio of selected companies. The descriptive table shows that mean value of this ratio was higher in NILE followed by SGEL and GMM. To check the statistical difference in these mean values researcher had applied ANOVA test. In ANOVA table, applying this test corresponding F-value and its p-values were obtained. F-value was 1.863 and p-value was 0.168. As p-value in above table was more than 0.05, above null hypothesis was accepted and concluded that there is no significant difference in mean debtors turnover ratio between selected companies. 2. Average Collection Period The Debtors/Receivable Turnover ratio when calculated in terms of days is known as Average Collection Period or Debtors Collection Period Ratio. 82

The average collection period ratio represents the average number of days for which a firm has to wait before its debtors are converted into cash. Average Collection Period = 365 days Debtors Turnover The Average Collection Period ratio measures the quality of debtors. A short collection period implies prompt payment by debtors. It reduces the chances of bad debts. Similarly, a longer collection period implies too liberal and inefficient credit collection performance. It is difficult to provide a standard collection period of debtors. Table 4.13: Average Collection Period of selected Glassline Companies Year GMM SGEL NILE Ratio Indices Ratio Indices Ratio Indices 1996 37.59 100.00 8.09 100.00 60.63 100.00 1997 64.37 171.25 24.91 308.12 55.64 91.77 1998 119.67 318.36 40.15 496.59 48.09 79.31 1999 107.04 284.75 53.99 667.75 47.10 77.68 2000 104.29 277.43 77.33 956.36 54.56 89.99 2001 86.49 230.09 84.69 1047.33 34.86 57.50 2002 70.74 188.18 81.47 1007.59 31.96 52.71 2003 43.30 115.18 57.75 714.24 40.47 66.74 2004 40.51 107.77 52.52 649.50 38.75 63.91 2005 43.09 114.64 44.35 548.48 27.30 45.03 2006 43.76 116.43 48.34 597.88 37.02 61.05 2007 55.64 148.02 47.04 581.70 43.71 72.10 2008 61.76 164.30 57.21 707.52 31.79 52.44 2009 59.84 159.18 55.56 687.06 23.07 38.05 2010 58.68 156.11 31.79 393.21 19.74 32.56 Source: Annual Reports of selected Glassline Companies from 1996 to 2010. 83

Chart 4.5: Average Collection Period of selected Glassline Companies 140 Average Collection Period 120 100 80 GMM 60 40 SGEL NILE 20 0 It observes from the table 4.13 and chart 4.5 that in GMM, average collection period was increased during 1996-2000 and decreased during 2001-2010. The similar pattern was seen in SGEL. NILE showed decreasing pattern throughout the study period i.e. 1996-2010. Among selected companies, NILE showed lowest average collection period and hence NILE is better than other two selected companies. 84

Table 4.14: Average Collection Period of selected Allied Companies Year AWL BBL CUMI CG ELECON ESSAR GEE JSPL REMI SAIL Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In 1996 11.08 100.00 85.08 100.00 53.13 100.00 104.58 100.00 104.58 100.00 301.65 100.00 102.24 100.00 - - 182.50 100.00 44.51 100.00 1997 13.05 117.77 103.11 121.19 55.47 104.41 124.15 118.71 134.69 128.78 132.73 44.00 105.80 103.48 - - 19.84 10.87 51.12 114.85 1998 23.12 208.61 103.99 122.22 64.04 120.53 123.73 118.31 158.70 151.74 99.73 33.06 91.48 89.47 - - 97.33 53.33 48.41 108.75 1999 30.44 274.73 120.46 141.58 76.68 144.33 122.07 116.72 128.98 123.32 105.19 34.87 123.31 120.61 75.10 100.00 172.99 94.79 46.14 103.67 2000 27.80 250.88 128.07 150.53 77.66 146.17 132.73 126.91 126.74 121.18 87.32 28.95 140.38 137.31 123.73 164.75 848.84 465.12 41.95 94.25 2001 21.65 195.37 127.62 150.00 72.28 136.04 146.00 139.60 132.73 126.91 83.14 27.56 162.22 158.67 93.35 124.30 912.50 500.00 39.16 87.98 2002 19.08 172.19 145.42 170.92 75.88 142.83 105.80 101.16 147.77 141.30 82.58 27.38 163.68 160.09 79.52 105.88 172.17 94.34 35.93 80.71 2003 12.70 114.61 113.35 133.23 75.73 142.53 103.99 99.43 125.86 120.34 32.13 10.65 103.99 101.71 54.48 72.54 79.52 43.57 28.90 64.92 2004 15.12 136.45 97.07 114.10 73.15 137.68 99.18 94.84 140.38 134.23 30.78 10.20 60.53 59.20 49.39 65.76 87.53 47.96 24.27 54.52 2005 8.37 75.57 89.68 105.41 68.87 129.62 87.74 83.89 97.07 92.82 24.16 8.01 36.35 35.56 28.63 38.12 47.84 26.21 19.71 44.28 2006 12.24 110.50 88.59 104.13 64.72 121.81 79.35 75.87 118.12 112.94 26.94 8.93 27.88 27.27 29.97 39.90 61.97 33.96 21.16 47.54 2007 17.30 156.11 81.84 96.19 61.04 114.88 73.15 69.94 130.82 125.09 22.22 7.36 35.20 34.43 29.01 38.63 73.74 40.40 19.39 43.57 2008 21.37 192.86 88.81 104.38 62.39 117.44 75.41 72.11 172.99 165.40 13.90 4.61 25.67 25.11 18.13 24.14 61.45 33.67 21.28 47.81 2009 26.60 240.09 98.65 115.95 72.85 137.13 72.56 69.38 170.56 163.08 11.03 3.66 27.69 27.09 14.66 19.52 66.00 36.17 22.76 51.12 2010 25.05 226.08 87.11 102.39 73.00 137.40 72.85 69.66 160.09 153.07 14.08 4.67 39.54 38.68 23.46 31.23 60.53 33.17 27.12 60.92 Source: Annual Reports of selected Allied Companies from 1996 to 2010. The table 4.14 gives the average collection period of selected allied companies in last fifteen years. During the study period of fifteen years, all companies showed decreasing trend. JSPL, ESSAR and SAIL showed lowest average collection period among all allied companies. Thus these companies seem to be better than others. 85

Table 4.15: Comparison of Average Collection Period between Glassline Companies H 0 : There is no significant difference in mean average collection period between selected companies. H 1 : There is significant difference in mean average collection period between selected companies. Descriptive Statistics 95% Confidence Company N Mean Std. Interval for Mean Std. Error Deviation Lower Upper Bound Bound GMM 15 66.45 26.29 6.78 51.88 81.01 SGEL 15 51.01 20.61 5.32 39.59 62.42 NILE 15 39.64 12.06 3.11 32.96 46.32 Total 45 52.37 22.91 3.41 45.48 59.25 ANOVA test Source of variation Sum of Squares df Mean Square F p-value Between Groups 5430.397 2 2715.199 6.455 0.004 Within Groups 17667.274 42 420.649 Total 23097.671 44 Table 4.15 shows mean Average Collection Period of selected companies. The descriptive table shows that mean value of this ratio was higher in GMM Company followed by SGEL and NILE. To check the statistical difference in these mean values researcher had applied ANOVA test. In ANOVA table, applying this test corresponding F-value and its p-values were obtained. F-value was 6.455 and p-value was 0.004. As p-value in above table was less than 0.05, above null hypothesis was rejected and concluded that there is a significant difference in mean Average Collection Period between selected companies. 86

3. Total Assets Turnover Ratio The total asset turnover ratio measures the ability of a company to use its assets to generate sales. The total asset turnover ratio considers all assets including fixed assets, like plant and equipment, as well as inventory and accounts receivable. Total Assets Turnover Ratio = Net Sales Total Assts The lower the total asset turnover ratio, as compared to historical data for the firm and industry data, the more sluggish the firm's sales. This may indicate a problem with one or more of the asset categories composing total assets - inventory, receivables, or fixed assets. The small business owner should analyze the various asset classes to determine where the problem lies. There could be a problem with inventory. The firm could be holding obsolete inventory and not selling inventory fast enough. With regard to accounts receivable, the firm's collection period could be too long and credit accounts may be on the books too long. Fixed assets, such as plant and equipment, could be sitting idle instead of being used to their full capacity. All of these issues could lower the total asset turnover ratio. Table 4.16: Total Assets Turnover Ratio of selected Glassline Companies Year GMM SGEL NILE Ratio Indices Ratio Indices Ratio Indices 1996 1.54 100.00 0.04 100.00 0.67 100.00 1997 1.24 80.37 0.70 1820.23 0.41 61.52 1998 0.89 57.93 0.66 1732.60 0.36 54.23 1999 0.98 63.93 0.83 2171.63 0.43 63.74 2000 0.75 48.57 0.90 2363.93 0.41 60.61 2001 0.88 57.33 1.08 2837.73 0.42 62.51 2002 0.88 56.95 1.13 2957.45 0.78 115.69 2003 1.15 74.96 1.57 4104.66 0.93 137.86 2004 1.19 77.21 1.97 5168.91 1.14 169.35 2005 1.35 87.70 2.24 5867.97 1.50 223.60 2006 1.60 103.92 1.44 3777.17 1.55 231.13 2007 1.40 90.67 1.34 3497.75 1.71 254.31 2008 1.56 101.46 1.63 4270.20 2.37 351.93 2009 1.71 111.21 1.39 3625.57 1.57 233.33 2010 1.68 109.13 1.50 3923.89 2.21 328.85 Source: Annual Reports of selected Glassline Companies from 1996 to 2010. 87

Chart 4.6: Total Assets Turnover Ratio of selected Glassline Companies 2.5 Total Assets Turnover Ratio 2 1.5 GMM 1 SGEL NILE 0.5 0 From the table 4.16 and chart 4.6, one can interpret that in GMM total assets turnover ratio was decreased during 1996-2002 and increased during 2003-2010. In SGEL, the ratio decrease during 1996-2001, increase during 2002-2005 and again decrease. NILE showed an increasing pattern throughout the study period i.e. 1996-2010. Among selected companies, NILE showed highest performance of total assets turnover ratio throughout the study period and hence NILE is better than other two selected companies. 88

Table 4.17: Total Assets Turnover Ratio of selected Allied Companies Year AWL BBL CUMI CG ELECON ESSAR GEE JSPL REMI SAIL Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In 1996 2.12 100.00 2.88 100.00 0.83 100.00 - - 1.98 100.00 0.08 100.00 1.29 100.00 - - 0.10 100.00 0.58 100.00 1997 1.81 85.49 2.26 78.41 0.80 96.77 0.96 100.00 1.67 84.61 0.24 293.40 1.29 100.16 - - 0.12 125.32 0.48 82.16 1998 1.60 75.33 2.60 90.31 0.87 105.41 0.90 93.43 1.38 69.78 0.35 422.43 1.08 83.84 - - 0.09 97.90 0.45 77.40 1999 1.87 88.23 2.24 77.82 0.90 108.47 0.91 95.46 1.80 91.22 0.31 375.92 1.01 78.19 14.41 100.00 - - 0.47 81.38 2000 1.66 78.25 2.25 78.01 0.97 116.84 0.87 90.43 1.35 68.54 0.37 447.80 1.03 80.33 13.51 93.76 0.01 9.35 0.70 121.54 2001 1.81 85.42 2.43 84.36 1.05 127.55 0.93 96.89 1.07 53.93 0.41 498.46 - - 10.73 74.49 0.00 1.56 0.76 130.83 2002 1.92 90.32 2.49 86.67 1.04 126.11 0.99 103.04 1.16 58.51 0.62 754.83 1.09 84.49 7.74 53.74 0.01 5.25 0.81 140.52 2003 2.28 107.38 3.04 105.46 1.13 136.96 1.09 113.64 1.36 69.03 0.26 321.82 1.67 129.67 6.50 45.13 0.01 7.09 1.09 188.68 2004 2.16 101.78 3.69 128.35 1.30 156.99 1.21 126.61 1.24 62.72 0.63 768.60 3.17 246.19 5.08 35.23 0.17 179.94 1.55 267.26 2005 2.52 118.86 2.78 96.52 1.30 157.14 1.56 163.25 1.70 85.94 0.94 1148.61 3.51 272.75 3.39 23.55 0.88 920.46 1.78 306.74 2006 2.58 121.70 2.51 87.28 1.20 145.34 1.58 164.44 1.48 74.92 0.55 668.49 3.75 291.30 2.08 14.46 0.93 976.01 1.66 286.83 2007 2.38 111.91 3.31 114.94 1.02 123.36 1.66 173.35 1.58 79.76 0.69 845.55 1.87 145.09 1.60 11.08 0.93 976.97 1.59 273.75 2008 2.15 101.18 3.02 104.83 0.90 108.82 1.65 172.42 1.28 64.66 0.99 1209.71 2.65 205.57 1.26 8.74 1.01 1063.09 1.52 262.92 2009 1.71 80.64 2.58 89.64 0.89 107.77 1.73 180.92 1.10 55.81 0.95 1165.25 2.80 217.64 0.92 6.39 0.77 806.77 1.21 208.75 2010 1.80 84.97 2.60 90.21 1.04 125.37 1.54 161.02 1.26 63.64 0.39 474.92 1.85 143.99 0.63 4.38 0.81 844.09 0.81 140.37 Source: Annual Reports of selected Allied Companies from 1996 to 2010. Table 4.17 provides the total assets turnover ratio of selected allied companies in last fifteen years. During the study period of fifteen years, all companies showed mixed trend. i.e. the ratio was fluctuating throughout the study period. GEE and SAIL showed better performance among all allied companies and hence these companies seem to be better than others. 89

Table 4.18: Comparison of Total Assets Turnover Ratio between Glassline Companies H 0 : There is no significant difference in mean total assets turnover ratio between selected companies. H 1 : There is significant difference in mean total assets turnover ratio between selected companies. Descriptive Statistics 95% Confidence Company N Mean Std. Std. Interval for Mean Deviation Error Lower Upper Bound Bound GMM 15 1.25 0.32 0.08 1.07 1.43 SGEL 15 1.22 0.55 0.14 0.92 1.53 NILE 15 1.09 0.68 0.17 0.71 1.47 Total 45 1.19 0.53 0.07 1.03 1.35 ANOVA test Source of variation Sum of Squares df Mean Square F p-value Between Groups 0.210 2 0.105 0.358 0.701 Within Groups 12.322 42 0.293 Total 12.532 44 Table 4.18 shows mean total assets turnover ratio of selected companies. The descriptive table shows that mean value of this ratio was higher in GMM followed by SGEL and NILE. To check the statistical difference in these mean values researcher had applied ANOVA test. In ANOVA table, applying this test corresponding F-value and its p-values were obtained. F-value was 0.358 and p-value was 0.701. As p-value in above table was more than 0.05, above null hypothesis was accepted and concluded that there is no significant difference in mean total assets turnover ratio between selected companies. 4. Fixed Assets Turnover Ratio This ratio is also known as the investment turnover ratio. It is based on the relationship between the cost of goods sold and assets of a firm. It define, measures the efficiency of a firm in managing and utilizing its assets. The higher the turnover ratio, the more efficient 90

is the management and utilization of the assets while low turnover ratios are indicative of under utilization of available resources and presence of idle capacity. In operational terms, it implies that the firm can expand its activity level without requiring additional capital investments. The fixed asset turnover ratio measures the company's effectiveness in generating sales from its investments in plant, property, and equipment. It is especially important for a manufacturing firm that uses a lot of plant and equipment in its operations to calculate its fixed asset turnover ratio. Fixed Assets Turnover Ratio = Net Sales Net Fixed Assts If the fixed asset turnover ratio is low as compared to the industry or past years of data for the firm, it means that sales are low or the investment in plant and equipment is too much. Table 4.19: Fixed Assets Turnover Ratio of selected Glassline Companies Year GMM SGEL NILE Ratio Indices Ratio Indices Ratio Indices 1996 2.21 100.00 0.63 100.00 1.80 100.00 1997 1.83 82.81 0.96 152.38 0.90 50.00 1998 1.28 57.92 0.91 144.44 0.69 38.33 1999 1.34 60.63 1.08 171.43 0.84 46.67 2000 1.29 58.37 1.23 195.24 0.73 40.56 2001 1.43 64.71 1.48 234.92 0.80 44.44 2002 1.32 59.73 1.49 236.51 1.33 73.89 2003 1.56 70.59 1.93 306.35 1.53 85.00 2004 1.73 78.28 2.49 395.24 1.66 92.22 2005 2.05 92.76 3.16 501.59 2.67 148.33 2006 2.32 104.98 2.65 420.63 3.03 168.33 2007 2.52 114.03 2.22 352.38 3.86 214.44 2008 2.86 129.41 2.39 379.37 5.46 303.33 2009 2.74 123.98 2.38 377.78 4.43 246.11 2010 2.70 122.17 2.07 328.57 4.84 268.89 Source: Annual Reports of selected Glassline Companies from 1996 to 2010. 91

Chart - 4.7 : Fixed Assets Turnover Ratio of selected Glassline Companies 6 Fixed Assets Turnover Ratio 5 4 3 GMM SGEL 2 NILE 1 0 From the table 4.19 and chart 4.7, one can say that in GMM, fixed assets turnover ratio was decreased during 1996-2002 and increased during 2003-2010. In SGEL, the ratio increase throughout the study period i.e. 1996-2010. NILE also showed an increasing pattern throughout the study period. Among selected companies, NILE showed highest performance of fixed assets turnover ratio throughout study period and hence NILE is better than other two selected companies. 92

Table 4.20: Fixed Assets Turnover Ratio of selected Allied Companies Year AWL BBL CUMI CG ELECON ESSAR GEE JSPL REMI SAIL Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In Ra In 1996 3.08 100.00 8.89 100.00 1.38 100.00 4.55 100.00 1.86 100.00 0.16 100.00 1.31 100.00 - - 0.52 100.00 0.98 100.00 1997 2.46 79.87 6.65 74.80 1.41 102.17 3.57 78.46 1.52 81.72 0.39 243.75 1.26 96.18 - - 0.59 113.46 0.78 79.59 1998 1.92 62.34 5.42 60.97 1.41 102.17 3.06 67.25 1.28 68.82 0.47 293.75 1.59 121.37 - - 0.12 23.08 0.68 69.39 1999 1.81 58.77 4.89 55.01 1.30 94.20 2.80 61.54 1.54 82.80 0.39 243.75 1.43 109.16 1.43 100.00 - - 0.59 60.20 2000 1.52 49.35 4.93 55.46 1.28 92.75 2.50 54.95 1.26 67.74 0.38 237.50 1.61 122.90 0.85 59.44 0.01 1.92 0.59 60.20 2001 1.40 45.45 5.44 61.19 1.39 100.72 2.00 43.96 0.99 53.23 0.39 243.75 1.89 144.27 0.95 66.43 0.00 0.00 0.61 62.24 2002 1.18 38.31 4.58 51.52 1.33 96.38 2.26 49.67 0.95 51.08 0.33 206.25 1.99 151.91 0.84 58.74 0.00 0.00 0.58 59.18 2003 1.38 44.81 5.20 58.49 1.31 94.93 2.19 48.13 1.26 67.74 0.53 331.25 2.98 227.48 1.09 76.22 0.01 1.92 0.70 71.43 2004 1.36 44.16 6.18 69.52 1.48 107.25 2.39 52.53 1.26 67.74 0.60 375.00 4.49 342.75 1.03 72.03 0.13 25.00 0.87 88.78 2005 1.93 62.66 6.71 75.48 1.58 114.49 2.83 62.20 2.20 118.28 0.95 593.75 6.43 490.84 1.16 81.12 0.70 134.62 1.15 117.35 2006 2.40 77.92 7.35 82.68 1.68 121.74 3.40 74.73 2.71 145.70 0.79 493.75 7.64 583.21 1.00 69.93 0.72 138.46 1.14 116.33 2007 2.17 70.45 10.04 112.94 1.70 123.19 4.21 92.53 3.74 201.08 0.74 462.50 6.01 458.78 0.95 66.43 0.77 148.08 1.33 135.71 2008 1.88 61.04 10.17 114.40 1.70 123.19 4.38 96.26 3.39 182.26 0.84 525.00 6.38 487.02 1.13 79.02 1.27 244.23 1.51 154.08 2009 1.41 45.78 7.12 80.09 1.48 107.25 4.63 101.76 2.83 152.15 0.85 531.25 6.98 532.82 1.27 88.81 1.04 200.00 1.53 156.12 2010 1.53 49.68 6.73 75.70 1.42 102.90 4.95 108.79 2.41 129.57 0.72 450.00 4.50 343.51 0.98 68.53 1.06 203.85 1.29 131.63 Source: Annual Reports of selected Allied Companies from 1996 to 2010. The table 4.20 provides the fixed assets turnover ratio of selected allied companies in last fifteen years. During the study period of fifteen years, all companies showed mixed trend. i.e. the ratio was fluctuating throughout the study period. GEE showed highest performance among all allied companies and hence it seems to be better than others. 93