CHAPTER 5

DATA
ANALYSIS (UNIT
WISE)
AND Z – SCORE

156
 INDEX
Sr. No. Topic Pg. No.
5.1 Introduction 159
Analysis of financial various components of Z-score model
5.2 in term of unit-wise of selected companies from different 160
industries.
5.2.1 Analysis of financial components of Piramal Enterprise Ltd. 161
5.2.2 Analysis of financial components of Sun Pharma Ltd. 163
5.2.3 Analysis of financial components of Torrent Pharma Ltd. 165
5.2.4 Analysis of financial components of Aurobindo Ltd. 167
5.2.5 Analysis of financial components of [Link]‘s Lab. 169
5.2.6 Analysis of financial components of UltraTech Cement. 171
5.2.7 Analysis of financial components of India Cements Ltd. 173
5.2.8 Analysis of financial components of J. K. Cement Ltd. 175
5.2.9 Analysis of financial components of JK Lakshmi Cement Ltd. 177
5.2.10 Analysis of financial components of Ambuja Cement. 179
Analysis of Z – score ratios in term of Unit-wise of selected
5.3 181
companies from different industries.
5.3.1 Analysis of Z – score ratios of Piramal Enterprise Ltd 184
5.3.2 Analysis of Z – score ratios of Sun Pharma Ltd. 186
5.3.3 Analysis of Z – score ratios of Torrent Pharma Ltd. 188
5.3.4 Analysis of Z – score ratios of Aurobindo Ltd. 190
5.3.5 Analysis of Z – score ratios of [Link]‘s Lab. 192
5.3.6 Analysis of Z – score ratios of UltraTech Cement. 194
5.3.7 Analysis of Z – score ratios of India Cements Ltd. 196
5.3.8 Analysis of Z – score ratios of J. K. Cement Ltd. 198
5.3.9 Analysis of Z – score ratios of JK Lakshmi Cement Ltd. 200
5.3.10 Analysis of Z – score ratios of Ambuja Cement. 202
Test of financial Solvency of selected companies from
5.4 204
different industries..
5.4.1 Test of financial Solvency of Piramal Enterprise Ltd 206
5.4.2 Test of financial Solvency of Sun Pharma Ltd. 208

157
5.4.3 Test of financial Solvency of Torrent Pharma Ltd. 210
5.4.4 Test of financial Solvency of Aurobindo Ltd. 212
5.4.5 Test of financial Solvency of [Link]‘s Lab. 214
5.4.6 Test of financial Solvency of UltraTech Cement. 216
5.4.7 Test of financial Solvency of India Cements Ltd. 218
5.4.8 Test of financial Solvency of J. K. Cement Ltd. 220
5.4.9 Test of financial Solvency of JK Lakshmi Cement Ltd 222
5.4.10 Test of financial Solvency of Ambuja Cement. 224
5.5 Conclusion 225

158
5.1 INTRODUCTION:

The risk involved in corporate liability and prediction of bankruptcy through Altman
model has become a very important concern for the various stakeholders in firm
including shareholders, managers, creditors and business partners as well as
government institutions accountable for maintaining stability of financial markets.
Therefore minimize default risk seeking seriously and bankruptcies not only affect the
creditors but also create value able atmosphere for economy as a whole like investors,
consumers, other firms as well as the industry.

So the concept of risk related to corporation performance has become a vital issue.
The credit risk has define as a situation in which actual income might be deviate for
expected or default risk define as a the degree of value fluctuations in debt instrument
and derivatives due to changes in the underlying credit quality of borrowers and
counter parties. So default risk is one of the most important types of risk associated
with financial market and monitoring as well as forecasting default risk of firms is one
of the main issues in financial markets.

Here, this question arises that how the performance and risk associated with
investment in the firm can be assessed and predicted. Financial statements provide
useful information concerning the financial position of an entity and the quality of its
operations. Altman and MC Gough (1974) states that. The basic objective of financial
statement is to provide information useful for making economic decision. The
fundament concern in economic decision making is the ability of enterprise to
maintain to operate as a going concern. Investment decision relating to a firm, engage
a new view when that firm is facing possible financial problems such as liquidation or
bankruptcy. Therefore, it is very important to that would be recognized bankruptcy or
liquidation at the earliest stage so that investors are able to plan for the it investment
according.

The two main issues related to going concern that investor will bring into
consideration by looking at a financial statements: (I) financing problems which is
defined as difficult in meeting obligations (II) operating problem as failure in
operating success.

159
The financing problem included liquidity efficiency, equity efficiency and debt
default and fund shortage. The operating problem included marketing operating
losses, insufficient revenues, ability to operate is deteriorated. Operation is controlled
poorly. Thus, financial information play key important role for performance of
entities. Therefore continuous financial analysis of financial position and result is
required to take corrective measure to meet the short-term and long –term requirement
adequate. The Z-rating is likewise a vital enterprise tool which makes use of to inform
a way to improve the financial fitness of enterprise. Therefore present chapter of the
study focus on analysis of financial health using application of Altman model (unit –
wise analysis). The Z-score of each unit also analyzed for testing the solvency
position of units.

5.2 ANALYSIS OF FINANCIAL VARIOUS COMPONENTS OF Z-

SCORE MODEL IN TERM OF UNIT-WISE OF SELECTED
COMPANIES FROM DIFFERENT INDUSTRIES:

In this study Altman model has been used for solvency test of sampled units. In the
Altman model, various components of financial statement are required. So researcher
has been also drawn required components from the financial statement of sampled
units. The name of components given below:

1. CA: Current Assets:

2. TA: Total Assets:
3. CL: Current Liability:
4. TL: Total Liability:
5. VE: Value of Equity:
6. NS: Net Sales:
7. I: Interest:
8. EBIT: Earnings Before Interest and Tax:
9. RE: Retained Earnings:
10. FC: Financial Component:

160
OBJECTIVE-1: TO KNOW THE FINANCIAL POSITION OF SELECTED SAMPLE FROM DIFFERENT INDUSTRIES IN INDIA:

5.2.1 ANALYSIS OF Z SCORE COMPONENTS OF PARIAMAL ENTERPRISE LTD:

Table 5.1 Z score components of Parimal Enterprise Ltd:

(Rupees in Crores)

FC Year 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 Average

CA 1464.4 10863.6 1811.2 3975.8 3669.9 5095.1 3362.8 3893.1 4934.3 2909.9 4198.0

TA 2266.4 12077.1 13744.4 16342.4 16928.6 16432.5 27117.2 25474.7 36732.1 38005.6 20512.1

CL 515.1 1067.8 2133.6 4957.0 7068.8 3693.2 8637.9 8276.0 11248.2 13516.8 6111.4

TL 1280.9 1446.4 2603.6 5786.4 7801.5 4985.7 14316.5 11052.1 15395.2 18480.4 8314.9

VE 1500.6 11698.5 11140.7 10555.9 9127.0 11446.8 12800.6 14422.6 21336.8 19525.2 12355.5

NS 2650.9 1585.3 1153.4 1403.1 1990.5 2401.4 3424.3 3809.3 3296.9 3671.4 2538.7

I 156.3 79.7 84.9 359.0 628.3 304.1 781.3 1158.2 973.2 1462.3 598.7

EBIT 633.6 16647.0 206.2 111.1 258.3 950.5 1765.0 2078.1 1726.7 670.7 2504.7

RE 311.6 12663.7 -220.2 -584.8 -1429.9 -42.6 216.8 776.7 83.2 -1404.7 1037.0
(Source: data collected from respective Annual reports of company)

161
Analysis: Table no. 5.1 reveals the components of Altman Model for the period of ten years
of the study of Parimal Enterprise Ltd. The currents assets of the company shows fluctuation
in the course of the duration of the have a look at, it's far maximum within the year 2010-11of
Rs. 10863.6 crores. In the year 2011-12 the current assets of the company is 1811.2 and it is
increased in the year 2012-13 by 3975.8 crores again its fall down in the year 2013-14 by
3669.9 crores in the year 2014-15 it again increases up to 5095.1 and in rest of the year it
shows fluctuations. The average current asset of the company is observed 4198.0 crores. The
total assets of the company in the year 2009-10 is 2266.4 which is increased till the year
2013-14 by 16928.6 crores but it shown downward trend in the year 2014-15 in the year
2015-16 it again increases by 27117.20 but again it goes down in the year 2016-17 by
25474.7 crores again in the year 2017-18 and 2018-19 it is increased. The average total assets
of the company were 20512.1.

The current liability of the company shows continues increased from the beginning year
2009-10 to the year 2013-14 and it is increased up to 7068.8 crores then in the year 2014-15 it
goes down by 3693.2 crores and form the next year 2015-16 it shows increase by 8637.9
crores in the year 2016-17 it declined by 8276.0 crores in the last two years current liability
shows increase it is increased by 13516.8 crores. The average current liability is observed
6111.4 crores. The total liability of the company increased in from the year 2009-10 to 2013-
14 but in the year 2014-15 it declined by 4985.7 crores and the total liability of the company
highest increased in the year 2018-19 which is 18480.4 crores. The value of equity shows
fluctuation during the ten years of the study. It was Rs. 1500.6 crores in the year 2009-10 and
in the year 2017-18 it goes up by Rs. 21336.8 crores with the average value of Rs. 12355.5
crores.
The net sales of Parimal Enterprise Ltd. is highest in the year 2018-19 with Rs. 3671.4 crores
and it shows the lowest sales in the year 2011-12 which is Rs. 1153.4 crores. In rest of the
year it shows ups and downs during the period of study. Interest was shows the mixture trend
during the period of study. It was highest Rs. 1462.3 crores in the year 2018-19 and lowest
Rs. 79.7 crores in the year 2010-11. The average was observed Rs. 598.7 crores. EBIT of the
company reveals the mix trend during the period of the study. It was recorded highest Rs.
16647 crores in the year 2010-11 after that it was not go high at these level. Except the year
2010-11 the EBIT of the company shows downward trend during the ten years. Retained
earnings of the company do not show the increasing trend, in few years it goes negative. In
the year 2018-19 it shows the decreasing value by Rs. -1404.7 crores with average of Rs.
1036.9 crores. This is not good indication for the company. Over all financial components are
increased in the last year of study period excluding the retained earning it suggested that the
increased in turnover year by year under study period.

162
5.2.2 ANALYSIS OF Z SCORE COMPONENTS OF SUN PHARMA LTD.:

Table 5.2 Z score components of Sun Pharma Ltd.

(Rupees in Crores)

FC Year 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 Average

CA 1584.2 2982.7 3970.8 3887.2 5699.4 5450.2 5316.2 6369.8 9575.2 11169.7 5600.5

TA 6468.5 7606.6 91,31.2 9246.4 14364.4 37445.5 34266.4 33748.2 36791.8 37714.1 24183.5

CL 605.7 747.03 10,18.5 1155.0 4233.4 11052.0 8627.3 10982.5 12558.4 13271.8 7025.9

TL 950.6 926.07 1253.0 1457.6 6956.5 14659.2 12375.7 12876.7 14469.2 14870.5 8079.5

VE 5717.9 6680.5 78,78.1 7788.8 7407.8 22771.3 21890.7 20871.5 22322.6 22843.6 15366.1

NS 1807.8 1933.1 40,15.5 2432.1 2828.7 8017.1 7863.6 7806.7 9006.2 10303.2 5777.6

I 0.11 0.25 2.05 1.50 16.13 1,73.8 289.8 101.3 295.6 333.5 115.6

EBIT 949.2 1454.2 1727.8 664.5 -2784.8 -1385.1 -792.1 68.9 575.9 1052.9 153.1

RE 566.5 962.5 1185.9 -89.2 -3191.9 -2343.0 -1956.1 -282.3 -492.4 336.8 -530.3
(Source: data collected from respective Annual reports of company)

163
Analysis:

Above table No. 5.2 observed the analysis of components related to Altman model
of Sun Pharma Ltd. during study period. Current asset was highest Rs.11169.7
crores in the year 2018-19 and lowest Rs.1584.2 crores in the year 2009-10 with
average Rs.-5600.5 crores. In Sun Pharma Ltd. Total assets showed increasing
trend during study period except in the year 2015-16 and 2016-17. It was
Rs.6468.5 crores in the year 2009-10 and rise up very big amount that is
Rs.37714.1 crores in the year 2018-19. The average was Rs.24.83.5 crores.
Current liability was Rs.605.7 crores in the year 2009-10 and it increased up to Rs.
11052.0 crores in the year 2014-15. After that year, it was declined up to Rs.
8627.3 crores in the year 2015-16 and rise up to Rs. 13271.8 crores in the year
2018-19. The average was observed Rs.70.25.9 crores. Total liability of Sun
pharma Ltd. was Rs. 950.6 crores in the year 2009-10 and it was increased up to
Rs.14659.2 crores in the year 2014-15, except in the year 2010-11. After that it
was declined up to Rs. 12375.7 crores in the year 2015-16 and again increased up
to Rs. 14870.5 crores in the year 2018-19 with average Rs.8079.5 crores.
In Sun pharma Ltd., the value of equity was Rs.5717.9 crores in the year 2009-10
and it was goes up to Rs.22843.6 crores in the year 2018-19 with average
Rs.15366.1 crores. Net sales of the company was Rs. 1807.8 in the year 2009-10 it
goes increases in so many years except 2012-13 and 2013-14 with the average of
[Link] was shows the mixture trend during the period of study. It was
highest Rs. 333.5 crores in the year 2018-19 and lowest Rs. 0.11 crores in the year
[Link] was increased in initially three years and then it was declined
Rs.664.53 crores in the year 2012-13. In the year 2013-14 to 2014-15 it shows
negative value. Again increased up to Rs.1052.9 crores in the year 2018-19.
Retained earnings was same it is in EBIT. It was Rs.179.3 crores in the year 2003-
04 and it was rise up to Rs.980.4 crores in the year 2008-09. Retained earnings
decreased Rs.-89.2 in the year 2012-13 and increased up to Rs.336.8 crores in the
year 2018-19.

164
5.2.3 ANALYSIS OF Z SCORE COMPONENTS OF TORRENT PHARMA LTD.:

Table 5.3 Z score components of Torrent Pharma Ltd.

(Rupees in Crores)

FC Year 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 Average

CA 985.3 1134.7 1423.9 2062.8 2672.3 2731.6 3136.9 3616.4 3639.1 3748.9 2515.2

TA 1847.7 2220.7 2578.3 3355.3 4332.6 6509.5 7288.5 8080.5 11820.0 12027.2 6006.0

CL 382.4 493.9 828.5 1112.0 1166.9 1325.8 1501.9 1184.1 2987.5 3087.8 1407.1

TL 966.9 1127.7 1273.8 1704.2 2042.8 3804.0 3581.2 3626.8 7263.5 7012.0 3240.3

VE 880.8 1093.0 1304.5 1651.0 2289.8 2705.5 3707.3 4453.7 4556.4 5015.2 2765.7

NS 1386.1 1680.3 1986.6 2617.5 3220.6 3409.8 5439.4 4592.6 4244.4 5762.4 3434.0

I 61.3 82.7 30.4 28.5 34.0 153.4 179.4 199.9 290.2 478.4 153.8

EBIT 375.0 441.0 401.1 693.8 992.3 949.5 2527.7 1154.9 852.3 1413.6 980.1

RE 148.1 212.1 227.6 319.6 564.3 394.7 602.8 650.5 217.2 435.7 377.3
(Source: data collected from respective Annual reports of company)

165
Analysis:

Above table No. 5.3 shows the analysis of components related to Altman model
during study period of Torrent Ltd. Current asset of Torrent Ltd was observed
increasing trend during study period. It was Rs.985.3 crores in the year 2009-10
and it increased increasing rate i.e. Rs.3748.9 crores in the year 2018-19 with
average Rs. 2515.2 crores. In Torrent Ltd., total assets was also increasing trend
during study period. Total asset was Rs.1847.7 crores in the year 2009-10 and rise
up to Rs.12027.2 crores in the year 2018-19. The average was represents Rs.
6006.0 crores. In Torrent Ltd., current liability was highest Rs.3087.8 crores in the
year 2018-19 and lowest Rs.382.4 crores in the year 2009-10. The average was Rs.
1407.1 crores. Total liability was shows mixture trend during study period. It was
Rs.966.9 cores in the year 2009-10 and it declined in the year 2015-16 i.e.
Rs.3581.2 crores. After that it was increased and reached up to Rs.7263.5 crores in
the year 2017-18 with average Rs. 3240.3 crores. Value of equity was observed
increasing trend during study period. It was Rs.880.8 crores in the year 2009-10
and it rise up to Rs.5015.2 crores in the year 2018-19 with average Rs. 2765.7
crores. Net sale was Rs.1386.1 crores in the year 20009-10 and it goes up to
Rs.5762.4 crores in the year 2018-19 with Average Rs. 3434.0 crores. Torrent‘s
performance was good in relation to net sale. Interest of Torrent Ltd. was moved
between Rs.28.50 crores to Rs.478.4 crores during period of study. The average
was showed Rs. 3434.0 crores. EBIT was Rs.375.0 crores in the year 2009-10 and
it declined Rs.401.1 crores in the year 2011-12. After that it was increased and
reached up to Rs. 1413.6 crores in the year 2018-19 with Average Rs. 980.1
crores. In Torrent Ltd. retained earnings Rs.148.1 crores in the year 2009-10 and it
declined up to Rs.394.7 crores in the year 2014-15. After that retained earnings
was increased up to Rs.650.5 crores in the year 2016-17 and it declined Rs.217.2
crores in the year 2017-18. Retained earnings were increased up to Rs.435.7 crores
in the year 2018-19 with average Rs. 377.3 crores.

166
5.2.4 ANALYSIS OF Z SCORE COMPONENTS OF AUROBINDO LTD.:

Table 5.4 Z score components of Aurobindo Ltd.

(Rupees in Crores)

FC Year 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 Average

CA 2678.3 3415.2 3017.4 3630.7 5081.1 6368.0 7774.5 6898.8 8981.2 10408.3 5825.4

TA 3954.2 5009.1 5991.2 6824.5 8575.5 10225.8 12565.5 13022.9 15793.8 18140.7 10010.3

CL 639.8 832.0 2656.3 2767.9 3317.2 3946.1 5343.6 4446.9 5754.1 6736.4 3644.0

TL 2679.7 3071.5 3498.0 3885.4 9821.3 4866.3 5699.7 4586.7 5811.2 6790.1 5071.0

VE 1914.3 2569.6 2493.1 2939.1 4012.3 5359.5 6865.8 8436.1 9982.5 11350.6 5592.3

NS 3252.2 4122.1 4281.4 5424.6 7110.7 8095.1 9322.7 9781.2 10303.1 12257.8 7395.1

I 54.3 37.3 73.0 99.1 77.0 49.5 59.5 40.2 48.2 126.6 66.5

EBIT 764.4 871.4 -64.7 662.2 1596.5 1989.9 2207.4 2218.7 2391.2 2091.2 1472.8

RE 493.3 525.4 -42.6 452.3 1069.8 1360.0 1415.6 1481.2 1548.3 1369.3 967.3
(Source: data collected from respective Annual reports of company)

167
Analysis:

Table No. 5.4 reveals the components of Altman model during study period of
Aurobindo Ltd. The current assets show the increased in the year 2009-10 to 2018-19
of Rs.2678.3 up to Rs.10408.3 crores and declined Rs.3017.4 crores in the year 2011-
12. Average was Rs.5825.4 crores. The total assets in the year 2009-10 was
Rs.3954.2 crores and it increased up to Rs.18140.7 crores in the year 2018-19. The
average was observed Rs.10010.3 crores. The current liability of Aurobindo Ltd. was
Rs.639.8 crores in the year 2009-10 and it increased up to Rs.6736.4 crores in the year
2018-19 with Average was Rs.3644.0 crores.

In Aurobindo Ltd., the total liability Rs.2679.7 crores in the year 2009-10 and it was
goes up to Rs.9821.3 crores in the year 2013-14. The total liability was goes down
Rs.4866.3 crores in the year 2014-15 and again rise up to Rs.5699.7 crores in the year
2015-16. After that it decreased in the year 2016-17 i.e., Rs.5811.2 crores and it was
increased up to Rs.6790.1 crores in 2018-19 with average Rs.5071.0 crores. The value
of equity shows increasing trend during study period. The value of equity was
Rs.1914.3 crores in the year 2009-10 and it increased up to Rs.11350.6 crores in the
year 2018-19, with average suggested Rs.5592.3 crores. The net sale shows
continuous raise during study period. It was highest in the year 2018-19 i.e., 12257.8
crores. The average net sale was 7395.1 crores.

The interest of Aurobindo Ltd. was Rs.54.3 crores in the year 2009-10 and it
increased up to Rs.126.6 crores in the year 2018-19. In the year 2010-11, 2014-15,
2016-17 and 2017-18 it shows downward situation. EBIT of Aurobindo Ltd. was
shows mixture trend during study period. It moved between Rs.764.4 crores to
Rs.2091.2 crores during study period with average Rs.1472.5 crores. Retained
earnings of Aurobindo Ltd. were fluctuated trend during study period. It was highest
Rs.1548.3 crores in the year 2017-18 and lowest Rs.-42.61 crores in the year 2011-12.
The average was observed Rs.967.3 crores.

168
5.2.5 ANALYSIS OF Z SCORE COMPONENTS OF DR. REDDY LAB.

Table 5.5 Z score components of Dr. Reddy Lab.

(Rupees in Crores)

FC Year 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 Average

CA 3626.0 4540.0 4923.7 6625.3 8907.8 10403.3 10211.1 8593.8 9038.5 8933.2 7580.2

TA 5687.0 6801.4 10340.6 11989.1 14508.1 16456.0 17585.2 16447.2 17100.3 16247.5 13316.2

CL 1689.3 1697.6 3062.3 4073.1 4114.2 4678.6 4388.8 4258.0 4719.9 3079.3 3576.1

TL 2327.5 3243.2 3622.8 4205.7 5179.1 5822.0 5506.8 4846.6 5292.5 3563.4 4360.9

VE 5914.6 6020.2 6717.8 7783.4 9329.0 10634.0 12078.4 11600.6 11807.8 12684.1 9456.9

NS 4401.1 5218.1 6603.8 8074.4 9495.7 9887.4 10006.0 9586.8 9246.8 10466.7 8298.6

I 4.1 4.8 62.2 63.1 105.4 64.7 64.1 57.2 62.8 56.8 54.5

EBIT 1088.9 1056.7 1321.4 1816.3 2559.8 2124.6 1740.7 1601.7 759.8 1757.5 1582.7

RE 624.5 672.1 641.5 967.4 1574.6 1269.6 967.0 1048.8 167.7 8777.1 1671.0

(Source: data collected from respective Annual reports of company)

169
Analysis:

Table No.5.5 represents the components of Altman model of [Link]‘s Labs Ltd.
during study period. The current asset of [Link]‘s Labs Ltd. was Rs.3626.0 crores
in the year 2009-10 and it increased up to Rs.10403.3 crores in the year 2014-15.
After that it declined Rs.10211.1 crores in the year 2015-16 it also declined in the
year 2016-17 and 2018-19 with average Rs.7580.2 crores. The total asset of
[Link]‘s Labs Ltd. was show the increasing trend except in the year 2016-17 and
2018-19 during study period. It was Rs.5687.0 crores in the year 2009-10 and reached
up to Rs.17585.2 crores in year 2015-16. The average was observed Rs.13316.2
crores. The current liability showed the increasing trend during study period. It was
Rs.2327.5 crores in initial year 2009-10 and it rise up to Rs.4388.8 crores in the year
2015-16 with average Rs.3576.1 crores.

Total liability was Rs.2327.5 crores in the year 2009-10 and it increased Rs.5822.0
crores in the year 2014-15. After that it suddenly declined Rs.3563.4 crores in the last
year 2018-19 with average suggested Rs.4360.96 crores. The important aspect value
of equity of [Link]‘s Labs Ltd. was increased increasing rate during study period.
The value of equity was Rs.5914.6 crores in the year 2009-10 and it was goes up
Rs.12684.1 crores in the year 2018-19 with average Rs.9456.9 crores. In [Link]‘s
Labs Ltd. the net sales was fluctuate trend during period of study. It was highest
Rs.10466.7 crores in the year 2018-19 and lowest Rs.4401.1 crores in the year 2009-
10. The average was Rs.8298.68 crores.

Interest of [Link]‘s Labs Ltd. moved between Rs.105.4 crores to Rs.4.1 crores
during study period with average Rs.54.5 crores. EBIT showed the mixture trend
during study period. It was highest Rs.2559.8 crores in the year 2013-14 and lowest
Rs.759.8 crores in the year 2017-18 with average Rs.1582.74 crores. Retained
earnings of [Link]‘s Labs Ltd. was moved between Rs.8777.1 crores to Rs.167.7
crores during study period. The average was represents Rs.1671.0 crores.

170
5.2.6 ANALYSIS OF Z SCORE COMPONENTS OF ULTRATECH CEMENT.
Table 5.6 Z score components of UltraTech cement
(Rupees in Crores)

FC Year 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 Average

CA 1472.3 3758.7 6804.2 7816.0 8983.7 7912.4 9735.4 12475.0 10585.6 11478.7 8102.2

TA 8342.9 19994.5 22945.1 27408.7 29754.0 35214.9 38290.5 39281.0 54373.0 58436.4 33404.1

CL 1299.0 3453.9 4576.4 6238.2 5726.8 8786.8 11298.1 8058.4 11225.9 11863.2 7252.7

TL 3734.3 9328.5 10085.3 12173.9 12656.5 16357.2 16658.7 15340.0 28449.9 30488.7 15527.3

VE 4608.6 10666.0 12859.8 15234.8 17097.5 18857.6 21631.8 23941.0 25923.0 27947.0 17877.7

NS 7049.6 13209.9 18158.2 20017.9 20077.8 22656.4 26947.1 27162.4 30251.7 35703.5 22123.5

I 112.9 271.1 261.7 330.0 396.4 588.5 527.2 579.6 1192.7 1424.4 568.5

EBIT 1701.1 2057.3 3654.6 4155.4 3171.9 3474.8 3828.8 4355.6 4494.6 4986.7 3588.1

RE 1006.1 1213.1 2157.4 2400.6 1855.7 1717.4 2076.8 2316.7 1900.8 2108.0 1875.3
(Source: data collected from respective Annual reports of company)

171
Analysis:

Table No. 5.6 Suggested the analysis of Altman model during study period of
Ultra Tech Cement. In Ultra Tech Cement, the current asset was Rs.1472.3 crores
in the year 2009-10 and it decreased Rs.3758.7 crores in the year 2010-11. After
that current assets rise up to Rs.11478.7 crores in the year 2018-19 with average
observed Rs.8102.2 crores. The total asset of Ultra Tech Cement shows the
increasing trend during study period. Total asset was Rs.8342.9 crores in the year
2009-10 and it was increased and reached up to Rs.5846.4 crores in the year 2018-
19. The average Rs. 33404.1 crores. The current liability moved between Rs.1299
crores to Rs.11863.2 crores during study period. The average was Rs. 7252.7
crores.

In Ultra Tech Cement, the total liability was Rs.3734.3 crores in the year 2009-10
and it increased Rs.30488.7 crores in the year 2018-19 and declined Rs.15340.0
crores in the year 2016-17. Total liability increased with average was Rs. 15527.0
crores. Value of equity suggests the increasing trend during study period. It was
Rs.4608.6 crores in the year 2009-10 and it increased very much that is
Rs.27947.0 crores in the year 2018-19 with average Rs. 17876.7 crores. Net sales
of Ultra Tech Cement was Rs.7049.6 crores in the year 2009-10 and it was
increased in increasing rate and reached Rs.35703.5 crores with average Rs.
22123.5 crores.

Interest shows increasing trend during study period. It was highest Rs.1424.4
crores in the year 2018-19. The average was observed Rs. 568.5 crores. The EBIT
of Ultra Tech Cement was increased initially 4 years i.e. Rs.4155 crores in the
year 2012-13 and declined in the year 2013-14, i.e. Rs.3171.9 crores. After that it
was increased Rs.4986.7 crores. The average was Rs. 3588.1 crores. Retained
earnings shows also increasing trend during period of study. Retained earnings
were Rs.1006.1 crores in the year 2009-10 and it rise up to Rs.2316.7 crores in the
year 2016-17 with average Rs. 1875.3 crores.

172
5.2.7 ANALYSIS OF Z SCORE COMPONENTS OF INDIA CEMENTS LTD.

Table 5.7 Z score components of India Cements Ltd.

(Rupees in Crores)

FC Year 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 Average

CA 2644.5 2903.8 1196.6 1473.8 1445.6 1520.1 1358.0 1698.6 1941.2 2331.4 1851.4

TA 7580.0 7938.4 8241.3 8802.8 8311.3 8736.8 10362.1 1358.0 10945.7 11300.2 8357.7

CL 1042.2 1118.3 2140.3 2258.0 2325.7 2119.9 2564.1 2311.3 1929.0 2508.3 2031.7

TL 3464.8 3866.8 4182.6 4713.2 4885.5 4718.2 5381.2 5535.3 5636.7 6000.2 4838.4

VE 4135.8 4089.7 4058.7 4089.6 3851.2 3593.0 4980.9 5109.9 5309.0 5300.0 4451.8

NS 3687.2 3417.0 4203.4 4597.0 4440.8 4423.6 4811.4 5777.5 5432.2 5770.3 4656.0

I 134.9 134.3 160.4 170.7 218.6 285.7 262.3 255.7 276.1 287.9 218.7

EBIT 666.2 224.2 541.4 423.1 56.2 315.2 454.7 515.7 365.9 337.6 390.0

RE 282.7 -46.9 221.5 91.6 -162.4 29.4 129.9 130.9 -9.8 42.2 70.9
(Source: data collected from respective Annual reports of company)

173
Analysis:

Table No.5.7 reveals the analysis of components of Altman model during study
period of India Cements Ltd. The current asset was represents the mix trend during
study period. It was Rs. 2644.5 crores in the year 2009-10 and it was rise
Rs.2903.8 crores in the year 2010-11 in rest of the year it shows fluctuations with
average was Rs.1851.4 crores. In India Cements Ltd., the total asset also shows the
mix trend during period of study. Total assets was Rs.7580.0 crores in the year
2009-10 and it increased and reached up to Rs.11300.2 crores in the year 2018-19.
The Average was observed Rs.8357.7 crores. The current liability of India
Cements Ltd. was Rs.1042.2 crores in the year 2009-10 and increased Rs.2325.7
crores in the year 2013-14. After that it was declined Rs.2119.9 crores in the year
2014-15 and again increased up to Rs.2508.3 crores in the year 2018-19. The
average was observed Rs.2031.7 crores.

The total liability was Rs. 3464.8 crores in the year 2009-10 and it increased
Rs.6000.2 crores in the year 2018-19. The average was Rs.4838.4 crores. The
value of equity shows the mix trend during study period. It was Rs.3593.0 crores
in the year 2014-15 and it increased up to Rs.5300.0 crores in the year 2018-19
with average Rs.4451.8 crores. The net sales of India Cements Ltd. show the
fluctuations during the study period. It is highest in the year 2016-17 of Rs. 5777.5
and lowest in the year 201-11 of Rs.3417.0. The average Rs.4656.0 crores.

Interest of India Cements Ltd. was highest Rs.287.9 crores in the year 2018-19 and
lowest Rs.134.3 crores in the year 2010-11 with average Rs.218.7 crores. In India
Cements Ltd., EBIT was observed the mixture trend during study period. It was
highest Rs.666.2 crores in the year 2009-10 and lowest Rs.56.2 crores in the year
2013-14. The Average was Rs.390.0 crores. The retained earnings was moved
between Rs.-9.8 crores to Rs.282.7 crores during study period with Average
Rs.70.93 crores.

174
5.2.8 ANALYSIS OF Z SCORE COMPONENTS OF J. K. CEMENT LTD.

Table 5.8 Z score components of J. K. Cement Ltd.

(Rupees in Crores)

FC Year 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 Average

CA 684.7 944.7 1084.7 1032.4 1292.7 1381.4 1250.4 1349.7 1556.1 1912.9 1249.0

TA 2968.2 3393.1 3580.3 3901.9 5102.7 5348.0 5563.8 5836.6 5983.8 6952.3 4863.1

CL 357.6 406.9 737.6 901.0 5102.7 5348.0 1140.1 1131.8 1175.3 1430.2 1773.1

TL 1617.2 2001.9 2051.3 2204.5 7468.7 7920.0 3,873.5 3916.1 3836.4 4059.5 3894.9

VE 1353.7 1399.0 1529.0 1697.3 1758.4 1646.5 1690.2 1920.3 2147.3 2892.8 1803.5

NS 1826.7 2083.0 2904.0 2537.8 2781.5 3337.3 4096.9 4327.8 4709.5 4919.1 3352.4

I 69.4 114.4 139.2 135.7 183.1 262.1 267.2 267.6 238.8 216.0 189.4

EBIT 380.6 198.2 425.0 476.3 319.3 421.2 409.3 592.0 678.6 689.5 459.0

RE 177.0 47.7 136.7 180.3 72.4 123.2 69.6 225.9 274.5 240.5 154.8
(Source: data collected from respective Annual reports of company)

175
Analysis:

Table No. 5.8 reveals the components of Altman model during study period of J. K.
Cement Ltd. The current assets show the increased in the year 2009-10 to 2011-12 of
Rs.684.7 up to Rs.1084.7 crores and declined Rs.1032.4 crores in the year 2012-13.
After that it was increased up to Rs.1912.9 crores in the year 2018-19 and Average
was Rs.1249.0 crores. The total assets in the year 2009-10 were Rs.2968.2 crores and
it increased up to Rs.5852.3 crores in the year 2018-19. The average was observed
Rs.4863.1 crores. The current liability of J. K. Cement Ltd. was Rs.357.6 crores in the
year 2009-10 and it increased up to Rs.1430.2 crores in the year 2018-19 with
Average was Rs.1773.1 crores.

In J. K. Cement Ltd., the total liability Rs.1617.2 crores in the year 2009-10 and it
was goes up to Rs.7920 crores in the year 2014-15. The total liability was goes down
Rs.3873.5 crores in the year 2015-16 and again rise up to Rs.3916.1 crores in the year
2016-17. After that it decreased in the year 2017-18 i.e., Rs.3836.4 crores and it was
increased up to Rs.4059.5 crores in 2018-19 with average Rs.3894.9 crores. The value
of equity shows the mixture trend during study period. The value of equity was
Rs.1353.7 crores in the year 2009-10 and it increased up to Rs.1758.4 crores in the
year 2013-14 and after that it declined Rs.1646.5 crores in 2014-15. The value of
equity was increased Rs.2892.8 crores in the year 2018-19 with average suggested
Rs.1803.5 crores. The net sale shows the increasing trend during study period. It was
highest Rs.4919.1 crores in the year 2018-19 and lowest Rs.1826.7 crores in the year
2009-10 and average was Rs.3352.4 crores.

The interest of J. K. Cement Ltd. was Rs.69.4 crores in the year 2009-10 and it
increased up to Rs.139.2 crores in the year 2011-12. After that it declined Rs.135.7
crores in the year 2012-13 and again increased Rs.267.6 crores in 2016-17. The
interest goes down in the year 2017-18 and 2018-19 i.e., Rs.238.8 and Rs. 216 crores
and with average Rs.189.4 crores. EBIT of J. K. Cement Ltd. was shows mixture
trend during study period. It moved between Rs.198.2 crores to Rs.689.5 crores
during study period with average Rs.459.1 crores. Retained earnings of J. K. Cement
Ltd. were fluctuated trend during study period. It was highest Rs.274.5 crores in the
year 2017-18 and lowest Rs.47.7 crores in the year 2010-11. The average was
observed Rs.154.8 crores.

176
5.2.9 ANALYSIS OF Z- SCORE COMPONENTS OF JK LAKSHMI CEMENT LTD.

Table 5.9 Z - score components of JK Lakshmi Cement Ltd.

(Rupees in Crores)

FC Year 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 Average

CA 665.6 554.3 786.4 629.8 709.6 770.8 845.0 1128.8 1,005.0 938.6 803.4

TA 2391.0 2537.5 2785.6 3143.6 3566.4 4087.2 4,108.3 4583.4 4,488.7 4,455.4 3614.7

CL 356.5 366.5 544.2 630.6 730.6 1116.9 1,254.4 1,456.9 1,325.7 1,310.2 909.31

TL 1370.3 1491.2 1610.4 1883.8 2263.2 2756.5 2804.2 3201.7 3035.5 2932.7 2335.0

VE 1020.7 1046.3 1175.1 1259.8 1303.2 1330.7 1,304.0 1,381.6 1,453.2 1,522.6 1279.7

NS 1490.5 1318.8 1718.1 2054.9 2056.6 2307.0 2,939.3 3,260.1 3,514.1 3,882.3 2454.2

I 51.1 56.4 86.7 82.9 76.6 89.6 195.4 186.8 195.4 185.8 120.7

EBIT 382.0 135.2 229.5 318.3 191.9 201.4 145.7 261.0 298.1 290.2 245.3

RE 205.3 51.3 81.2 141.4 65.4 67.2 -34.8 78.4 73.3 68.9 79.8
(Source: data collected from respective Annual reports of company)

177
Analysis: Table No. 5.9 suggested the analysis of components of Altman model
during study period of JK Lakshmi Ltd. Current asset of JK Lakshmi Ltd. was
Rs.665.6 crores in the year 2009-10 and it goes up Rs.770.8 crores in the year 2014-
15. Again it was increase Rs.845.0 crores in the year 2015-16 and increased Rs.938.5
crores in the year 2018-19 with average Rs.803.4 crores. Total assets show the
increasing trend during study period. It was Rs.2391.0 crores in the year 2009-10 and
it increased Rs.4455.4 crores in the year 2018-19 with average was Rs.3614.7 crores. .
In JK Lakshmi Ltd., current liability was Rs.356.5 crores in the year 2009-10 and it
increased up to Rs.1310.24 crores in the year 2014-15. The average was observed
Rs.909.3 crores.

Total liability was Rs.1370.3crores in the year 2009-10 and increased up to Rs.2756.5
crores in the year 2014-15. After that it was increase and reached Rs.2804.2 crores in
the year 2015-16 and again increased Rs.3201.7 crores in the year 2016.17. Again
goes up to Rs.2932.76 crores in the year 2018-19 with average Rs.2335.1 crores. The
value of equity of JK Lakshmi Ltd. was Rs.1020.7 crores in the year 2009-10 and it
goes up to Rs.13.3.2 crores in the year 2013-14. It was increase up to Rs.1330.7
crores in the year 2014-15 with average Rs.18031279.7 crores. Net sales of JK
Lakshmi Ltd. was Rs.1490.5 crores in the year 2009-10 and it goes up to Rs.1718.1
crores in the year 2011-12 and suddenly it goes increase Rs.2054.9 crores in the year
2012-13. After that net sale was increased Rs.3882.3 crores in the year 2018-19 with
average Rs.2454.2 crores.

In JK Lakshmi Ltd., interest was shows the mixture trend during study period. Interest
was lowest Rs.51.1 crores in the year 2009-10 and highest Rs.195.4 crores in the year
2015-16. The Average was observed Rs.120.7 crores. EBIT was moved between
Rs.135.2 crores to Rs.382.0 crores during study period. The average was suggested
Rs.245.3 crores. In JK Lakshmi Ltd., retained earnings was show the fluctuate trend
during study period. It was Rs.205.3 crores in the year 2009-10 and it reduced up to
Rs.51.3 crores in the year 2010-11. It was increased Rs.141.4 crores in the year 2012-
13 and again declined Rs.65.4 crores in the year 2013-14 and retained earnings was
goes down and negative Rs.-34.8 crores in year 2015-16 and again it shows
increasing value up to Rs. 68.92 crores in 2018-19 with average Rs 79.8 crores.

178
5.2.10 ANALYSIS OF Z SCORE COMPONENTS OF AMBUJA CEMENT.

Table 5.10 Z score components of Ambuja Cement.

(Rupees in Crores)

FC Year 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 Average

CA 3135.3 3,828.3 5276.4 5537.0 5995.2 6548.6 4213.6 5492.2 5740.3 6848.1 5261.5

TA 11456.3 10319.7 12313.0 12964.5 13900.8 14161.9 23352.7 24617.1 25186.6 26990.7 17526.3

CL 2394.1 2694.2 2899.3 2843.2 3137.5 3226.0 3431.6 4117.3 3715.4 4447.4 3290.6

TL 2990.0 3387.2 3508.0 3479.0 3797.5 3855.0 3,995.9 4,643.9 4,174.1 4,785.5 3861.6

VE 7,330.1 8069.4 8805.0 9485.5 10103.3 10306.8 19356.8 19973.2 21012.5 22205.1 13664.8

NS 7390.2 8514.5 9674.9 9086.8 9910.7 9368.3 10387.5 11009.3 10977.0 11352.7 9767.2

I 48.6 52.6 75.6 65.0 64.4 91.7 73.3 105.9 78.3 81.0 73.7

EBIT 1710.5 1755.5 1977.4 1579.2 1847.8 1264.0 1352.8 1725.1 1584.4 2029.1 1682.6

RE 800.4 658.5 727.3 647.8 575.2 284.5 284.0 613.8 1037.2 1196.5 682.5
(Source: data collected from respective Annual reports of company)

179
Analysis:

Table No. 5.10 represent the interpretation of components of Altman model during
study period of Ambuja Cement of cement industry in India. Current asset was
Rs.3135.3 crores in the year 2009-10 and it increased up to Rs.6548.6 crores in the
year 2014-15 and it declined up to Rs.4213.6 crores in the year 2015-16. The average
was Rs.5261.5 crores. Total assets was observed Rs.11456.3 crores in the year 2009-
10 and it decreased up to Rs.10319.7 crores in the year 2010-11. After that it was
increased up to Rs.26990.7 crores in the year 2018-19. The average was Rs.17526.3
crores. Current liability of Ambuja Cement was highest Rs.4447.4 crores in the year
2018-19 and lowest Rs.2394.1 crores in the year 2009-10 with average Rs.3290.6
crores.

In Ambuja Cement., total liability was Rs.2990.0 crores in the year 2009-10 and it rise
up to Rs.3508.0 crores in the year 2011-12. After that year, it decreased up to
Rs.3479.0 crores in the year 2012-13 and increased Rs.4785.5 crores in the year 2018-
19. The average was Rs.3861.6 crores. Value of equity observed that the increasing
trend during study period. It was Rs.7330.1 crores in the year 2009-10 and goes up to
Rs.22205.1 crores in the year 2018-19. The average was suggested Rs.13664.8 crores.
Net sale of Ambuja Cement was show the mix trend during study period. It was
Rs.7390.2 crores in the year 2009-10 and it increased up to Rs.11352.7 crores in the
year 2018-19. The average was showed Rs.9767.2 crores. Interest was also showed
the mixture trend during study period. It was moved between Rs.48.6 crores to
Rs.105.9 crores during period of study. The average was Rs.73.7 crores.

Profitability related components EBIT was Rs.1710.5 crores in the year 2009-10 and
it increased up to Rs.1977.4 crores in the year 2011-12. After that EBIT was declined
Rs.1579.2 crores in the year 2012-13 and again increased up to Rs.2029.1 crores in
the year 2018-19 with average Rs.1682.6 crores. Retained earnings of Ambuja
Cement were Rs.800.4 crores in the year 2009-10 and declined Rs.658.5 crores in the
year 2010-11. Retained earnings was Goes up Rs.727.3 crores in the year 2011-12 and
it goes down up to Rs.284 crores in the year 2015-16. Again increased up to Rs.613.8
crores in the year 2016-17 and it was rise up to Rs.1196.5 crores in the year 2018-19
with average Rs.682.5 crores.

180
5.3 ANALYSIS OF Z – SCORE RATIOS IN TERM OF UNIT-WISE
OF SELECTED COMPANIES FROM DIFFERENT INDUSTRIES:

This model uses these five ratios. It is symbolically X1, X2, X3 X4 and X5. Under
these ratios X1, X2 and X4 mention financial problems and X3 and X5 mentioned
operating problems. These ratios are follows:

X1= Working Capital / Total Assets (Stand for liquidity measure).

X2= Retained Earning / Total Assets (Stand for measure of reinvested earning).

X3= Earnings Before Interest and taxes / Total Assets (Stand for profitability
measure).

X4= Capital Fund / Total Liability (Stand for leverage measure).

X5= Sales / Total Assets (Stand for sales generating ability).

X1= WORKING CAPITAL / TOTAL ASSETS (STAND FOR LIQUIDITY

MEASURE):

The working capital to overall belongings ratio, frequently observed in research of

corporate troubles. This ratio measures the net liquid belongings of the company
relative to capitalization or total assets. The working capital defined as a difference
between modern belongings and present day liability. Often a company experiencing
constant running losses will have present day belongings in relation to general
belongings. Other liquidity ratios tested have been the cutting-edge ratio and quick
ratio. There had been located to be much less helpful and problem to perverse traits
for some failing firm.

X2= RETAINED EARNING / TOTAL ASSETS (STAND FOR MEASURE OF

REINVESTED EARNING):

Retained earnings are the accounts which report the full quantity of reinvested income
of a firm over its complete life of particular period. The accounts are also referred to
as earned surplus.

This ratio measures the cumulative profitability over a time as well particular period.

181
The age of a company is implicitly taken into consideration in this ratio. For instance:
relatively young companies will probable display a low RE/TA ratio because it has
now not had time to accumulate its cumulative So this is major limitation of the
model. In addition, the RE / TA ratio measures the leverage of the firm. Those firms
with high Retained earning relative to total assets, have financed their assets through
retention of profits and have not utilize as much debt. Consequently it could be argued
that the younger firm against this analysis and risk to as bankrupt is incredibly higher
than on other older company.

X3= EARNINGS BEFORE INTEREST AND TAXES / TOTAL ASSETS

(STAND FOR PROFITABILITY MEASURE):

This ratio is a degree of the actual productivity of the company‘s property,

independents of any tax or leverage factors. The company‘s closing life is based on
earning energy of its property (Utilization of assets). Furthermore insolvency in a
bankrupt sense occurs when total liability of exceed total assets of firm. The fair
valuation of firm is determined by the earning power of the assets. So we will show
this ratio continuously out performs other profitability measure including cash flow.

X4 = CAPITAL FUND / TOTAL LIABILITY (STAND FOR LEVERAGE

MEASURE):

Capital fund is measured by the combined market value if The all proportion of
inventory, desired and common, even as liabilities blanketed each contemporary and
long time. The measures indicates how plenty the firm‘s property can be decline value
before the liabilities exceed the assets the firm emerge as bankrupt.

For example: Business enterprise with a market cost of its equity of Rs 100 crores
and debt of Rs.500 crores. Could experience 2 / 3 drops in assets value before
insolvency. However the same firm with Rs.250 crores equity will be insolvent if
assts drop only 1/3 in value. The equity market value serves as for the firm assets
value.

X5 = SALES / TOTAL ASSETS (STAND FOR SALES GENERATING

ABILITY):

182
The capital turnover ratio is widespread monetary ratio exhibits the sales producing
potential of firms assets. This ratio is managing management capacity with
competitive situation. This ratio is precise relationships to other variable inside the
version. The sales / general assets ratio ranks 2d in its contribution to the general
capacity of version.

183
OBJECTIVE-2: TO ANALYZE THE FINANCIAL HEALTH OF DIFFERENT INDUSTRIES IN INDIA (COMPANY WISE):
5.3.1 ANALYSIS OF Z – SCORE RATIOS OF SELECTED SAMPLE:
Table 5.11 Z score ratios of Piramal Enterprise Ltd.

Ratio Year 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
X1 0.418 0.811 -0.023 -0.06 -0.200 0.085 -0.194 -0.172 -0.171 -0.279
X2 0.137 1.048 -0.016 -0.035 -0.084 -0.002 0.007 0.030 0.002 -0.036
X3 0.279 1.378 0.015 0.006 0.015 0.057 0.065 0.081 0.047 0.017
X4 1.171 8.087 4.278 1.824 1.169 2.295 0.894 1.304 1.385 1.056
X5 1.169 0.131 0.083 0.085 0.117 0.146 0.126 0.149 0.089 0.096
(Source: data collected from respective Annual reports of company and calculation as per Z score model)
Figure 5.1 Z – score ratios of Piramal Enterprise Ltd.

10
X1 = WC / TA X2 = RE / TA X3 =EBIT / TA X4 = VE / TL X5 = NS/ TA
8

0
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
-2

184
Analysis:

Table No: 5.11 shows analysis of ratio which is used to Altman Model of Piramal
Enterprise Ltd. In Piramal Enterprise Ltd.., working capital to total assets ratio was
0.418 in the year 2009-10 which was fluctuate in rest of the year under study period.
In the year 2010-11, this ratio highest means large amount blocked in current assets
and may reduce in profit figure for that year. However in year 2012-13, this ratio was
lower and maintains profit at average level. The retained earnings to total assets ratio
shows how company used earning with two alternatives namely declared dividend
and retained earnings for internal growth.
In Piramal Enterprise Ltd., the ratio was higher in the year 2009-10 and 2010-11
which indicates that in this year company used retained earnings as sources of finance
to improve profitability. The operating performance and productivity of assets is
judge through EBIT to total assets. The EBIT to total assets ratio was range from
0.015 to 1.378 under study period. In Piramal Enterprise Ltd., during 2009-10 and
2011-12 utilization of assets was declined. However, company takes corrective
actions and further boost in next year. It is clear depicts that the in Piramal Enterprise
Ltd. long-term finance and leverage policies was quite satisfactory because portion of
equity was high in total liability. The sales to total assets represent utilization of assets
in relation to generate revenue. The power of assets utilization was lower between
2010-11 to 2018-19 compared to average of study period.
Figure No.5.1 clearly observed that the retained earnings to total assets below 2 and
lower than other ratios of Altman model. It shows that Piramal Enterprise Ltd. not
utilizing its own earning but debt finance. Value of equity to total liability and sales to
total assets start same point and end the same point but both fluctuate between start
and end point during study period. Sales increased very much up to the year 2009-10
and then decline. EBIT line clearly shows that it was mixture trend during study
period.
Working capital to total assets line increased up to the year 2010-11 and then declined
up to year 2018-19 (very much decreased in the year 2012-13). The working capital
was decline reason is that the liquidity position of the company was not good and
poor working capital management of the company and low level of investment in
current assets. A firm deals with low working capital, company facing short – term
obligations because company has not enough current assets to recover them.

185
 Table 5.12 Z – score ratios of Sun Pharma Ltd.

Ratio Year 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
X1 0.151 0.293 0.323 0.295 0.102 -0.149 -0.096 -0.136 -0.081 -0.055
X2 0.087 0.126 0.129 -0.009 -0.222 -0.062 -0.057 -0.008 -0.013 0.008
X3 0.146 0.191 0.189 0.071 -0.193 -0.036 -0.023 0.002 0.015 0.027
X4 6.015 7.213 6.287 5.343 1.064 1.553 1.768 1.620 1.542 1.536
X5 0.279 0.254 0.439 0.263 0.196 0.214 0.229 0.231 0.244 0.273
(Source: data collected from respective Annual reports of company and calculation as per Z score model)
Figure 5.2 Z – score ratios of Sun Pharma Ltd.

8
7
6
X1 = WC / TA X2 = RE / TA X3 =EBIT / TA X4 = VE / TL X5 = NS/ TA
5
4
3
2
1
0
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
-1

186
Analysis:

Table No.5.12 shows mathematical figure of various ratios which is used Altman
model for prediction of corporate bankruptcy and financial health of the company. In
every company liquidity and profitability are measure areas to shows financial health
of company. The excess working capital impact adversely in profitability and lack of
working capital invite insolvency in future. So maintain adequate working capital
with good profitability performance is essential for every firm. The working capital to
total assets ratio of Sun pharma Ltd. was fluctuates between -0.149 to 0.323. The table
also indicates that the Sun pharma Ltd. block large fund in current assets between
2010-11 to 2012-13. However, this ratio was decline in year 2014-15 to 2018-19 and
also impact positively in profitability which indicates in Sun pharma Ltd. profitability
was more affected from working capital. The retained earnings are one of the best
financial sources to require the fund as per need to reduce financial cost at the time of
low profitability. Thus maintain right balance between dividend payout ratio and
retention ratio is sound financial decision.
In Sun pharma Ltd., positive retain policy up to year 2011-12 and increase the amount
of retained earning every year. The retained policy after 2011-12 fluctuate and
company transfer only little amount because of low profitability. The operating
performance and productivity of assets is judge through EBIT to total assets ratio. In
Sun pharma Ltd., EBIT to total assets ratio was increased up to 2012-13 due to sound
working capital management policy. However, in the year 2013-14, EBIT to total
assets ratio was decline much more and it goes negative to Rs.-0.193 EBIT for one
rupee of total assets. It is essential to manage long – term finance policy and leverage
for creation of value for their stakeholder.
In Sun pharma Ltd., average capital fund or value of equity to total liability was 7.213
under study period. In Sun pharma Ltd. higher portion in equity suggested that
provide higher margin of safety to their creditors. The revenue generation capacity
from total assets was shows utilization power of assets. The lower utilization power of
assets lead to increased in EBIT due to lower operating cost. After 2013-14 with
sound utilization of assets, EBIT was decline due to higher operating cost.
Figure No.5.2 shows the all the ratios of Altman model (Except Value of equity)
below 1. Value of equity was declined up to 2012-13 and it goes up in2013-14
because mix capital structure of the company.

187
 Table 5.13 Z – score ratios of Torrent Pharma Ltd.

Ratio Year 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
X1 0.326 0.288 0.230 0.283 0.347 0.215 0.224 0.301 0.055 0.054
X2 0.080 0.095 0.088 0.095 0.130 0.060 0.082 0.080 0.018 0.036
X3 0.202 0.198 0.155 0.206 0.229 0.145 0.346 0.142 0.072 0.117
X4 0.910 0.969 1.024 0.968 1.120 0.711 1.035 1.227 0.627 0.715
X5 0.750 0.756 0.770 0.780 0.743 0.523 0.746 0.568 0.359 0.479
(Source: data collected from respective Annual reports of company and calculation as per Z score model)
Figure 5.3 Z – score ratios of Torrent Pharma Ltd.

1.4
X1 = WC / TA X2 = RE / TA X3 =EBIT / TA X4 = VE / TL X5 = NS/ TA
1.2

0.8

0.6

0.4

0.2

0
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

188
Analysis:

Table No.5.13 indicates analysis of different ratio which is used to define Z-score
through Altman Model of Torrent Pharma Ltd. The working capital to total assets
ratio used for measure liquidity position of company. In total capitalization
contribution of current assets shows working capital position. The effective
management of working capital no doubt reduces the cost. In Torrent Ltd., The
running capital to total assets ratio varies among 0.301 to 0.347 below look at
duration. The ratio was highest in the year 2013-14 means excess fund block in
current assets and reduce profit figure in same year. The retained earnings to total
assets ratio used to judge policy regarding reinvestment of earnings.
In Torrent Pharma Ltd. Company has opportunity used more earning as internal
growth to reduce finance cost. The finance always to concern a take sound investment
decision means allocate a fund in such assets they generate higher return. The
utilization capacity of assets derived from the EBIT to sales ratio. In Torrent Ltd., the
assets productivity shows mixture trend under study period. Company generates
higher EBIT from effective utilization of assets. The leverage situation and long term
financial policy shows financial status of corporate. The capital fund or value of
equity to total liability ratio of Torrent Ltd. was ranges between 0.627 to 1.227 which
shows Torrent Ltd. provide more margin of safety to their creditors. The revenue for
total assets suggested that the utilization power of assets. In Torrent Ltd., generate
Rs.0.955 sales for every one rupee of total assets. It means company has good power
to utilize their assets in relation to generate revenue. However, in the year 2009-10,
2010-11, 2011-12, 2012-13 and 2015-16, company generates higher sales form per
rupee of assets.
Figure No.5.3 represents the EBIT was below 0.50. Retained earnings was declined
up to 2010-11 and reached at the point of EBIT and moved same point during study
period. Working capital to total assets also below the point 0.50 and changes like
EBIT and retained earnings because company has very low level of investment in
current assets which shows the poor working capital management of the company.
Value of equity to total liability very much declined in the year 2012-13 and reached
0.715 in the year 2018-19 because financial health was not good during study period.
Net sales shows fluctuates during study period and sale condition was not good
because weak sales generating capacity.

189
 Table 5.14 Z – score ratios of Aurobindo Ltd.

Ratio Year 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
X1 0.515 0.515 0.060 0.126 0.205 0.236 0.193 0.188 0.204 0.202
X2 0.124 0.104 -0.007 0.066 0.124 0.132 0.112 0.113 0.098 0.075
X3 0.193 0.173 -0.010 0.097 0.186 0.194 0.175 0.170 0.151 0.115
X4 0.714 0.836 0.712 0.756 0.408 1.101 1.204 1.839 1.717 1.671
X5 0.822 0.822 0.714 0.794 0.829 0.791 0.741 0.751 0.652 0.675
(Source: data collected from respective Annual reports of company and calculation as per Z score model)
Figure 5.4 Z – score ratios of Aurobindo Ltd.

X1 = WC / TA X2 = RE / TA X3 =EBIT / TA X4 = VE / TL X5 = NS/ TA
1.5

0.5

0
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

-0.5

190
Analysis:

Table No: 5.14 shows analysis of ratio which is used to Altman Model of Aurobindo
Ltd. In Aurobindo Ltd., working capital to total assets ratio was 0.515 in the year
2009-10 which was fluctuate in rest of the year under study period. In the year 2010-
11, this ratio highest means large amount blocked in current assets and may reduced
in profit figure for that year. However in year 2012-13, this ratio was lower and
maintains profit at average level. The retained earnings to total assets ratio shows how
company used earning with two alternatives namely declared dividend and retained
earnings for internal growth.
In Aurobindo Ltd., the ratio was higher in the year 2009-10 and 2010-11 which
indicates that in this year company used retained earnings as sources of finance to
improve profitability. The operating performance and productivity of assets is judge
through EBIT to total assets. The EBIT to total assets ratio was range from -0.0108 to
0.193 under study period. In Aurobindo Ltd., during 2009-10 to 2013-14 utilization of
assets was declined. However, company takes corrective actions and further boost in
next year. It is clear depicts that the in Aurobindo Ltd. long-term finance and leverage
policies was quite satisfactory because portion of equity was high in total liability.
The sales to total assets represent utilization of assets in relation to generate revenue.
The power of assets utilization was lower between 2011-12, 2014-15 and 2016-17
compared to average of study period.
Figure No.5.4 clearly observed that the retained earnings to total assets below 1 and
lower than other ratios of Altman model. It shows that Aurobindo Ltd. not utilizing its
own earning but debt finance. Value of equity to total liability and sales to total assets
start same point and end the same point but both fluctuate between start and end point
during study period. Sales increased very much up to the year 2013-14 and then
decline in the year 2016-17 and last year it was again increases. EBIT line clearly
shows that it was mixture trend during study period.
Working capital to total assets line increased up to the year 2010-11 and then declined
up to year 2012-13 (very much decreased in the year 2011-12). The working capital
was decline reason is that the liquidity position of the company was not good and
poor working capital management of the company and low level of investment in
current assets. A firm deals with low working capital, company facing short – term
obligations because company has not enough current assets to recover them.

191
 Table 5.15 Z – score ratios of Dr. Reddy Lab.

Ratio Year 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
X1 0.340 0.417 0.18 0.212 0.330 0.347 0.331 0.263 0.252 0.360
X2 0.109 0.098 0.062 0.080 0.108 0.077 0.054 0.063 0.009 0.540
X3 0.191 0.155 0.127 0.151 0.176 0.129 0.098 0.097 0.044 0.108
X4 2.541 1.856 1.854 1.850 1.801 1.826 2.193 2.393 2.231 3.559
X5 0.773 0.767 0.638 0.673 0.654 0.600 0.569 0.582 0.540 0.644
(Source: data collected from respective Annual reports of company and calculation as per Z score model)
Figure 5.5 Z – score ratios of Dr. Reddy Lab.

4
X1 = WC / TA X2 = RE / TA X3 =EBIT / TA X4 = VE / TL X5 = NS/ TA
3.5

2.5

1.5

0.5

0
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

192
Analysis:

Table No.5.15 shows the analysis of Dr. Reddy‘s labs Ltd. which is used to Altman
model. The ratio of working capital / total assets measure the liquidity position of
related to total capitalization. The average of working capital to total assets was 0.304
for every one rupee of assets. During 2009-10 and 2010-11, the ratio was higher than
the average. It depicts that the high level of investment in current assets and it shows
the better liquidity position of the company. In 2012-13 to 2014-15, the ratio was
lower than the average it means poor working capital management Of the business
enterprise. Retained profits to total property suggests the low retained income to
overall belongings are financing capital expenditure thru borrowing in place of thru
retained profits. It manner the average of ratio was 0.12. The ratio of EBIT to overall
belongings varies between 0.044 to 0.1914throughout have a look at duration and
average 0.138. It shows the not effective management of a firm‘s ability to compress
profits before factors like interest and tax are deducted.
The ratio of value of equity to total liability was shows the equity portion higher than
the total liability it means the ratio was more than the one which indicates that the
increase the profit of the company and it furnishes a margin of safety to its creditors in
the times of dissolution. The sales revenue is an important aspect to measure the
performance of the companies. The ratio of sales to total assets measure how well
management handles competition. The average was 0.645 of this ratio and this ratio
was lowest most of the during study period. It was shows the not good management of
a firm uses assets to generate sales. It will have an adverse effect on its performance.
It was clearly that the companies still had an opportunity to improve its sales capacity
but not opportunity to utilize their assets in generating the sales revenue.
Figure No.5.5 suggests that the all ratios of Altman model (except value of equity to
total liability) moved same line and below 1 it measures that company not maintain
proper working capital policy, low equity portion in capital structure, poor
performance of financial management and sales generating capacity and low level
productivity of the assets. Value of equity to total liability shows high fluctuation
during the period of study and it was decreased from the year 2010-11 to 2014-15
because company not provide a margin of safety to its creditors in the times of
insolvency and low equity portion in the capital structure of the company.

193
 Table 5.16 Z – score ratios of UltraTech cement

Ratio Year 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
X1 0.020 0.015 0.097 0.057 0.109 -0.024 -0.040 0.112 -0.011 -0.006
X2 0.120 0.060 0.094 0.087 0.062 0.048 0.054 0.058 0.034 0.036
X3 0.203 0.102 0.159 0.151 0.106 0.098 0.099 0.110 0.082 0.085
X4 1.234 1.143 1.275 1.251 1.350 1.152 1.298 1.560 0.911 0.916
X5 0.844 0.660 0.791 0.730 0.674 0.643 0.703 0.691 0.556 0.610
(Source: data collected from respective Annual reports of company and calculation as per Z score model)
Figure 5.6 Z – score ratios of UltraTech cement

1.8
1.6
X1 = WC / TA X2 = RE / TA X3 =EBIT / TA X4 = VE / TL X5 = NS/ TA
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
-0.2

194
Analysis:

Table No: 5.16 shows analysis of ratio which is used to Altman Model of Ultratech
Cement. In Ultratech Cement, working capital to total assets ratio was 0.020 in the
year 2009-10 which was fluctuate in rest of the year under study period. In the year
2016-17, this ratio highest means large amount blocked in current assets and may
reduced in profit figure for that year. However in year 2018-19, this ratio was lower
and maintains profit at average level. The retained earnings to total assets ratio shows
how company used earning with two alternatives namely declared dividend and
retained earnings for internal growth.
In Ultratech Cement the ratio was higher in the year 2009-10 which indicates that in
this year company used retained earnings as sources of finance to improve
profitability. The operating performance and productivity of assets is judge through
EBIT to total assets. The EBIT to total assets ratio was range from 0.082 to 0.203
under study period. In Ultratech Cement., during 2009-10 to 2016-17 utilization of
assets was declined. However, company takes corrective actions and further boost in
next year. It is clear depicts that the in Ultratech Cement long-term finance and
leverage policies was quite satisfactory because portion of equity was high in total
liability. The sales to total assets represent utilization of assets in relation to generate
revenue. The power of assets utilization was lower between 2010-10 to 2018-19
compared to average of study period.
Figure No.5.6 clearly observed that the retained earnings to total assets below 1 and
lower than other ratios of Altman model. It shows that Ultratech Cement not utilizing
its own earning but debt finance. Value of equity to total liability and sales to total
assets start same point and end the same point but both fluctuate between start and
end point during study period. Sales increased very much up to the year 2015-16 and
then decline in the year 2016-17 and last year it was again increases. EBIT line clearly
shows that it was mixture trend during study period.
Working capital to total assets line increased up to the year 2016-17 and then declined
up to year 2014-15 (very much decreased in the year 2017-18). The working capital
was decline reason is that the liquidity position of the company was not good and
poor working capital management of the company and low level of investment in
current assets. A firm deals with low working capital, company facing short – term
obligations because company has not enough current assets to recover them.

195
 Table 5.17 Z – score ratios of India Cements Ltd.

Ratio Year 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
X1 0.211 0.224 -0.114 -0.089 -0.105 -0.068 -0.116 -0.451 0.001 -0.015
X2 0.037 -0.005 0.026 0.010 -0.019 0.003 0.012 0.096 -0.000 0.003
X3 0.087 0.028 0.065 0.048 0.006 0.036 0.043 0.379 0.033 0.029
X4 1.193 1.057 0.970 0.867 0.788 0.761 0.925 0.923 0.941 0.883
X5 0.486 0.430 0.51 0.522 0.534 0.506 0.464 4.254 0.496 0.510
(Source: data collected from respective Annual reports of company and calculation as per Z score model)
Figure 5.7 Z – score ratios of India Cements Ltd.

5
X1 = WC / TA X2 = RE / TA X3 =EBIT / TA X4 = VE / TL X5 = NS/ TA
4

0
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

-1

196
Analysis:

Table No. 5.17 Exhibits evaluation of ratios of India Cements Ltd. Via which predicts
company financial ruin the use of Altman version. The adequate operating capital
suggests liquidity position of agency which ids decide via running capital to total
property. The running capital to overall belongings of India Cements Ltd. Became varies
among -0.015 to 0.224 beneath examine duration. The lowest working capital ratio no
doubt increased profitability but liquidity problem arises. In India Cements Ltd. this ratio
of very low in last two year of study period. At the time of low profitability company use
retained earnings as a source finance it shows good management policies. In India
Cements Ltd., Retained earnings to overall assets were higher in the year2016-17 which
true to used such source of finance with downward fashion in profitability. The EBIT to
general belongings indicates overall performance of running interest of organization and
assets productiveness. In India Cements Ltd. in all the years assets productivity was good
compared to average of study period (excluding the year 2013-14).

The policy of lengthy-term price range and leverages less or extra basis of have an impact
on to advent of fee for stakeholder of company. The soundness of such coverage is judge
via value of equity to total legal responsibility ratio. Up to the 2010-11, value of fairness
better as compared to general legal responsibility, but after that higher for relaxation of
the 12 months underneath have a look at period. It reveals up to 2010-11 company work
higher degree of leverage after that lower degree of leverage. The utilization of power of
assets is measure through sale to total assets. The average of sale to total assets was 0.87
under study period. In the year 2009-10 to 2011-12, this ratio was lower than average
ratio indicates more opportunity to utilize assets to generate revenue more and more.

Figure No. 5.7 also shows the retained earnings to total assets and working capital to total
assets line below 3 which reflects the extent of the company‘s leverage and finance
capital expenditure through borrowing rather than through retained earnings. Weak
liquidity position of relative to total capitalization but company maintain the proper
working capital in the year 2010-11 and working capital decline in seven years if the
study period. Sales to total assets increasing trend up to the year 2009-10 and then it was
declined up to the year 2011-12 because company was failure to utilize their assets in
generating the sales revenue. Value of equity to total assets shows mixture trend during
the study period. EBIT to total assets was highest in the year 2016-17 it means company
earns profit of that year.

197
 Table 5.18 Z – score ratios of J. K. Cement Ltd.

Ratio Year 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
X1 0.110 0.158 0.096 0.033 -0.746 -0.741 0.019 0.037 0.063 0.069

X2 0.059 0.014 0.038 0.046 0.014 0.023 0.012 0.038 0.045 0.034

X3 0.128 0.058 0.118 0.122 0.062 0.078 0.073 0.101 0.113 0.099

X4 0.837 0.698 0.745 0.769 0.235 0.207 0.436 0.490 0.559 0.712

X5 0.615 0.613 0.811 0.650 0.545 0.624 0.736 0.741 0.787 0.707
(Source: data collected from respective Annual reports of company and calculation as per Z score model)
Figure 5.8 Z – score ratios of J. K. Cement Ltd.

1
0.8
0.6
0.4
0.2
0
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
-0.2
-0.4
-0.6
-0.8
X1 = WC / TA X2 = RE / TA X3 =EBIT / TA X4 = VE / TL X5 = NS/ TA
-1

198
Analysis: Table No.5.18 shows ratios analysis of J. K. Cement Ltd. included in
Altman model for review the financial health of the company. In relation to total
capitalization how much amount are spent for current assets shows liquidity position
of the company. In J. K. Cement Ltd., since 2011-12 company investment lower fund
in current assets compared to total capitalization. In J. K. Cement Ltd. during the
study period per one rupee of total capitalization or total assets of the company spent
very low amount under study period. The how much fund is generated from the profit
as internal growth of the organization in relation to total assets was described through
retained earnings to total assets. Average value of retained earnings to total assets was
0.03 their earning as internal growth for every one rupee of assets. In every company,
EBIT are used as one yardstick to measure operating performance and assets
productivity. In J. K. Cement Ltd., EBIT to total assets was decline in the year 2010-
11 due to increased in the value of total assets continuously. During this period
company do not use assets productivity are reason for decline of this ratio. However,
in the year 2010-11 and 2016-17, the ratio was increased from previous year decline.
The management of capital fund and total liability is part of management of capital
structure and related to capital structure decision. The sound capital structure decision
lead to optimum value of the firm and minimum cost of capital. In J. K. Cement Ltd.
value of equity to total liability was higher one in study period which suggested
market value of equity was higher than total liability. From 2010-11 to 2012-13, value
of equity was three times or four times higher than total liability. In current era to
sustain with competition, utilization power of assets are a critical factors for
management of every corporate. The J. K. Cement Ltd. has sound power to utilize
their assets to generate revenue because they generate Rs.0.68 sales for one rupee of
assets under study period. Figure No.5.8 shows the retained earnings to total assets,
working capital to total assets and EBIT to total assets, these three ratios move same line
and it below 1. It measures the company unable to operate the fixed assets properly, weak
working capital management of the company and Sustainable boom of the business
enterprise at some point of have a look at length. Sales to general assets turned into
elevated most effective 2 years i.e. 2011-12 and 2015-16 and continue to be years, it
become near with the aid of 1. It indicates the agency has to take appropriate steps to
utilize of its assets in generating increasingly more sales revenue. Value of equity to total
liability line observed that the value of equity highly fluctuate during study period and
company not same maintain capital structure.

199
 Table 5.19 Z – score ratios of JK Lakshmi Cement Ltd.

Ratio Year 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
X1 0.129 0.073 0.086 -0.000 -0.005 -0.084 -0.099 -0.071 -0.071 -0.083
X2 0.085 0.020 0.029 0.045 0.018 0.016 -0.008 0.017 0.016 0.015
X3 0.159 0.053 0.082 0.101 0.053 0.049 0.035 0.056 0.066 0.065
X4 0.744 0.701 0.729 0.668 0.575 0.482 0.465 0.431 0.478 0.519
X5 0.623 0.519 0.616 0.653 0.576 0.564 0.715 0.711 0.782 0.871
(Source: data collected from respective Annual reports of company and calculation as per Z score model)
Figure 5.9 Z – score ratios of JK Lakshmi Cement Ltd.

1
X1 = WC / TA X2 = RE / TA X3 =EBIT / TA X4 = VE / TL X5 = NS/ TA
0.8

0.6

0.4

0.2

0
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
-0.2

200
Analysis: Table No.5.19 display the ratios evaluation associated with Altman version
of JK Lakshmi Cement Ltd. The operating capital to overall belongings ratio changed
into degrees between -0.000 to 0.129. In years 2009-10 to 2018-19, running capital to
total property ratio indicates mild stage investment. From the yr 2012-thirteen, the
ratio turned into negative, it indicating that negative running capital ratio it method it
is a extreme hassle for firm and coffee level of investments in modern-day property
which changed into suggests the vulnerable liquidity role of the company. The ratio of
retained earnings to overall property shows the how a good deal part of total assets
has been financed by way of retained income. In the 12 months 2009-10, this ratio
turned into higher associated with EBIT it means 0.085, this indicates the better
economic situation of the corporation at times of bad profitability length. During
study period (excluding 2009-10), company‘s utilizing more debt rather than retained
earnings. EBIT to total assets shows the operating performance and productivity of
the assets. This ratio was good in the year 2009-10, 2012-13 and 2017-18 i.e. 0.159,
0.101 and 0.066 respectively. It means operating performance of the company is very
good. It shows the able to operate the fixed assets properly. Remaining years shows
the very low condition which represents unable to operate the fixed assets properly.
The ratio of value of equity to total liability shows the soundness of the long term
financial policies. The company is not having 1:1 equity to total liability is not good
condition. This ratio varies between 0.465 to 0.744 during study period. It concluded
that the company does not take any type of risk and company‘s financial health is
good and it provides a margin of safety to its creditors in times of insolvency. Sales
are a completely critical aspect for all the parties. Sales revenue plays a momentous
role in performance of the companies because all the functions are depends on the
sales revenue. Income to general property ratio vestige the power of the belongings in
producing the income. This ratio ranges from 0.519 to 0.873 during the period of
study. The average of this ratio was 0.663 it means sales generating capacity of JK
Lakshmi Cement Ltd. was 0.663 for every one rupee of assets. In 2009-10 to 2018-19
(excluding 2010-11), the ratio shows the higher than average, it indicates the good
performance of the company in optimum utilization of its assets in generating the sales
revenue. In 2010-11 and 2014-15, the ratio was lower than the average it measure the
poor performance and management of the company to sales generating ability and need to
take a corrective steps in maximum utilization of its assets in generating more and more
sales revenue.

201
 Table 5.20 Z – score ratios of Ambuja Cement

Ratio Year 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
X1 0.064 0.109 0.193 0.207 0.205 0.234 0.033 0.055 0.080 0.088
X2 0.069 0.063 0.059 0.049 0.041 0.02 0.012 0.024 0.041 0.044
X3 0.149 0.170 0.160 0.121 0.132 0.089 0.057 0.07 0.062 0.075
X4 2.451 2.382 2.509 2.726 2.660 2.673 4.844 4.300 5.033 4.64
X5 0.645 0.825 0.785 0.700 0.712 0.661 0.444 0.447 0.435 0.420
(Source: data collected from respective Annual reports of company and calculation as per Z score model)
Figure 5.10 Z – score ratios of Ambuja Cement

6
X1 = WC / TA X2 = RE / TA X3 =EBIT / TA X4 = VE / TL X5 = NS/ TA
5

0
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

202
Analysis: Table No.5.20 display the ratios analysis associated with Altman model of
Ambuja Cement the operating capital to overall assets ratio turned into degrees
between 0.193 to 0.234. In years 2009-10 to 2018-19, running capital to overall
belongings ratio indicates moderate degree funding. In 2014-15, the ratio became
excessive i.E.0.234, it indicating that fantastic running capital ratio it means it's far no
severe hassle for company of low degree of investments in current property which
changed into indicates the good liquidity position of the business enterprise. The ratio
of retained earnings to general belongings suggests the how much part of overall
property has been financed through retained earnings. In the year 2009-10 and 2010-
eleven, this ratio changed into better related to EBIT it means 0.069 and 0.063
respectively, this shows the better economic situation of the employer at instances of
negative profitability period. During study period (excluding 2009-10 and 2010-11),
company‘s utilizing more debt rather than retained earnings. EBIT to total assets
shows the operating performance and productivity of the assets. This ratio was good
in the year 2010-11, 2011-12 and 2013-14 i.e. 0.170, 0.160 and 0.132 respectively. It
means operating performance of the company is very good. It shows the able to
operate the fixed assets properly. Remaining years shows the very low condition
which represents unable to operate the fixed assets properly. The ratio of value of
equity to total liability shows the soundness of the long term financial policies. The
company having 1:1 equity to total liability is shows sound condition of the company.
This ratio varies between 2.382 to 5.033 during study period. It concluded that the
company does not take any type of risk and company‘s financial health is good and it
provides a margin of safety to its creditors in times of insolvency. Sales known as an
important factor for all the parties. Sales revenue plays a momentous role in performance
of the companies because all the functions are depends on the sales revenue. Sales to
overall property ratio vestige the electricity of the belongings in producing the income.
This ratio ranges from 0.645 to 0.785 during the period of study. The average of this ratio
was 0.608 it means sales generating capacity of Ambuja Cement was 0.608 for every one
rupee of assets. In 2009-10 to 2018-19(excluding 2014-15 to 2018-19), the ratio shows
the higher than average, it indicates the good performance of the company in optimum
utilization of its assets in generating the sales revenue. In last four year, the ratio was
lower than the average it measure the poor performance and management of the company
to sales generating ability and need to take a corrective steps in optimum utilization of its
assets in generating more sales revenue during the period.

203
5.4 TEST OF FINANCIAL SOLVENCY OF SELECTED
COMPANIES:

In place of searching for unmarried fine ratio professor Edward Altman has
introduced new model in 1968 known as Altman Z-rating version. The Z-rating is
multivariate formulas that measures the monetary fitness of the business enterprise
and expect the financial ruin inside years. The version covers each the issues,
monetary problems and operating problems. The model makes use of five ratios
symbolically X1, X2, X3 X4 and [Link] ratio X1, X2 and X4 for monetary problems
and X3 and X5 for working issues. The ratios are follows:

X1= Working Capital to Total Assets (Stand for liquidity measure).

X2= Retained Earning to Total Assets (Stand for measure of reinvested earning).

X3= Earnings Before Interest and taxes to Total Assets (Stand for profitability
measure).

X4= Capital Fund to Total Liability (Stand for leverage measure).

X5= Sales to Total Assets (Stand for sales generating ability).

The Z-score is composite credit score for manufactures involving measures of firm‘s
performance including measures of corporate liquidity, cumulative and current
profitability, leverage and sales productivity. Each measure is assigned a compute
determined weighting such, that when an analyst multiplies the weights lines the
financial performance and sums up of this five factors, the result is the overall Z-
score.

The Z-score have gained acceptance by auditor‘s management accountants, courts and
data base system for evaluation. It's been used in form of context and nations bus
become designed in the beginning for publicly held manufacturing corporations with
property of greater than$01 million. The latter published Altman modification model
called Z1-score which can be applied to privately hold manufacturing companies and
Z2-soore for non- manufacturing companies. The various Altman model with
applicable firm are as follow:

204
Name Model Applicable Firms
Z- Publicly Manufacturing
1.2X1+1.4X2+3.3X3+0.6X4+0.999X5
score Companies
Z1- Privately Manufacturing
0.171X1+0.847X2+3.107X3+0.42X4+0.99X5
score Companies
Z2- None-Manufacturing
6.56X1+3.26X2+6.72X3+1.05X4
score Companies

The latter 2 equations are frequently referred as Altman model for privately
Manufacturing Companies and non- manufacturing companies ‘zones of
discrimination are as follows:

Zones Z Z1 Z2
Safe Zones Z > 2.99 Z > 2.9 Z > 2.6
Grey Zones 1.81 < Z < 2.99 1.23 < Z < 2.9 1.1 < Z < 2.6
Distress Zones Z < 1.81 Z < 1.23 Z < 1.1

Note: Full form:

SZ = Safe Zones
GZ = Grey Zones
DZ = Distress Zones

205
 OBJECTIVE-3: TO REVIEW THE FINANCIAL RESULT OF SELECTED COMPANIES IN INDIA WITH THE HELP
OF ALTMAN’S MODEL:
Table 5.21 Financial Solvency of Parimal Enterprise Ltd:
2009- 2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017- 2018-
Score/ Year Avg.
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
X1*1.2 0.502 0.973 -0.028 -0.072 -0.240 0.102 -0.233 -0.206 -0.206 -0.334
X2*1.4 0.192 1.467 -0.022 -0.049 -0.118 -0.003 0.011 0.042 0.003 -0.051
X3*3.3 0.922 4.548 0.049 0.022 0.050 0.190 0.214 0.268 0.155 0.058
X4*0.6 0.702 4.852 2.567 1.094 0.701 1.377 0.536 0.782 0.831 0.633
X5*0.999 1.168 0.131 0.083 0.085 0.117 0.145 0.126 0.149 0.089 0.096
Z Score 3.488 11.973 2.650 1.080 0.510 1.812 0.654 1.037 0.873 0.402 2.448
Zones SZ SZ GZ DZ DZ GZ DZ DZ DZ DZ GZ
Figure 5.11 Financial Solvency of Parimal Enterprise Ltd:

14
12
10
8
6
4
2
0
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
Safe Zones 2.99 2.99 2.99 2.99 2.99 2.99 2.99 2.99 2.99 2.99
Grey Zones 1.81 1.81 1.81 1.81 1.81 1.81 1.81 1.81 1.81 1.81
Z Score 3.4883 11.9731 2.6502 1.0807 0.5104 1.8129 0.6545 1.0372 0.8731 0.402

206
Analysis:

Table No. 5.21 shows solvency test of Parimal Enterprise Ltd. The Z-score of
Aurobindo was 3.488 in the year 2009-10 which was decline in the year 2011-
12 up to 2.650. The reason for decline in Z-score over the year was decline in
sales generating ability. However Z-score was above 1.99 indicated that it was
not under comfortable zone in that year. The Z-score was declined in rest of the
year. The reason is that decreased sale and not satisfactory reinvested earning.
The Z-score moved between 0.402 to 11.973 in year 2009-10 to 2018-19. It
means company‘s financial condition fluctuation between safe zone and grey
zone The Z-score was increased in immediate next successive year but reach in
safe zone. The reasons for increasing the profitability is the increases in Z-
score in the 2010-11 again come in comfortable and maintain continuity up to
that year. The overall position shows poor financial health and reason for weak
financial condition if unhealthy liquidity maintain by Parimal Enterprise Ltd.,
lower level management efficiency of firm, not properly maintain working
capital ratio and sales were declined.

207
 Table 5.22: Financial Solvency of Sun Pharma Ltd.
2009- 2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017- 2018-
Score/ Year Avg.
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
X1*1.2 0.181 0.352 0.387 0.354 0.122 -0.179 -0.115 -0.163 -0.097 -0.066
X2*1.4 0.122 0.177 0.181 -0.013 -0.311 -0.087 -0.079 -0.011 -0.018 0.012
X3*3.3 0.484 0.630 0.624 0.236 -0.639 -0.121 -0.076 0.006 0.051 0.092
X4*0.6 3.609 4.328 3.772 3.206 0.638 0.931 1.061 0.972 0.925 0.921
X5*0.999 0.279 0.253 0.439 0.262 0.196 0.213 0.229 0.231 0.244 0.272
Z Score 4.676 5.742 5.405 4.046 0.007 0.757 1.018 1.034 1.105 1.232 2.502
Zones SZ SZ SZ SZ DZ DZ DZ DZ DZ DZ GZ

Figure 5.12 Financial Solvency of Sun Pharma Ltd.

7
6
5
4
3
2
1
0
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
Safe Zones 2.99 2.99 2.99 2.99 2.99 2.99 2.99 2.99 2.99 2.99
Grey Zones 1.81 1.81 1.81 1.81 1.81 1.81 1.81 1.81 1.81 1.81
Z Score 4.6761 5.7423 5.4053 4.0467 0.0074 0.7571 1.0184 1.0345 1.1056 1.232

208
Analysis:

Table No.5.22 exhibits solvency test of Sun pharma Ltd. The Z-score of Sun
pharma Ltd was 4.676 in the year 2009-10 it means it is in safe zone. The Z-
score of Sun pharma Ltd. Was decline for the successive next year 2012-13 to
2018-19 respectively. The lower sales generating capacity and negative impact
of leverage are the reason for downward trend of Z-score. However Z-score
was not increased up to the last years. Unfortunately Z-score was decline in the
year 2013-14 very much of study period but firm suffer in safe zone in the first
four years, because Z-score was higher than 2.99. The overall looking toward
figure reveals that the companies suffer in dangers zone after 2013-14 company
is not make any progress to reach above safe zone up to last year of the study
period. The Sun pharma in critical situation from 2013-14 to 2018-19 about
financial status but for that company is not taking any initiative for bouncy in
financial status. The company enjoys the benefits of safe zone in initial years of
the study period. The overall position shows poor financial health and reason
for weak financial condition if unhealthy liquidity maintain by Sun pharma
Ltd., lower level management efficiency of firm, not properly maintain
working capital ratio and sales were declined.

209
 Table 5.23: Financial Solvency of Torrent Pharma Ltd.
2009- 2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017- 2018-
Score/ Year Avg.
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
X1*1.2 0.391 0.346 0.277 0.339 0.416 0.259 0.269 0.361 0.066 0.065
X2*1.4 0.112 0.133 0.123 0.133 0.182 0.084 0.115 0.112 0.025 0.050
X3*3.3 0.669 0.655 0.513 0.682 0.755 0.481 1.144 0.471 0.237 0.387
X4*0.6 0.546 0.581 0.614 0.581 0.672 0.426 0.621 0.736 0.376 0.429
X5*0.999 0.749 0.755 0.769 0.779 0.742 0.523 0.745 0.567 0.358 0.478
Z Score 2.468 2.472 2.297 2.515 2.769 1.774 2.895 2.249 1.064 1.411 2.192
Zones GZ GZ GZ GZ GZ DZ GZ GZ DZ DZ GZ

Figure 5.13 Financial Solvency of Torrent Pharma Ltd.

3.5

2.5

2
Z Score

1.5

0.5

0
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
Safe Zones 2.99 2.99 2.99 2.99 2.99 2.99 2.99 2.99 2.99 2.99
Grey Zones 1.81 1.81 1.81 1.81 1.81 1.81 1.81 1.81 1.81 1.81
Z Score 2.4688 2.4722 2.2976 2.5157 2.7696 1.7748 2.8958 2.2498 1.0645 1.4118

210
Analysis:

Table No. 5.23 reveals the solvency test of Torrent Pharma Ltd. The Z-score of
Torrent Pharma Ltd. was 2.468 in the year 2009-10 and it declined up to 2.297
in the year 2011-12 because of negative impact of leverage relation to liability,
low RE/TA ratio because firm has not had time to build up its cumulative
profit, low sales generating capacity of firm‘s assets in compared to 2009-10.
The Z-score was moved from 1.774 to 1.411 in the year 2014-15 to 2018-19.
The firm suffers between grey zone and distress zone, it indicates the healthy
level and danger level but up warding in last year, it is increased profitability,
firm‘s ultimate existence is based on earning power of its assets means
utilization of assets. In the year 2014-15 and 2017-18 show the much low
profitability and low earning power compared to other years during study
period. From the figure clearly identify that the firm maintain stability
throughout the study period excluding the first year of the study period. The
firm solvency curve was likely to parallel to safe zone curve under study
period. The overall reveals that the firm financial position was not in upward
trend. The company has a scope to improve the financial position in better way.

211
 Table 5.24: Financial Solvency of Aurobindo Ltd.
2009- 2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017- 2018-
Score/ Year Avg.
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
X1*1.2 0.618 0.618 0.072 0.151 0.246 0.284 0.232 0.225 0.245 0.242
X2*1.4 0.174 0.146 -0.009 0.092 0.174 0.186 0.157 0.159 0.137 0.105
X3*3.3 0.637 0.573 -0.035 0.320 0.614 0.641 0.579 0.561 0.499 0.380
X4*0.6 0.428 0.501 0.427 0.453 0.245 0.660 0.722 1.103 1.030 1.002
X5*0.999 0.821 0.822 0.713 0.794 0.828 0.790 0.741 0.750 0.651 0.675
Z Score 2.680 2.663 1.168 1.812 2.108 2.563 2.432 2.800 2.564 2.406 2.32
Zones GZ GZ DZ GZ GZ GZ GZ GZ GZ GZ GZ

Figure 5.14 Financial Solvency of Aurobindo Ltd.

3.5
3
2.5
Z Score

2
1.5
1
0.5
0
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
Safe Zones 2.99 2.99 2.99 2.99 2.99 2.99 2.99 2.99 2.99 2.99
Grey Zones 1.81 1.81 1.81 1.81 1.81 1.81 1.81 1.81 1.81 1.81
Z Score 2.6809 2.6632 1.1681 1.8121 2.1086 2.5634 2.4328 2.8005 2.5641 2.4063

212
Analysis:

Table No5.24 shows solvency test of Aurobindo Ltd. The Z-score of

Aurobindo Ltd. was 2.680 in the year 2009-10 which was decline in the year
2011-12 up to 1.168. The reason for decline in Z-score over the year was
decline in sales generating ability. However Z-score was above 2.99(except
2011-12 and 2012-13) indicated comfortable zone in that year. The sales
generating capacity recovered and z-score increased in next year up to 2.108. In
the year 2011-12 with the sound liquidity position, firm‘s capacity of
reinvestment, profitability and leverage not satisfactory and Z-score was
decline up to1.168 it means firm switch to grey zone from the distress zone.
The Z-score was increased in immediate next successive year but reach in safe
zone. The reason for increasing the profitability is the increase in Z-score in the
2013-14 again comes in comfortable and maintains continuity up to 2018-19.
The overall financial position of Aurobindo Ltd. shows average growth under
study period.

213
 Table 5.25: Financial Solvency of Dr. Reddy Lab.
2009- 2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017- 2018-
Score/ Year Avg.
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
X1*1.2 0.408 0.501 0.216 0.255 0.396 0.417 0.397 0.316 0.303 0.432
X2*1.4 0.153 0.138 0.086 0.112 0.151 0.107 0.076 0.089 0.013 0.756
X3*3.3 0.631 0.512 0.421 0.499 0.582 0.426 0.326 0.321 0.146 0.356
X4*0.6 1.524 1.113 1.112 1.110 1.080 1.095 1.315 1.436 1.338 2.135
X5*0.999 0.773 0.766 0.637 0.672 0.653 0.600 0.568 0.582 0.540 0.643
Z Score 3.491 3.032 2.474 2.651 2.864 2.647 2.684 2.744 2.341 4.324 2.925
Zones SZ SZ GZ GZ GZ GZ GZ GZ GZ SZ GZ

Figure 5.15 Financial Solvency of Dr. Reddy Lab.

5
4.5
4
3.5
3
Z Score

2.5
2
1.5
1
0.5
0
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
Safe Zones 2.99 2.99 2.99 2.99 2.99 2.99 2.99 2.99 2.99 2.99
Grey Zones 1.81 1.81 1.81 1.81 1.81 1.81 1.81 1.81 1.81 1.81
Z Score 3.4915 3.0322 2.4746 2.651 2.8649 2.647299 2.6846 2.7447 2.3419 4.3244

214
Analysis:

Table No. 5.25 represents the solvency test of [Link]‘s Lab The z-score was
above 2.99 in 2009-10 and 2010-11 i.e. 3.491 and 3.032 respectively. After that
Z-score decline up to 2.474 in 2011-12 it means grey zone, it shows poor
financial condition. In 2018-19, Z-score increased i.e.4.324. The reason for
increasing z-score is increased sales, the market value of equity to liability
compared to other financial years under study period, increased EBIT, maintain
ideal working capital ratio. And it shows decreasing position from the year
2011-12 to 2017-18 it is between 2.474 to 2.341, the reason of declining z-
score was low productivity of the firm‘s assets, low reinvestment capacity
relation to total assets, low working capital ratio and sales were decrease and
EBIT was also declining. In the last year, Z-score was increased, the reason is
sales were increased but EBIT was declined, increased utilization of assets and
best performance of liquidity ratios and reinvestment ability. Thus management
of [Link]‘s Labs takes certain initiative measures toward their market value
of fund over a total liability of the firm defective capital structure for improve
in financial health.

215
 Table 5.26: Financial Solvency of UltraTech cement
2009- 2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017- 2018-
Score/ Year Avg.
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
X1*1.2 0.024 0.018 0.116 0.069 0.131 -0.029 -0.048 0.134 -0.014 -0.007
X2*1.4 0.168 0.084 0.131 0.122 0.087 0.068 0.075 0.082 0.048 0.050
X3*3.3 0.672 0.339 0.525 0.500 0.351 0.325 0.329 0.365 0.272 0.281
X4*0.6 0.740 0.685 0.765 0.750 0.810 0.691 0.779 0.936 0.546 0.549
X5*0.999 0.844 0.659 0.790 0.729 0.674 0.642 0.703 0.690 0.555 0.610
Z Score 2.450 1.788 2.328 2.172 2.054 1.697 1.838 2.209 1.409 1.484 1.943
Zones GZ DZ GZ GZ GZ DZ GZ GZ DZ DZ GZ

Figure 5.16 Financial Solvency of UltraTech cement

3.5
3
2.5
Z Score

2
1.5
1
0.5
0
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
Safe Zones 2.99 2.99 2.99 2.99 2.99 2.99 2.99 2.99 2.99 2.99
Grey Zones 1.81 1.81 1.81 1.81 1.81 1.81 1.81 1.81 1.81 1.81
Z Score 2.4508 1.788 2.3288 2.172 2.0546 1.6979 1.8386 2.2098 1.4095 1.484

216
Analysis:

Table No. 5.26 reveals the solvency position of Ultra Tech Cement. The Z-
score of Ultra Tech Cement was below 2.99, it means firm working grey zone
except in year 2010-11, 2014-15, 2017-18 and 2018-19 i.e. 1.788, 1.697, 1.409
and 1.484 respectively. This safe zone indicates higher level management
efficiency and sound financial position. In these four years i.e,2010-11, 2014-
15, 2017-18 and 2018-19 shows high operating cost, lower working capital
ratio and retained earnings also below in relation to total assets. In 2009-10, Z-
score 2.450 and it declined immediately successive year in 2011-12. The
reason is low reinvestment earning, after that in 2011-12, 2012-13 and 2013-
14, Z-score represent the increasing trend and shows the sales were declined
but EBIT was up warding. The last two years show the downward trend during
study period. Because of profitability condition was not good in 2017-18 and in
2018-19 negative working capital ratios. Overall looking toward figure predicts
that the never firm go in bankruptcy in near future.

217
 Table 5.27: Financial Solvency of India Cements Ltd.
2009- 2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017- 2018-
Score/ Year Avg.
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
X1*1.2 0.253 0.269 -0.137 -0.106 -0.127 -0.082 -0.139 -0.541 0.001 -0.018
X2*1.4 0.052 -0.008 0.037 0.014 -0.027 0.004 0.017 0.134 -0.001 0.005
X3*3.3 0.289 0.093 0.216 0.158 0.022 0.118 0.144 1.253 0.110 0.098
X4*0.6 0.716 0.634 0.582 0.520 0.472 0.456 0.555 0.553 0.565 0.529
X5*0.999 0.485 0.429 0.509 0.521 0.533 0.505 0.463 4.25 0.495 0.51
Z Score 1.797 1.419 1.208 1.108 0.874 1.003 1.041 5.650 1.171 1.124 1.639
Zones DZ DZ DZ DZ DZ DZ DZ SZ DZ DZ DZ

Figure 5.17 Financial Solvency of India Cements Ltd.

6
5
4
Z Score

3
2
1
0
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
Safe Zones 2.99 2.99 2.99 2.99 2.99 2.99 2.99 2.99 2.99 2.99
Grey Zones 1.81 1.81 1.81 1.81 1.81 1.81 1.81 1.81 1.81 1.81
Z Score 1.7974 1.419 1.2084 1.1081 0.8744 1.0036 1.0415 5.6503 1.171 1.1245

218
Analysis:

Table No. 5.27 reveals the solvency test of India Cements Ltd. The z-score
varies between 0.874 to 5.650 under study period and suffer distress zone. In
year 2009-10, Z-score was 1.797 and it was increased and reached 5.650 in the
year 2016-17. The reason is rise sales and increased market value of equity. In
2013-14 and 2017-18, Z-score declined, the main reason for decreased z-score
is not maintain stable liquidity, lower productivity of the firm. Again it was
increased in the year 2014-15 and the Z-score increased because firm maintain
proper working capital ratio, it means current assets exceed current liability,
higher level reinvested earnings, increased value of fund. After that z-score
continuously declining in last two years and also below 1.99, it means not in
safe zone financially. It indicates financial position is unhealthy. The reason for
unhealthy financial position was high operating cost, lower working capital
ratio, and weak capacity of reinvestment and not covered satisfactory sales
level. Finally says that the no any single year Z- score move ups in safe zone
(except 2016-17) under study period. In India Cements Ltd., companies work
with distress zone but unfortunately up to the last year it comes in distress
zone. India Cements Ltd. was in financially critical situation in last three year.
The management needs to take corrective action to improve firm financial
health.

219
 Table 5.28: Financial Solvency of J. K. Cement Ltd.
2009- 2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017- 2018-
Score/ Year Avg.
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
X1*1.2 0.132 0.190 0.116 0.040 -0.896 -0.89 0.023 0.044 0.076 0.083
X2*1.4 0.083 0.019 0.053 0.064 0.019 0.032 0.017 0.054 0.064 0.048
X3*3.3 0.423 0.192 0.391 0.402 0.206 0.259 0.242 0.334 0.374 0.327
X4*0.6 0.502 0.419 0.447 0.461 0.141 0.124 0.261 0.294 0.335 0.427
X5*0.999 0.614 0.613 0.810 0.649 0.544 0.623 0.735 0.740 0.786 0.706
Z Score 1.755 1.434 1.818 1.619 0.015 0.149 1.280 1.468 1.636 1.592 1.277
Zones DZ DZ GZ DZ DZ DZ DZ DZ DZ DZ DZ

Figure 5.18 Financial Solvency of J. K. Cement Ltd.

3.5

2.5
Z Score

1.5

0.5

0
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
Safe Zones 2.99 2.99 2.99 2.99 2.99 2.99 2.99 2.99 2.99 2.99
Grey Zones 1.81 1.81 1.81 1.81 1.81 1.81 1.81 1.81 1.81 1.81
Z Score 1.7555 1.4349 1.8185 1.6191 0.0157 0.1499 1.2809 1.4682 1.6366 1.5928

220
Analysis:

Table No. 5.28 reveals the solvency test of J. K. Cements Ltd. The z-score
varies between 0.015 to 1.636 under study period and suffer distress zone. In
year 2009-10, Z-score was 1.755 and it was decreased and reached 1.434 in the
year 2010-11. The reason is decrease sales and decreased market value of
equity. In 2012-13 and 2014-15, Z-score declined, the main reason for
decreased z-score is not maintain stable liquidity, lower productivity of the
firm. Again it was increased in the year 2015-16 and the Z-score increased
because firm maintain proper working capital ratio, it means current assets
exceed current liability, higher level reinvested earnings, increased value of
fund. After that z-score continuously declining in last two years and also below
1.99, it means not in safe zone financially. It indicates financial position is
unhealthy. The reason for unhealthy financial position was high operating cost,
lower working capital ratio, and weak capacity of reinvestment and not covered
satisfactory sales level. Finally says that the no any single year Z- score move
ups in safe zone under study period. In J. K. Cements Ltd., companies work
with distress zone and up to the last year it work with distress zone. The
management needs to take corrective action to improve firm financial health.

221
 Table 5.29: Financial Solvency of JK Lakshmi Cement Ltd.
2009- 2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017- 2018-
Score/ Year Avg.
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
X1*1.2 0.155 0.088 0.104 -0.000 -0.007 -0.101 -0.119 -0.085 -0.085 -0.1
X2*1.4 0.120 0.028 0.040 0.063 0.025 0.022 -0.011 0.023 0.022 0.021
X3*3.3 0.527 0.175 0.271 0.334 0.177 0.162 0.116 0.187 0.219 0.214
X4*0.6 0.446 0.420 0.437 0.401 0.345 0.289 0.279 0.258 0.287 0.311
X5*0.999 0.622 0.519 0.616 0.652 0.576 0.563 0.714 0.710 0.782 0.870
Z Score 1.871 1.232 1.470 1.450 1.117 0.937 0.978 1.095 1.225 1.318 1.269
Zones GZ DZ DZ DZ DZ DZ DZ DZ DZ DZ DZ

Figure 5.19 Financial Solvency of JK Lakshmi Cement Ltd.

3.5

2.5

2
Z Score

1.5

0.5

0
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
Safe Zones 2.99 2.99 2.99 2.99 2.99 2.99 2.99 2.99 2.99 2.99
Grey Zones 1.81 1.81 1.81 1.81 1.81 1.81 1.81 1.81 1.81 1.81
Z Score 1.8715 1.2326 1.4702 1.4509 1.1175 0.937 0.9789 1.095 1.2255 1.3181

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Analysis:

Table No. 5.29 reveals the solvency test of JK Lakshmi Cement Ltd. The Z-
score of JK Lakshmi Cement Ltd. was 1.871 in the year 2009-10 and it
declined up to 1.232 in the year 2010-11 because of negative impact of
leverage relation to liability, low RE/TA ratio because firm has not had time to
build up its cumulative profit, low sales generating capacity of firm‘s assets in
compared to 2009-10. The Z-score was moved from 0.937 to 1.450 in the year
2011-12 to 2018-19. The firm suffers between grey zone and distress zone, it
indicates the healthy level and danger level but up warding in last two years, it
is increased profitability, firm‘s major existence is depends on earning power
of its assets means utilization of assets. In the year 2014-15 and 2015-16 show
the much low profitability and low earning power compared to other years
during study period. From the figure clearly identify that the firm maintain
stability throughout the study period excluding the first year of the study
period. The firm solvency curve was likely to parallel to grey zone curve under
study period. The overall reveals that the firm financial position was not in
upward trend. The company has a scope to improve the financial position in
better way.

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 Table 5.30: Financial Solvency of Ambuja Cement.
2009- 2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017- 2018-
Score/ Year Avg.
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
X1*1.2 0.077 0.131 0.231 0.249 0.246 0.281 0.04 0.066 0.096 0.106
X2*1.4 0.097 0.089 0.082 0.069 0.057 0.028 0.016 0.034 0.057 0.062
X3*3.3 0.492 0.561 0.529 0.401 0.438 0.294 0.191 0.231 0.207 0.247
X4*0.6 1.470 1.429 1.505 1.635 1.596 1.604 2.906 2.580 3.020 2.784
X5*0.999 0.644 0.824 0.784 0.7 0.712 0.660 0.444 0.446 0.435 0.420
Z Score 2.782 3.035 3.134 3.056 3.051 2.868 3.598 3.359 3.816 3.620 3.232
Zones GZ SZ SZ SZ SZ GZ SZ SZ SZ SZ SZ

Figure 5.20 Financial Solvency of Ambuja Cement.

4.5
4
3.5
3
Z Score

2.5
2
1.5
1
0.5
0
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
Safe Zones 2.99 2.99 2.99 2.99 2.99 2.99 2.99 2.99 2.99 2.99
Grey Zones 1.81 1.81 1.81 1.81 1.81 1.81 1.81 1.81 1.81 1.81
Z Score 2.7829 3.0357 3.1349 3.0567 3.0513 2.8687 3.5986 3.3598 3.8169 3.6205

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Analysis:

Table No. 5.30 represent the solvency test of Ambuja Cement. The Z-score of
Ambuja Cement was higher than 2.99 except in the year 2009-10 i.e. 2.782.
The Z-score was 2.782 in the year 2009-10 and it increased up to 3.134 in the
year 2011-12. The reason for increasing z-score is maintain ideal working
capital ratio, retained earnings invested in assets, firm has financed their assets
through retention of profits and have not utilize as much debt and good
leverage relation to liability. In the year 2012-13 and 2013-14, Z-score was
decreased because working capital ratio decline, EBIT decline and again Z-
score increased in year 2014-15 relation to increased productiveness of the
firm‘s property independents of tax or leverage elements. After that in rest of
the years, Z-score much high because high working capital ratio, increased
EBIT and increased sales generating capacity. And z-score was upgrade and
reached safe and comfortable zone. The overall financial position of Ambuja
Cement is satisfactory under study period.

5.5 CONCLUSION:

In this chapter use three way of analysis of Edward Model first, analysis
of individual company was taken with industry average and sample wise
average analysis has carried out. Second, five ratios of Altman model has taken
for each sample unit. Finally solvency test of individual units has analyzed to
know solvency position of sampled units. The figure of sampled units for
solvency test has been drawn attention directly were the individual sampled
units work in each year. The major three zones i.e. safe, gray and distress use
to predict bankruptcy of selected companies.

225
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