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INTRODUCTION
Marginal Costing - Definition
Marginal costing is formally defined as: The accounting system in which variable costs are
charged to cost units and the fixed costs of the period are written-off in full against the aggregate
contribution. Its special value is in decision making. Marginal costing distinguishes between
fixed costs and variable costs as conventionally classified. Variable costing is another name
of marginal costing. Marginal costing may be defined as the technique of presenting cost data
where invariable costs and fixed costs are shown separately for managerial decision-making. It
should be clearly understood that marginal costing is not a method of costing like process
costing or job costing. Rather it is simply a method or technique of the analysis of cost
information for the guidance of management which tries to find out an effect on profit due to
changes in the volume of output.
MARGINALCOST
The marginal cost of a product is its variable cost. This is normally taken to be; direct labor,
direct material, direct expenses and the variable part of overheads. Marginal cost means the cost
of the marginal or last unit produced. It is also defined as the cost of one more or one less unit
produced besides existing level of production The marginal cost varies directly with the volume
of production and marginal cost per unit remains the same. It consists of prime cost, i.e. cost of
direct materials, directlabour and all variable overheads. It does not contain any element of
fixed cost which is kept separate under marginal cost technique. The term contribution
mentioned in the formal definition is the term given to the difference between Sales and
Marginal cost. Thus MARGINAL COST =VARIABLE COST DIRECT LABOUR + DIRECT
MATERIAL+ DIRECT EXPENSE+ VARIABLE OVERHEADS Marginal costing technique has given
birth to a very useful concept of contribution where contribution is given by: Sales revenue less
variable cost (marginal cost)Contribution may be defined as the profit before the recovery of
fixed costs. Thus, contribution goes toward the recovery of fixed cost and profit, and is equal to
fixed cost plus profit (C = F + P). In case a firm neither makes profit nor suffers loss,
contribution will be just equal to fixed cost (C = F). This is known as breakeven point. The
concept of contribution is very useful in marginal costing. It has a fixed relation with sales.
The proportion of contribution to sales is known as P/V ratio which remains the same
under given conditions of production and sales.
20
The principles of marginal costing are as follows: a. For any given period of time, fixed costs
will be the same, for any volume of sales and production (provided that the level of activity is
within the relevant range).Therefore, by selling an extra item of product or service the
following will happen:
Revenue will increase by the sales value of the item sold.
Costs will increase by the variable cost per unit.
Profit will increase by the amount of contribution earned from the extra item. b. Similarly, if the
volume of sales falls by one item, the profit will fall by the amount of contribution earned from
the items. Profit measurement should therefore be based on an analysis of total contribution.
Since fixed costs relate to a period of time, and do not change with increases or decreases in
2
sales volume, it is misleading to charge units of sale with a share of fixedcosts.d. When a unit
of product is made, the extra costs incurred in its manufacture are the variable production costs.
Fixed costs are unaffected, and no extra fixed costs are incurred when output is increased.
In economics and finance, marginal cost is the change in the total cost that arises when the
quantity produced has an increment by unit. That is, it is the cost of producing one more unit of a
good. In general terms, marginal cost at each level of production includes any additional costs
required to produce the next unit. For example, if producing additional vehicles requires building
a new factory, the marginal cost of the extra vehicles includes the cost of the new factory. In
practice, this analysis is segregated into short and long-run cases, so that over the longest run, all
costs become marginal. At each level of production and time period being considered, marginal
costs include all costs that vary with the level of production, whereas other costs that do not vary
with production are considered fixed.
If the good being produced is infinitely divisible, so the size of a marginal cost will change with
volume, as a non-linear and non-proportional cost function includes the following:
variable terms dependent to volume, constant terms independent to volume and occurring with
the respective lot size, jump fix cost increase or decrease dependent to steps of volume increase.
In practice the above definition of marginal cost as the change in total cost as a result of an
increase in output of one unit is inconsistent with the differential definition of marginal cost for
virtually all non-linear functions. This is as the definition finds the tangent to the total cost curve
at the point q which assumes that costs increase at the same rate as they were at q. A new
definition may be useful for marginal unit cost (MUC) using the current definition of the change
in total cost as a result of an increase of one unit of output defined as: TC(q+1)-TC(q) and redefining marginal cost to be the change in total as a result of an infinitesimally small increase in
q which is consistent with its use in economic literature and can be calculated differentially.
If the cost function is differentiable joining, the marginal cost is the cost of the next unit
produced referring to the basic volume.
If the cost function is not differentiable, the marginal cost can be expressed as follows.
A number of other factors can affect marginal cost and its applicability to real world problems.
Some of these may be considered market failures. These may includeinformation asymmetries,
the presence of negative or positive externalities, transaction costs, price discrimination and
others.
Since (by definition) fixed costs do not vary with production quantity, it drops out of the
equation when it is differentiated. The important conclusion is that marginal cost is not related
to fixed costs. This can be compared with average total cost or ATC, which is the total cost
divided by the number of units produced and does include fixed costs.
For discrete calculation without calculus, marginal cost equals the change in total (or variable)
cost that comes with each additional unit produced. In contrast, incremental cost is the
composition of total cost from the surrogate of contributions, where any increment is determined
by the contribution of the cost factors, not necessarily by single units.
For instance, suppose the total cost of making 1 shoe is $30 and the total cost of making 2 shoes
is $40. The marginal cost of producing the second shoe is $40 $30 = $10.
4
Marginal cost is not the cost of producing the "next" or "last" unit. [2] As Silberberg and Seen
note, the cost of the last unit is the same as the cost of the first unit and every other unit. In the
short run, increasing production requires using more of the variable input conventionally
assumed to be labor. Adding more labor to a fixed capital stock reduces the marginal product of
labor because of the diminishing marginal returns. This reduction in productivity is not limited to
the additional labor needed to produce the marginal unit - the productivity of every unit of labor
is reduced. Thus the costs of producing the marginal unit of output has two components: the cost
associated with producing the marginal unit and the increase in average costs for all units
produced due to the damage to the entire productive process (AC/q)q. The first component
is the per unit or average cost. The second unit is the small increase in costs due to the law of
diminishing marginal returns which increases the costs of all units of sold. Therefore, the precise
formula is: MC = AC + (AC/q)q.
Marginal costs can also be expressed as the cost per unit of labor divided by the marginal product
of labor.
Because
is the change in quantity of labor that affects a one unit change in output, this
. Therefore
[4]
constant, marginal cost and marginal product of labor have an inverse relationshipif marginal
cost is increasing (decreasing) the marginal product of labor is decreasing (increasing).
Economies of scale
Economies of scale is a concept that applies to the long run, a span of time in which all inputs
can be varied by the firm so that there are no fixed inputs or fixed costs. Production may be
subject to economies of scale (or diseconomies of scale). Economies of scale are said to exist if
an additional unit of output can be produced for less than the average of all previous units that
is, if long-run marginal cost is below long-run average cost, so the latter is falling. Conversely,
there may be levels of production where marginal cost is higher than average cost, and average
cost is an increasing function of output. For this generic case, minimum average cost occurs at
the point where average cost and marginal cost are equal (when plotted, the marginal cost curve
intersects the average cost curve from below); this point will not be at the minimum for marginal
cost if fixed costs are greater than 0.
Externalities
Externalities are costs (or benefits) that are not borne by the parties to the economic transaction.
A producer may, for example, pollute the environment, and others may bear those costs. A
consumer may consume a good which produces benefits for society, such as education; because
the individual does not receive all of the benefits, he may consume less than efficiency would
suggest. Alternatively, an individual may be a smoker or alcoholic and impose costs on others. In
these cases, production or consumption of the good in question may differ from the optimum
level.
Negative externalities of production
Social costs
Of great importance in the theory of marginal cost is the distinction between the
marginal private and social costs. The marginal private cost shows the cost associated to the firm
in question. It is the marginal private cost that is used by business decision makers in their profit
maximization goals. Marginal social cost is similar to private cost in that it includes the cost of
private enterprise but also any other cost (or offsetting benefit) to society to parties having no
direct association with purchase or sale of the product. It incorporates all negative and
positive externalities, of both production and consumption. Examples might include a social cost
from air pollution affecting third parties or a social benefit from flu shots protecting others from
infection.
total unit cost under absorption costing method.3. Marginal Contribution Marginal costing
technique makes use of marginal contribution for marking various decisions. Marginal
contribution is the difference between sales and marginal cost. It forms the basis for judging the
profitability of different products or departments.
10
4. Volume variance in standard costing also discloses the effect of fluctuating output unfixed
overhead. Marginal cost data becomes unrealistic in case of highly fluctuating levels of
production, e.g., in case of seasonal factories.
5. Application of fixed overhead depends on estimates and not on the actual and as such there
may be under or over absorption of the same.
6. Control affected by means of budgetary control is also accepted by many. In order to know
the net profit, we should not be satisfied with contribution and hence, fixed overhead is also
a valuable item. A system which ignores fixed costs is less effective since a major portion
of fixed cost is not taken care of under marginal costing.
7. In practice, sales price, fixed cost and variable cost per unit may vary. Thus, the
assumptions underlying the theory of marginal costing sometimes becomes unrealistic. For
long term profit planning, absorption costing is the only answer.
RESEARCH DESIGN
For the purpose of the present study only secondary data were used. Secondary data are
collected from books and websites
During the study there was lack of information available for the study.
11
CHAPTER 2
COMPANY PROFILE
Traded as
NSE: LT
BSE: 500510
BSE SENSEX Constituent
Industry
Conglomerate
Founded
Founder
Headquarters
Area served
Key people
Products
Construction
Heavy equipment
Electrical equipment
Power
12
Shipbuilding
Financial services
IT Services
Revenue
Operating
income
Net income
Total assets
Total equity
Number of
employees
Divisions
Subsidiaries
Website
www.larsentoubro.com
Larsen & Toubro Limited (L&T) is a technology, engineering, construction and manufacturing
company. It is one of the largest and most respected companies in India's private sector.
More than seven decades of a strong, customer-focused approach and the continuous quest for
world-class quality have enabled it to attain and sustain leadership in all its major lines of
business.
L&T has an international presence, with a global spread of offices. A thrust on international
business has seen overseas earnings grow significantly. It continues to grow its global
13
The evolution of L&T into the country's largest engineering and construction organization is
among the most remarkable success stories in Indian industry.
L&T was founded in Bombay (Mumbai) in 1938 by two Danish engineers, Henning HolckLarsen and Soren Kristian Toubro. Both of them were strongly committed to developing
India's engineering capabilities to meet the demands of industry.
Germany's invasion of Denmark in 1940 stopped supplies of Danish products. This crisis
forced the partners to stand on their own feet and innovate. They started manufacturing
dairy equipment indigenously. These products proved to be a success, and L&T came to
be recognised as a reliable fabricator with high standards.
The war-time need to repair and refit ships offered L&T an opportunity, and led to the
formation of a new company, Hilda Ltd., to handle these operations. L&T also started
two repair and fabrication shops - the Company had begun to expand.
Again, the sudden internment of German engineers (because of the War) who were to put
up a soda ash plant for the Tatas, gave L&T a chance to enter the field of installation - an
area where their capability became well respected.
History
A company was founded in Bombay (Mumbai) in 1938 by two Danish
engineers, Henning Holck-Larsen and Soren Kristian Toubro. The company began as a
representative of Danish manufacturers of dairy equipment. However, with the start of
the Second World War in 1939 and the resulting restriction on imports, the partners
started a small workshop to undertake jobs and provide service facilities.[9]
Germany's invasion of Denmark in 1940 stopped supplies of Danish products.[9] The wartime need to repair and refit ships offered L&T an opportunity, and led to the formation
of a new company, Hilda Ltd., to handle these operations.[9] L&T also started to repair
and fabrication shops signalling the expansion of the company.[9]
The sudden internment of German engineers in British India (due to suspicions caused
by the War), who were to put up a soda ash plant for the Tatas, gave L&T a chance to
enter the field of installation.[9]
In 1944, ECC was incorporated by the partners; the company at this time was focused on
construction projects (Presently, ECC is the construction division of L&T). L&T decided
to build a portfolio of foreign collaborations. By 1945, the company represented British
manufacturers of equipment used to manufacture products such as hydrogenated oils,
15
Post-independence
Offices were set up in Kolkata (Calcutta), Chennai (Madras) and New Delhi. In 1948,
fifty-five acres of undeveloped marsh and jungle was acquired in Powai, Mumbai. That
uninhabitable swamp subsequently became the site of its main manufacturing hub.[9]
In December 1950, L&T became a public company with a paid-up capital of Rs.
20 lakhs (2 million rupees) (2,000,000). The sales turnover in that year was Rs.
1.09 crore (10.9 million rupees).[9] In 1956, a major part of the company's Mumbai office
moved to ICI House in Ballard Estate, Mumbai; which would later be purchased by the
company and renamed as L&T House, its present corporate office.[9]
The sixties witnessed the formation of many new ventures: UTMAL (set up in 1960),
Audco India Limited (1961), Eutectic Welding Alloys (1962) and TENGL (1963).[9]
Operating divisions
L&T has delivered Engineering, Procurement and Construction (EPC) services for many
projects in the upstream hydrocarbon sector over the last two decades, in India, Middle
East, Africa, South-East Asia and Australia.
L&T has formed a joint venture with SapuraCrest Petroleum Berhad, Malaysia for
providing services to offshore construction industry worldwide. The joint venture will
16
own and operate the LTS 3000, a Heavy Lift cum Pipelay Vessel.
L&T Power has set up an organization focused on coal-based, gas-based and nuclear
power projects. L&T has formed two joint ventures with Mitsubishi Heavy Industries,
Japan to manufacture super critical boilers and steam turbine generators.
L&T is among the top five fabrication companies in the world. L&T has a shipyard
capable of constructing vessels of up to 150 meters long and displacement of 20,000
tons at its heavy engineering complex at Hazira. The shipyard is geared up to take up
construction of niche vessels such as specialized Heavy lift Cargo Vessels, CNG carriers,
Chemical tankers, defense & para military vessels, submarines and other role specific
vessels.
The design wing of L&T ECC is called EDRC (Engineering Design and Research
Centre). EDRC provides consultancy, design and total engineering solutions to
customers. It carries out basic and detailed design for both residential and commercial
projects.
L&T Solar
L&T Construction a subsidiary of the Larsen & Toubro conglomerate also undertakes
solar projects. In April 12, L&T commissioned India's largest solar photo voltaic-based
power plant (40 MWp) owned by Reliance Power at Jaisalmer, Rajasthan from concept
to commissioning in 129 days. In 2011, L&T entered into a partnership with Sharp for
EPC (engineering, procurement and construction) in megawatt solar project and plan to
construct about 100 MW in the next 12 months in most of the metros. L&T Infra
Finance, promoted by the parent L&T Ltd, is also active in the funding of solar projects
in India.
Electrical and automation
L&T is an international manufacturer of a wide range of electrical and electronic
products and systems. L&T also manufactures custom-engineered switchboards for
17
industrial sectors like power, refineries, petrochemicals and cement. In the electronic
segment, L&T offers a range of meters and provides control and automation systems for
industries. Medical Equipment.
Information technology
Main article: Larsen & Toubro Infotech
L&T Infotech focuses on information technology and software services. Larsen &
Toubro Infotech Limited, a 100 per cent subsidiary of the L&T, offers software and
services with a focus on Manufacturing, BFSI and Communications and Embedded
Systems. It also provides services in the embedded intelligence and engineering space.
Machinery and industrial products
L&T manufactures, markets and provides service support for construction and mining
machinery, surface miners, hydraulic excavators, aggregate crushers, loader backhoes
and vibratory compactors; supplies a wide range of rubber processing surya; and
manufactures and markets industrial valves and allied products and a range of
application-engineered welding alloys.[citation needed]
EWAC Alloys Limited
EWAC Alloys Limited is a wholly owned subsidiary of Larsen & Toubro, India. The
Company is engaged in design & development, manufacture and supply of special
welding electrodes, gas brazing rods and fluxes, welding torches and accessories,
atomised metal powder alloys, flux cored continuous wires & wire feeders, polymer
compounds & wear resistant plates.
Prof. Wasserman, Founder of Eutectic Castolin, and Mr. Henning Hock Larsen, Founder
of Larsen & Toubro, laid the foundation of Eutectic Division in India in the year 1962.
Recently Eutectic Castolin merged into Messer Group of Companies, Germany and
referred as Messer Eutectic Castolin (MEC).
18
L&T TS has its design and delivery locations in Vadodara, Chennai, Bangalore, Mysore
and Mumbai in India.
L&T TS services also encompass architectural, civil, structural design and building
utility systems design. Practices include both product and plant engineering services in
the automotive, trucks and off-highway vehicles, industrial .
Mysore based campus of Electronic design unit of TS works predominantly for
Embedded systems with a variety of range of operations from Avionics, Automotive,
Industrial automation and metering, Medical and more.
L&T Valves
L&Ts Valves Business Group markets valves manufactured by L&T's Valve
Manufacturing Unit and L&T's joint ventures, Audco India Limited, India and Larsen &
Toubro Valves Manufacturing Unit, Coimbatore as well as allied products from major
international manufacturers.
The company's valve manufacturing Unit in Coimbatore manufactures industrial valves
specifically for the Power Industry. It also sells value-added flow control solutions to oil
and gas, refining, petrochemical, chemical and power industries, industrial valves and
customized products for major Refinery, LNG, GTL, Petrochemical and Power projects.
L&T Valves Business Group has offices in the USA, South Africa, Dubai, Abu Dhabi,
India and China, and alliances with valve distributors and agents in these countries.
L&T MHPS Boiler
LMB is the joint venture between L&T and Mitsubishi Hitachi Power Systems. The
group specializes in Engineering, Manufacturing, Erecting & Commissioning of Super
Critical Boilers used in Mega and Ultra Mega power plants. It is mainly headquartered in
Faridabad with Manufacturing facility in Hazira and an Engineering Centre in Chennai &
Faridabad. Currently the group is engaged in projects for JVPL, MAHAGENCO,
NABHA Power & RRVUNL.
21
THE JOURNEY
In 1944, ECC was incorporated. Around then, L&T decided to build a portfolio of
foreign collaborations. By 1945, the Company represented British manufacturers of
22
EXPANDING HORIZONS
By 1964, L&T had widened its capabilities to include some of the best technologies in the
world. In the decade that followed, the company grew rapidly, and by 1973 had become
one of the Top-25 Indian companies.
In 1976, Holck-Larsen was awarded the Magsaysay Award for International
Understanding in recognition of his contribution to India's industrial development. He
retired as Chairman in 1978.
In the decades that followed, the company grew into an engineering major under the
guidance of leaders like N. M. Desai, S.R. Subramaniam, U. V. Rao, S. D. Kulkarni and
A. M. Naik.
Today, L&T is one of India's biggest and best known industrial organisations with a
reputation for technological excellence, high quality of products and services, and strong
customer orientation. It is also taking steps to grow its international presence.
For an institution that has grown to legendary proportions, there cannot and must not be
an 'end'. Unlike other stories, the L&T saga continues....
CHAPTER 3
FINANCIAL STATEMENTS
Standalone Profit & Loss
account
Income
Sales Turnover
Excise Duty
Net Sales
Other Income
Mar '12
Mar '11
Mar '10
Mar '09
12 mths
12 mths
12 mths
12 mths
12 mths
Stock Adjustments
Total Income
Expenditure
Raw Materials
Power & Fuel Cost
Employee Cost
Other Manufacturing Expenses
Selling and Admin Expenses
Miscellaneous Expenses
Preoperative Exp Capitalised
Total Expenses
1,132.03
539.77
532.64
-422.99
105.11
64,110.25 55,103.57 45,918.88 38,768.87 35,574.23
15,243.62 14,133.98 11,208.01 9,593.53 9,316.38
758.99
638.79
420.27
334.08
456.39
4,436.32 3,663.45 2,830.08 2,379.14 1,998.02
33,081.82 26,787.18 22,372.53 16,913.31 15,659.17
0.00
0.00
0.00 1,854.23 1,844.83
2,077.48 2,204.28 1,968.05
325.58
569.32
0.00
0.00
0.00
-36.25
-24.48
55,598.23 47,427.68 38,798.94 31,363.62 29,819.63
Mar '13
Mar '12
Mar '11
Mar '10
Mar '09
12 mths
Operating Profit
PBDIT
Interest
PBDT
Depreciation
Other Written Off
Profit Before Tax
Extra-ordinary items
PBT (Post Extra-ord Items)
Tax
Reported Net Profit
Total Value Addition
Preference Dividend
Equity Dividend
Corporate Dividend Tax
Per share data (annualised)
Shares in issue (lakhs)
Earning Per Share (Rs)
Equity Dividend (%)
Book Value (Rs)
12 mths
12 mths
12 mths
12 mths
6,123.99
72.77
825.00
411.87
6,088.52
65.01
725.00
358.81
6,021.95
72.66
625.00
303.28
5,856.88
59.45
525.00
212.32
25
Sources Of Funds
Total Share Capital
Equity Share Capital
Share Application Money
Preference Share Capital
Reserves
Revaluation Reserves
Networth
Secured Loans
Unsecured Loans
Total Debt
Total Liabilities
Mar '09
12 mths
12 mths
123.08
123.08
0.00
0.00
29,019.64
0.00
29,142.72
1,234.01
6,771.55
8,005.56
37,148.28
Mar '13
12 mths
Application Of Funds
Gross Block
Less: Accum. Depreciation
Net Block
Capital Work in Progress
Investments
Inventories
Sundry Debtors
Cash and Bank Balance
Total Current Assets
Loans and Advances
Fixed Deposits
Total CA, Loans & Advances
Deffered Credit
11,864.73
3,559.59
8,305.14
596.84
16,103.39
2,064.18
22,613.01
1,455.66
26,132.85
21,035.99
0.00
47,168.84
0.00
12 mths
12 mths
122.48
122.48
0.00
0.00
25,100.54
0.00
25,223.02
1,453.34
6,813.44
8,266.78
33,489.80
Mar '12
121.77
121.77
0.00
0.00
21,724.49
0.00
21,846.26
1,063.04
5,268.54
6,331.58
28,177.84
Mar '11
12 mths
10,455.23
2,850.25
7,604.98
758.68
15,871.90
1,776.62
18,729.84
1,778.12
22,284.58
21,172.82
0.00
43,457.40
0.00
12 mths
8,872.71
2,228.52
6,644.19
771.34
14,684.82
1,577.15
12,427.61
1,729.55
15,734.31
19,275.34
0.00
35,009.65
0.00
12 mths
120.44
120.44
25.09
0.00
18,142.82
23.29
18,311.64
955.73
5,845.10
6,800.83
25,112.47
Mar '10
117.14
117.14
0.00
0.00
12,317.96
24.59
12,459.69
1,102.38
5,453.65
6,556.03
19,015.72
Mar '09
12 mths
12 mths
7,235.78
1,727.68
5,508.10
857.66
13,705.35
1,415.37
11,163.70
1,104.89
13,683.96
12,662.55
326.98
26,673.49
0.00
26
5,575.00
1,421.39
4,153.61
1,040.99
8,263.72
5,805.05
10,055.52
693.13
16,553.70
7,198.85
82.16
23,834.71
0.00
Current Liabilities
Provisions
Total CL & Provisions
Net Current Assets
Miscellaneous Expenses
Total Assets
32,656.20
2,369.73
35,025.93
12,142.91
0.00
37,148.28
31,816.07
2,387.09
34,203.16
9,254.24
0.00
33,489.80
Contingent Liabilities
12,987.97 10,309.19
473.57
411.87
26,687.98
2,244.18
28,932.16
6,077.49
0.00
28,177.84
19,443.77
2,188.36
21,632.13
5,041.36
0.00
25,112.47
15,211.04
3,066.53
18,277.57
5,557.14
0.26
19,015.72
7,761.66
358.81
1,719.39
1,371.86
303.28
212.32
Mar '09
12 mths
12 mths
12 mths
12 mths
12 mths
6457.09
2114.75
6255.33
1081.58
5568.56
3833.30
5880.67 3940.41
5482.75 1478.57
464.93
-1922.28
-2409.98
-6071.73 -3308.53
-2990.26
1015.61
-1124.84
1245.56 1640.79
-410.58
174.91
298.48
656.58
1905.26
1494.68
1730.35
1905.26
1431.87
1730.35
775.29 964.46
1431.87 775.29
Particulars
Rs (In Cr.)
27
-189.17
Sales Revenue
60,873.26
28
Chapter 4
Findings, Suggestions and Conclusion
Findings
Marginal cost is the cost of the next unit or one additional unit of volume or output.
The marginal cost varies directly with the volume of production and marginal cost per
unit remains the same. It consists of prime cost, i.e. cost of direct materials, direct labor
and all variable overheads.
L & T is diversified company, which operates in national as well as international level.
Company is going for new ventures in the market so , we can assume that it has greater
scope in future.
Earnings per share of the company Rs 56, which shoes the positive trend.
Operating income of the company is showing positive trend in the 2011,which shows the
positive trend.
Net profit of the company is showing the negative slope, which is risky for the company.
Long term debt and equity of the company is showing the negative slop, which is good
for the company.
Fixed assets of the company are showing the decline slop which is alarming situation for
the company.
Current ratio of the company is showing the giz-gaz trend which is not suitable for the
company.
Total exports of the company are declining at high rate which is alarming for the
company.
29
CHAPTER V
CONCLUSION
From the above information, we can conclude that company is having sound financial position,
with reference to debt equity ratio, earning per share, and operating income .But net profit, net
export, fixed assets and current ratio is showing negative trend .L&T need to pay attention
towards the cost reduction so that profitability of the company can be maintained, and control the
liabilities
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BIBLIOGRAPHY
The information is obtained from the listed sources
www.moneycontrol.com
www.wikipedia.com
www.timesofindia.com
Financial Management- Khan and Jain
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