The study assesse the amount of capital expenditure made by the company during the period of study 2010-11 to 2014-15. It is conducted to evaluate the fixed assets turnover of BIRLA SHAKTI CEMENT and to evaluate whether fixed assets are giving adequate returns to the company. It also assesses what portion of the fixed assets can be used to pay the owner's fund and long-term obligations in the event of liquidation. The data used for the analysis and interpretation is from annual reports of the company, that is, secondary forms of data. Ratio analysis is used for calculation purpose.
As fixed assets play an important role in company’s objectives. These fixed are not convertible or not liquidable over a period of time. The owner’s funds and long term liabilities are invested in fixed assets. If firms fixed assets are idle and not utilized properly it affects the long-term sustainability of the firm, which may affect liquidity and solvency and profitability positions of the company. Fixed assets are the assets which cannot be liquidated into cash within one year. The huge amounts of funds of the company are invested in these assets. Every year company invests an additional fund in these assets directly or indirectly. The survival and other objectives of the company depend on operating performance of management i.e. effective utilization of these assets.
Table of Contents
1 INTRODUCTION
2 PROFILE OF THE COMPANY
3 RESEARCH DESIGN AND METHODOLOGY
4 ANALYSIS AND INTERPRETATION OF DATA
5 FINDINGS AND SUGGESSIONS
Research Objectives and Core Themes
This study focuses on the management of fixed assets at Kesoram Cement, specifically analyzing capital expenditure patterns, asset turnover, and the adequacy of returns generated by these assets to meet company obligations. The research aims to evaluate the effectiveness of the organization's fixed asset utilization over the period 2010-2011 to 2014-2015 using secondary financial data.
- Analysis of capital expenditure trends over the five-year study period.
- Evaluation of fixed asset turnover efficiency within the cement manufacturing context.
- Assessment of the relationship between fixed assets and long-term financial stability.
- Examination of the company's asset utilization practices and their impact on profitability.
Excerpt from the Book
FIXED ASSETS MANAGEMENT CYCLE
The fixed assets management cycle is the cycle of activities from the acquisition of the asset to the final disposition of the assets at the end of their useful life.
The cycle has 7 steps:
Acquisition: The cycle begins with the acquisition, purchase, gift or otherwise, of an asset and the determination that the asset is to be capitalized. To be capitalized the asset has to meet the agency’s capitalization limit and have a useful life of one year or more.
Receiving: The asset is formally received and accepted by the agency. Receipt may be verified by entry into an automated purchasing system or by hard copy document. In the case of donated fixed assets, receipt can be verified by a letter to the donor.
Payment: Payment is made for the asset according to the terms of the purchase order or recognition of acceptance of a gift to the donor. The payment includes the acquisition cost, freight and all other costs to put the asset. Acquisition cost of donated fixed assets is determined by its fair market value.
Identification: The asset is identified as an asset, tagged or otherwise identified and entered into the fixed assets management inventory system. Assets are identified with a permanently attached identification tag, etching or by painting on the identification number.
Inventory: The longest step in the cycle. The asset is used over its useful life. Assets are inventoried and accounted for during this step until they are no longer needed. The agency’s policies and procedures determine the inventory interval.
Summary of Chapters
1 INTRODUCTION: This chapter provides an overview of fixed assets in business, including their classification, valuation, and the importance of depreciation in maintaining a "going concern."
2 PROFILE OF THE COMPANY: This section details the industrial background of cement manufacturing and the specific historical development, operational capacity, and corporate achievements of Kesoram Cement.
3 RESEARCH DESIGN AND METHODOLOGY: This chapter reviews literature regarding accounting standards for fixed assets and outlines the secondary data analysis approach used to study Kesoram Cement.
4 ANALYSIS AND INTERPRETATION OF DATA: This chapter presents the empirical data, including tables and graphs, calculating various financial ratios such as fixed assets turnover and return on capital employed.
5 FINDINGS AND SUGGESSIONS: This chapter synthesizes the results of the ratio analysis and provides specific recommendations for improving fixed asset management and inventory control at the company.
Keywords
Fixed Assets, Asset Management, Capital Expenditure, Depreciation, Kesoram Cement, Financial Performance, Ratio Analysis, Asset Turnover, Capital Employed, Net Worth, Inventory Management, Long-term Liabilities, Industrial Profile, Corporate Finance, Fixed Assets Management Cycle.
Frequently Asked Questions
What is the primary focus of this research study?
The study examines the effectiveness of fixed asset management at Kesoram Cement, evaluating how efficiently the company utilizes its long-term assets to drive production and maintain financial stability.
What are the main thematic areas covered in the book?
The book covers accounting definitions of fixed assets, the lifecycle of asset management (from acquisition to disposition), industry-specific profiles of cement manufacturing, and a detailed ratio analysis of Kesoram Cement.
What is the primary research objective?
The core objective is to assess capital expenditure, evaluate fixed asset turnover, determine the adequacy of returns generated by assets, and analyze how these assets contribute to meeting owner funds and long-term obligations.
Which scientific methodology does the author apply?
The research relies on secondary data derived from the annual reports of Kesoram Cement, utilizing descriptive ratio analysis to measure financial performance and asset utilization trends.
What does the main body of the work address?
The main body focuses on the theoretical framework of fixed assets, the practical implementation of asset control systems, and an empirical analysis of Kesoram Cement’s financial data from 2014 to 2019.
Which keywords characterize this work?
Key terms include Fixed Assets, Asset Management, Financial Performance, Depreciation, Capital Expenditure, and Ratio Analysis.
What specific control mechanisms are recommended for fixed assets?
The author recommends implementing formal capital investment approval forms, conducting regular physical asset audits, using serial number databases for tracking, and segregating responsibilities for acquisition, custody, and disposal.
How does the author define the "Fixed Assets Management Cycle"?
The cycle is defined as a seven-step process encompassing Acquisition, Receiving, Payment, Identification, Inventory, Excess declaration, and Surplus disposition.
What is the significance of the "Return on Fixed Assets" ratio in this study?
This ratio is used to measure the profitability generated by the company's fixed assets; the study highlights that during the review period, this specific ratio showed significant fluctuations, necessitating strategic improvements.
- Quote paper
- Rangasamudram Neelaiah (Author), 2019, Fixed Assets Management. A Study of Kesoram Cement, Munich, GRIN Verlag, https://www.grin.com/document/1156334
