CHAPTER 1
Introduction
 Objectives
 Source of Data
 Research Methodology
 Limitations
1
INTRODUCTION OF THE STUDY
Finance may be defined as the provision of money at the time where, it is
required. Finance refers to the management flews of money through an organization. It
concerns with the application of skills in the manipulation, use and control of money.
Different authorities have interpreted the term “Finance” differently. However there are
three main approaches to finance.
1. The first approach views finance as to providing of funds needed by a business on
most suitable terms this approach confines finances to the raising of funds and to the
study of financial institutions and instruments from where funds can be procured.
2. The second approach relates finance to cash.
3. The third approach views finance is being concerned with raising of funds and their
effective utilization.
Definition of Financial Management;
Financial Management as practice by corporate firms can be called corporation finance or
business finance Financial Management refers to that part of the management activity,
which is concerned with the planning & controlling of firms financial resources. It deals
with finding out various sources for raising funds for the firm. The sources must suitable
and economical for the needs of the business. The most appropriate use of such funds
also forms a part of Financial Management.
2
Objective of Financial Management
Financial Management is concerned with procurement and use of funds. its
Main aim is to use business funds in such a way that the firm’s value / earning are
maximized there are various
alternatives available for using business funds. The
pros & cons of various decisions have to look into before making a final selection.
Financial Management
provides a frame work for selecting a
and decision available commercial strategy. The main
proper cause if action
objective of a business is to
maximize the owner economics welfare. These objectives can be achieved by
1. Profit maximization and
2. Wealth maximization
(A)MANAGEMENT OF FIXED ASSETS
The selection of various fixed asset required creating the desired Production facilities and
the decision regards the extermination of the level of Fixed assets is primarily the task
that at the production technical people. The decision relating to fixed assets involves
huge funds a long period of time and are
generally irreversible nature affecting
the
long term profitability of a concern, an unsound invest decision may prove to b total to
the very existence of the organization. Thus, the management of fixed asset is of vital
importance to any organization.
The process of fixed asset management involves:
(i) Selection of most worthy projects or alternative of fixed assets,
(ii) Arranging the requisite funds / capital for the same
The first importance consideration to be acquire only that much amount of fixed assets
which will be just sufficient to ensure and efficient running of the business. In some cases
it may be economical to by certain asset in a lot size. Another important consideration
to be kept in mind is possible increase in demand of the firm’s product necessarily
expansion of its activities. Hence a firm should have that
assets , which
much
amount of fixed
could adjust to increase demand.
The third of fixed assets management is that a firm must ensure buffer stocks of
certain essential equipment / services to ensure uninterrupted production in this events of
emergencies. Sometime, there may be a breakdown in some equipment or services
3
affecting the entire production. It is always better to have some alternative arrangements
to deal with such situations. But at the same time the cost of carrying such buffer stock
should also be evaluated. Efforts should also be made to minimize the level of buffer
stock of fixed assets be encouraging their maximum utilization during learn period,
transferring a part of peak period and living additional capacity.
(B) FIXED ASSETS:
Fixed assets are those, which are required and held permanently for a pretty
longtime in the business and are used for the purpose of earning profits. This successful
continuance of the business depends upon the maintenance of such assets. They are not
meant for release in the ordinary course or business and the utility of these remains so
long as they are in working order, so they are also known as capital assets. Land and
building, plant and machinery, motor vans, furniture and fixture are some examples of
these assets.
Financial transactions are recorded in the books keeping in view the going concern aspect
of their business unit. It is assumed the business unit has a reasonable expectation of
continuing business at a profit for indefinite period of time. It will continue to operate I
the future. This assumption provides much of the justification for recoding fixed assets at
original coat and depreciating them in a systematic manner without reference to their
current realizable value. It is useless to show fixed assets in the balance sheet at their
estimated realizable values if there is no immediate expectation of selling them. Fixed
resale, so they are shown at their book values (i.e., cost less depreciation provided) and
not at their current realizable values.
The market value of a fixed asset may change with the passage of time, but for
accounting purpose it continues to be shown in the books at its book value, i.e., the cost
at which it was purchased minus depreciation proved up to date.
The cost concept of accounting, depreciation calculated on the basis of historical
costs of old assets is usually lower than that of those calculated at current value or
replacement value, This results in more profits on paper, which if distributed in full, will
lead to reduction of capital.
4
Objectives of Financial Management:
 In order to meet the day to day operation every firm should maintain
necessary liquid assets.
 The immediate objective of any business is to earn profit and
maximize the profit as much as possible.
 Profit maximization at the cost of social or moral obligation is a short
signated policy.
 Wealth
Maximization
is
better
criteria
rather
than
maximization. Any financial action which creates wealth.
5
profit
Objectives of the Study:
 The study is made to known the amount of capital expenditure made
by the company during study period.
 The study is conducted to evaluate depreciation and method of
depreciation adopted by LG.
 Profit maximization is not considered as basic idea for making
investment and financing decision through Fixed Asset Management.
 The study is evaluate is giving adequate returns to the company.
 Study is conducted to evaluate that if fixed assets are liquidated. What
is the proportion of fixed assets amount will contribute for payment of
owner fund and long term liabilities.
6
Sources of Data:
After going through different methods of data collection, it was decided that
both primary and secondary data are suitable for this survey.
Primary Data:
The primary data was collected mainly with interactions and discussions
with the company’s executives.
Secondary Data:
 The data gathering method is adopted purely form secondary sources.
 The theoretical content is gathered form eminent text book reference
and library at LG ELECTRONICS.
 The financial data and information is gathered from annual reports of
the company internal records.
 Interpretation, Conclusions and suggestions are purely base on my
opinion and suggestions provided by the project guide.
7
Need for study:
Fixed Assets play vary important role in realign company’s objectives
the firms to which capital investment vested on fixed assets. Theses fixed
assets are not convertible or not liquid able over a period of time the total
owner finds and long term liabilities are invested in fixed assets. Since fixed
assets playing dominant role in total business the firms has realized the
effective utilization of fixed assets. So ration contributes very much in
analyzing and utilized properly it effects long term sustainability of the firms
in analyzing and utilized properly it affect long term sustainability of the
firms which may effect liquidity and solvency and profitability positions of
the company. The idle of fixed assets lead a tremendous in financial cost and
intangible cost associate to it. So there needs lead a tremendous in financial
cost and intangible cost associate to it. So there is need for the companies to
evaluate fixed assets performance analysis time to time by comparing with
pervious performance comparison with similar company and comparison
with industry standards. So chose a study to conduct on the fixed assets
analysis of LG ELECTRONICS. Using ratio in comparison with previous
year performance, the title of the project is analysis on Fixed Assets
management.
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Importance:
Fixed assets are the assets which cannot be liquidates into cash within
one year. The large amount of the company is invested in these assets. Every
year the company investment a additional fund in these assets directly or
indirectly the survival and other objectives of the company purely depends
on operating performance of management in effective utilization of there
assets.
Firm has evaluate the performance of fixed assets with proportion of
capital employee on net assets turnover and other parameters which is
helpful for evaluating the performance of fixed assets.
Scope of Study:
The project is covered of fixed Assets of LG ELECTRONICS. drawn
form annual report of the company. The fixed assets considered in the
project is which cam not be converted into cash with one year. Ratio
analysis is used for evaluating fixed assets performance of LG
ELECTRONICS.
The subject matter is limited to fixed assets it analysis and its performance
but not any other areas of accounting, corporate marketing and financial
matters.
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METHODOLOGY
 The present study confines to the evaluation of overall financial
performance of LG Electronics.
 For this purpose of the study the recent five years period(2007 to
2011) is selected.
 The data used for analysis and interpretation from annual reports of
the company that is secondary forms of data.
 Trend analysis and Ratio analysis are the techniques used for
calculation purpose.
 The project is presented by using tables, graphs and with their
interpretations.
 No survey is undertaken or observation study is conducted in
evaluating “Fixed Assets” performance of LG ELECTRONICS.
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Limitations:
 The study period of 45 days as prescribed by Osmania University.
 The study is limited up to the date and information provided by LG
ELCTRONICS INDIA LTD and its reports.
 The reports will not provide exact fixed Assets status and position in
LG ELECTRONICS. it may varying form time to time and situation
to situation.
 This report is not helpful in investing in LG ELECTRONICS. Either
through disinvestments or capital market.
 The accounting procedure and other accounting principles are limited
by the company changes in them may vary the fixed assets
performance.
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Objectives of the study:
 The study is conducted to evaluate fixed assets performance of the
study is conducted to evaluate the fixed assets turnover on LG
ELECTRONICS.
 The study is made to known the amount of capital expenditure made
by the company during study period.
 The study is conducted to evaluate depreciation and method of
depreciation adopted by LG ELECTRONICS.
 The study is conducted to known the amount of finance made by long
term liabilities and owner funds towards fixed assets.
 Study is conducted to evaluate that if fixed assets are liquidated. What
is the proportion of fixed assets amount will contribute for payment of
owner funds and long term liabilities.
 The study is to evaluate adequate returns to the company.
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CHAPTER II
Theoritical concept
 Introduction of Topic
 Definitions
 Process
 Methods
13
THEORITICAL CONCEPT
MANAGEMENT OF FIXED ASSETS:
The selection of various fixed assets required for creating the desired
production facilities and the decision regarding the determination of level of
fixed assets in the capital structure is an important decision for the company
to take for the smooth running of business. The decisions relating to fixed
assets involve huge funds for long period of time and are generally of
irreversible nature affecting the long profitability of the business. Thus,
management of fixed asset is of vital importance to any organization.
The process of Fixed Assets Management involves:
1. Selection of most worthy projects from the different alternatives of fixed
assets.
2. Arranging the requisite funds/capital for the same.
The first important consideration is to acquire only that amount of fixed
assets, which will be just sufficient to ensure smooth and efficient running of
the business. In some cases it may be economical to buy certain assets in a
lot size. Another important consideration to be kept in mind is possible
increase in the demand of the firm’s product needs the expansion of
activities. Hence a firm should have that amount of fixed assets, which
could adjust to increase demand.
Another aspect of fixed assets management is that a firm must ensure
buffer stocks of certain essential equipments to ensure uninterrupted
production in the events of emergencies. Sometimes, there may some
14
breakdown in some equipments or services affecting the entire production. It
is always better to have some alternative arrangements to deal with such
situations but at the same time the cost of carrying such buffer stock should
also be evaluated. Efforts should also be made to minimize the level of
buffer stock of fixed assets so that there will be maximum utilization during
that period.
Fixed assets management is an accounting process that seeks to track Fixed
assets for the purposes of financial accounting, preventive Maintenance, and
theft deterrence.Many organizations face a significant challenge to track the
location, quantity, condition, maintenance and depreciation status of their
fixed assets. A popular approach to tracking fixed assets utilizes serial
numbered Asset Tags, often with bar codes for easy and accurate reading.
Periodically, the owner of the assets can take inventory with a mobile
barcode reader and then produce a report.Off-the-shelf software packages
for fixed asset management are marketed to businesses small and large.
Some Enterprise Resource Planning systems are available with fixed assets
modules.
Investment management is the professional management of various
securities (shares, bonds etc) and other assets (e.g. real estate), to meet
specified investment goals for the benefit of the investors. Investors may be
institutions (insurance companies, pension funds, corporations etc.) or
private investors (both directly via investment contracts and more commonly
via collective investment schemes eg. mutual funds) .The term asset
management is often used to refer to the investment management of
collective investments, whilst the more generic
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fund management may refer to all forms of institutional investment as well
as investment management for private investors. Investment managers who
specialize in advisory or discretionary management on behalf of (normally
wealthy) private investors may often refer to their services as
wealth management or portfolio management often within the context of
so-called "private banking".The provision of 'investment management
services' includes elements of financial analysis, asset selection, stock
selection,
plan
implementation
and
ongoing
monitoring
of
investments.Investment management is a large and important global industry
in its own right responsible for caretaking of trillions of dollars, euros,
pounds and yen. Coming under the remit of financial services many of the
world's largest companies are at least in part investment managers and
employ millions of staff and create billions in revenue.
Fund manager (or investment advisor in the U.S.) refers to both a firm
that provides investment management services and an individual(s) who
directs 'fund management' decisions
Fixed asset, also known as property, plant, and equipment (PP&E), is a
term used in accountancy for assets and property which cannot easily be
converted into cash. This can be compared with current assets such as cash
or bank accounts, which are described as liquid assets. In most cases, only
tangible assets are referred to as fixed.
Fixed assets normally include items such as land and buildings,motor
vehicles, furniture, office equipment, computers, fixtures and fittings, and
plant and machinery. These often receive favorable tax treatment
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(depreciation allowance) over short-term assets because they depreciate over
time.
Assets Characteristics:
Assets have three essential characteristics:

They embody a future benefit that involves a capacity, singly or in
combination with other assets, in the case of profit oriented
enterprises, to contribute directly or indirectly to future net cash flows,
and, in the case of not-for-profit organizations, to provide services;

The entity can control access to the benefit; and,

The transaction or event giving rise to the entity's right to, or control
of, the benefit has already occurred.
It is not necessary; in the financial accounting sense of the term, for control
of access to the benefit to be legally enforceable for a resource to be an
asset, provided the entity can control its use by other means.
It is important to understand that in an accounting sense an asset is not the
same as ownership. In accounting, ownership is described by the term
"equity," (see the related term shareholders' equity). Assets are equal to
"equity" plus "liabilities."
The accounting equation relates assets, liabilities, and owner's equity:
The accounting equation relates assets, liabilities, and owner's equity:
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The accounting equation is the mathematical structure of the balance sheet.
Assets are usually listed on the balance sheet. It has a normal balance, or
usual balance, of debit (i.e., asset account amounts appear on the left side of
a ledger).
Similarly, in economics an asset is any form in which wealth can be held.
Probably the most accepted accounting definition of asset is the one used by
the International Accounting Standards Board. The following is a quotation
from the IFRS Framework: "An asset is a resource controlled by the
enterprise as a result of past events and from which future economic benefits
are expected to flow to the enterprise."
Assets are
formally controlled and
managed
within larger
organizations via the use of asset tracking tools. These monitor the
purchasing, upgrading, servicing, licensing, disposal etc., of both physical
and non-physical assets.
The assets in the balance sheet are listed either in order of liquiditypromptness with which they are expected to be converted into cash-or in
reverse order, that is, fixity or listing of the least liquid (fixed) first followed
by others. All assets are grouped into categories, that is, assets with similar
characteristics are put in one category. The assets included in one category
are different from those in other categories. The standard classification of
assets divides them into (1) fixed assets, (2) current assets, (3) investments,
and (4) other assets.
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Tangible fixed assets
are those, which have physical existence and
generate goods and services. Included in this category are land, building,
plants, machinery, furniture, and so on. They are shown in the balance sheet,
in accordance with the cost concept, at their cost to the firm at the time they
were Purchased. Their cost is allocated to/charged against/spread over their
useful life. The yearly charge is referred to as depreciation. As a result, the
amount of such assets shown in the balance sheet every year declines to the
extent of the amount of depreciation charged in that year and by the end of
the useful life of the asset it equals the salvage value, if any. Salvage value
signifies the amount realized by the sale of the discarded asset at the end of
its useful life.
Intangible assets
do not generate goods and services directly. In a way,
they reflect the rights of the firm. This category of assets comprises patents,
copyrights, trade marks and goodwill. They confer certain exclusive rights to
their owner’s patents conger exclusive rights to use an invention, copyrights
relate to production and sale of literary, musical and artistic works, trade
marks represent exclusive right to use certain names, symbols, labels,
designs, and so on intangible fixed assets are also written-off over a period
of time.
Intangible assets lack physical substance and arise form a right granted by
the government or another company. Intangibles may be acquired or
developed internally. Examples of rights granted by the government are
patents, copyrights, and trademarks, while am example of a privilege granted
by another company is a franchise. Other types of intangibles include
organization costs, leasehold improvements, and goodwill. Organization
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costs are the expenditures incurred in starting a new company; an example
would be legal fees. Leasehold improvements are expenditures made by a
tenant to his or her leased property, such as the cost of putting up new
paneling. Goodwill represents the amount paid for another business in
excess of the fair market value of its tangible net assets. For example, if
company A paid $ 1000,000 for company B’s net assets having a fair market
value of $84,000, the amount paid for goodwill is $16,000. Goodwill can be
recorded only when a company purchases another business. The amount
paid for the goodwill of a business may be based upon the acquired firm’s
excess earnings over other companies in the industry. Internally developed
goodwill (e.g., good customer relations) is not recorded in the accounts.
ACCOUNTING FOR INTANGIBLE ASSETS
APB Opinion 17 specifies the requirements for accounting for intangible
assts. Intangibles that have been acquired, such as goodwill, should be
recorded at cost. In the event that an intangible is acquired for other than
cash, it should be reflected at either the fair market value of the
consideration given or the fair market value of the right received, whichever
is more clearly evident. Intangibles should not be arbitrarily written off if
they still have value.
When identifiable intangibles are internally developed (e.g., patents), they
should be recorded as assets and reflected at cost. If they are not identifiable,
they should be expensed.
Intangible assets must be amortized over the period benefited not to exceed
40 years. Amortization is a term used to describe the systematic write-off to
20
expense of an intangible asset’s cost over its economic life. The straight-line
method of amortization is used.
The amortization entry is
Amortization expense
Intangible asset
The credit is made directly to the given intangible asset account. However, it
would not be incorrect to credit an accumulated amortization account, if
desired.
Some intangibles have a limited legal life. An example is patents, which
have a legal life of 17 years.
DEFERRED CHARGES
Deferred charges are of along-term, nonrecurring nature. They are allocated
to a number of future periods. Examples are start-up costs and plant
rearrangement costs.
Deferred charges are customarily listed as the last asset category in the
balance sheet since their dollar value is usually insignificant relative to total
assets.
OTHER ASSETS
When non-current assets cannot be properly placed into the asset
classifications already
21
Discussed, they may be included in the Other Assets category. Placement of
an item in this classification depends upon its nature and dollar magnitude.
However, this classification should be used as a last resort.
COLLECTIBLE ASSETS
Not surprisingly, periodic disenchantment with returns on marketable
securities has led some investors to examine a host of tangible assets that are
normally considered only by “collectors”. The average returns on
collectibles such as Chinese ceramics, coins, diamonds, paintings, and
stamps have on occasion been quite high, but generally such assets also
experience periods of negative returns. This fluctuation is not surprising
because if one (or more) type of collectible had provided consistently high
returns, many investors would have been attracted to it and would have bid
its price up to a level where high returns would no longer have been
possible. In deed, more recent studies of prints and paintings have concluded
that their risk and return characteristics make them relatively unattractive
investments for risk-averse investors.
In a sense, a collectible asset often provides income to the owner in the form
of consumption. For example, an investor can admire a Roberto Clementre
rookie baseball card, sit on a Chippendale chair, gaze upon a Georgia O’
Keefe painting, play a Stradivarius violin, and drive a Stutz Bearcat
automobile. Value received in this manner is not subject to income taxation
and is thus likely to be especially attractive for those in high tax brackets.
However, the value of such consumption depends strongly on one’s
preferences.
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If markets are efficient, collectible assets will be priced so that those who
enjoy them most will find it desirable to hold them in greater-than-marketvalue proportions, whereas those who enjoy them least will find it desirable
to hold them in less-than-market-value proportions (or, in many cases, not at
all).
Institutional funds and investment pools have been organized to own
collectibles of one type or another. These arrangements are subject to serious
question if they involve locking such objects in vaults where they cannot be
seen by those who derive pleasure from this sort of consumption. On the
other hand, if the items are rented to others, the only loss may be that
associated with the transfer of a portion of the consumption value to the
government in the form of a tax on income.
Investors in collectibles should be aware of two especially notable types of
risk. The first is that the bid-ask spread is often very large. Thus an investor
must see a large price increase just to recoup the spread and break even. The
second is that collectibles are subject to fads (that risk has been referred to as
stylistic risk). For example, Chinese ceramics may be actively sought by
many investors today, leading to high prices and big returns for earlier
purchasers. However, they may fall out of favor later on and plunge in value.
Unlike financial assets, there is no such thing as fair value for collectibles
that can act as a kind of anchor for the market price.
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GOLD
In the United States, private holdings of gold bullion were illegal before the
1970s. In other countries, investment in gold has long been a tradition.
According tone estimate, at the end of 1984 gold represented over 6% of the
world market wealth portfolio.
History suggests gold has performed like other types of collectibles in that it
has had periods of high returns but also periods of low returns (particularly
since the early 1980s). Furthermore, gold has had a high standard deviation,
suggesting that by itself it has been a risky investment. However, for any
single investment, risk and return are only parts of the story. Correlations of
an asset’s returns with the returns on other assets are also relevant. In
general, gold price changes have a near-zero correlation with stock returns.
Gold thus appears to be an effective diversifying asset for an equity investor.
Furthermore, gold prices generally have been highly correlated with the rate
of inflation in the United States as measured by changes in the Consumer
Price Index. This is consistent with gold’s traditional role as a hedge against
inflation, because higher inflation generally brings higher gold prices.
Investors interested in gold need not restrict themselves to bullion. Other
possibilities range from stocks of gold mining companies to gold futures to
gold coins and commemoratives. Furthermore, there are other types of
precious metals, such as silver, that investors may want to consider
Current Assets
The second category of assets included in the balance
sheet are current assets. In contrast to fixed assets, they are
short-term in nature. They refer to assets/resources, which are
either held in the form of cash or ate expected to be realized to
cash within the accounting period in the normal operation
24
cycle of the business. The term ‘operating cycle’ means the
time span during which cash is converted into inventory,
inventory, into receivable /cash sales and receivables into
cash. Conventionally, such assets are held for a short period
of time, usually not more than a year. These are also known
as liquid assets. Current assets include cash, marketable
securities,
accounts
receivable
(debtors),
notes/bills
receivables and inventory.
Cash
is the most liquid current asset and includes cash to hand and cash at
bank.
It
provides
instant
liquidity
and
can
be
used
to
meet
obligations/acquire without assets without any delay.
Marketable securities
are short-term investments, which are both
readily marketable and are expected to be converted into cash within a
year. They provide an outlet to invest temporary surplus /idle
funds/cash. According to generally accepted accounting principles,
marketable securities are shown in the balance sheet below the cost or
the market price. When, however, show at cost, the current market
value is also shown in parenthesis.
Accounts receivable
represent the amount that the customers owe to the
firm, arising from the sale of goods o credit they are shown in the balance
sheet at the amount owed less an allowance (bad debts) for the portion which
may but be collected.
Notes/bills payable refer the amounts owned by outsiders for which written
acknowledgments of the obligations are available.
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Inventory means the aggregate of those items which are (i) held for sale in
the ordinary course of business (finished goods), (ii) in the process of
production for such sales (work-in-process) or (iii) to be currently consumed
in the production of goods and services (raw materials) to be available for
sale. It is the least liquid current assets. Included in inventory are raw
materials, working process (semi-finished) and finished goods. Each of these
serves a useful purpose in the process of production and sale. Inventory is
reported in the balance sheet at the cost or market value whichever is lower.
Investments the third category of fixed assets is investments. They represent
investments of funds in the securities of another company. They are longterm assets outside the business of the firm. The purpose of such investments
is either in earn return or/and to control another company. It is customarily
shown in the balance sheet at costs with the market value shown in
parenthesis.
Other assets included in this category of assets are what are called deferred
charges that are advertisement expenditure preliminary expenses and so on.
They are pre-payment for services /benefits for the periods exceeding the
accounting period.
Liabilities
The second major content of the balance sheet is liabilities defined as the
claims of outsiders that is, other than owners. The assets have to be financed
by different sources. One of source of funds is borrowing – long-term as
well as short-term. The firms can borrow on a long-term basis from financial
26
institutions/banks or through bonds/mortgages/debentures, and so on. The
short-term borrowing may be in the form of purchase of goods and services
on credit. These outside sources from which a firm can borrow are termed as
liabilities. Since they finance the assets, they are, in a sense, claims against
the assets. The amount shown against the liability items is on the basis of the
amount owned, not the amount payable. Depending upon the periodicity of
the funds, liabilities can be classified into (1) long-term liabilities and (2)
current liabilities.
Long-term Liabilities
They are so called because the sources of funds
included in them are available for periods exceeding one year. In other
words, such liabilities represent obligations of a firm payable after the
accounting period.
Debentures or bonds
are issued by a firm to the public to raise debt. A
debenture or a bond is a general obligation of the firm to pay interest and
return the principal sum as per the agreement. Loan raised through ‘Issue of
debentures or bonds may be secured or unsecured.
Secured loans are the long-term borrowings with fixed assets pledged as
security. Term loans from financial institutions and commercial banks are
secured against the assets of the firm.
They have to be repaid/redeemed either in lump sum at the maturity of the
loan/debenture or in installments over the life of the loan. Long-term
liabilities are shown in the balance sheet net of redemption/repayment.
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Current Liabilities
In contrast, the long term-liabilities, such liabilities
are obligations to outsiders repayable in a short period, usually within the
accounting period or the operating cycle of the firm. It can be said to be the
counterpart of the current assets. Conventionally, they are paid ;out of the
current assets; in some cases, however existing current liabilities can be
liquidated through the creation of additional current liabilities.
Sundry creditors or accounts payable represent the current liability towards
suppliers from whom the firm has purchased raw materials on credit. This
liability is shown in the balance sheet till the payment has been made to the
creditors.
Bills payable are the promises made in writing by the firm to make payment
of a specified sum to creditors at some specific date. Bills are written by
creditors over the firm and become bill payable once they are accepted by
the firm. Bills payable have a life of less than a year; therefore, they are
shown as current liabilities in the balance sheet.
Bank borrowings form a substantial part of current liabilities of a large
number of companies in India. Commercial banks advance short-term credit
to firms or financing their current assets. Banks may also provide funds
(term loans) for a financing a firm’s fixed assets. Such loans will be grouped
under long-term liabilities. In India, it is a common practice to include both
short and long-term borrowings under loan funds.
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Provisions
are other types of current liabilities. They include provision
for taxes or provision for dividends. Every business has to pay taxes on its
income. Usually, it takes some time to finalize the amount of tax with the tax
authorities. Therefore, the amount of tax is estimated and shown as provision
for taxes or tax liability in the balance sheet. Similarly, provision for paying
dividends to shareholders may be created and shown as current liability.
Expenses payable or outstanding expenses are also current liabilities. The
firm may owe payments to its employees and others at the end of the
accounting period for the services received in the current year. These
payments are payable within a very short period. Examples of outstanding
expenses are wages payable, rent payable, or commission payable.
Income received in advance
is yet another example of current liability. A
firm can sometimes receive income for gods or services to be supplied in the
future. As goods or services have to be provided within the accounting
period, such receipts are shown as current liabilities in the balance sheet.
Installments of long-term loans
are payable periodically. That portion of
the long-term loan which is payable in the current year will for part of
current liabilities.
Deposits from public
may be raised by a firm for financing its current
assets. These may therefore classify under current liabilities. It may be noted
that public deposits may be raised for duration of one year through three
years.
29
How should the changing value of a fixed asset be reflected in a
company's accounts?
The benefits that a business obtains from a fixed asset extend over several
years. For example, a company may use the same piece of production
machinery for many years, whereas a company- owned motor car used by a
salesman probably has a shorter useful life.
By accepting that the life of a fixed asset is limited, the accounts of a
business need to recognize the benefits of the fixed asset as it is "consumed"
over several years.
This consumption of a fixed asset is referred to as depreciation.
Definition of depreciation
Financial Reporting Standard 15 (covering the accounting for tangible fixed
assets) defines depreciation as follows:
"the wearing out, using up, or other reduction in the useful economic life of
a tangible fixed asset whether arising from use, effluxion of time or
obsolescence through either changes in technology or demand for goods and
services produced by the asset.'
A portion of the benefits of the fixed asset will be used up or consumed in
each accounting period of its life in order to generate revenue. To calculate
profit for a period, it is necessary to match expenses with the revenues they
help earn.
30
In determining the expenses for a period, it is therefore important to include
an amount to represent the consumption of fixed assets during that period
(that is, depreciation).
In essence, depreciation involves allocating the cost of the fixed asset (less
any residual value) over its useful life. To calculate the depreciation charge
for an accounting period, the following factors are relevant:
- The cost of the fixed asset;
- The (estimated) useful life of the asset;
- The (estimated) residual value of the asset.
What is the relevant cost of a fixed asset?
The cost of a fixed asset includes all amounts incurred to acquire the asset
and any amounts that can be directly attributable to bringing the asset into
working condition.
Directly attributable costs may include:
- Delivery costs
- Costs associated with acquiring the asset such as stamp duty and import
duties
- Costs of preparing the site for installation of the asset
- Professional fees, such as legal fees and architects' fees
Note that general overhead costs or administration costs would not costs of a
fixed asset (e.g. the costs of the factory building in which the asset is kept, or
the cost of the maintenance team who keep the asset in good working
condition)
31
The cost of subsequent expenditure on a fixed asset will be added to the cost
of the asset provided that this expenditure enhances the benefits of the fixed
asset or restores any benefits consumed.
This means that major improvements or a major overhaul may be capitalized
and included as part of the cost of the asset in the accounts.
However, the costs of repairs or overhauls that are carried out simply to
maintain existing performance will be treated as expenses of the accounting
period in which the work is done, and charged in full as an expense in that
period.
DEPRECIATION AND SALVAGE VALUE
Although the useful life of equipment (a fixed asset) may be long, it is
nonetheless limited. Eventually the equipment will lose all productive worth
and will possess only salvage value (scrap value). Accounting demands a
period-by-period matching of costs against income. Hence, the cost of a
fixed asset (over and above its salvage value) is distributed over the asset’s
estimated lifetime. This spreading of the cost over the periods which receive
benefits is known as depreciation.
The depreciable amount of a fixed asset – that is, cost minus salvage
value – may be written off in different ways. For example, the amount may
be spread evenly over the years affected, as in the straight-line method. The
units of production method bases depreciation for each period on the amount
of output. Two accelerated methods, the double declining balance method
and the sum-of-the years’-digits method, provide for greater amounts of
depreciation in the earlier years
32
DEPRECIATION METHODS
1. STRAIGHT-LINE METHOD
This is the simplest and most widely used depreciation method. Under
this method an equal portion of the cost (above salvage value) of the asset is
allocated to each period of use. The periodic depreciation charge is
expressed as
Cost – Salvage Value
= Depreciation
Estimated life
2. UNITS OF PRODUCTION METHOD
Where the use of equipment varies substantially from year to
year, the units-of-production method is appropriate for determining the
depreciation. For example, in some years logging operations may be carried
on for 200 days, in other years for 230 days, in still other years for only 160
days, depending on weather conditions. Under this method, depreciation is
computed for the appropriate unit of output or production (such as hours,
miles, or pounds) by the following formula:
33
Cost – Salvage
= Unit Depreciation
Estimated units of production during lifetime
The total number of units used in a year is then multiplied by the unit
depreciation to arrive at the depreciation amount for that year. We can
express this as
Unit depreciation x usage = depreciation
Or
Cost – Salvage
X usage = depreciation
Estimated life (in units)
This method has the advantage of relating depreciation cost directly to
income.
34
3. DOUBLE DECLINING BALANCE METHOD
The double declining balance method produces the highest amount
of depreciation in the earlier years. It does not recognize salvage or scrap
value. Instead, the book value of the asset remaining at the end of the
depreciation period becomes the salvage or scrap value. Under this method,
the straight-line rate is doubled and applied to the declining book balance
each year. Many companies prefer the double declining balance method
because of the greater “write-off” in the earlier years, a time when the asset
contributes most to the business and when the expenditure was actually
made. The procedure is to apply a fixed rate to the declining book value of
the asset each year. As the book value declines, the depreciation becomes
smaller.
100%
X 2 = depreciation rate
Estimated life in years
4. SUM-OF-THE-YEARS-DIGITS METHOD
With this method, the years of asset’s lifetime are labeled 1,2,3
and so on, and the depreciation amounts are based on a series of fractions
that have the sum of the years’ digit as their common denominator. The
greatest digit assigned to a year is used as the numerator for the first year,
the next greatest digit for the second year, and so forth.
35
CHAPTER III
Company Profile
 Brief History
 Board of Directors
 Objectives of Company
 Industrial Profile
36
COMPANY PROFILE
HISTORY:-
The trajectory of LG Electronics, its growth and diversification, has always been
grounded in the company ethos of making our customers' lives ever better and easierhappier, even-through increased functionality and fun.
Since its founding in 1958, LG Electronics has led the way to an ever-more advanced
digital era. Along the way, our constantly evolving technological expertise has lent itself
to many new products and applied technologies. Moving forward into the 21st century,
LG continues to on its path to becoming the finest global electronics company, bar none.
BRAND IDENTITY
LG is the brand that is Delightfully Smart. "Life's Good" slogan, and futuristic logo are a
great representation of what we stand for.
Global, Tomorrow, Energy, Humanity and Technology are the pillars that this
corporation is founded on; with the capital letters L and G positioned inside a circle to
center our ideals above all else, humanity. The symbol mark stands for our resolve to
establish a lasting relationship with, and to achieve the highest satisfaction for our
customers.
The letters "L" and "G" in a circle symbolize the world, future, youth, humanity, and
technology. Our philosophy is based on Humanity. Also, it represents LG's efforts to
keep close relationships with our customers around the world. The symbol mark consists
of two elements: the LG logo in LG Grey and the stylized image of a human face in the
unique LG Red color. Red, the main color, represents our friendliness, and also gives a
strong impression of LG's commitment to deliver the best. Therefore, the shape or the
color of this symbol mark must never be changed.
37
Our logo is the fundamental visual expression used to identify LG. It expresses the
quality and sophistication that is the hallmark of our products. It is simple, modern and
distinctive. Consistent and proper usage of the logo is absolutely essential. The logo is
symbolic of our steadfast reputation for excellence; therefore, any variation of the logo
diminishes the visual identity of LG Electronics and its products.
VISION OF LG:
 Management Based on Esteem for Human Dignity
Human Value each Individual.
Dignity Capitalize on Individual competencies, Respect for personal
aspiration.
Esteem People are of the origin of all values. By developing people
we improve the organizations clear tasks and fair treatment.
 LOOKING
AHEAD
Our
Millennium
Commitment
On the way to becoming the Best Global Organization we are
promising:
 DIGITAL TECHNOLOGY LEADERSHIP: The new millennium sees
the birth of the Digital Technology at LGEIL-TL2006 (Technology
Leadership), which offers customers easy to use, very affordable, and
technologically ingenious "Champion Products".
 GLOBALISATION: 70 % of its total revenues are from overseas. 54
subsidiaries carry out manufacturing, sales and marketing, logistics,
R&D and the customer services in key geographical sites worldwide.
 CREATING VALUE FOR THE PEOPLE: LG extends a warm hand
to contribute to the world community; to touch the hearts of the
customers, friends, shareholders, employees, partners and subsidiaries
38
at home and abroad. We create value help people realize their dreams
of a better life.
LG ELECTRONICS 50-YEAR HISTORY
Download(PDF, 21.0mb)
1958 Founded as GoldStar
1959 Produce Korea's first consumer radios
1998 Introduce the 60-inch plasma TV
2003 Enter UK GSM handset market
1999 Forge joint venture with Philips
2005 Develop 3G UMTS DMB handset
2007 Launch HD disc-player and drive
1958
GoldStar (today’s LG Electronics) established
1959
Korea’s first radio produced
1965
Korea’s first refrigerator produced
1966
Korea’s first black & white TV produced
1968
Korea’s first air conditioner produced
1969
Korea’s first washing machine produced
1974
GoldStar Communications went public
1977
Color TV produced
1978
Exports surpassed US$100 million, a first for Korea’s electronics industry
39
1980
First EU sales subsidiary in Germany (LGEWG) established
1982
Color TV plant established in the US in Huntsville, Alabama
1984
Sales surpassed 1 trillion Won
1986
European-standard VCR plant established in Germany
1989
Sales subsidiary and a joint production subsidiary established in Thailand
1990
Ireland-based design technology center established
1993
With the establishment of Huizhou subsidiary in China(LGEHZ), marketing in
China took full swing
1995
Company name changed to LG Electronics and US-based Zenith acquired
1997
40-inch Plasma TV and the world’s first IC set for DTVs developed India
production subsidiary (LGEIL) established
1998
World’s first 60-inch Plasma TV developed
1999
LG.Philips LCD established
2000
LG Information & Communications merged The world’s first Internet-enabled
refrigerator launched Global sales of refrigerators reached the number one
position
40
2001
Asynchronous
IMT-2000
equipment
commercialized
The
world’s
first
Internetenabled washing machine, air conditioner, and microwave oven launched
LG.Philips Displays, a joint venture with Philips established
2002
Under the LG Holding Company system, the Company spun off to LG
Electronics (LGE)& LG Electronics Investment (LGEI) The first home network
system commercialized in the global market
2003
World’s first synchronous-asynchronous IMT-2000 mobile phone developed The
world’s first 76-inch Plasma TV developed CDMA mobile handsets took the
largest share in the US and world CDMA market Launched the world’s first
Super Multi DVD Rewriter
2004
EVSB, the next-generation DTV transmission technology, chosen to be the
US/Canada DTV transmission standard by the US ATSC All-in-one LG 55-inch
LCD TV, the world’s first and largest among LCD TVs, commercialized The
world’s largest and first 71-inch Plasma TV commercialized The world’s first
terrestrial DMB phone developed Developed Wireless Speaker Home Cinema
System
2005
The world’s first DMB notebook commercialized The world’s slimmest TV
commercialized The world’s largest 102-inch Plasma TV developed LG and
Nortel Networks agreed to establish a joint venture for telecommunication
network equipment Satellite-based DMB phone commercialized The largest share
seized in the global CDMA market
2006
Launched the LG Shine, the second handset in the Black Label Series Globally
launched the steam washing machine and interactive TV refrigerator Developed
the world's first 100-inch LCD TV Launched the world's largest Full HD 102-inch
41
Plasma TV (1080p) Developed the world's first dual-format high-definition Disc
Player& Drive
2007
Launches the industry's first dual-format, high-definition disc player and drive
Launches 120Hz Full HD LCD TV Demonstrated the world-first MIMO 4GEnabled technologies with 3G LTE Won contract for GSMA's 3G campaign

2008
Introduces new global brand identity: "Stylish design and smart technology, in
products that fit our consumer's lives." Posted No.1 spot in US frontloading
washers in 5 consecutive quarters Unveiled the world's first Bluetooth headset
combined mobile phone Unveiled the world's first Blu-ray network storage
Developed the world's first LTE mobile modem chip Recorded over 100 million
units of LG air conditioners in accumulated sales

2009
Became second-largest LCD TV provider worldwide Became third-largest
supplier of mobile handsets market worldwide Became Global Partner and
Technology Partner of Formula One™

2010
Unveiled the world’s first and fastest dual-core smartphone, LG OPTIMUS 2X
Unveiled the world’s first full LED 3D TV
LG Electronics continues to pursue its 21st century vision of becoming a worldwide
leader in digital—ensuring customer satisfaction through innovative products and
superior service while aiming to rank among the world’s top three electronics,
information, and telecommunications firms by 2010.
On our way, we hold tight to a philosophy of "Great Company, Great People,"
underscoring our belief that only great people can create a great company.
42
LG strives for greatness in what we've identified as our three core capabilities: Product
Leadership, Market Leadership, and People Leadership—each strength a key part of
realizing our growth strategies for "fast innovation" and "fast growth".
LG Electronics is pursuing the vision of becoming a true global digital leader, attracting
customers worldwide through its innovative products and design. The company’s goal is
to rank among the top 3 consumer electronics and telecommunications companies in the
world by 2010. To achieve this, we have embraced the idea of “Great Company, Great
People,” recognizing that only great people can create a great company.
CORE CAPABILITIES
Product leadership refers to the ability to develop creative, top-quality products, using
specialized new technologies.
Market leadership refers to the ability to achieve top ranking, worldwide, thanks to a
formidable market presence in countries across the globe.
People leadership refers to the market dominance achieved by selecting and nurturing
talented team players able to internalize and execute innovation across the board.
Growth Strategies
Fast innovation calls for securing a competitive edge over the competition by setting—
and meeting—the highest of goals in all realms of innovation, by at least 30%. This
applies to new-product development and unveiling, innovation in design and
technology—as well as product sales, market share, and corporate value.
Fast growth is the result of implementing strategies designed to swiftly expand market
size and earnings, with and eye toward monetary growth.
43
Corporate Culture
Though a company can boast stellar management strategies and an outstanding and
talented pool of employees, it is still necessary to adopt a corporate culture that can fully
unleash the power of these capabilities.
No to “No’s”
At LG, we try to meet every road block with an alternate route—brainstorming and
working harder before saying “no.”
‘We’ not ‘I’
LG’s embraces a code of strong teamwork—encouraging pride in achievement as goals
are met by many working together as one.
Fun Workplace
LG’s workplace is one where the individual’s creativity and freedom are respected, and
work is made fun.

Established In : Jan 1997

Managing Director : Mr. Soon Kwon

Corporate Office : Plot No. 51, Udyog Vihar, Surajpur Kasna Road, Greater
Noida (UP)
BUSINESS AREAS & MAIN PRODUCTS
Home Entertainment
Plasma Display Panels, LCD TVs, LED LCD TVs, Colour TVs, Audios, Home Theatre
System, DVD Recorder/Player, BluRay Players
44
Home Appliances
Refrigerators, Washing Machines, Microwave Ovens, Vacuum Cleaners, Air Purifiers
AC
Split AC, Window AC, Commercial AC’s
Business Solutions
LCD monitors, CRT monitors, Network Monitors, Graphic Monitor, Optical Storage
Devices, LED Projectors, NAS (Network attached Storage) and Digital signage
GSM
Smart Phones, Color Screen GSM Handsets, Camera Phones, Touch Screen Phones, 3G
Phones, Multimedia Phones, Dual SIM Phones, CDMA Phones
AWARDS
Award Name
Awarded By
Year
Most Admired Company in India
A&M Magazine
1998
Most Admired MNC
A&M Magazine
1999
No.1 Consumer Durable Company
A&M Magazine
1999
Best Marketing Company
A&M Magazine
1999
Most Ethieal MNC
Business World
1999
Techies Award Best Flat Screen Monitor
Computer World
2000
3rd Largest Exporter
ESC2001
2001
Best Employer
Business
Today/
Hewitt2001
Today/
Hewitt2002
Assts
Best Employer
Business
Assts
Enterpreneur of the year
Ernst & Young
2002
Gold Rating for Environmental Performance
CII
2003
No. 1Awareness Award.
Business Today
2003
45
Super Achivers Award : MD LGEIL
CETMA
2003
Green Technology Gold Award
Green Tech Foundation
2003
Best Designer Award -Art Cool Air Conditioner
Business World & NIT
2003
VAR India User Choice Award : Monitors
VAR India
2003
Most Admired Product - Microwave
EFY
2004
Award for IT Innovation
Business Today
2004
Most Trusted Brand -CD Writers
DIGIT/Jasubhai
Digital2004
Media
EFY's Electronics Organisation of the Year Award forElectronics for You
2005
Television
Consumer Durable Retailer of the Year
ICICI Bank
2005
Excellence in Corporate Leadership & Entreprerenural Spirit CNBC TV 18
Most preferred Brand- CTV & WM
CNBC
2005
Consumer
Vote2005
Awards
Maximum Imports & Third Highest Exports
CONCOR
2005
EFY Reader's Choice Award For Microwaves
EFY
2005
Outstanding Contribution in the field of HR
CETMA
2005
Outstanding Contribution in the field of HR
MID DAY
2005
Top Company :CDMA Handsets
V&D
2005
Top Company : Fixed Phones
V&D
2005
Best in Recruiting & Staffing
RASBIC
2006
Most Preferred Brand - CTV, WM, Computer & AC
CNBC
Awaaz
Consumer2006
Awards
4 P Award : Refrigerator and Air Conditioner
4Ps Power Brand Award
4P Power Brand
CNBC
Consumer
2006
Vote2006
Awards
Most Trusted Brand - LCD TV, Plasma TV, AC, WM, Ref,Reader's Digest
2006
PC
Maximum Exports-Consumer Electronics
ESC
2006
Maximum Exports
CONCOR
2006
First Consumer Awards - CTV, Ref, WM, AC, MWO, PC
Times Group
2006
46
Business World Customer Loyalty Survey : Air-conditioner &Business World & IMRB
2007
Refrigerator
Top Newsmaker – Consumer Durables
Business Today & Cirrus
2007
Most Trusted Brand - TV, AC & HA
Super Brands
2007
Reader's
Digest
Trusted
Brands:
Platinum
Awards-Reader's Digest
2007
Airconditioner. Gold Awards- LCD TV/Plasma TV, Ref,
Washing Machine,PC
EFY Reader's Choice Award For IT & MWO
EFY
2007
India's Most Trusted Brands 2007
Brand Equity
2007
4 Ps Business & Marketing : India's 100 Most ValuablePlanman
Consulting
&2007
Awards
ICMR Ranking
Business Leadership Award in Consumer Durable Sector
NDTV
2007
Most Preferred Brand -CTVs, ACs, Ref.and WashingCNBC
2007
Machines
Loyalty Awards - Customer and Brand Loyalty in theIndia Times- Mindscape with2008
Consumer Durables Sector
Savile-Row
Avaya Global Connect Customer Responsiveness Awards
ET Avaya Awards
2008
EFY Reader's Choice Awards 2008 -Microwaves
EFY
2008
Smart Living Awards -TV, AC, Microwave & Washing360 degrees, Times of India 2008
Machine
Brand for Excellence 2008
VAR India
Reader's Digest Trusted Brand : Platinum Awards -AC. GoldReader's Digest
2008
2008
Awards - LCD TV /Plasma TV,Ref, PC
Most Preferred Brand- Consumer Electronics and HomeCNBC
Awaaz
Appliances
Awards
Most Admired MNC in India
4P’s Award
47
Consumer2008
2008
OBJECTIVES OF COMPANY
LG Electronics (LG), a major player in the global flat panel display
market, recently announced business strategies and goals for its
display business at IFA International 2009 in Berlin, Germany.
 Competition has intensified since the flat panel TV industry has
fully matured,' said Simon Kang, President and CEO of LG
Electronics
Digital
Display Company,
during
a
press
conference at IFA.
 we are confident that focused, localized marketing activities
emphasizing our products, which
embody the perfect
harmony of design and technology, will separate us from our
competitors.'
 LG has established itself as a premium brand by systematically
focusing on brand marketing activities, for its products which
balance stylish design and smart technology.
 The company plans to invest in marketing and will take a
segmented,
regional
approach.
LG
plans
to
reinforce
partnerships with premium distributors and centralize brand
marketing activities in developed markets such as North
America and Europe.
48
 In contrast to assembly line manufacturing, cell assembly
allows one person to assemble a TV from start to finish
 LG will maximize its return on invested capital through
outsourcing, innovative manufacturing technology, and an
advanced supply chain management system.
MANAGEMENT SYSTEM
When LG Electronics removed the Circulating Investment Structure of its affiliated
companies (through the launch of a holding company system), this enabled the holding
company to take full charge of investments. Consequently, LG Electronics has been able
to focus on its own businesses while increasing the overall value of the Company. This
corporate governance structure has laid the groundwork for increasing managerial
transparency. Through a responsible management system comprising of the CEO of LG
Electronics and a Board of Directors, we are taking huge steps in strengthening our
competitiveness at both the domestic and international level, in order to maximize
corporate and shareholder value.
Board of Directors
LG Electronics' Board of Directors maintains independence from its management and
major shareholders. Currently, the Board has a total of seven directors, four of whom are
outside directors. To ensure that external directors are appointed fairly and
independently, the "External Director Recommendation Committee," comprised of one
in-house director and one external director, nominates external directors following close
examination of their qualifications. These outside directors are then voted on at the next
shareholders' meeting.
49
Committees
The BOD is supported by three Board Committees. They are the Audit Committee, the
Outside Director Candidate Recommendation Committee and the Management
Committee. The Audit Committee consists of three Outside Directors, and is responsible
for examining corporate financial records and accounting to ensure compliance with the
accounting laws and transparency. The Management Committee reviews and determines
the agendas delegated by the BOD and ordinary management activities. In 2010, the
Management Committee reviewed a total of 52 agendas.
Evaluation and Compensation
Compensation for the BOD members is made within regulations pertaining to BOD
compensation that has been approved at the General Shareholder's Meeting. The
evaluation of management and executives of LGE is held annually. Top management and
executives are evaluated to determine whether they have set and achieved challenging
goals, whether their job objectives composed of quantitative and non-quantitative factors
were achieved, as well as their capability through fair and objective process, and
appropriate compensation corresponding to the outcome of the evaluation is determined.
Key Executives for LG Electronics India Pvt. Ltd.
Mr. Soon H. Kwon
Managing Director and Director
Mr. Y. V. Verma
Chief Operating Officer
Mr. Chandramani M. Singh
Product Chief and Head of Consumer Electronics
Mr. R. Manikandan
Business Group Head of Digital Display & Storage
Mr. V. Ramachandran
Head of Strategy
Compensation as of Fiscal Year 2012.
ORGANIZATION
Take a look at LG Electronics’ organization information, including our global operations.
50
51
INDUSTRY PROFILE
52
INDUSTRY PROFILE
Electronics is the study of the flow of charge through various materials and
devices such as, semiconductors, resistors, inductors, capacitors, nanostructures, and vacuum tubes. All applications of electronics involve the
transmission of either information or power. Although considered to be a
theoretical branch of physics, the design and construction of electronic
circuits to solve practical problems is an essential technique in the fields of
electronics engineering and computer engineering.
The study of new semiconductor devices and surrounding technology is
sometimes considered a branch of physics. This article focuses on
engineering aspects of electronics. Other important topics include electronic
waste and occupational health impacts of semiconductor manufacturing.
Consumer Durables
(Data table headings are shown Year-wise in descending order)
 Air Conditioners
 Bicycles
 Crystal Glass
 Domestic Electrical Appliances
 Gems and Jewellery
 Glass Products
 Kitchen Equipment
 Liquefied Petroleum Gas Cylinders
 Microwave Ovens
 Refrigerators
53
 Sewing Machines
 Sunglasses
 Toys and Games
 Washing Machines and Vacuum Cleaners
 Watches and Clock
54
CHAPTER IV
 Data Analysis

Balance Sheets

Bar Diagrams

Charts
55
DATA ANALYSIS:
The selection of various fixed assets required creating the desired
production facilities and the decision as regards determination of the level of
fixed assets is primarily the task at the production / technical people. The
decision relating to fixed assets involve huge funds for a long period of time
and are generally of irreversible nature affecting the long term profitability
of a concern, an unsound invest decision may prove to be total to the very
existence of the organization. Thus, management of fixed assets is of vital
importance to any organization.
The process of fixed asset management involves:
(i)
Selection of most worthy projects or alternatives of fixed assets.
(ii)
Arranging the requisite funds / capital for the same.
The first important consideration to be acquire only that much amount
of fixed assets which will be just sufficient to ensure smooth and
efficient running of the business. In some cases it may be economical
to be kept in mind is possible increase in demand of the firm’s product
necessarily expansion of its activities. Hence a firm should have that
much amount of fixed assets which could adjust to increase demand.
The third aspect of fixed assets management is that a firm must ensure
buffer stock of certain essential equipments / services to ensure
uninterrupted production in the events of emergencies. Sometime, there may
be breakdown in some equipment or services affecting the entire production.
It is always better to have some alterative arrangements to deal with Cush
situations. But at the same time the cost of carrying such situations. But at
the same time cost of carrying such arrangements to deal with such
56
situations. But at the same time the cost of carrying such buffer stock of
fixed assets be encouraging their maximum utilization during lean period,
transferring a part of peak period and living additional capacity.
Fixed Assets:
Fixed assets are those assets which are required and held permanently
for a pretty longtime in the business and are used for the purpose of earning
profits. The successful continuance of the business depends upon the
maintenance of such assets. They are not meant for resale in the ordinary
course or business and the utility of these remains so long as they are in
working order, so they are also known as capital assets. Land and buildings,
plant and machinery, motor vans, furniture and fixture are some examples of
these assets.
Financial transactions are recorded in the books keeping in view the
going concern aspect of the business unit. It is assumed the business unit has
a reasonable expectation of continuing business at a profit for an indefinite
period of time. It will continue to operate in the future. This assumption
provides much of the justification for recording fixed assets at original cost
and depreciating them in a systematic manner without reference to their
current realizable value. It is useless to show fixed assets in the balance
sheet at their estimated realizable values if there is no immediate expectation
of selling them. Fixed resale, so they are shown at their book values and not
at their current realizable values.
The market values of a fixed asset may change with the passage of
time, but for accounting purpose it continues be shown in the books at its
book value the cost at which it was purchased minus depreciation paved up
to date.
57
The cost concept of accounting, deprecation calculated on the basis of
historical costs of old assets is usually lower than that of those calculated at
current values or replacement value. This results in more profits on paper
which if distributed in full, will lead to reduction of capital.
Need for valuation of fixed assets:
Valuation of fixed assets is important in order to have fair measure of
profit or loss and financial position of the concern.
Fixed assets are meant for use for many years. The value of these
assets decreases with their use or with time or for other reasons. A portion of
fixed asset reduced by use is converted into cash though charging
depreciation. For correct measurement of income proper measurement of
depreciation is essential, as depreciation constitutes a part of the total cost of
production.
Trend analysis and Ratio analysis are the techniques used in analysis
of Fixed assets management.
58
Trend Analysis:
In Financial analysis the direction of changes over a period of years is
of initial importance. Time series or trend analysis of ratios indicators the
direction of change. This kind of analysis is particularly applicable to the
items of profit and loss account. It is advisable that trends of sales and net
income may be studies in the light of two farceurs. The rate of fixed
expansion or secular trend in growth of the business and the general Price
level. It might be found in practice that a number of the business and the
general price level. It might be found in practice that a number of firms
would be shown a persistent growth over period of years. But to get a true of
growth, the sales figure should be adjusted by a suitable index of general
prices. In other words, sales figures should be deflated for rising price level.
Another method of securing trend of growth and one which can be used
instead of the adjusted sales figure or as check on them is to tabulate and
plot the output or physical volume of the sales expressed in suitable units of
measure. If the general price level is not considered while analyzing trend of
growth, it can be mislead management they may become unduly optimistic
in period of prosperity and pessimistic in duel periods.
For trend analysis the use of index numbers is generally advocated the
procedure followed is to assign the numbers 100 to times of the base year
and at calculate percentage change in each items of other years in relation to
the base year. The procedure may be called as “Fixed percentage method”.
59
LG Electronics Inc. and Subsidiaries
Income Statement:
2007-2008
2008-2009
2009-2010
2010-2011
2011-2012
Income Statement
(Rs. in
Lakhs)
(Rs. In
Lakhs)
(Rs. in
Lakhs)
(Rs. in
Lakhs)
(Rs. in
Lakhs)
Sales
134543.28
140116.22
135375.24
129553.62
142195.78
Domestic
Exports
17062.4
71294.5
19584.3
72379.8
22058
73131.7
25534.8
73943.5
28777.9
74943.9
Cost of Sales
60513.1
65982.7
70725
76108.3
80938.1
Gross Profit
22879.3
23476.4
24464.7
23370
22783.7
SG&A
20146.5
19764.3
20803.4
21074
20290.9
Operating Profit
3547.2
3887
3661.3
2296
2492.8
Non-Operating
Income
Non-Operating
Expenses
2598.9
5017.3
3574.6
4239.2
4538.7
5235.7
3239
4411.6
8224.6
4153.3
Recurring Profit
5998.7
5646.4
29684
1123.4
6564.1
Extraordinary Gains
Extraordinary
Losses
-
-
-
-
-
Income before
Income Taxes
4509.07
3991.5
2968.4
6090.47
3765.1
Tax
135.9
145.64
153.73
209.1
413.82
Net Profit
4644.97
4137.14
2814.67
6299.57
3351.28
60
LG Electronics Inc. and Subsidiaries
Consolidated Balance Sheets:
2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
Balance Sheet
(Rs. In
Lakhs)
(Rs. In
Lakhs)
(Rs. In
Lakhs)
(Rs. In
Lakhs)
(Rs. In
Lakhs)
Current Assets
53063.74
45598.02
49713.32
53951.48
63063.52
Quick Assets
Inventories
11568.5
5762.2
12484.8
4876.8
10315.6
5637.5
8831.4
4739.6
8306.6
4173.8
Fixed Assets
Investment Assets
Tangible Assets
Intangible Assets
6,07,94.08 6,25,64.02 5,89,55.39 5,69,93.08 5,71,48.37
19568.6
13543.5
1293.5
20834.5
15859.6
1423.7
21947.3
16617.3
1681
22972.3
18273.7
1984.4
31225.6
17818.6
1758.9
Total Assets
179137.63 163641.62 164867.41 167745.96 317929.03
Current Liabilities
Fixed Liabilities
2,05,36.47 2,03,50.59 2,40,99.51 2,14,80.89 2,30,72.27
Total Liabilities
2,05,36.47 2,03,50.59 2,40,99.51 2,14,80.89 2,30,72.27
Paid in Capital
Capital Surplus
Retained Earnings
Capital Adjustment
2965.4
7832.7
9765.6
2246.6
3079.5
8067.3
9945.8
2359.9
3202.1
8437.8
10057.3
2976.6
3472.7
9532.5
10590.3
2759.3
3571.1
9799
15547.2
2906.9
Total Shareholder's
Equity
18456.8
20543.5
24673.8
26354.8
31824.2
Total Liabilities and
Shareholder's Equity
54387.8
55346.9
56198.7
56801.4
6326.3
61
LG Electronics Inc. and Subsidiaries
Financial Highlights:
Financial
Highlights
Sales
Operating Profit
Net Profit
Total Assets
Total Liabilities
Total Shareholder's
Equity
ROE
EBITDA
Capex
2007-2008
2008-2009
2009-2010
(Rs. In
(Rs. In
(Rs. In
Lakhs)
Lakhs)
Lakhs)
134543.28 140116.22 135375.24
3547.2
3887
3661.3
4644.97
4137.14
2814.67
179137.63 163641.62 164867.41
2,05,36.47 2,03,50.59 2,40,99.51
2010-2011
2011-2012
(Rs. In
Lakhs)
129553.62
2296
6299.57
167745.96
2,14,80.89
(Rs. In
Lakhs)
142195.78
2492.8
3351.28
317929.03
2,30,72.27
18456.8
20543.5
24673.8
26354.8
31824.2
10.5%
1,476
1,075
8.7%
1,585
1,179
12.6%
1,685
1,291
3.5%
1,297
860
19.1%
1,349
1,060
62
BAR DIAGRAMS & CHARTS:
YEAR
INVESTMENT
TREND
PERCENTAGE
2007-2008
41,28,06,232
100
2008-2009
44,85,21,386
108.65
2009-2010
39,68,35,265
96.13
2010-2011
24,99,02,930
60.54
2011-2012
28,19,24,444
68.29
CHART:
INTERPRETATION:
From the analysis of the above table it can be observed that the
growth rate of total investment of LG ELECTRONICS industries is in
downward trend which show table LG ELECTRONICS Industries
63
investment in total investment is decreasing form time to the during the year
2007-2008 it was recorded 100%. But it is decreasing in the year 2011-2012
which shows that there is a net decrease by 68.29%. The average investment
in total assets was found to be Rs.35, 79, 98,051.4 during the review period.
During the period of 2007-2008 it is Rs. 41, 28, 06,232 and it was decrease
in the year 2011-2012 Rs. 28, 19, 24,444.
GROWTH RATE IN FIXED ASSETS:
Table: 2
YEAR
FIXED ASSETS
PERCENTAGE
2007-2008
6,07,94,08,271
100
2008-2009
6,25,64,02,873
102.91
2009-2010
5,89,55,39,377
96.97
2010-2011
5,69,39,08,565
93.74
2011-2012
5,71,48,06,436
94.00
64
Chart:
INTERPRETATION:
Growth rate in fixed assets, the examination of the above table reveals
analysis and interpretation.
1. During the year 2007-2008 the assets investment was recorded at
6,07,94,08,271 and it is decreased to Rs 5,71,48,37,436 in 2011-2012
the fixed assets investment is quite satisfactory.
2. The trend percentage in the year 2007-2008 is taken as the base year
as 100% and it was decreased to 94.00% in the year 2011-2012.
3. The average growth rate in Fixed assets Rs.5, 92, 90,306 in 5 years.
65
RATIO ANALYSIS:
Ratio analysis is a powerful tool of financial analysis. A ratio is
defined as “The indicated quotient of two mathematical expression” and as
“The relationship between for evaluating the financial position and
performance of firm. The absolute accounting figure reported in financial
statement do not private a meaningful understanding of the performance and
financial position of a firm. An accounting figure conveys meaning when it
is related to some other relevant information.
Ratios help to summarize large quantities of financial data and to
make qualitative judgments about the firm’s financial performance.
66
1. Fixed Assets to Net Worth Ratio:
This ratio establishes the relationship between Fixed Assets and net worth.
Net Worth = Share Capital + Reserves & Surplus + Retained Earnings.
Fixed Assets
Fixed assets to Net worth Ratio = ------------------ X 100
Net Worth
This ratio of “Fixed Assets to Net Worth” indicates the extent to
which shareholder funds are sunk into the fixed assets.
Generally, the purchase of fixed assets should be financed by
shareholders, equity including reserves & surpluses and retained earnings. If
the ratio is less than 100 % it implies that owners funds are more than total
fixed assets and a part of the working is provided by the shareholders. When
the ratio is more 100% it implies that owner’s funds are not sufficient to
finance the fixed assets and the finance has to depend upon outsiders to
fiancé the fixed assets. There is no “rule of thumb” to interpret this ratio but
60% to 65 % is considered to be satisfactory ratio in case of industrial
undertaking.
67
2. Fixed Assets Ratio:
This ratio explains whether the firm has raised adequate long term
funds to meet its fixed assets requirements and is calculated as under.
Fixed assets (after depreciation)
------------------------------------------Capital Employed
This ratio gives an idea as to what part of the capital employed has been
used in purchasing the fixed assets for the concern. If the ratio is less than
one it is good for the concern.
3. Fixed assets as a percentage to current Liabilities:
This ratio measures the relationship between fixed assets and the
funded debt and is a very useful so the long term erection. The ratio can be
calculated as below.
Fixed Assets
Fixed assets as a percentage to current Liabilities = ---------------------------Current
Liabilities
4. Total investment Turnover Ratio:
This ratio is calculated by dividing the net sales by the value of total
assets that is (Net sales / Total Investment) or (sales / Total Investment.) A
high ratio is an indicator of over trading of total assets while a low ratio
reveals idle capacity. The traditional standard for the ratio is two times.
68
5. Fixed Assets Turnover Ratio.
This ratio expresses the number of times fixed assets are being turnedover is a state period. It is calculated as under.
Sales
------------------------------------------------------Net fixed Assets (After depreciation)
This ratio shows low well the fixed assets are being uses in the
business. The ratio is important in case of manufacturing concern because
sales are produced not only by use of Current Assets but also by amount
invested in Fixed Assets the higher ratio, the better is the performance. On
the other hand a low ratio indicated that fixed assets are not being efficiently
utilized.
6. Gross capital Employed:
The term “Gross Capital Employed” usually comprises the total
assets, fixed as well as current assets used in a business.
Gross Capital Employed = fixed Assets + Current Assets.
7. Return on Fixed Assets:
Profit after Tax
--------------------- X 100
Fixed assets
This ratio is calculated to measure the profit after tax against the
amount invested in total assets to ascertain whether assets are being utilized
properly or not. The higher the ratio the better it is for the concern.
69
1. Fixed Assets to Net Worth:
The ratio indicates the extent to where shareholders funds are struck
in the fixed assets. The formula to compute fixed assets to net worth is
calculated as follows. Fixed assets (after depreciation) / Net Worth.
Net Worth = share capital + reserve & Surplus + Retained earnings.
If the ratio is less than 100 % it implies that owner funds are more
than the fixed assets and a part of working capital is provided by the share
holders and vice – versa.
Fixed assets
Fixed assets to net worth ratio = ------------------------------------- X 100
Net worth
70
Table:
NET WORTH
YEAR
GROSS FIXED
ASSETS
RATIO IN
2007-2008
3,64,91,77,075
6,07,94,08,271
166.59
2008-2009
3,38,81,85,855
6,25,64,02,879
184.65
2009-2010
3,38,78,40,215
5,89,55,39,377
174.02
2010-2011
3,48,48,27,422
5,69,93,08,565
163.54
2011-2012
3,7714,58,784
5,71,48,37,436
151.52
Chart :
INTERPRETATION:
A) The Gross fixed to Net worth Ratio is fluctuating from year to year. In
the year 2007-2008 the gross fixed assets to net worth ratio is 166.59,
in the year 2007-2012 the fixed assets to net worth to acquire the ratio
is 151052.
71
B) The average net worth to fixed assets ratio is Rs,3,53,62,97,870 or
fixed assets average ratio is Rs. 5,92,90,99,306 the average percentage
of fixed assets to net worth is 168.06.
C) The highest ratio recorded in 2008-2009 at 184.65 the lowest ratio is
recorded at 151.52 in the year 2011-2012.
2. Fixed Assets as a percentage to long term Liabilities:
Fixed Assets ratio a various of fixed assets to net worth is a ratio of
fixed assets to long term funds which is calculated as
Fixed assets (after depreciation)
-------------------------------------------------------- X 100
Capital Employed (Long Term Funds)
72
TABLE:
YEAR
FIXED ASSETS
LONG TERM
PERCENTAGE
FUNDS
2007-2008
6,07,94,08,271
3,64,91,77,075
166.5
2008-2009
6,25,64,02,879
3,38,81,85,855
184.6
2009-2010
5,89,55,39,377
3,38,78,40,215
174.0
2010-2011
5,69,93,08,565
3,48,48,27,422
163.5
2011-2012
5,71,48,37,436
3,7714,58,784
152.7
CHART:
INTERPRETATION:
A) The fixed assets as a % of long term liabilities the ratio is fluctuating
form year to year. The fixed asset as a percentage of long term
liabilities is recorded at 166.5% in the year 2011-2012.
B) The highest ratio is recorded at 184.6% in the 2008-2009 the lowest
ratio is 152.7% in 2011-2012.
73
3. FIXED ASSETS AS A PERCENTAGE TO CURRENT
LIABILITIES:
Fixed Assets
Fixed Assets as a percentage to Current Liabilities = ----------------------------Current Liabilities
TABLE:
PERCENTAGE
6,07,94,08,271
CURRENT
LIABILITIES
2,05,36,47,518
2008-2009
6,25,64,02,879
2,03,50,59,123
3.07
2009-2010
5,89,55,39,377
2,40,99,51,568
2.44
2010-2011
5,69,93,08,565
2,14,80,89,665
2.65
2011-2012
5,71,48,37,436
2,30,72,27,432
2.47
YEAR
FIXED ASSETS
2007-2008
CHART:
74
2.96
INTERPRETATION:
A) The ratio was fluctuating trend percentage in review period.
B) From the above table it is observed that the ratio was recorded at 2.96 in
the 2007-2008 and is gradually changing to 2.47 in 2011-2012 which
indicates that the current funds are used in the fixed asset which is quite
satitsfactory.
C) The average ratio was recorded at 2.71 during the review period of time.
D) The highest ratio was recorded at 3.07 which is higher than the average
ratio.
E) The lowest ratio was recorded at 2.44 which is less than the average ratio.
75
4. TOTAL INVESTMENT TURNOVER RATIO:
The total invest turnover ratio can be calculated by the formula as given
under.
Sales
Total investment turnover ratio = --------------------------- X 100
Total investment
TABLE:
YEAR
SALES (IN LACKS)
TOTAL
RATIOS
INVESTMENT
2007-2008
134543.28
4128.06
32.5
2008-2009
140116.22
4485.21
31.2
2009-2010
135375.24
3968.35
34.1
2010-2011
129553.62
2499.02
51.84
2011-2012
142195.78
2819.24
50.43
CHART :
76
INTERPRETATION:
A) The ratio was in increasing trend.
B) During the year 2007-2008 the ratio was recorded at 32.5 and in the
2011-2012 the ratio was increasing to 53.43.
C) The highest ratio was recorded at 51.84 in the year 2010-2011 which
is more than the average ratio.
D) The lowest ratio was 32.5 which is lesser than the average ratio.
5. FIXED ASSETS TUROVER RATIO:
The fixed assets turnover ratio is the relationship between the sales or
cost o f goods / capital assets employed in a business.
Sales
Fixed assets turnover ratio = --------------------------------- X 100
Total fixed Assets
TABLE:
YEAR
SALES (IN LACKS)
TOTAL FIXED
PERCENTAGE
ASSETS
2007-2008
134543.28
60794.08
2.21
2008-2009
140116.22
62564.02
2.23
2009-2010
135375.24
58955.39
2.29
2010-2011
129553.62
56993.08
2.27
2011-2012
142195.78
57148.37
2.40
77
CHART:
INTERPRETATION:
A) The fixed assets turnover ratio is fluctuating trend during the review
period of time. During the year 2007-2008 the ratio was recorded as
2.21 % and in the 2011-2012 the ratio was increased to 2.40 %.
B) Average ratio was observed 2.28 % during the review period of time.
C) The highest ratio was recorded at 2.40 % in 2011-2012 which is more
than the average.
D) The lowest ratio was 2.21 % in the 2007-2008 which is less than the
average
78
6. FIXED ASSETS AS A PERCENTAGE TO TOTAL ASSETS:
Fixed assets
Fixed assets a % Total Assets = -------------------------------- X 100.
Total Asset
TABLE:
TOTAL ASSETS PERCENTAGE
YEAR
FIXED ASSETS
2007-2008
60794.08
117985.89
51.5
2008-2009
62564.03
112647.26
55.5
2009-2010
58955.39
112637.07
52.3
2010-2011
56993.08
113443.60
50.0
2011-2012
57148.37
123031.14
46.0
CHART:
79
INTERPRETATION:
A) Fixed assets to total assets is fluctuating trend during the review
period of time.
B) During the year 2007-2008 the ratio was recorded at 51.5 % and the
year 2011-2012 the ratio decreased to 46 %.
C) Average ratio was observed at 51.06 % during the review period of
time.
D) The highest ratio was observed at 55.5 % in the year 2007-2008 which
is more than the average. The lowest ratio was recorded at 46% in
2011-2012 which is less than average ratio.
7. GROSS CAPITAL EMPLOYED:
Gross capital employed = fixed assets + Current Assets.
TABLE:
FIXED SALES
CURRENT
GROSS CAPITAL
(IN LACKS)
ASSETS
EMPLOYED (IN LACKS)
2007-2008
60794.08
53063.74
113857.82
2008-2009
62564.03
45598.02
108162.05
2009-2010
58955.39
49713.32
108668.71
2010-2011
56993.08
53951.48
110944.56
2011-2012
57148.37
63063.52
120211.89
YEAR
80
PROFIT AFTER TAX:
TABLE:
YEAR
PROFIT AFTER TAX (IN LACKS)
2007-2008
4644.97
2008-2009
4137.14
2009-2010
2814.67
2010-2011
6299.57
2011-2012
3351.28
INTERPRETATION:
From
the above profits of LG ELECTRONICS Industries is in
increasing which is good for the company. In the year 2011-12 the PAT is
3351.28 lacks and then it is decreasing.
In the year 2009-10 the pat is the lowest and in 2010-11 it observed
the highest PAT is 62999.57 over the years.
81
8. RETURN ON GROSS CAPITAL EMPLOYED:
The profit for the purpose of calculation on capital employed should
be computed according to the concept of capital employed & used. The
profits taken must be the profit earned on the capital employed in the
business.
Profit After Tax
Return on Gross Employed = ------------------------------------ X 100
Gross Capital Employed
TABLE:
YEAR
PROFIT AFTER
GROSS CAPITAL
TAX (LACKS)
EMPLOYED
2007-2008
4644.97
113857.82
4.0
2008-2009
4137.14
108668.71
3.8
2009-2010
2814.67
108668.05
2.5
2010-2011
6299.57
110944.56
5.7
2011-2012
3351.28
120211.89
2.8
CHART:
82
PERCENTAGE
INTERPRETATION:
 Return on Gross Capital Employ6ed ratio is fluctuating trend during the
review period of time
 During the year 2007-08the ratio was recorded at 4.0 % and in the year
2011-12 the ratio was increased to 2.8 % and average ratio is 3.76 %.
 The highest ratio was recorded at 5.7 % in the year 2010-11 which is
more than average ratio.
 The lowest ratio was recorded at 2.5 % in the year 2009-10 which is the
less than the average ratio
83
9. RETURN ON FIXED ASSETS:
The return on fixed assets can be calculated as under.
PAT
Return on Fixed Assets = ------------------------- X 100
Fixed Assets
TABLE:
YEAR
PROFIT AFTER
FIXED ASSETS
PERCENTAGE
TAX (LACKS)
2007-2008
4644.97
60794.08
7.6
2008-2009
4137.14
62564.03
6.6
2009-2010
2814.67
58955.39
4.7
2010-2011
6299.57
56993.08
11.05
2011-2012
3351.28
57148.37
5.86
CHART:
84
INTERPRETATION:
 Return on fixed assets ratio is decreasing.
 During the year 2007-08the ratio recorded as 7.6 % & in the year
2011-
12 the ratio decreased 5.86 %.
 The average ratio is 7.14 %
 The highest ratio is recorded at 11.05 % in the year 2009-10, the lowest
ratio is 4.7 % in the year 2009-10
85
 Conclusions
 Suggestions
86
FINDINGS:
 Company should concentrate on long term assets are utilized for
working capital problem will not arise in future.
 Company should concentrate on inventory it can improves the
inventory turn over ratio
 Growth rate of investment trend percentage, growth rate in fixed
assets
 Growth rate in fixed assets during the years 2008-09 increased to
6,25,64,02,873.
 Fixed asset to net worth is good position in LG Electronics.
 Fixed assets to long term liability highest ratio is regarded 184.6% in
the 2007-08lowest ratio is 152.7% in 2010-11.
 Total investment turn over ratio was highest regarded 51.84% in the
year 2010-11.Which is more than average ratio
 Fixed assets turn over ratio was increased the every year. Highest ratio
was regarded at 2.40% in 2011-12.
 Return on grass capital employee highest ratio was regarded 5.7% in
the year 2010-11.
87
SUGGESTIONS:
 Regarding the fixed assets to total assets it been observed that there
was decreased form 31.5% to 46 % as a results it is said to be that the
ratio is quite satisfactory.
 Regarding the profit and gross capital employed ratio it can be
observed that it as been increasing over the year form 113857.82 to
120211.89. As a result of the above it can be said that the ratio is
steadily increasing.
 From the above study it can be said that the LG ELECTRONICS
industries financial position on fixed assets is quite satisfactory.
 Company should maintain adequate ratios
 It should try to utilize the fixed assets to maintain maximum profit.
88
CONCLUSIONS:
Regarding the profit and gross capital employed ratio it can be observed that it has
been increasing over the year i.e., from 113857.82 to 020211.89. As a result of the
above it can be said that the ratio is steadily increasing.
From the above study it can be said that the LG ELECTRONICS Financial
position on Fixed Assets in quite satisfactory.
The company should focus on the current where the fixed assets to the total assets
have decreased from 31.50% to 46% in order to meet current obligations of the
business.
The Company should focus on the current where the fixed assets to the total assets
have decreased from 31.50% to 46% in order to meet current obligations of the
business.
89
APPENDIX
 Bibiliography
90
BIBLIOGRAPHY
Authors name
:
Title of the Book, Publisher & Edition
L.M Panday
:
Financial management vikas publisher,
Prasanna Chandra
:
Financial Management, Tata McGrawhile
R.K Sharma
:
Management Accounting Kalyani Polishers.
S.P Jain & K.L Narang :
Financial Accounting & Analysis Kalyani
Publisher
Websites:
WWW.LGELECTRONICS.COM
News paper
WWW.GOOGLE.COM
Business line,
India Today.
:
91