Ac Synchronous Machine And Its Application Engineering Essay

Ac Synchronous Machine And Its Application Engineering Essay Synchronous machines are principally used as alternating current (AC) generators. They supply the electric power used by all sectors of modern societies: industrial, commercial, agricultural, and domestic. Synchronous machines are sometimes used as constant-speed motors, or as compensators for reactive power control in large power systems. This article explains the constructional features and operating principles of the synchronous machine. Generator performance for stand-alone and grid applications is discussed. The effects of load and field excitation on the synchronous motor are investigated. The hunting behavior of a synchronous machine is studied, and a review of various excitation systems provided. INTRODUCTION: Synchronous motor A synchronous electric motor is an AC motor distinguished by a rotor spinning with coils passing magnets at the same rate as the alternating current and resulting rotating magnetic field which drives it. Another way of saying this is that it has zero slip under usual operating conditions. Contrast this with an induction motor, which must slip in order to produce torque. They operate synchronously with line frequency. As with squirrel-cage induction motors, speed is determined by the number of pairs of poles and the line frequency. Synchronous motors are available in sub-fractional self-excited sizes to high-horsepower direct-current excited industrial sizes. In the fractional horsepower range, most synchronous motors are used where precise constant speed is required. In high-horsepower industrial sizes, the synchronous motor provides two important functions. First, it is a highly efficient means of converting ac energy to work. Second, it can operate at leading or unity power factor and thereby provide power-factor correction. There are two major types of synchronous motors: non-excited and direct-current excited. Non-excited motors are manufactured in reluctance and hysteresis designs, these motors employ a self-starting circuit and require no external excitation supply. Reluctance designs have ratings that range from sub-fractional to about 30  hp. Sub-fractional horsepower motors have low torque, and are generally used for instrumentation applications. Moderate torque, integral horsepower motors use squirrel- cage construction with toothed rotors. When used with an adjustable frequency power supply, all motors in the drive system can be controlled at exactly the same speed. The power supply frequency determines motor operating speed. Hysteresis motors are manufactured in sub-fractional horsepower ratings, primarily as servomotors and timing motors. More expensive than the reluctance type, hysteresis motors are used where precise constant speed is required. D C-excited motors made in sizes larger than 1  hp, these motors require direct current supplied through slip rings for excitation. The direct current can be supplied from a separate source or from a dc generator directly connected to the motor shaft. Slip rings and brushes are used to conduct current to the rotor. The rotor poles connect to each other and move at the same speed hence the name synchronous motor. Synchronous motors fall under the category of synchronous machines which also includes the alternator (synchronous generator). These machines are commonly used in analog electric clocks, timers and other devices where correct time is required. The speed of a synchronous motor is determined by the following formula: where v is the speed of the rotor (in rpm), f is the frequency of the AC supply (in Hz) and n is the number of magnetic poles. Figure: Two pole Two pole: P.T.O Main features of synchronous machine: A synchronous machine is an ac machine whose speed under steady-state conditions is proportional to the frequency of the current in its armature. Armature winding: on the stator, alternating current. Field winding: on the rotor, dc power supplied to built a rotating magnetic field. Cylindrical rotor: for two- and four-pole turbine generators. Salient-pole rotor: for multi-polar, slow-speed, hydroelectric generators and for most synchronous motors. The rotor, along with the magnetic field created by the dc field current on the rotor, rotates at the same speed as, or in  synchronism with, the rotating magnetic field produced by the armature currents, and a steady torque results. Synchronous motors have the following characteristics: A three-phase stator similar to that of an induction motor. Medium voltage stators are often used. A wound rotor (rotating field) which has the same number of poles as the stator, and is supplied by an external source of direct current (DC). Both brush-type and brushless exciters are used to supply the DC field current to the rotor. The rotor current establishes a north/south magnetic pole relationship in the rotor poles enabling the rotor to lock-in-step with the rotating stator flux. Starts as an induction motor. The synchronous motor rotor also has a squirrel-cage winding, known as an Amortisseur winding, which produces torque for motor starting. Synchronous motors will run at synchronous speed in accordance with the formula: 120 x Frequency Synchronous RPM = Number of Poles Example: the speed of a 24 -Pole Synchronous Motor operating at 60 Hz would be: 120 x 60 / 24 = 7200 / 24 = 300 RPM Synchronous Motor Operation: The squirrel-cage Amortisseur winding in the rotor produces Starting Torque and Accelerating Torque to bring the synchronous motor up to speed. When the motor speed reaches approximately 97% of nameplate RPM, the DC field current is applied to the rotor producing Pull-in Torque and the rotor will pull-in -step and synchronize with the rotating flux field in the stator. The motor will run at synchronous speed and produce Synchronous Torque. After synchronization, the Pull-out Torque cannot be exceeded or the motor will pull out-of-step. Occasionally, if the overload is momentary, the motor will slip-a-pole and resynchronize. Pull-out protection must be provided otherwise the motor will run as an induction motor drawing high current with the possibility of severe motor damage. Advantages of Synchronous Motors: The initial cost of a synchronous motor is more than that of a conventional AC induction motor due to the expense of the wound rotor and synchronizing circuitry. These initial costs are often off-set by: Precise speed regulation makes the synchronous motor an ideal choice for certain industrial processes and as a prime mover for generators. Synchronous motors have speed / torque characteristics which are ideally suited for direct drive of large horsepower, low-rpm loads such as reciprocating compressors. Synchronous motors operate at an improved power factor, thereby improving overall system power factor and eliminating or reducing utility power factor penalties. An improved power factor also reduces the system voltage drop and the voltage drop at the motor terminals. Synchronous generator: Speed of rotation of synchronous generator: Electric power generated at 50 or 60 Hz, so rotor must turn at fixed speed depending on number of poles on machine To generate 60 Hz in 2 pole machine, rotor must turn at 3600 r/min, and to generate 50 Hz in 4 pole machine, rotor must turn at 1500 r/min Internal generated voltage of ac generated machine. magnitude of induced voltage in one phase determined in last section: EA=à ¢Ã‹â€ Ã… ¡2 à Ã¢â€š ¬ NC à Ã¢â‚¬   f Parts of ac synchronous machine: A synchronous motor is composed of the following parts: The stator is the outer shell of the motor, which carries the armature winding. This winding is spatially distributed for poly-phase AC current. This armature creates a rotating magnetic field inside the motor. The rotor is the rotating portion of the motor. it carries field winding, which may be supplied by a DC source. On excitation, this field winding behaves as a permanent magnet. The slip rings in the rotor, to supply the DC to the field winding, in the case of DC excited types. Operation: The operation of a synchronous motor is simple to imagine. The armature winding, when excited by a poly-phase (usually 3-phase) winding, creates a rotating magnetic field inside the motor. The field winding, which acts as a permanent magnet, simply locks in with the rotating magnetic field and rotates along with it. During operation, as the field locks in with the rotating magnetic field, the motor is said to be in synchronization. Once the motor is in operation, the speed of the motor is dependent only on the supply frequency. When the motor load is increased beyond the break down load, the motor falls out of synchronization i.e., the applied load is large enough to pull out the field winding from following the rotating magnetic field. The motor immediately stalls after it falls out of synchronization. Starting method of synchronous motor: Synchronous motors are not self-starting motors. This property is due to the inertia of the rotor. When the power supply is switched on, the armature winding and field windings are excited. Instantaneously, the armature winding creates a rotating magnetic field, which revolves at the designated motor speed. The rotor, due to inertia, will not follow the revolving magnetic field. In practice, the rotor should be rotated by some other means near to the motors synchronous speed to overcome the inertia. Once the rotor nears the synchronous speed, the field winding is excited, and the motor pulls into synchronization. The following techniques are employed to start a synchronous motor: A separate motor (called pony motor) is used to drive the rotor before it locks in into synchronization. The field winding is shunted or induction motor like arrangements are made so that the synchronous motor starts as an induction motor and locks in to synchronization once it reaches speeds near its synchronous speed. Reducing the input electrical frequency to get the motor starting slowly, Variable-frequency drives can be used here which have Rectifier-Inverter circuits or Cycloconverter circuits. Special Properties: Synchronous motors show some interesting properties, which finds applications in power factor correction. The synchronous motor can be run at lagging, unity or leading power factor. The control is with the field excitation, as described below: When the field excitation voltage is decreased, the motor runs in lagging power factor. The power factor by which the motor lags varies directly with the drop in excitation voltage. This condition is called under-excitation. When the field excitation voltage is made equal to the rated voltage, the motor runs at unity power factor. When the field excitation voltage is increased above the rated voltage, the motor runs at leading power factor. And the power factor by which the motor leads varies directly with the increase in field excitation voltage. This condition is called over-excitation. The most basic property of synchro motor is that it can be use both as a capacitor or inductor. Hence in turn it improves the power factor of system. The leading power factor operation of synchronous motor finds application in power factor correction. Normally, all the loads connected to the power supply grid run in lagging power factor, which increases reactive power consumption in the grid, thus contributing to additional losses. In such cases, a synchronous motor with no load is connected to the grid and is run over-excited, so that the leading power factor created by synchronous motor compensates the existing lagging power factor in the grid and the overall power factor is brought close to 1 (unity power factor). If unity power factor is maintained in a grid, reactive power losses diminish to zero, increasing the efficiency of the grid. This operation of synchronous motor in over-excited mode to correct the power factor is sometimes called as Synchronous condenser. Uses: Synchronous motors find applications in all industrial applications where constant speed is necessary. Improving the power factor as Synchronous condensers. Electrical power plants almost always use synchronous generators because it is important to keep the frequency constant at which the generator is connected. Low power applications include positioning machines, where high precision is required, and robot actuators. Mains synchronous motors are used for electric clocks. Record player turntables. Advantages: Synchronous motors have the following advantages over non-synchronous motors: Speed is independent of the load, provided an adequate field current is applied. Accurate control in speed and position using open loop controls, e.g. stepper motors. They will hold their position when a DC current is applied to both the stator and the rotor windings. Their power factor can be adjusted to unity by using a proper field current relative to the load. Also, a capacitive power factor, (current phase leads voltage phase), can be obtained by increasing this current slightly, which can help achieve a better power factor correction for the whole installation. Their construction allows for increased electrical efficiency when a low speed is required (as in ball mills and similar apparatus). They run either at the synchronous speed else no speed is there. Conclusion: With the help of the above paper now we can understand ac synchronous machine, its working, method, uses, advantages, disadvantages, application etc. We can also explain what kind of further enhancements are going to be, on the field of ac synchronous machine. Although important information is been provided about ac synchronous motors, ac synchronous generator etc. And even on the combination of both of them.

Physics of Robots :: physics robot robots

Definition of a Robot A Robot is a reprogramable, multi-functional manipulator designed to move material, parts, tools, or a specialized devices through variable programmed motions for the performance of variety of tasks. In order to make a robot do anything it has to have a program or a set of programs that tell it to do certain tasks. Robots come in all different shapes and sizes. Some robots have been used to try and look and behave physically like a human being. Other robots are used for home entertainments. For example there is a robotic dog that now for sale that can behave and act like a dog. The nice thing about having a robotic dog is a person could shut it off when they get tired of it. Different Kinds of Robots Some robots have arms, legs, heads, wheels, and etc. There are robots that are used in big industrial factories. General Electric uses robotic arms to weld. The robotic arms can weld with such great precision that it looks perfect. There are also robots that have been used in movies such as Mighty Joe Young, Star Wars, and Jurrasic Park. Then there are also miniture robots that are designed like small insects such as horseflys and ladybugs. You can read about the insect robots in the National Geographics Magazine. The Structure of the Robotic Hand A robotic hand can be designed in different ways. The most important is that there is a wrist, fingers, and a way to move an object. The wrist will give the twisting motion. The fingers will be able to grab an object. Some people use grippers. The grippers work like sicorrs. There are also devices that act like sensory nerves. These devices are either light sensitive or switch activated. That way a robot would be able to tell where a light source is coming from or when it was running into a wall. The hardest part about making a robotic hand do something is to make the open and closing motion with the fingers. Humans have nerves and muscels that alow them to retract and contract their fingers. With a robot cables, motors, or pneumatic hydralics can be used. Strong cables can be used to give easy and quiet movements. Motors used with different gear ratios can make the fingers stronger when gripping or faster. By determining how much work would have to be done on the gear to make it spi n would make the gear lift an object with force.

Credit Card Debt

Many people use credit cards and most of the time the credit card is not used in the right moment. I believe that credit cards are not beneficial because they aren't used for the right things. It would be very different if they were used correctly, credit cards are to be used it case of an emergency,meaning not to be used when you are going to the 7-eleven to buy a bag of chips an a soda. It has shown that more than 75% percent of americans have been bankrupt or on the verge of it.There are more than 60% of americans that have credit card debt because they are using them for the wrong things. Facts have proven that the total U. S. credit card debt, is $793. 1 Billion. and Average credit card debt per household is 15,799. Most people do not understand that when you have a credit card it comes with alot of responsibility and i say that because there are more than 10% of americans have been victims of credit card theft it may not seem like alot but credit card theft is a very serious th ing.Most complaints come from adults within the ages 40-59, Nevada, Colorado, and New Hampshire have the highest rate of credit card fraud. Having a credit card is not what people think it is; people think that if i have a credit card then i do not have to have money with me, and its just free money but its very dangerous to have a credit card. Having a credit card can lead to bankrupt and going bankrupt can make you lose everything such as your car, house, and etc. , or it could be worse an you could be placed in jail for a long time.Just because you had a credit card and used it for the wrong thing and spent way to much money†¦ A credit card is nothing but trouble each and every type of way. The credit card companies and banks are getting richer, while most Americans are getting more in debt. The economy is in trouble, therefore, more and more people are relying on credit cards. In today's society we are constantly trying to get out of debt, but in the process of trying to ge t ourselves out of debt, we create more debt.One of the major problems that most of us are dealing with is credit card debt. Most credit card companies are not looking out for your best interest. They are constantly raising interest rates. Minimum payments are just enough to cover the finance charges. Most Americans should not use credit cards for the following reasons: it will create bad spending habits; you will incur more debt affecting credit score rating; and possibly make you a victim of identity theft.In my opinion, a credit card should be used for purchases that you are able to pay off in full upon receiving your statement, but most of us don't. Most people lack self control and tend to misuse the credit card. Credit cards should mainly be used for emergencies, but we tend to use them for everyday purchases such as: food, gas, clothing, etc. Some people are living in a borrowed lifestyle, because they purchase things they can't afford. People will spend more on a purchasing using a credit card than they would with cash. People that use credit cards tend to spend 12%-18% more on transactions than those who use cash (faithfitnessfinance. com). † For example, if you are going to pay with a credit card in a fast food establishment, it is easier to get the large drink instead of the medium drink. When the statement arrives, most people will make the minimum payment on his/her credit card. The minimum payment only covers the finance charges, which will increase the amount of time it will take to pay the debt off. â€Å"It will also increase the amount of interest you end up paying

The Ratio Is An Arithmetical Expression Finance Essay - Free Essay Example

Sample details Pages: 12 Words: 3508 Downloads: 9 Date added: 2017/06/26 Category Finance Essay Type Compare and contrast essay Did you like this example? The ratio is an arithmetical expression i.e. relationship of one number to another. It may be defined as an indicated quotient of the mathematical expression. Don’t waste time! Our writers will create an original "The Ratio Is An Arithmetical Expression Finance Essay" essay for you Create order It is expressed as a proportion or a fraction or in percentage or in terms of number of times. A financial ratio is the relationship between two accounting figures expressed mathematically. The financial statements, incorporating the profit and loss account statement, the balance sheet, and the cash flow statement and all of the associated notes, contain a vast amount of information. The role of ratios is to distil this information into a more usable form for the purpose of analysis. Ratios provide clues to the financial position of a concern. These are the indicators of financial strength, soundness, position or weakness of an enterprise. One can draw conclusions about the financial position of a concern with the help of accounting ratios. Liquidity Ratios The term liquidity refers to the ability of the company to meet its current liabilities. Liquidity ratios assess capacity of the firm to repay its short term liabilities. Thus, liquidity ratios measure the firms ability to fulfil short term commitments out of its liquid assets. The important liquidity ratios are (i) Current ratio (ii) Quick ratio Current ratio Current ratio is a ratio between current assets and current liabilities of a firm for a particular period. This ratio establishes a relationship between current assets and current liabilities. The objective of computing this ratio is to measure the ability of the firm to meet its short term liability. It compares the current assets and current liabilities of the firm. This ratio is calculated as under: Current ratio = Current Assets Current liabilities Current Assets are those assets which can be converted into cash within a short period i.e. not exceeding one year. It includes the following: Cash in hand, Cash at Bank, Bill receivables, Short term investment, Sundry debtors, Stock, Prepaid expenses Current liabilities are those liabilities which are expected to be paid within a year. It includes the following: Bill payables, Sundry creditors, Bank overdraft, Provision for tax, outstanding expenses. Significance It indicates the amount of current assets available for repayment of current liabilities. Higher the ratio, the greater is the short term solvency of a firm and vice a versa. However, a very high ratio or very low ratio is a matter of concern. If the ratio is very high it means the current assets are lying idle. Very low ratio means the short term solvency of the firm is not good. Thus, the ideal current ratio of a company is 2: 1 i.e. to repay current liabilities; there should be twice current assets. Quick ratio Quick ratio is also known as Acid test or Liquid ratio. It is another ratio to test the liability of the concern. This ratio establishes a relationship between quick assets and current liabilities. This ratio measures the ability of the firm to pay its current liabilities. The main purpose of this ratio is to measure the ability of the firm to pay its current liabilities. For the purpose of calculating this ratio, stock and prepaid expenses are not taken into account as these may not be converted into cash in a very short period. This ratio is calculated as under: Liquid ratio = Liquid or quick assets Current liabilities Where, liquid assets = current assets (stock + prepaid expenses) Significance Quick ratio is a measure of the instant debt paying capacity of the business enterprise. It is a measure of the extent to which liquid resources are immediately available to meet current obligations. A quick ratio of 1: 1 is considered good/favourable for a company. ACTIVITY RATIO Activity ratios measure the efficiency or effectiveness with which a firm manages its resources. These ratios are also called turnover ratios because they indicate the speed at which assets are converted or turned over in sales. These ratios are expressed as times and should always be more than one. Some of the important activity ratios are : (i) Stock turnover ratio (ii) Debtors turnover ratio (iii) Creditors turnover ratio (iv)Working capital turnover ratio Stock turnover ratio Stock turnover ratio is a ratio between cost of goods sold and the average stock or inventory. Every firm has to maintain a certain level of inventory of finished goods. But the level of inventory should neither be too high nor too low. It evaluates the efficiency with which a firm is able to manage its inventory. This ratio establishes relationship between cost of goods sold and average stock. Stock Turnover Ratio =Cost of goods sold = Sales Gross Profit Average stock = Opening stock + Closing stock 2 (i) If cost of goods sold is not given, the ratio is calculated from the sales. (ii) If only closing stock is given, then that may be treated as average stock. Inventory/stock conversion period It may also be of interest to see average time taken for clearing the stocks. This can be possible by calculating inventory conversion period. This period is calculated by dividing the number of days by inventory turnover. Inventory conversion period = Days in a year I nventory turnover ratio (times) Significance The ratio signifies the number of times on an average the inventory or stock is disposed of during the period. The high ratio indicates efficiency and the low ratio indicates inefficiency of stock management. Debtors Turnover ratio This ratio establishes a relationship between net credit sales and average account receivables i.e. average trade debtors and bill receivables. The objective of computing this ratio is to determine the efficiency with which the trade debtors are managed. This ratio is also known as Ratio of Net Sales to average receivables. It is calculated as under Debtors Turnover Ratio = Net credit annual sales Average debtors In case, figure of net credit sale is not available then it is calculated as if sales are credit sales: Average debtors = Opening Debtors + Closing Debtors 2 Note: If opening debtors are not available then closing debtors and bills receivable are taken as average debtors. Debt collection period This period refers to an average period for which the credit sales remain unpaid and measures the quality of debtors. Quality of debtors means payment made by debtors within the permissible credit period. It indicates the rapidity at which the money is collected from debtors. This period may be calculated as under : Debt collection period = Average Trade Debtors Average Net credit sales period Significance Debtors turnover ratio is an indication of the speed with which a company collects its debts. The higher the ratio, the better it is because it indicates that debts are being collected quickly. In general, a high ratio indicates the shorter collection period which implies prompt payment by debtor and a low ratio indicates a longer collection period which implies delayed payment for debtors. Creditors Turnover Ratio It is a ratio between net credit purchases and average account payables (i.e creditors and Bill payables). In the course of business operations, a firm has to make credit purchases. Thus a supplier of goods will be interested in finding out how much time the firm is likely to take in repaying the trade creditors. This ratio helps in finding out the exact time a firm is likely to take in repaying to its trade creditors. This ratio establishes a relationship between credit purchases and average trade creditors and bill payables and is calculated as under Creditors turnover ratio = Net credit purchases Average trade creditors Average creditors = Creditors in the beginning + Creditors at the end 2 Significance Creditors turnover ratio helps in judging the efficiency in getting the benefit of credit purchases offered by suppliers of goods. A high ratio indicates the shorter payment period and a low ratio indicates a longer payment period. Working Capital Turnover Ratio Working capital of a concern is directly related to sales. The current assets like debtors, bill receivables, cash, stock etc., change with the increase or decrease in sales. Working capital = Current Assets Current Liabilities Working capital turnover ratio indicates the speed at which the working capital is utilised for business operations. It is the velocity of working capital ratio that indicates the number of times the working capital is turned over in the course of a year. This ratio measures the efficiency at which the working capital is being used by a firm. A higher ratio indicates efficient utilisation of working capital and a low ratio indicates the working capital is not properly utilised. This ratio can be calculated as Working Capital Turnover Ratio = Cost of sales working capital SOLVENCY RATIOS The term solvency refers to the ability of a concern to meet its long term obligations. The long-term liability of a firm is towards debenture holders, Financial institutions providing medium and long term loans and other creditors selling goods on credit. These ratios indicate firms ability to meet the fixed interest and its costs and repayment schedules associated with its long term borrowings. The following ratios serve the purpose of determining the solvency of the business firm. Debt equity ratio Proprietary ratio Debt-equity ratio It is also otherwise known as external to internal equity ratio. It is calculated to know the relative claims of outsiders and the owners against the firms assets. This ratio establishes the relationship between the outsiders funds and the shareholders fund. Thus, Debt-equity ratio = Outsiders funds Share holders funds The two basic components of the ratio are outsiders funds and shareholders funds. The outsiders funds include all debts/liabilities to outsiders i.e. debentures, long term loans from financial institutions, etc. Shareholders funds mean preference share capital, equity share capital, reserves and surplus and fictitious assets like preliminary expenses. This ratio indicates the proportion between shareholders funds and the long-term borrowed funds. In India, this ratio may be taken as acceptable if it is 2: 1. If the debt-equity ratio is more than that, it shows a rather risky financial position from the long term point of view. Significance The purpose of debt equity ratio is to derive an idea of the amount of capital supplied to the concern by the proprietors. This ratio is very useful to assess the soundness of long term financial position of the firm. It also indicates the extent to which the firm depends upon outsiders for its existence. A low debt equity ratio implies the use of more equity than debt. Proprietary ratio It is also known as equity ratio. This ratio establishes the relationship between shareholders funds to total assets of the firm. The shareholders fund is the sum of equity share capital, preference share capital, reserves and surpluses. Out of this amount, accumulated losses should be deducted. On the other hand, the total assets mean total resources of the concern. The ratio can be calculated as under: Proprietary ratio = Shareholders funds Total assets Significance Proprietary ratio throws light on the general financial position of the enterprise. This ratio is of particular importance to the creditors who can ascertain the proportion of shareholders funds in the total assets employed in the firm. A high ratio shows that there is safety for creditors of all types. Higher the ratio, the better it is for concerned. A ratio below 50% may be alarming for the creditors since they may have to lose heavily in the event of companys liquidation on account of heavy losses. PROFITABILITY RATIOS The main aim of an enterprise is to earn profit which is necessary for the survival and growth of the business enterprise. It is earned with the help of amount invested in business. It is necessary to know how much profit has been earned with the help of the amount invested in the business. This is possible through profitability ratio. These ratios examine the current operating performance and efficiency of the business concern. These ratios are helpful for the management to take remedial measures if there is a declining trend. The important profitability ratios are: (i) Gross profit ratio (ii) Net profit ratio (iii) Operating profit ratio (iv) Return on investment ratio Gross profit ratio It expresses the relationship of gross profit to net sales. It is expressed in percentage. It is computed as Gross profit ratio = Gross profitÃÆ'Æ’-100 Net sales where Net sales = Total sales (sales returns + excise duty) Gross profit = Net sales Cost of goods sold. Significance Gross profit ratio shows the margin of profit. A high gross profit ratio is a great satisfaction to the management. It represents the low cost of goods sold. Higher the rate of gross profit, lower the cost of goods sold. Net profit ratio A ratio of net profit to sales is called Net profit ratio. It indicates sales margin on sales. This is expressed as a percentage. The main objective of calculating this ratio is to determine the overall profitability. The ratio is calculated as: Net profit ratio = Net profit ÃÆ'Æ’-100 Net sales Significance Net profit ratio determines overall efficiency of the business. It indicates the extent to which management has been effective in reducing the operational expenses. Higher the net profit ratio, better it is for the business. Operating profit ratio Operating profit is an indicator of operational efficiencies. It reveals only overall efficiency. It establishes relationship between operating profit and net sales. This ratio is expressed as a percentage. It is calculated as: Operating profit = Operating profit ÃÆ'Æ’-100 Net sales Operating Profit = Gross Profit (Administration expenses + selling expenses) Significance It helps in examining the overall efficiency of the business. It measures profitability and soundness of the business. Higher the ratio, the better is the profitability of the business. This ratio is also helpful in controlling cash. Return on investment ratio (ROI) ROI is the basic profitability ratio. This ratio establishes relationship between net profit (before interest, tax and dividend) and capital employed. It is expressed as a percentage on investment. The term investment here refers to long-term funds invested in business. This investment is called capital employed. where Capital employed = Equity share capital + preference share capital + Reserve and surplus + long term liabilities fictitious assets Non trading investment OR Capital employed = (Fixed asset depreciation) + (Current Asset- Current liabilities) OR Capital employed = (Fixed Assets Depreciation) + (Working capital) This ratio is also known as Return on capital employed ratio. It is calculated as under ROI = Net profit before interest, tax and dividend ÃÆ'Æ’-100 Capital employed Significance ROI ratio judges the overall performance of the concern. It measures how efficiently the sources of the business are being used. In other words, it tells what is the earning capacity of the net assets of the business. Higher the ratio the more efficient is the management and utilisation of capital employed. LEVERAGE RATIO Leverage ratio is otherwise known as capital structure ratio. The term capital structure refers to the relationship between various long term forms of financing such as debentures (long term), preference share capital and equity share capital including reserves and surpluses. Financing the firms assets is a very crucial problem in every business and as a rule there should be a proper mix of debt and equity capital in financing the firms assets. Leverage or capital structure ratios are calculated to test the long term financial position of a firm. Generally capital gearing ratio is mainly calculated to analyse the leverage or capital structure of the firm Capital gearing ratio The capital gearing ratio is described as the relationship between equity share capital including reserves and surpluses to preference share capital and other fixed interest bearing loans. If preference share capital and other fixed interest bearing loans exceed the equity share capital including reserves, the firm is said to be highly geared. The firm is said to be low geared if preference share capital and other fixed interest bearing loans are less than equity capital and reserves. Capital gearing ratio = Equity share capital reserves and surpluses Preference share capital + long term debt bearing fixed interest Significance Capital gearing ratio is very important ratio. Gearing should be kept in such a way that the company is able to maintain a steady rate of dividend. High gearing ratio is not good for a new company or a company of which future earnings are uncertain. LIMITATION OF ACCOUNTING RATIOS Accounting ratios are very significant in analysing the financial statements. Through accounting ratios, it will be easy to know the true financial position and financial soundness of a business concern. However, despite the advantages of ratio analysis, it suffers from a number of disadvantages. The following are the main limitations of accounting ratios. Ignorance of qualitative aspect The ratio analysis is based on quantitative aspect. It totally ignores qualitative aspect which is sometimes more important than quantitative aspect. Ignorance of price level changes Price level changes make the comparison of figures difficult over a period of time. Before any comparison is made, proper adjustments for price level changes must be made. No single concept In order to calculate any ratio, different firms may take different concepts for different purposes. Some firms take profit before charging interest and tax or profit before tax but after interest tax. This may lead to different results. Misleading results if based on incorrect accounting data Ratios are based on accounting data. They can be useful only when they are based on reliable data. If the data are not reliable, the ratio will be unreliable. No single standard ratio for comparison There is no single standard ratio which is universally accepted and against which a comparison can be made. Standards may differ from Industry to industry. Difficulties in forecasting Ratios are worked out on the basis of past results. As such they do not reflect the present and future position. It may not be desirable to use them for forecasting future events. BALANCE SHEET OF TAJ GROUP OF HOTELS INDIA (RS IN MILLIONS) LIABLITIES MARCH-2011 MARCH-2010 SHARE CAPITAL 62034.50 62033 RESERVES SURPLUS 235011.50 210974.30 NETWORTH SECURED LOANS UNSECURED LOANS 297046 39130.50 230331.30 273007 35205.80 145011.10 TOTAL LIABLITIES 566507.80 453224.20 ASSETS MARCH 2009 MARCH 2008 GROSS BLOCK 200570.10 164795.90 (-)ACC. DEPRECIATION NET BLOCK (A) 90624.70 109945.40 82324.80 82561.10 CAPITAL WORK IN PROGRES (B) 34876.80 43674.50 INVESTMENTS 423717.80 41031.90 INVENTORIES 34804.70 26049.80 SUNDRY DEBTORS 6359.80 5434.80 CASH AND BANK 15906 4650.40 LOANS AND ADVANCES 58846 345828.40 (1) 115916.60 381963.40 CURRENT LIABLITIES 89657.60 684222.60 PROVISIONS 29341.90 29135.20 (2) 118999.50 97557.80 NET CURR ASSETS (1-2) -3082.90 284405.60 MISC. EXPENSES 1050.70 1551.10 ANNUAL PROFIT AND LOSS STATEMENT TAJ GROUP OF HOTELS INDIA( RS IN MILLIONS) MARCH- 2009 MARCH-2008 SALES 243483.20 196544.10 OTHER INCOME 3053.60 3472.80 TOTAL INCOME 246536.80 200016.90 RAW MATERIAL COST 82794.40 60248 EXCISE 24952.10 25370.20 OTHER EXPENCES 43972.30 28480.50 OPERATING PROFIT 91764.40 82445.40 INTREST NAME 14895 9290.30 GROSS PROFIT 76869.40 73155.10 DEPRECIATION 9734 8346.10 PROFIT BEF TAX 70189 68281.80 NET PROFIT 49040.30 44479 OTHER NON RECURRING INCOME 2977.10 2391 REPORTED PROFIT 52017.40 46870.30 EQUITY DIVEDEND 11689.50 11689.30 ANALYSIS FOR FINANCIAL RATIOS FOR 2011 RATIO PARTICULARS VALUE CRITIQUE Net Working Capital = Current assets-Current liabilities Current Assets = 115,916.60 Current Liabilities =118,999.50 3082.9 Liquidity available is less 2 Current Ratio =Current Assets Current Liabilities Current Assets = 115,916.60 Current Liabilities = 118,999.50 0.97 It is not safe. Acid test or Quick ratio =Quick Assets Current Liabilities Quick Assets = 81111.9 Current Liabilities =118,999.50 0.68 It is not safe. Debt-Equity Ratio = Long term debt Shareholders Equity Total debt = 269461.8 Shareholder Equity = 297,046.00 0.91 It is good. Interest Coverage = Operating Profit Interest Operating Profit = 91,764.40 Interest = 14,895.00 6.16 It is not safe. Operating Profit margin = Operating Profit ÃÆ' ¢Ãƒâ€¹Ã¢â‚¬  - 100 Sales Operating Profit = 91,764.40 Sales = 243,483.20 37 % It is good. Gross Profit margin = Gross Profit ÃÆ' ¢Ãƒâ€¹Ã¢â‚¬  - 100 Sales Gross Profit = 76,869.40 Sales = 243,483.20 31.57 % It is good. Net Profit margin = Net profit ÃÆ' ¢Ãƒâ€¹Ã¢â‚¬  - 100 Sales Net Profit = 52,017.40 Sales =243,483.20 21.36% It is not good. Return on Assets = Operating Profit ÃÆ' ¢Ãƒâ€¹Ã¢â‚¬  - 100 Average Assets Operating Profit = 91,764.40 Average Assets = 616843.75 14.87% It is not good. Return on Investments =Profit Before Tax ÃÆ' ¢Ãƒâ€¹Ã¢â‚¬  - 100 Net worth Profit Before Tax = 70189 Net Worth = 297046 23.62% It is not satisfactory Return on Net Worth =Net Profit ÃÆ' ¢Ãƒâ€¹Ã¢â‚¬  - 100 Average Net worth Net profit = 49040.30 Average Net Worth = 285026.65 17.20% It is not good. Return on Capital Employed = Operating Profit ÃÆ' ¢Ãƒâ€¹Ã¢â‚¬  - 100 Average Capital Employed Operating Profit = 91,764.40 Avg. Capi tal Employed = 725122.4 12.65% It is not good. Operating Ratio = Cost of Goods sold + other Expenses Sales Other Expenses = 43,972.30 0.52 0.52 It is not satisfactory Fixed Assets turnover = sales Fixed assets Fixed Assets = 568540 Sales = 243,483.20 0.42 It is satisfactory ANALYSIS FOR FINANCIAL RATIOS FOR 2010 RATIO PARTICULAR VALUE CRITIQUE Net Working Capital = Current assets-Current liabilities Current Assets = 381963.40 Current Liabilities = 97557.80 284405.6 Liquidity position is good. Current Ratio = Current Assets Current Liabilities Current Assets = 381963.40 Current Liabilities = 97557.80 3.92 It is safe Acid test or Quick ratio = Quick Assets Current Liabilities Quick Assets = 355913.6 Current Liabilities = 97557.80 3.64 It is satisfactory Debt-Equity Ratio = Long term debt Shareholders Equity Total debt = 180216.9 Shareholder Equity = 273007.30 0.66 It is not safe Interest Coverage = Operating profit Interest Operating Profit = 82445.40 Interest = 9290.30 8.87 It is not satisfactory Operating Profit margin = Operating profit ÃÆ' ¢Ãƒâ€¹Ã¢â‚¬  - 100 Sales Operating Profit = 82445.40 Sales = 196544.10 41% It is satisfactory Gross Profit margin = Gross profit ÃÆ' ¢Ãƒâ€¹Ã¢â‚¬  - 100 Sales Net Profit = 46870.30 Sales =196544.10 23.8% It is not satisfactory Return on Assets = Operating profit ÃÆ' ¢Ãƒâ€¹Ã¢â‚¬  - 100 Average Assets Operating Profit = 82445.40 Average Assets = 433708.7 19 % It is not safe. Return on Investments = profit before Tax ÃÆ' ¢Ãƒâ€¹Ã¢â‚¬  - 100 Net worth Profit Before Tax = 68281.80 Net Worth = 273007.30 25.01% It is not good Return on Net Worth = Net profit ÃÆ' ¢Ãƒâ€¹Ã¢â‚¬  - 100 Average Net worth Net profit = 44479 Average Net Worth = 206984.4 21.48% It is not satisfactory Return on Capital Employed = Operating profit ÃÆ' ¢Ãƒâ€¹Ã¢â‚¬  - 100 Average Capital Employed Operating Profit = 82445.40 Avg. Capital Employed = 523886.1 15.73% It is not safe Cost of Goods Sold Ratio =Cost of Goods Sold Sales Cost of goods sold = 60248 Sales = 196544.10 0.30 It is not satisfactory Operating Ratio = Cost of Goods sold + other Expenses Sales Other Expenses = 28480.50 0.45 It is not satisfactory Fixed Assets turnover = sales Fixed assets Fixed Assets = 167267.5 Sales = 196544.10 1.17 It is not safe