CHAPTER 1Introduction

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. Finan-

cial Management provides a frame work for selecting a proper cause if action and de-

cision available commercial strategy. The main 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 much amount of fixed

assets , which 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 profit

maximization. Any financial action which creates wealth.

5

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.

8

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.

9

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.

10

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.

11

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.

12

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

15

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

16

(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 enter-

prises, 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:

17

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 liquidity-

promptness 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.

18

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

19

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 col-

lectibles 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 re-

turn 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.

22

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-market-

value 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.

23

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.

25

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 long-term 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.

27

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.

28

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 easier-

happier, 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 1999 Forge joint venture with Philips

2003 Enter UK GSM handset market 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

39

Exports surpassed US$100 million, a first for Korea’s electronics industry

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 4G-

Enabled 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 CAPABILITIESProduct 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/ Hewitt

Assts

2001

Best Employer Business Today/ Hewitt

Assts

2002

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 Digital

Media

2004

EFY's Electronics Organisation of the Year Award for

Television

Electronics for You 2005

Consumer Durable Retailer of the Year ICICI Bank 2005

Excellence in Corporate Leadership & Entreprerenural Spirit CNBC TV 18 2005

Most preferred Brand- CTV & WM CNBC Consumer Vote

Awards

2005

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 Consumer

Awards

2006

4 P Award : Refrigerator and Air Conditioner 4Ps Power Brand Award 2006

4P Power Brand CNBC Consumer Vote

Awards

2006

Most Trusted Brand - LCD TV, Plasma TV, AC, WM, Ref,

PC

Reader's Digest 2006

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 &

Refrigerator

Business World & IMRB 2007

Top Newsmaker – Consumer Durables Business Today & Cirrus 2007

Most Trusted Brand - TV, AC & HA Super Brands 2007

Reader's Digest Trusted Brands: Platinum Awards-

Airconditioner. Gold Awards- LCD TV/Plasma TV, Ref,

Washing Machine,PC

Reader's Digest 2007

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 Valuable

Awards

Planman Consulting &

ICMR Ranking

2007

Business Leadership Award in Consumer Durable Sector NDTV 2007

Most Preferred Brand -CTVs, ACs, Ref.and Washing

Machines

CNBC 2007

Loyalty Awards - Customer and Brand Loyalty in the

Consumer Durables Sector

India Times- Mindscape with

Savile-Row

2008

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 & Washing

Machine

360 degrees, Times of India 2008

Brand for Excellence 2008 VAR India 2008

Reader's Digest Trusted Brand : Platinum Awards -AC. Gold

Awards - LCD TV /Plasma TV,Ref, PC

Reader's Digest 2008

Most Preferred Brand- Consumer Electronics and Home

Appliances

CNBC Awaaz Consumer

Awards

2008

Most Admired MNC in India 4P’s Award 2008

47

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

48

marketing activities in developed markets such as North

America and Europe.

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, nano-

structures, 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

56

the same time cost of carrying such arrangements to deal with such

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 SubsidiariesIncome Statement:

Income Statement2007-2008 2008-2009 2009-2010 2010-2011 2011-2012

(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

DomesticExports

17062.471294.5

19584.372379.8

2205873131.7

25534.873943.5

28777.974943.9

Cost of Sales 60513.1 65982.7 70725 76108.3 80938.1Gross Profit 22879.3 23476.4 24464.7 23370 22783.7

SG&A 20146.5 19764.3 20803.4 21074 20290.9Operating Profit 3547.2 3887 3661.3 2296 2492.8Non-Operating

IncomeNon-Operating

Expenses

2598.95017.3

3574.64239.2

4538.75235.7

32394411.6

8224.64153.3

Recurring Profit 5998.7 5646.4 29684 1123.4 6564.1Extraordinary GainsExtraordinary Losses

--

--

--

--

--

Income before Income Taxes 4509.07 3991.5 2968.4 6090.47 3765.1

Tax 135.9 145.64 153.73 209.1 413.82Net Profit 4644.97 4137.14 2814.67 6299.57 3351.28

LG Electronics Inc. and SubsidiariesConsolidated Balance Sheets:

60

Balance Sheet2007-2008 2008-2009 2009-2010 2010-2011 2011-2012

(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 63063.52Quick AssetsInventories

11568.55762.2

12484.84876.8

10315.65637.5

8831.44739.6

8306.64173.8

Fixed Assets 6,07,94.08 6,25,64.02 5,89,55.39 5,69,93.08 5,71,48.37Investment AssetsTangible Assets

Intangible Assets

19568.613543.51293.5

20834.515859.61423.7

21947.316617.3

1681

22972.318273.71984.4

31225.617818.61758.9

Total Assets 179137.63 163641.62 164867.41 167745.96 317929.03Current 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 2,30,72.27Paid in CapitalCapital Surplus

Retained EarningsCapital Adjustment

2965.47832.79765.62246.6

3079.58067.39945.82359.9

3202.18437.810057.32976.6

3472.79532.510590.32759.3

3571.19799

15547.22906.9

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

LG Electronics Inc. and SubsidiariesFinancial Highlights:

Financial Highlights

2007-2008 2008-2009 2009-2010 2010-2011 2011-2012(Rs. In (Rs. In (Rs. In (Rs. In (Rs. In

61

Lakhs) Lakhs) Lakhs) Lakhs) Lakhs)Sales 134543.28 140116.22 135375.24 129553.62 142195.78

Operating Profit 3547.2 3887 3661.3 2296 2492.8Net Profit 4644.97 4137.14 2814.67 6299.57 3351.28

Total Assets 179137.63 163641.62 164867.41 167745.96 317929.03Total Liabilities 2,05,36.47 2,03,50.59 2,40,99.51 2,14,80.89 2,30,72.27

Total Shareholder's Equity 18456.8 20543.5 24673.8 26354.8 31824.2

ROE 10.5% 8.7% 12.6% 3.5% 19.1%EBITDA 1,476 1,585 1,685 1,297 1,349

Capex 1,075 1,179 1,291 860 1,060

BAR DIAGRAMS & CHARTS:

62

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

investment in total investment is decreasing form time to the during the year

63

YEAR INVESTMENT TRENDPERCENTAGE

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

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 turned-

over 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:

YEAR NET WORTH 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

FUNDS

PERCENTAGE

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 liabili-

ties 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 LiabilitiesTABLE:

YEAR FIXED ASSETS CURRENT LIABILITIES

PERCENTAGE

2007-2008 6,07,94,08,271 2,05,36,47,518 2.96

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

CHART:

74

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 in-

dicates 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 investmentTABLE:

YEAR SALES (IN LACKS) TOTAL

INVESTMENT

RATIOS

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

ASSETSPERCENTAGE

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 AssetTABLE:

YEAR FIXED ASSETS TOTAL ASSETS PERCENTAGE

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 pe-

riod 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:

YEARFIXED SALES

(IN LACKS)

CURRENT

ASSETS

GROSS CAPITAL

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

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

TAX (LACKS)

GROSS CAPITAL

EMPLOYED

PERCENTAGE

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

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

TAX (LACKS)

FIXED ASSETS PERCENTAGE

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:

INTERPRETATION:

84

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

FINDINGS:

Company should concentrate on long term assets are utilized for working capital problem will not arise in future.

86

Company should concentrate on inventory it can improves the inven-tory turn over ratio

Growth rate of investment trend percentage, growth rate in fixed as-sets

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.

SUGGESTIONS:

87

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 ob-

served 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 in-

dustries 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.

CONCLUSIONS:

88

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

BIBLIOGRAPHY90

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

WWW.GOOGLE.COMNews paper : Business line,

India Today.

91