An Analysis of Profitability, Operational and Financial Efficiency of Mangalore Refinery and Petrochemicals Ltd.

Abstract

This paper attempts to explore the interface of two important financial ratios, the net profit margin and asset turnover and their impact on the profitability of a refinery and petrochemical company. It is vital for management to understand the profitability position so that it can monitor its operations and can take imperative decisions' in time. The concept of Du Pont analysis has been applied in the present paper to examine the company's return on equity by dividing it into three main components: profit margin, asset turnover and leverage factor. The overall performance or efficiency of a firm is a result of its working and operations, which are reflected in the margin it gets through carrying on business and the speed at which the assets are usefully employed in the business. The combined effect of three aspects - profitability, operating efficiency and financing efficiency can be well comprehended with the Du Pont analysis of Mangalore Refinery And Petrochemicals Ltd.