Sri Sharada Institute of Indian Management-Research 7, Institutional Area, Phase-II, Vasant Kunj, New Delhi 70 Website: www.srisiim.

org

SUMMER INTERNSHIP PROJECT REPORT ON ACCOUNT PAYABLE & FIXED ASSETS PUNEET (20110112) PGDM (2011-13)

FACULTY GUIDE: Mr. SANJEEV SAREEN

INDUSTRIAL GUIDE: Mr. DEEPAK GHOSH (Head of Cooperate accounts)

Sri Sharada Institute of Indian Management-Research 7, Institutional Area, Phase-II, Vasant Kunj, New Delhi 70 Website: www.srisiim.org

SUMMER INTERNSHIP PROJECT REPORT ON

ACCOUNT PAYABLE & FIXED ASSETS

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF DEGREE OF POST GRADUATE DIPLOMA IN MANAGEMENT SESSION 2011-2013

FACULTY GUIDE: Mr. SANJEEV SAREEN

INDUSTRIAL GUIDE: Mr. DEEPAK GHOSH (Head of Cooperate accounts)

SUBMITTED BY: PUNEET (20110112) PGDM (2011-13)

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DECLARATION
I PUNEET student of PGDM (2011-13) hereby declare that I have completed this project ACCOUNT PAYABLE & FIXED ASSETS. The information submitted is true to the best of my knowledge.

PUNEET

(20110112)

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Table of Content
1. ACKNOWLEDGEMENT 2. EXECUTIVE SUMMARY 3. INTRODUCTION 4. COMPANYS HISTORY 5. COMPANY PROFILE 6. CEO MESSAGE 7. NMC PHILOSOPHY 8. RESEARCH METHODOLOGY 9. DOCUMENTS REQUIRED FOR ACCOUNTS PAYABLE 10.ACCOUNT PAYABLE PROCESS OF NMC 11.FIXED ASSETS CAPITALIZATION PROCEDURE 12.ANALYSIS & PRESENTATION OF DATA AND INTERPRETATION 13.FINDING 14.SUGGESTIONS & RECOMMENDATIONS: 15.CONCLUSION 16.REFERENCES/BIBLIOGRAPHY . 4 . 5 .. 6 .. 11 . 12 . 15 . 17 . 20 . 23 . 28 . 34 . 36 . 50 . 51 . 52 . 53

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ACKNOWLEDGEMENT
Its a privilege to be associated with NMC Healthcare, one of the most respected and dominant business houses in the UAE. This acknowledgement is not only the means of formality, but to me, it is a way by which I am getting the opportunity to show the deep sense of gratitude and obligation to all the people who have provided me with inspiration, guidance and help during the preparation of the project. At the very outset, I would like to express my gratitude from bottom of my heart to MR. RAVEENDRA RAI (Vice President) of HR & Personnel for giving me the opportunity to do my Summer Internship Project in this esteemed organization. I articulate my sincere gratitude to my project guide MR. DEEPAK GHOSH Head of Coorporate Accounts who has spend his valuable time and guided me throughout the training process in spite his busy schedule, in shaping of my project. I owe the enormous intellectual debt towards my CMD SWAMI (DR.) PARTHASARTHY of SRI SIIM who helped to provide me the opportunity to undergo my Summer Internship Project in NMC Healthcare and my faculty guide, MR. SANJEEV SAREEN for guiding and helped me in preceding my project work, which ultimately resulted in successful completion of the project. But last not the least I am thankful to my parents, friends and all wellwishers for blessing me for my success.

PUNEET (20110112)

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Executive Summary
This project deals in Account Payable and Fixed Assets at NMC healthcare L.L.C.. Payable Management and Fixed Asset Management is one of the most important aspects of the organization, as they all deal with the internal management of the organization. The Accounts payable help to reduce the liabilities of the companies and sound fixed asset management can lead to a substantial tax savings in depreciation deductions, poor fixed asset practices can threaten the accuracy of financial reports, causing re-reporting and negatively impacting the bottom line. Therefore it needs a careful analysis and proper management. Creditor are the liabilities for the company which company have to pay as soon as possible in this Accounts payable helps the company to pay off the creditors. On the other hand Fixed Asset Management helps the company to put tracking and depreciating fixed asset, which is an important task for the organization. With an increasing domestic and international competition, NMC Healthcare L.L.C is using decent policy, in order to maintain its premium position, with proper control on Accounts Payable and Fixed Assets Management.

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INTRODUCTION
LITERATURE REVIEW:-

For Accounts Payable:

What is Account Payable? Accounts Payable is a means by which you can monitor the disbursement of money from you company simply put, Accounts payable records and pays a companys bill or liabilities. When a liability or debt is incurred, the vendor to whom the money is owed issues an invoice. The debt or liability is recorded into Account Payable when you enter the invoice. On the basis of this Account payable, the company is able to pay off all their liabilities. The Accounts Payable Cycle Accounts Payable is normally operated on a monthly accounting cycle. During the month you enter and post hand checks as they are issued. Then perhaps weekly, biweekly or even daily, depending on the volume of invoices you receive, you use the checks processing cycle to create, print and post machine check payment to your vendors. At the end of the month, print the monthly reports and balance the accounts payable subsidiary ledger to your General Ledger. Finally, run the close month process to close accounts payable for the current month and prepare for the next months processing. Reports can be printed and inquiries used to supply information at any time during the month.

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For 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 for 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 of business and the utility of these assets remains so long as they are in work order, so they are also known as capital assets. Land and buildings, plant and machinery, motor vans, furniture and fixtures 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 (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 bulk value, i.e., the cost at which it was purchased minus depreciation provided 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 result 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.
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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 assets 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. Learning Objective: 1. Accounts payable: -AP is the short term liabilities that a business owes to any of the outside company stakeholders. Accounts payable has a lot of importance when you want to run your business successfully. The first important reason is that if we dont exactly know to whom we owe what we can be fooled by anyone who can receive repeated payments from us. This usually happens with businesses when there are no records maintained or the amount is so much that it becomes extremely difficult to keep a lid on things. Not knowing the exact date of the payment of an account payable will result into accumulation of interest on your company only because of the negligence. Accounts payable are also important for maintaining the cash flows. When you are dealing with mass purchases, you often can negotiate the terms of your accounts payable. 2. Fixed Assets: -Fixed Assets plays very important role in relating companys objectives the firms to which capital investment vested on fixed assets. This fixed asset is not convertible or not liquid able over a period of time the total owner funds and long-term liabilities are invested in fixed assets. Since fixed assets playing dominant role in total
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business the firms has realized the effective utilization of fixed assets. So ratio contributes very much in analyzing and evaluating the performance of fixed assets. If firms fixed assets are idle and not utilized properly it effects long-term sustainability of the firms, which may affect 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 is need for the companies to evaluate fixed assets performance. Comparison with similar company and comparison with industry standards. So chose a study to conduct on the fixed assets analysis of NMC corporate using ratio in comparison with previous year performance. The title of the project is analysis on fixed assets.

Scope of Study: For Account Payable: Validate all Account Payable invoices for the month (this is ongoing). Review supplier statements and check all invoices are secondary approved/or current (i.e. not due for payment). Review employee expense claims/advances to ensure they are upto-date and processed. Review credit card statements to supporting receipts/vouchers and journal expenditure from the department suspense account to relevant cost centre.
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 Run Invoices on Hold, Report to list invoices placed on hold and then action all holds, as necessary. For Fixed assets: Fixed asset is an asset held with the intention of being used for the purpose of producing or providing goods or services and is not held for sale in the normal course of business. Fixed assets often comprise a significant portion of the total assets of an enterprise, and therefore are important in the presentation of financial position. Furthermore, the determination of whether expenditure represents an asset or an expense can have a material effect on an enterprise's reported results of operations. Fixed Assets also need to be capitalized because when it start giving revenue we have to record it how much a asset is giving the Profit and how much depreciation we are charging on it. The project is covered of fixed assets of NMC drawn from annual reports of the company. The fixed assets considered in the project are which cannot be converted into cash with one year. Ration analysis is used for evaluating fixed assets performance of NMC. The subject matter is limited to fixed assets it analysis and its performance but not any other areas of accounting corporate, marketing and financial matters.

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Companys History
NMC Health was founded by H.E. Abdulla Humaid Al-Mazroei and B. R. Shetty in 1977 as the "New Medical Centre" in Abu Dhabi, and is now the largest private hospital chain in the UAE. NMC Healthcare LLC is one of the most respected and dominant business houses in the UAE, engaged in business sectors ranging from healthcare, trading (marketing and distribution) and information technology. Apart from these main business sectors, NMC Healthcare LLC also has affiliate companies serving business sectors such as healthcare, financial services, pharmaceutical manufacturing, hospitality, real estate and media. From a small one room clinic in 1973, NMC Healthcare LLC has evolved into an integrated healthcare company with a wide network of hospitals, medical centres, and pharmacies across the UAE. NMC Healthcare LLC provides a comprehensive range of healthcare services, supported by experienced medical professionals cutting across various disciplines, covering the entire gamut of medical diagnosis and treatment. Over the years, NMC Healthcare LLC has earned reputation as a world-class medical institution synonymous with genuine care, concern and commitment. In 2012 it became listed on the London Stock Exchange.

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Company Profile: NMC Healthcare

Hospitals Pharmacies Trading Trading Healthcare FMCG & Education Information Technology

Specialty Hospital

Hospitals & Medical Centers

These are the Branches of NMC which I explain one by one: 1. Hospitals: - In UAE NMC has 5 Hospitals. In which 3 are Special Hospital and 2 are Hospital and Medical Centres. Those are: A) Specialty Hospitals: These are 3 Specialty hospitals NMC Specialty hospitals Abu Dhabi NMC Specialty hospitals Dubai NMC Specialty hospitals Al Ain B) Hospitals and Medicals Centres: These are 2 Medical centres New Medical Centre Hospital Dubai New Medical Centre Sharjah

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Pharmacies: In Pharmacies there are 2 sections. A) Bait Al Shifa B) New Pharmacy

Trading Healthcare: There are 3 divisions in this. A) Scientific Division B) Pharmacy Division C) Veterinary Division

Trading FMCG and Education: In this there are 3 Division. 1. Food Division 2. Non Food Division 3. Education Division

Information Technology: IT is divided into 3 categories.

1. Healthcare IT 2. Business Application IT 3. Infrastructure

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Vision of NMC Healthcare: To be the trusted healthcare provider in UAE and abroad driven by excellence through innovation, Quality, Team Work, advanced technologies, Patient safety, and customized care offering.

Mission of NMC Healthcare: To lead the healthcare industry in UAE by providing customized healthcare solution to different segments of the society. To provide consistent high quality cost-effective patient care in a compassionate and caring environment. To achieve high level of customer satisfaction through integrity, dedication, professionalism, teamwork, and timely service. To introduce latest technologies in healthcare for better diagnosis and treatment.

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CEO Message:

At NMC Healthcare, we guarantee personalized care, genuine concern and a sincere commitment to the overall well-being of the society. We believe that healthcare is simply not about detecting, diagnosing, informing or treating an individual but it is about helping people to lead a wholesome and healthy life. We are committed to serve the communities where we do business and pledge to provide our customers with hope - Hope of a Healthy and Happy Life. As the expression goes, The journey of a thousand miles begins with a single step, our incredible journey also began with our first step in 1973, when we established a small clinic and pharmacy in Abu Dhabi under the name New Medical Center (NMC). During the initial years, NMC, being the first private health care provider was confronted with many complicated challenges. Instead of viewing these challenges as setbacks, we perceived them as Opportunities - Blessings in Disguise, and resolved them successfully with grit, perseverance, determination, and strength. We attribute our
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success today to the sincerity, hard work and commitment of our staff, which have helped us to grow and prosper over the years. We believe in the policy of providing healthcare to all sections of the society while upholding ethical medical practices and discouraging malpractices. Our customers are assured of receiving personalized care in a compassionate and friendly environment under highest standards of quality at affordable charges. These founding principles continue to guide and motivate us everyday as we aspire to become the leading healthcare brand in the region. Continuing with our mission to provide advanced healthcare services to all the customers, we are also keen to explore new business opportunities with like-minded partners in the UAE and abroad. With the sustained patronage of customers and Almightys Blessings, we are confident of addressing emerging opportunities and achieving more milestones in the years ahead. Our corporate motto Together We Smile has its origins rooted in our resolute belief to make a positive change in the lives of people whom our service touches and bring smiles to all. Lets together cross lifes miles with a smile.

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NMC Philosophy:
One of the strategic objectives of NMC Healthcare is to position itself as a Pan-UAE healthcare player through a network of specialty hospitals, medical centres, day-care centres, clinics, and pharmacies in different Emirates to provide high quality, reliable, and cost effective medical services in accordance with global standards of excellence. Adhering to the policy of providing healthcare to all sections of the society. Upholding ethical medical practices and discouraging malpractice. Providing customized care in a compassionate and friendly manner. Maintaining highest standards of quality and affordable service charges. NMC Healthcare has been successful in creating a work culture that attracts and retains highly skilled and specialized medical professionals from different parts of the world. All medical professionals are carefully selected through rigorous recruitment processes and ongoing training programs and are mandated to undergo periodic training programs and workshops to upgrade their skills. Over the decades, NMC Healthcare has earned a reputation as employer of choice in the market as evident from a long list of employees serving for decades as well as the continuing trend of several family members preferring to work in the company. Critical Success Factors The key factors that facilitate NMC Healthcare to deliver quality care and attain the status of being the premier healthcare institution are: Employing skilled doctors and paramedics with sound educational background, proven work experience, polite behavior, and caring nature.
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 Emphasizing capacity building in medical diagnostics (laboratory and radiology) by incorporating advanced equipment, cutting-edge technologies, and highly skilled medical professionals. Imbibing widely accepted quality standards such as those prescribed by Joint Commission International (JCI) and International Organization for Standardization (ISO) 9001. Creating a sophisticated technology infrastructure to deliver seamless healthcare services through Wipro Hospital Information System (HIS) and Oracle Enterprise Resource Planning (ERP). Improving services processes continuously and introducing new services in a timely manner. Cultivating harmonious working relationships with federal and local regulatory authorities, insurance companies, government entities, and local communities. Establishing seamless referral systems for advance treatment within and outside the NMC Healthcare network through affiliations with reputed healthcare institutions around the world. Serving a diverse pool of patients transcending nationality and income levels. Catering to the requirements of all insurance companies and third party administrators (TPAs) with customized IT solutions. Adhering to corporate governance and sound management practices.
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NMC Healthcare strives to continuously improve healthcare in the UAE and shares the vision of the Government of UAE to position the country as a world-class quality healthcare destination.

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RESEARCH METHODOLOGY

1. Research objective: Account payable: My objective is to find out a short-term liquidity measure used to quantify the rate at which a company pays off its suppliers. Accounts payable turnover ratio is calculated by taking the total purchases made from suppliers and dividing it by the average accounts payable amount during the same period. Accounts Payable Turnover = The measure shows investors how many times per period the company pays its average payable amount. Fixed Assets: The study is conducted to evaluate fixed assets performance of NMC. The study is conducted to evaluate the fixed assets turnover of NMC. 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 NMC. The study is conducted to known the amount of finance made by long-term liabilities and owner funds towards fixed assets.
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 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. The study is evaluate is giving adequate returns to the company. 2. Research Methodology:Both for FIXED ASSETS and ACCOUNT PAYABLE: The data used for analysis and interpretation form annual reports of the company that is secondary forms of data. Ratio analysis is used for calculation on 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 and ACCOUNT PAYABLE performance of NMC.

3. Limitations:Both for FIXED ASSETS and ACCOUNT PAYABLE: The study period of 42 days as prescribed by university. The study is limited unto the date and information provided by NMC and its annual reports. The report will not provide exact fixed assets status and position in NMC; it may vary from time to time and situation to situation.
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 This report is not helpful in investing in NMC either through disinvestments or capital market. The accounting procedure and other accounting principles are limited by the company changes in them may vary the fixed assets performance.

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DOCUMENTS REQUIRED FOR ACCOUNTS PAYABLE 1. INVOICE 2. PURCHASE ORDER 3. GRIN (GOODS RECEIVED AND INSPECTION NOTE) 4. GRN (GOODS RECEIVED NOTE)

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1. INVOICE

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2. PO (PURCHASE ORDER)

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3. GRIN (GOODS RECEIVED AND INSPECTION NOTE)

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4. GRN (GOODS RECEIVED NOTE)

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ACCOUNT PAYABLE PROCESS OF NMC Accounts Payables is nothing but a Liability which has to be paid by the company for the goods that they have purchased or services that they have availed from a Vendor. The Firm is Accountable or responsible to pay for the goods purchased or services that they have availed. Accounts payable best practices in controlling accounts payable with the intention of contributing positively to cash flow and bearing jointly beneficial relationships with suppliers. The hope between a company and its suppliers seems to be shaken by accounts payable actions there by upsetting supplier relations. On the other hand, paying your bills on time improves your relationship with the supplier. An improved relationship with suppliers is essential to a company since they supply priceless trade credit, and also offer ideas for new methods and products, which are considered as important role in customer service. As NMC follows centralized Accounting, which is why Payable is also centralized in NMC healthcare. So, the procedure is different from other companies. The procedure of Accounts Payable in NMC is as follows: a) Collecting invoices from all section b) Checking c) the accuracy of invoices with GRN, PO and also the approval of the H.O.D d) Preparing files for processed and un paid invoices for necessary accounting e) Writing accounts heads in each invoices
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f) Arranging invoices alphabetically and put Document Numbers g) Entering the bills in to computer and checking all the invoices accounted as correct or not. h) Copies of invoices generated in H.O sending to various affiliates i) Preparing payment advices for each suppliers j) Party reconciliation k) Proper filing of invoices l) Checking of GRN list monthly to ensure all the purchase are entered m)Proper Bill matching with payment vouchers n) Preparing monthly expenses details for Trading & Reliance

COLLECTING INVOICES FROM ALL SECTION:

In this step Accounts payable department collect all the invoices from various branches of NMC Healthcare. The document which I show is of Al Ain branch.

CHECKING THE ACCURACY OF INVOICES WITH GRN, PO AND ALSO THE APPROVAL OF THE H.O.D:
In this step employee check the accuracy of GRN and PO that the amount which GRN and PO is showing is correct and matched

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or not. There is one more document is required that is Approval of Head of Department (H.O.D).

PREPARING FILES FOR PROCESSED AND UN PAID INVOICES FOR NECESSARY ACCOUNTING:
In this step the employee makes an separate file for the processed and unpaid invoices. After that, they do proper accounting treatment for it.

WRITING ACCOUNTS HEADS IN EACH INVOICES:

In this step employee put every transaction in their prescribed Accounting head.

ARRANGING INVOICES ALPHABETICALLY AND PUT DOCUMENT NUMBERS:

In this step employee put the entire document in the alphabetical order and also put the document numbers on every Invoice. This helps the employee to find the invoice whenever they need it.

ENTERING THE BILLS IN TO COMPUTER AND CHECKING ALL THE INVOICES ACCOUNTED AS CORRECT OR NOT:
After all the above steps, in this step the employee put all the invoice transaction in the computer in their respective accounting head. After that they have to check that the entire amount which you accounted is correct or not.

COPIES OF INVOICES GENERATED IN H.O SENDING TO VARIOUS AFFILIATES:

In this step all the invoices were sent to all the different branches of NMC healthcare. In which they cross check all the data that all those data is accounted correctly. This step is done because this company follows the centralized control.
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PREPARING PAYMENT ADVICES FOR EACH SUPPLIER:

In this step H.O employee makes the payment advice in Excel sheet. Accordingly, they pay their debt to their suppliers. Actually it is a Statement on which the Account payable employee gives advice to the company on how much amount they have to pay to whom.

PARTY RECONCILIATION:
In this part account payable made the suppliers reconciliation. In this they make tally their account with the supplier account or if there is any omission then that value comes under the Reconciliation Account.

PROPER FILING OF INVOICES:

After the reconciliation next step is to make a proper filing of all the invoices because in reconciliation we record those values which is not appear in the supplier or NMC statement. After payment of those omitted values proper filing is mandatory.

CHECKING OF GRN LIST MONTHLY TO ENSURE ALL THE PURCHASE ARE ENTERED:
Now, in this step monthly list of GRN is checked with the Books of NMC by the Employee to know there is no omission or wrong entry.

PROPER BILL MATCHING WITH PAYMENT VOUCHERS:

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In this step the employee have to match the entire bill with the payment vouchers.

PREPARING MONTHLY EXPENSES DETAILS FOR TRADING & RELIANCE:

This is the last step of Account payable procedure, in this the Account payable employee prepares the detail monthly expenses which is done by the trading and Reliance Department.

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DIAGRAM FOR ACCOUNTS PAYABLE

Invoice sent to H.O

st 1 QC (Whether all invoices belong to related company)

No

Sent wrong invoices to validator

Yes
Segregate and save invoices in specific folder for required validation

2nd QC* (Invoices saved must be equal to invoices

Invoices approved by validator (with expense account number and cost center)

Book invoice in accounting software according to validation

3rd QC* (Account number and cost center must be same as given by validator)

Invoice is approved for payment

No

Yes
Make Payment by using approved bank account

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Change status to Complete

QC* = Quality Check

FIXED ASSETS CAPITALIZATION PROCEDURE

1. Budget for capital Expenditure 2. Identify the suppliers 3. Select quotation 4. Raise PO to the lowest quotation 5. Receive the Item/ Install 6. Once commissioned then capitalized 7. Charge depreciation

BUDGET FOR CAPITAL EXPENDITURE:

It is the first step in fixed assets capitalization, in which we make the Budget for capital expenditure. In this budget we estimate how much that asset cost to the company and how much we pay for that fixed asset.

IDENTIFY THE SUPPLIERS:

After estimating the budget, now we proceed to inviting the suppliers to whom we purchase the assets. There are lots of suppliers with their quotations but at different prices.

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SELECT QUOTATION:
Now, after getting the quotation, company selects the best price from those quotations.

RAISE PO TO THE LOWEST QUOTATION:

In this step we choose the lowest quotation, on which we raise the PO (Purchase Order) to Purchase the assets.

RECEIVE THE ITEM/ INSTALL:

In this step, after issuing the purchase order the asset is being received by the company from the supplier or if it is machinery then it need to be installed.

ONCE COMMISSIONED THEN CAPITALIZED:

In this step, after when the machinery is installed or any other assets is being purchased and that asset or machinery is ready to use. Then we say, that asset is being capitalized.

CHARGE DEPRECIATION: This is the last step, in this we start charging depreciation on assets. This depreciation is charged by 2 methods. 1. Straight line method 2. Written down value method But, NMC uses the written down value method on their assets.

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ANALYSIS & PRESENTATION OF DATA AND INTERPRETATION

ANALYSIS FOR ACCOUNTS PAYABLE:

DEBT TO ASSET RATIO Explanation of Debt to Asset Ratio: The Debt to Asset Ratio measures the percentage of the company's Total Assets that are financed with debt (Total Liabilities). This ratio basically looks at what debt the company owes, and compares that debt to what assets the company owns. Importance of Debt to Asset Ratio: The lower the Debt to Asset Ratio, the better, as companies with high amounts of debt introduce more risk. You certainly want to look very hard at companies that have more Total Liabilities than Total Assets, as this is a precarious position for a company to be in. Depending on the industry of the company, you might expect the company to have two or three times as many assets as liabilities. Anything less than this might be a signal that the company is running into trouble. Debt to Asset Ratio Formula:

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Debt to Asset ratio =

Interpreting the Calculator Results: If Debt to Asset Ratio increases over time: An increasing Debt to Asset Ratio means the amount of debt the company has compared to its assets is increasing, which can be a bad sign. If Debt to Asset Ratio decreases over time: A decreasing Debt to Asset Ratio means the amount of debt the company has compared to its assets is shrinking, which is generally a good sign. If Debt to Asset Ratio stays the same over time: An unchanged Debt to Asset Ratio means the amount of debt the company has compared to its assets has remained the same. Debt to Asset Ratio Calculation: Debt to Asset ratio=

Debt to Asset ratio 2009 =

= 76.35
= 75.36

Debt to Asset ratio 2010 =

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Debt to Asset ratio 2011 =

= 71.75%

Debt to Assets Ratio

77 76 75 74 73 72 71 70 69 2009 2010 2011 Debt to Assets Ratio

Interpretation: As in the above graph, in 2009 the Debt to Assets Ratio is 76.35 which come down to 71.75 in 2011. This shows a decline in Debt to Assets Ratio, which is a good sign for a company, because as decreasing Debt to Asset Ratio means the amount of debt the company has compared to its assets is shrinking, which is generally a good sign.

ACCOUNTS PAYABLE TURNOVER RATIO: The accounts payable turnover ratio indicates how many times a company pays off its suppliers during an accounting period. It measures how a company manages paying its own bills. A higher ratio is generally more favorable as payables are being paid more quickly. When placed on a trend graph accounts payable turnover analysis becomes simplified: the line raises and lowers just as the ratio does. Common adaptations used to calculate accounts payable turnover yield results like accounts
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payable turnover ratio in days, Accounts Payable turnover in days, and more. A useful tool in managing and measuring the efficiency of paying bills is a Flash Report.

ACCOUNTS PAYABLE TURNOVER RATIO FORMULA: A solid grasp of the accounts payable turnover ratio formula is of utmost importance to any business person. Though some ratios may or may not apply to different business models everyone has bills to pay. The need to understand Accounts Payable turnover is universal. Accounts payable turnover = Cost of goods sold / Average accounts payable Or = Credit purchases / average accounts payable. Purchases = Cost of goods sold + ending inventory - beginning inventory.

ACCOUNTS PAYABLE TURNOVER CALCULATION:

Accounts payable turnover is calculated by dividing total purchases made from suppliers by the average accounts payable amount during the same period. Average Accounts payable is the average of the opening and closing balances for Accounts payable. In real life, sometimes it is hard to get the number of how much of the purchases were made on credit. Investors can assume that all purchases are credit purchase as a shortcut. When this is done, it is important to remain consistent if the ratio is compared to that of other companies.
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Average Accounts Payable =51488 Cost of Goods Sold= Opening inventory + Purchases Closing Inventory Cogs = 48798 + 1037000 54178

= 1031620

Accounts payable turnover ratio =

Accounts payable turnover ratio = 20.1times

Account payable Turnover Days = Account payable Turnover Days = 18 Days.

INTERPRETATION: This ratio represents how much time a company takes to pay off its suppliers. According to this ratio, NMC takes 18 days to pay off its suppliers. This shows a good sign for the company as they pay off their supplier this quickly.

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ANALYSIS FOR FIXED ASSETS: The analysis returns on fixed assets of National Medical Centre (NMC) is studied with the help of Ratio Analysis. RATIO ANALYSIS: Ratio analysis is a powerful tool of financial analysis. A ratio is defined as the indicated quotient of two mathematical expressions and as the relationship between for evaluating the financial position and performance of a firm. The absolute accounting figure reported in financial statement do not provide a meaningful understanding of the 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 judgment about the firms financial performance. 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 or Net Worth Ratio =

100

This ratio of Fixed Assets to Net worth indicates the extent to which shareholder funds are sunk into the fixed assets. Generally, the purchase
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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 capital is provided by the shareholders. When the ratio is more than 100% it implies that owners funds are not sufficient to finance the fixed assets and the finance has to depend upon outsiders to finance 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. Long Term Debt to Total Asset Ratio: Definition of Long Term Debt to Total Asset Ratio Long Term Debt to Total Asset Ratio is the ratio that represents the financial position of the company and the companys ability to meet all its financial requirements. It shows the percentage of a companys assets that are financed with loans and other financial obligations that last over a year. As this ratio is calculated yearly, decrease in the ratio would denote that the company is fairing well, and is less dependents on debts for their business needs. Formula for Long Term Debt to Total Assets Ratio The formula to ascertain Long Term Debt to Total Assets Ratio is as follows: Long Term debt to Total Assets Ratio = Long Term Debt / Total Assets Interpretation: The higher the level of long term debt, the more important it is for a company to have positive revenue and steady cash flow. It is very helpful for management to check its debt structure and determine its debt capacity. It also shows how many assets of your company are finances
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with the help of debts. To calculate long term debt to total assets ratio you need to add together your current and long term debts and sum up the current and fixed assets and divide both the total liabilities and the total asset to get an output in percentage form. The output is the assets that are financed by the debt financing while the other half is financed by the investors in your firm. Having the long term debt to total asset ratio as a high percentage should be worrying factor for the firm and the company should look in to it and determine the reason of the high percentage and try to minimize it as much as possible. The high value would mean that your company needs to have a good cash inflow to meet all the expenses. Long Term Debt to Total Asset Ratio therefore provides a measurement to the investor regarding the percentage of a companys assets which are financed with the help of loans or debts for a period lasting over a year. FIXED ASSETS AS A % TO CURRENT LIABILITIES The 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 as a % to Current Liabilities =

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
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RETURN ON FIXED ASSETS

RETURN ON 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.

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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 + Reserves & surplus + Retained Earnings. If the ratio is less than 100% it implies that owner funds are more than the fixed assets and the shareholders and vice-versa provide a part of working capital. Fixed Assets or Net Worth Ratio = 100

Year

Net Worth

GROSS FIXED ASSETS 1,71,165 1,64,937 88,434

RATIO IN %

2009 2010 2011

89,865 1,01,363 99,287

190.46 162.72 89.07

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RATIO IN %
200 180 160 140 120 100 80 60 40 20 0 190.46 162.72

89.07

RATIO IN %

2009

2010

2011

INTERPRETATION: The Gross fixed assets to net worth ratio are fluctuating from year to year. In the year 2009 the gross fixed assets to net worth ratio is 190.46 in the year 2011 the fixed assets to net worth ratio is 89.07 decreased which shows that the net worth utilization to acquire the fixed assets is decrease in the year 2011 when compare to 2009. The highest ratio recorded in 2009 at 190.46 the lowest ratio is recorded at 89.07 years 2011.

Long Term Debt to Total Asset Ratio: Formula for Long Term Debt to Total Assets Ratio The formula to ascertain Long Term Debt to Total Assets Ratio is as follows: Long Term debt to Total Assets Ratio = Long Term Debt / Total Assets Long Term Debt to Total Assets Ratio =

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= 0.1 Interpretation: This means that the company has AED 0.1 as a long term debt for every Dirham it has in assets.

FIXED ASSETS AS A PERCENTAGE CURRENT LIABILITY: Fixed assets as a % to Current Liabilities = Fixed Assets/ Current Liabilities Year 2009 2010 2011 Fixed Assets 171,165 164,937 88,434 Current Liabilities 219,820 287,154 210,571 Percentage 77.86 57.44 42

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Percentage
80 70 60 Axis Title 50 40 30 20 10 0 2009 2010 2011 Percentage, 42

Year

Interpretation: The ratio was fluctuating trend percentage in review period. Form the above table it is observed that the ratio was recorded at 77.86 in the 2009and is gradually changing to 42 in 2011, which indicates that the current funds are used in the fixed assets, which is quite satisfactory.
FIXED ASSETS AS A PERCENTAGE TO TOTAL ASSETS:

Fixed Assets as a % to Total Assets =

Year 2009 2010 2011

Net fixed Assets 171,165 164,937 88,434

Total Assets 384,287 417,909 355,235

Percentage 103.8 39.46 24.89

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Percentage
120 100 80 60 40 20 0 2009 2010 2011 Percentage

Interpretation: From the above table it is examined that Fixed Assets to total assets ratio is fluctuating trend during the review period of time. During the year 2009 the ratio was recorded at 103.8 % and the year 2011 the ratio decreased to 24.89.

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FINDING Finding for Accounts Payable Companys debt has compared to its assets is shrinking, which is generally a good sign. NMC takes 18 days to pay off its suppliers, this shows a good sign

Finding for Fixed Assets

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 Regarding the fixed assets to net worth it has observed that it has been decreased slightly to 89.07. Regarding the fixed assets it has been observed that the fixed asset has decreased. The company has AED 0.1 as a long term debt for every Dirham it has in assets. Current funds are used in the fixed assets, which is quite satisfactory Regarding the fixed assets as a percentage of current liabilities it is observed it is decreased over the Years. Regarding the fixed assets to total assets it has been observed that there was Decrease.

FROM THE ABOVE STUDY IT CAN BE SAID THAT THE NMC FINANCIAL POSITION ON FIXED ASSETS IS QUITE SATISFACTORY. SUGGESTIONS & RECOMMENDATIONS: Suggestion and Recommendation for Accounts Payable are as follow: The company should adopt the automatic recording of Accounts payable entries The company should adopt the decentralized way of recording Accounts payable entries.

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Suggestions for efficient management of fixed assets of NMC are: The NMC should follow the NPV method or IRR method both at a time rather than following only NPV method. The NMC should analyze and measure a list of projects for evaluation. The NMC capital budgeting policies should be achieved in the forthcoming Years. NMC must concentrate on other diversification and takeover. NMC must be expanded with profit making units with low cost.

CONCLUSION: Conclusion for Accounts Payable: By using this Account Payable System user can get following items. Discover the latest timesavers for processing payables It is more effective internal controls for reducing duplicate payments, fraud and wasteful spending Turn your AP department into a profit center!
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 Streamline the entire payment process with simple techniques and dramatically boost your efficiency Build safety nets into your processing system that guarantee bills get paid on time

Conclusion for Fixed Assets: After analyzing the financial position of NEW MEDICAL CENTRE (NMC) and evaluating its fixed assets Management or capital budgeting techniques in respect of ratio analysis. The following conclusions are drawn from the project preparation. The progress of the NMC shows that the company is in good condition as its Long Term Debt to Total Assets Ratio is quite satisfactory. The financial position of NMC regarding investment it has been increasing from 100%. REFERENCES/BIBLIOGRAPHY www.wikipedia .com www.Investopedia.com
http://www.heka-finance.com/ http://www.accountingtools.com http://www.nmc.ae/

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