Incentive Schemes for Employees

Incentive Schemes for Employees In this situation, the management should taking effective measures in organization towards there goals of the business. The management can apply following points to overcome this situation in order to increase productivity and low absenteeism. The following points are given below:- The benefits should replaced by INCENTIVES- In this situation, the management should introduce a quota system or perhaps the production pay in which workers are rewarded by meeting quota or paid more for superior production. The incentive should provide with monetary as well as non-monetary benefits like bonus, profit-sharing, status, job security etc.The incentives plan encourages employees to perform additional tasks for this compensation, in addition to their normal workload. An incentives plan costs the employers additional money but well designed plan will provide greater return by increasing productivity and lowering other costs. INCENTIVES should be linked with PRODUCTIVITY of the employees. The management should launch a performance based plan to enhance the productivity. They introduced performance linked incentive and Halsey premium plan to increase the productivity efficiently. A Performance Linked Incentive is a form of payment from an EMPLOYER to an EMPLOYEE, which is directly related to the performance output of an employee and which may be specified in an employment contact. PERFORMANCE LINKED INCENTIVE may either be open ended (does not have a fixed ceiling) or close ended (has an upper ceiling which is normally stipulated in the employment contract) Open ended incentives are normally applicable revenue generating activities (e.g., Sales) and Close ended incentives are associated to support functions (e.g., Operation, Human Resources, etc.). Method of calculating PERFORMANCE LINKED INCENTIVE:- PLI, by virtue of being sanctified in the employment contract, is paid for objective, measurable and visible results. MBO is the generally used to define the output which determines the payment of Performance linked incentive. Since Performance linked incentive is paid for the results and not merely for the efforts, the objects should be chosen to reflect those activities whose results are visible immediately after the effort. Also, in calculating performance linked incentive, only the performance and not the potential of the employee should be considered. Potential of the employee is normally subjective and can be contested. Performance linked incentive should be based on metrics which are absolutely objective and clearly perceived as fair by both employee and employer. Halsey premium plan This plan is a combination of time and speed while they are working.- That every worker is paid according to hourly rate.- Every worker is paid according to the time he hason the work.- Every worker is given that he has to finish the allotted work within the standard time. If he is able to save the time, he will be paid a bonus for the time he has saved. The amount of bonus is 50 percent of time saved. Total Earnings = Time Taken * Hourly Rate + (Standard Time Time Taken) * Hourly Rate * 50 percent Advantages of these incentives plans: Higher wages for worker and higher profits for the firm. Focus subordinate efforts Variable costs linked to results Reward those who will perform well. EXAMPLE Productivity incentive scheme for TEA PLUCKERS IN Tamil Nadu. till 1980s workers were paid a fixed rate and small incentive for extra plucking of leaves This was a constant amount/kg of tea but in due course, the system was reined by having two incentive slabs After several rounds of negotiations, an agreement was reached in 1990 Result:- There was a 36 percentage improvement in the plucking average. 2. The benefits to puckers during the five year period had gone up by 25 percentages. Salary/wage structures should be re-worked out The management should pay according to the industrial policy norms so that employees feel that they are being adequately paid. The management provided salary/wages to them keeping in mind that the minimum wages/salary act and all other act should be follow before fixation of salary/wages structure. The management is also set an appraisal time to time to increase the wage/salary structure so that they can get a completive salary/wages as compared to other industries. For this, the management should follow five steps to determine the salary/wages. This are- Review your own pay practices. Define the job Track the completion Set the salary range Bundle pay and parks. Advantage of fair and true fixation of salary/wages by management- Increase motivation among employers. Increase productivity. Achieving the target. There is employees stability. Reduce wastage of manpower planning. HR Personnel Should Be Re-Shuffled The problem of low productivity and higher absenteeism showing there is Lax HR personnel. So the HR personnel may reshuffled and to promote the culture of hard work to there employees. They can set there rigid rules to there employers in order to avoid the given problems. The management should adopt the right HR practice to increase productivity. The top ten HR practices which should follow in every firm. This are- Safe, Healthy and happy work place Creating a safe, healthy and happy workplace will ensure that the employees feel homely and stay with the organization for a very long time. Capture their pulse through employee surveys. Open book management style Sharing information about contracts, sales, new clients, management objectives, company policies, employee personal data etc. ensures that the employees are as enthusiastic about the business as the management. Through this open book process you can gradually create a culture of participative management and ignite the creative endeavor of your work force It involves making people an interested party to your strategic decisions, thus aligning them to your business objectives. Be as open as you can. It helps in building trust motivates employees. Employee self service portal, Manager on-line etc. are the tools available today to the management to practice this style. Performance linked bonus Paying out bonuses or having any kind of variable compensation plan can be both an incentive and disillusionment, based on how it is administered and communicated. Bonus must be designed in such a way that people understand that there is no payout unless the company hits a certain level of profitability. Additional criteria could be the teams success and the individuals performance. Never pay out bonus without measuring performance, unless it is a statutory obligation. 360 degree performance management feedback programmed This system, which solicits feedback from seniors (including the boss), peers and subordinates, has been increasingly embraced as the best of all available methods for collecting performance feedback. Gone are the days of working hard to impress only one person, now the opinions of all matter, especially if you are in a leadership role (at any level). Every person in the team is responsible for giving relevant, positive and constructive feedback. Such systems also help in identifying leaders for higher level positions in the organization. Senior managers could use this feed back for self development Fair evaluation system for employees Develop an evaluation system that clearly links individual performance to corporate business goals and priorities. Each employee should have well defined reporting relationships. Self rating as a part of evaluation process empowers employees. Evaluation becomes fairer if it is based on the records of periodic counseling achievements of the employee, tracked over the year. For higher objectivity, besides the immediate boss, each employee should be screened by the next higher level (often called a Reviewer). Cross functional feedback, if obtained by the immediate boss from another manager (for whom this employees work is also important), will add to the fairness of the system. Relative ratings of all subordinates reporting to the same manager are another tool for fairness of evaluation. Normalization of evaluation is yet another dimension of improving fairness. Knowledge sharing Adopt a systematic approach to ensure that knowledge management supports strategy. Store knowledge in databases to provide greater access to information posted either by the company or the employees on the knowledge portals of the company. When an employee returns after attending any competencies or skills development program, sharing essential knowledge with others could be made mandatory. Innovative ideas (implemented at the work place) are good to be posted on these knowledge sharing platforms. However, what to store how to maintain a Knowledge base requires deep thinking to avoid clutter. Highlight performers Create profiles of top performers and make these visible though company intranet, display boards etc. It will encourage others to put in their best, thereby creating a competitive environment within the company. If a systems approach is followed to shortlist high performers, you can surely avoid disgruntlements. Open house discussions and feedback mechanism Ideas rule the world. Great organizations recognize, nurture and execute great ideas. Employees are the biggest source of ideas. The only thing that can stop great ideas flooding your organization is the lack of an appropriate mechanism to capture ideas. Open house discussions, employee-management meets, suggestion boxes and ideas capture tools such as Critical Incidents diaries are the building blocks that can help the Managers to identify develop talent. Reward ceremonies Merely recognizing talent does not work, you need to couple it with ceremonies where recognition is broadcast. Looking at the Dollar Check is often less significant than listening to the thunderous applause by colleagues in a public forum. Delight employees with the unexpected The last but not least way is to occasionally delight your employees with unexpected things that may come in the form of a reward, a gift or a well-done certificate. Reward not only the top performers but also a few others who are in need of motivation to exhibit their potential 4) If Absenteeism is due to lack of interest by the employees in the job, because they do not see career advancement in the company. The management should started career counseling sessions to generate interest in the job among the employees. 5) Leave encashment may be encouraged:- Leave encashment refers to that amount payable for the employees leave period, depending upon the leaves to his credit and his salary at the time of termination of employment or at the time of encasing his leaves. The encashment can be calculated as:- Basic +DA (BASIC+DA/26)*NO. OF DAYS) 6. A suitable (encouraging competition) promotion policy should be introduced, if not already existing A set of rules guidelines set forth by a firm or organization that outlines how employees are to interact with potential customers in the promotion of a good or service. The promotion policy helps the company keep control of the message it is sending about the good or service, as well as to dictate appropriate actions that employees can take when dealing with outside personnel. For example, a pharmaceutical company could have a promotion policy that its field representatives must adhere to when they meet with doctors to promote a drug. The firm can adopt various types of promotional activity to increase there productivity. There are a numerous ways to promote there goods and service. Sometime in big organization may adopt a various types of sales strategies to increase there goods and service. These are:- Contests Contests are a frequently used promotional strategy. Many contests dont even require a purchase. The idea is to promote your brand and put your logo and name in front of the public rather than make money through a hard-sell campaign. People like to win prizes. Sponsoring contests can bring attention to your product without company overtones. Social Media Social media websites such as Face book and Google+ offer companies a way to promote products and services in a more relaxed environment. This is direct marketing at its best. Social networks connect with a world of potential customers that can view your company from a different perspective. Rather than seeing your company as trying to sell something, the social network can see a company that is in touch with people on a more personal level. This can help lessen the divide between the company and the buyer, which in turn presents a more appealing and familiar image of the company. Mail Order Marketing Customers who come into your business are not to be overlooked. These customers have already decided to purchase your product. What can be helpful is getting personal information from these customers. Offer a free product or service in exchange for the information. These are customers who are already familiar with your company and represent the target audience you want to market your new products to. Product Giveaways Product giveaways and allowing potential customers to sample a product are methods used often by companies to introduce new food and household products. Many of these companies sponsor in-store promotions, giving away product samples to entice the buying public into trying new products. Point-of-Sale Promotion and End-Cap Marketing Point-of-sale and end-cap marketing are ways of selling product and promoting items in stores. The idea behind this promotional strategy is convenience and impulse. The end cap, which sits at the end of aisles in grocery stores, features products a store wants to promote or move quickly. This product is positioned so it is easily accessible to the customer. Point-of-sale is a way to promote new products or products a store needs to move. These items are placed near the checkout in the store and are often purchased by consumers on impulse as they wait to be checked out. Customer Referral Incentive Program The customer referral incentive program is a way to encourage current customers to refer new customers to your store. Free products, big discounts and cash rewards are some of the incentives you can use. This is a promotional strategy that leverages your customer base as a sales force. Causes and Charity Promoting your products while supporting a cause can be an effective promotional strategy. Giving customers a sense of being a part of something larger simply by using products they might use anyway creates a win/win situation. You get the customers and the socially conscious image; customers get a product they can use and the sense of helping a cause. One way to do this is to give a percentage of product profit to the cause your company has committed to helping. Branded Promotional Gifts Giving away functional branded gifts can be a more effective promotional move than handing out simple business cards. Put your business card on a magnet, ink pen or key chain. These are gifts you can give your customers that they may use, which keep your business in plain sight rather than in the trash or in a drawer with other business cards the customer may not look at. Customer Appreciation Events An in-store customer appreciation event with free refreshments and door prizes will draw customers into the store. Emphasis on the appreciation part of the event, with no purchase of anything necessary, is an effective way to draw not only current customers but also potential customers through the door. Pizza, hot dogs and soda are inexpensive food items that can be used to make the event more attractive. Setting up convenient product displays before the launch of the event will ensure the products you want to promote are highly visible when the customers arrive. After-Sale Customer Surveys Contacting customers by telephone or through the mail after a sale is a promotional strategy that puts the importance of customer satisfaction first while leaving the door open for a promotional opportunity. Skilled salespeople make survey calls to customers to gather information that can later be used for marketing by asking questions relating to the way the customers feel about the products and services purchased. This serves the dual purpose of promoting your company as one that cares what the customer thinks and one that is always striving to provide the best service and product. 7) Training programmers should be started with a motivational approach:- The management should provide training for overall performance of employees in order to get work affiance. In order to grow a business, employees and managers need to be trained in motivational sales techniques. Motivational sales training teaches participants how to use different skills, approaches and techniques to motivate people to purchase the product or service being offered. Without continual training, salespeople can become dependent on one particular selling approach, which can limit their sales results. Use motivational sales training to continually challenge and sharpen employees abilities to sell. 8) TRADE UNION Trade union is an organization that consists of workers and it is formed to protect its members from those forces that could harm their interests. These forces could be the employers or management, the state or the government or any other agency identified as such. This could be, broadly speaking; a simple description of trade unions and it contains the basic idea of what trade unions are. In case there is no union, or the union is not strong enough, some employees who are top absentees or least productive may be shunted out to send a message or signal to the other employee to come to terms. The management should form the trade union on behalf of workers so that the workers should feel to the organization. They can feel free to meet there demand through union leader. If there is no trade union than workers are not meet there expectation and afterwards they De-Motivated and hence productivity will tend to decrease. Benefits of trade unions a) Increase productivity: Unions help build high-trust workplaces where workers are healthier, better skilled and more able to resolve grievances all of which lead to a more committed and productive workforce. Unions can also help maintain productivity during periods of employer innovation by providing ways of consulting with workers over change and reducing the chances of staff resistance. b) Save money. Early identification of problems in the workplace can lead to significant savings, for example by reducing the costs employers face as a result of accidents, ill health and staff turnover. Unions also have a strong record of working with employers to identify efficiencies and cost savings- both employers and employees have a shared interest in business success. c) Provide access to learning and skills: Helping members to access education and training is a key priority for unions. Research shows that union recognition has a consistently positive effect on the amount and range of training that is provided to employees.2 In turn, higher skilled employees bring productivity benefits for employers. d) Ensure workplaces are safe:-. Union representatives help to lower accident rates at work by ensuring safe working practices and reducing stress-related ill health caused by, for example, working long hours, being bullied or working in poor quality environments. Evidence shows that unionized workplaces are safer workplaces1 which has the added benefit for employers of significantly reducing the costs of ill health and accidents. To lower accident rates at work of significantly reducing the costs of ill health and accidents. to lower accident rates at work by ensuring safe working practices and reducing stress-related ill health caused by, for example, working long hours, being bullied or working in poor quality environments. Evidence shows that unionized workplaces are safer workplaces1 which has the added benefit for employers of significantly reducing the costs of ill health and accidents. 9) Social security provide by management:- The national commission of labor(2002) opines that in the Indian context, social security may be defined a all types of measures consisting of preventive, promotional or protective depending on whether they are designed to:Â   prevent deprivation(preventive measure) assure everyone of basic minimum income which would be adequate for meeting the basic needs of oneself ones family or dependants( promotional measures) protect income against loss or diminution due to the occurrence of any contingency including sickness(protective measure) The management should provide all social security to there employers such as:- social assistance social insurance major acts to serve better to the interest of workers like- 1) Employees state insurance act, 1948. 2) Maternity benefits act (1961) 3) Employees provident funds act, 1952 4) The payment of gratuity act, 1971

Women Safety

Being in the 21st century, with technology and world so advanced, we still talk about this subject, â€Å"Are Women Safe, in India, especially? † With surveys and understandings of what is happening around us, it is time that the country joins hands together to realize that – ‘Women are NOT SAFE in any means in India’. There have many cases that have been reported and many unreported for the torture a woman undergoes, yet there has been nothing done to change the law or the system to the way a woman is being looked at. Women have been advancing, progressing and have proved that they can beat men in any sector they are in.Be it sports, arts, science, politics, service or for that matter any where, she has stood at par with what a man could do. Yet, she still fights for equality. No matter what, the old thoughts and upbringing culture still lay cluttered in the minds of men that women should not be above men, but below them. It is sad to understand that women are the better halves of the society, yet they are the ones who face the maximum tortures in many ways in their lives. Time has changed, yet attitude towards women have never been changed.To understand better, one has to get to the root cause of the problem. It has all started ages ago, where men are thought to be gods and powerful and women to be just like slaves for household works. From inside the womb, till her death, a woman is always faced with danger. In the womb, the chances of being killed, even before seeing light, when being born and growing, she faces harsh brutalities like molestation, abusing, physical and mental tortures and above all a heap of workloads and in old age, just abandoned and still being opened for more brutalities till death.What a life? One has to understand, women are also human beings. They also have the same thoughts, desires, and dreams and feel the same pain that men feel. How could they just be taken for granted? We all know the Delhi Rape Case. (Dec 16th 2012) The most brutal rape case ever heard. There were Nation wide protests, debates, and candle lights, everything done by the public to punish the criminals. It is high time that the law has been changed with regard to cases like these.There has to be stringent punishments and fast tracks to monitor these kinds of cases. When the law is stringent in a country, before committing a crime, at least the offender would think twice on committing the crime. I agree that with one punishment, the nation is not going to get better, but with consecutive punishments, it would be under a controllable situation. Nothing changes overnight, but in due course it does create an effect. The present scenario is not going to change, but yes the coming generations could definitely make a remarkable difference.The basic understanding that men and women are equal has to start at school levels. Education is a must for all. The government has to come up with strategies where every child gets educ ation. Respecting the opposite sex has to be taught from school levels and parents and teachers have to join hands in this subject. With proper understanding, exploitation could be reduced to much extend. Women are not sex and child bearing objects, but they are also equally powerful and emotional and a great companion for men and the vice-versa should be made to understand.Once this understanding gets through, half the scenario changes. Changes do not take place soon or easily, but if each one of us join hands in every possible way that we can and start to make little changes within the family from today, it would gradually get implemented and there would be a better society that respects and understands women, at least for our next generation and generations to come. Women could walk around freely, without the fear of being attacked at any time, anywhere. Join hands and save women.

Direct Health Care Costs For Health Services Essay

Direct health care costs to health services: 1- Staffing : cardiologists 2- Training costs 3- Inpatient services and hospital admission 4- Diagnostic procedures 5- Post-operative care cost ,such as imaging services and ECG costs, and medical devices 6- Consumables : e.g. drugs, suture, dressing, gown 7- Outpatient clinic costs, follow up care, such as cardiologists visit 8- Costs of treating of side effects such as, GPs visit 9- Capital costs: spaces required to provide the new intervention 10- Overhead costs such as, administration, light, heat, and cleaning which is supplied centrally (1). Societal perspective includes direct health care cost, direct non-health care costs, and indirect costs. Direct non-health care costs: costs associated with patients and families 1- Over the counter drugs for eliminating side effects 2- Co- payment for the hospital admission, cardiologists, imaging services, ECG, and GPs 3- Additional costs of being in the hospital, post-operative care, follow up visit, such as, child minding. 4- Travel costs to hospital, GPs, outpatient clinic. 5- Wage lost due to being unable to work. Indirect cost: it is related to time value 1- Reduced productivity at work due to side effects. 2- Incapacity for work such as, short-term loss due to being undertaken new intervention, follow up care, post-operative care, GPs consultation, cardiologist visit),and long-term loss, such as, early retirement (1). Technical efficiency or inside program efficiency isShow MoreRelatedOral Health System Of Australia Essay902 Words   |  4 PagesLITERATURE REVIEW 1. 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Business Of National Grid Essay Example Pdf - Free Essay Example

Sample details Pages: 13 Words: 3932 Downloads: 8 Date added: 2017/06/26 Category Business Essay Did you like this example? National Grid plc (National Grid) is an international electric and gas company and also is one of the largest investor owned Energy Company in the world. It is listed on the London Stock Exchange (LSE: NG) and New York Stock Exchange (NYSE:NGG). Primary areas of operations are the ownership and operation of regulated electricity and gas infrastructure network in UK and the US, serving more than 19 million consumers in a direct or indirect way. Don’t waste time! Our writers will create an original "Business Of National Grid Essay Example Pdf" essay for you Create order In UK the company owns the high voltage electricity transmission network, high pressure gas transmission system and also operates in related markets which include electricity interconnectors, metering services, Liquefied Natural Gas (LNG) facilities, LNG storage and transportation and land remediation. The company in US owns over 4,000 MW of contracted electricity generation along with non-regulated gas transmission pipelines. National grid is headquartered in London, UK. The Company have more than 27,500 employees located in the UK and the US. The Business Model is divided into 4 key areas: Transmission Electricity Distribution Generation Gas Distribution Non-regulated Businesses Transmission The transmission of electricity and gas in the UK as owner and operator of high voltage electricity transmission network in England and Wales, the gas national transmission system in Great Britain, the electricity inter connector with France and storage facilities for LNG .Operator of electricity transmission networks in Scotland. Key Facts Over 20,900 kilometres of electrical overhead lines Over 800 kilometres of electrical underground cables 296 Twh of electricity transmitted in the UK Over 7,600 kilometres of gas pipeline 1,158 Twh of gas throughput Electricity Distribution Generation This operation is carried out in US as owner of electricity distribution networks in upstate New York, Massachusetts, New Hampshire and Rhode Island. Key Facts Over 116,700 kilometres of circuit 3.4 million customers 670 substations 57 generation units at 13 locations across Long Island Gas Distribution Owner and distributor of four of Great Britains eight gas distribution networks. Key Facts Around 190,000 kilometres of gas pipe Delivery of 317 and 205 Twh of gas to over 10.8 million consumers in the UK. Non-Regulated Businesses Primarily metering services, Property management, LNG importation terminal on the Isle of Grain, construction and operation of electricity interconnector between Netherlands and the UK. Key Facts Metering and meter reading services for more than 20 million meters in the UK Property portfolio of over 800 sites with more than land of around 1,600 hectares Phase III Grain LNG completion anticipated in 2010 Analysis and evaluation of the annual reports. Table of Absolutes Statistics 2010  £m 2009  £m Variation B/W Revenue 13,988 11,423 -10.47% W Cost Of Sales 10,714 8,534 -17.98% B Operating Profit 3,239 2,964 25.54% B Profit after tax 1,386 947 23.33% B Fixed Assets 38,488 30,830 2.05% B Comparison of Balance Sheet 2010  £m 2009  £m 2010  £m 2009  £m Equity 4,211 3,984 Fixed Assets 38,488 37,712 Debt 32,783 33,457 Stock 407 556 Debtors 2,293 1,569 Others 2,365 4,630 Total C.A. 5,065 6,755 Trade Creditors 2,847 1,653 Borrowings 2,806 3,253 Others 906 2,120 Total C.L. 6,559 7,026 Capital Employed 36,994 37,441 T.A. C.L. 36,994 37,441 Ratio Analysis RATIO 2010 2009 B/W Op. Profit/T.A. less C.L. 3293/36994 8.9% 2,623 / 37,441 7.05% B Operating Profit Margin Op. Profit / Sales 3,293/13988 23.54% 2,623 / 15,624 16.78% W Sales / T.A.-C.L. 13,988/36,994 0.37 times 15,624 / 37,441 0.41 times B Fixed Asset Turnover Sales / Fixed Assets 13,988/38,488 0.36 times 15,624 / 37,712 0.41 times W Stock Turnover Stock x 365 / Cost Of Sales (407*365)/10,714 13.8 days 556*365 / 13064 15.53 days B Debtor Turnover Debtors x 365 / Sales (2293*365)/13,988 59.8days 1569 * 365 / 15,624 36.65 days W Creditor Turnover Creditors x 365 / Cost Of Sales (2847*365)/10,714 96 days 1653 * 365 / 13,064 46.18 days W Current Ratio C. Assets/ C. Liabilities 5,065/6,559 0.77 times 6,755 / 7,026 0.96 times W Quick Ratio (C. A. Stock) / C. Liabilities (5,065-407)/6,559 0.71 times (6,755 556) / 7,026 0.882 times W Debt to Equity Ratio Debt / Equity 32,783/4,211 7.78% 33,457 / 3,984 8.39% W Gearing Ratio Debt / (Debt + Equity) 32,783/(32,783+4,211) 88.61% 33,457 / (33,457 + 3984) 89.35% W Return on Equity R.O.E. Profit after tax/equity 1,386/4,211 32.91% 947 / 3984 23.7% B Dividend Yield 38.49/594 6.47% 35.64/684 5.21% B Dividend Cover 1,386/688 2.01 times 947/ 838 1.13 times B Earnings Per Share 56.1p 36.9p B Earnings Yield 56.1p/594 9.44% 36.9p/684 5.69% B Price Earnings Ratio P / E 594/56.1p 10.58 times 684/36.9 18.67 times W Market-To-Book 10.58*0.329 3.48 17.7 *0.23 4.07 W Operating Performance Ratio Sales Revenue/Average No of Employees 13,988/28,067 494.83% 15,624 / 28,208 55.38% W Return on Asset ROA 2,193/43,553 5.03% 1394/44,467 3.13% B analysis and evaluation of the development of the organisation during last two years : Operating Profit Margin Ratio Definition The operating profit margin ratio indicates how much profit a company makes after paying for variable costs of production such as wages, raw materials, etc. It is expressed as a percentage of sales and shows the efficiency of a company controlling the costs and expenses associated with business operations. Operating Profit Margin Formula The operating profit margin ratio formula is calculated simply using: [Operating profit margin = Operating income à · Total revenue] Operating Profit Margin Meaning Operating profit margin ratio analysis measures a companys operating efficiency and pricing efficiency with its successful cost controlling. The higher the ratio, the better a company is. A higher operating profit margin means that a company has lower fixed cost and a better gross margin or increasing sales faster than costs, which gives management more flexibility in determining prices. It also provides useful information for investors to determine the quality of a company when looking at the trend in operating margin over time and to compare with industry peers. Usually, it serves more as a general measurement than a concrete value. The objective of margin analysis is to detect consistency or positive/negative trends in a companys earnings. Positive profit margin analysis translates into positive investment quality. To a large degree, it is the quality, and growth, of a companys earnings that drive its stock price. Financial statement in this operating profit margin, in the year of 31 march 2010 was 23.5% and in the year of 2009 it was 16.78%. The total OP of the income statement was 3293 £ in 2010 and 13064 in 2009 so the OP is best in the when comparing with 2009. Fixed Assets Turnover Ratio: Definition: Fixed Asset Turnover ratio is also known as Sales to Fixed Asset Ratio. The fixed asset turnover ratio tends to measure the efficiency and profit earning capacity of the concern. Higher the ratio, greater is the intensive utilization of fixed assets. Lower ratio means under utilization of fixed assets. Formula of Fixed Assets Turnover Ratio: Fixed assets turnover ratio is calculated by the following formula: [Fixed Assets Turnover Ratio = Sales / Fixed Assets] The fixed-asset turnover ratio measures a companys ability to generate net sales from fixed-asset investments -  specifically property, plant and equipment (PPE) net  of depreciation. This ratio is often used as a measure in manufacturing industries, where major purchases are made for PPE to help increase output. When companies make these large purchases, prudent investors watch this ratio in following years to see how effective the investment in the fixed assets was. The fixed assets are worst in 2010. The Fixed ration is 0.3 times and in the 2009 it was 0.41. the measures of the fixed asssets was worst and as per the income statement in 2010  £m 13988 and  £m 15624 in 2009. If the fixed asset turnover ratio is low as compared to the industry or past years of data for the firm, it means that sales are low or the investment in plant and equipment is too much. Inventory Turnover Ratio or Stock Turnover Ratio (ITR): Every Small or Big firm needs to maintain a specific level of inventory of the finished goods which enables them to meet the requirements of carrying out the business. One need to bear in mind that level of inventory should neither be too high nor too low. A higher inventory means that there are higher carrying costs involved and also higher is the risk of stocks becoming obsolete. Also if there is a low inventory than it suggests loss of business opportunities. Thus it is of prime significance to keep sufficient stock in business. Definition: Stock turnover ratio and inventory turnover ratio are the same. This ratio is a relationship between the cost of goods sold during a particular period of time and the cost of average inventory during a particular period. It is expressed in number of times. Stock turnover ratio / Inventory turnover ratio indicates the number of time the stock has been turned over during the period and evaluates the efficiency with which a firm is able to manage its inventory. Formula of Stock Turnover/Inventory Turnover Ratio: The ratio is calculated by using the following formula: [Stock Turnover Ratio: Stock x 365 / Cost of Sales] The inventory turnover ratio in the year 2010 is 13.8 days and the value is 407 and in the year 2009 it was 556 and turnover was 13064. So the result shows that the turnover ratio is best when comparing with year 2009. Significance of ITR: Inventory turnover ratio measures the velocity of conversion of stock into sales. Usually a high inventory turnover/stock velocity indicates efficient management of inventory because more frequently the stocks are sold; the lesser amount of money is required to finance the inventory. A low inventory turnover ratio indicates an inefficient management of inventory. A low inventory turnover implies over-investment in inventories, dull business, poor quality of goods, stock accumulation, accumulation of obsolete and slow moving goods and low profits as compared to total investment. The inventory turnover ratio is also an index of profitability, where a high ratio signifies more profit; a low ratio signifies low profit. Current Ratio: It is a measure of general liquidity and is most widely used to make the analysis for short term financial position or liquidity of a firm. Definition: Current ratio may be defined as the relationship between current assets and current liabilities. This ratio is also known as working capital ratio. Formula: Following formula is used to calculate current ratio: [Current Ratio = Current Assets / Current Liabilities] The current liabilities of this company in the year 2010 is 6559 and 7026 in the year 2009. The current assts was 5065 in the year 2010 and 6755 in the yrear 2009 so the ratio in the year 2010 was 0.77 times which is worst in the year 2010 because in the year 2009 it was 0.96 times. Significance: This ratio is a general and quick measure of liquidity of a firm. It represents the margin of safety or cushion available to the creditors. It is an index of the firms financial stability. It is also an index of technical solvency and an index of the strength of working capital. A relatively high current ratio is an indication that the firm is liquid and has the ability to pay its current obligations in time and when they become due. On the other hand, a relatively low current ratio represents that the liquidity position of the firm is not good and the firm shall not be able to pay its current liabilities in time without facing difficulties. An increase in the current ratio represents improvement in the liquidity position of the firm while a decrease in the current ratio represents that there has been deterioration in the liquidity position of the firm. A ratio equal to or near 2: 1 is considered as a standard or normal or satisfactory. The idea of having double the curren t assets as compared to current liabilities is to provide for the delays and losses in the realization of current assets. Limitations of Current Ratio: This ratio is measure of liquidity and should be used very carefully because it suffers from many limitations. It is, therefore, suggested that it should not be used as the sole index of short term solvency. It is crude ratio because it measures only the quantity and not the quality of the current assets. Even if the ratio is favourable, the firm may be in financial trouble, because of more stock and work in process which is not easily convertible into cash, and, therefore firm may have less cash to pay off current liabilities. Quick Ratio or Acid Test: Definition: Quick Ratio is also termed as Liquidity Ratio or Acid Test Ratio. It is the ratio of liquid assets to current liabilities. The true liquidity refers to the ability of a firm to pay its short term obligations as and when they become due. Formula of Quick Ratio / Acid Test Ratio: [Quick Ratio: (Current Assets Stock) / Current Liabilities] The Quick Ratio is also known as Acid Ratio. The current assets of the National Grid in the year 2010 is 43, 553 and in the year 2009 is 44,467 and the stock is 407 in the year 2010 and 556 in the year 2009 and the current liabilities of both years are 6,559 and 7,026. The Quick Ratio of National Grid in the year 2010 is 0.17 times and 0.88 in the year 2009 as per the balance sheets of the both the companies. Significance: The quick ratio/acid test ratio is very useful in measuring the liquidity position of a firm. It measures the firms capacity to pay off current obligations immediately and is more rigorous test of liquidity than the current ratio. It is used as a complementary ratio to the current ratio. Generally higher liquid ratios are an indication of the liquidity of the firm and its ability to meet the current liabilities on appropriate time. On other hand a low liquidity ratio indicates that the firms liquidity position is not good. As a convention, generally, a quick ratio of one to one (1:1) is considered to be satisfactory Debt to Equity Ratio: Definition: Debt-to-Equity ratio indicates the relationship between the external equities or outsiders funds and the internal equities or shareholders funds. It is determined to ascertain soundness of the long term financial policies of the company. Formula of Debt to Equity Ratio: The formula for Debt to Equity ratio is as follows: [Debt to Equity Ratio: Debt / Equity] The debt to equity ratio in 2010 is 7.78% and 8.39% in the year 2009. Significance of Debt to Equity Ratio: Debt to equity ratio indicates the proportionate claims of owners and the outsiders against the firms assets. The purpose is to get an idea of the cushion available to outsiders on the liquidation of the firm. However, the interpretation of the ratio depends upon the financial and business policy of the company. The owners want to do the business with maximum of outsiders funds in order to take lesser risk of their investment and to increase their earnings (per share) by paying a lower fixed rate of interest to outsiders. The outsider creditors on the other hand, want that shareholders (owners) should invest and risk their share of proportionate investments. A ratio of 1:1 is usually considered to be satisfactory ratio. Theoretically if the owners interests are greater than that of creditors, the financial position is highly solvent. Return on Equity Capital (ROEC) Ratio: In real sense, ordinary shareholders are the real owners of the company. They assume the highest risk in the company. (Preference share holders have a preference over ordinary shareholders in the payment of dividend as well as capital. The range of measures used to analyse the return to equity investors is much greater than that applied to debentures, perhaps because this class of investment carries a greater risk, and ordinary shareholders are the most significant group of investors. Preference share holders get a fixed rate of dividend irrespective of the quantum of profits of the company). The rate of dividends varies with the availability of profits in case of ordinary shares only. Thus ordinary shareholders are more interested in the profitability of a company and the performance of a company should be judged on the basis of return on equity capital of the company. Return on equity capital which is the relationship between profits of a company and its equity. Formula of return on equity capital or common stock: Formula of return on equity capital ratio is: [Return On Equity: Profit after Tax / Equity] This ratio indicates how profitable a company is by comparing its net income to its average shareholders equity. The  return on equity ratio (ROE) measures how much the shareholders earned for their investment in the company. The higher the ratio percentage, the more efficient management is in utilizing its equity base and the better return is to investors. Significance: This ratio is more meaningful to the equity shareholders who are interested to know profits earned by the company and those profits which can be made available to pay dividends to them. Interpretation of the ratio is similar to the interpretation of return on shareholders investments and higher the ratio better is. Price Earnings Ratio (PE Ratio): Definition: Price earnings ratio (P/E ratio) is the ratio between market price per equity share and earnings per share. The ratio is calculated to make an estimate of appreciation in the value of a share of a company and is widely used by investors to decide whether or not to buy shares in a particular company. Formula of Price Earnings Ratio: Following formula is used to calculate price earnings ratio: [Price Earnings Ratio = Market price per equity share / Earnings per share] The financial statement of the national grid company in the year 2010 is 56.1p and in the year 2009 it was 36.9p. The price earnings ratio in this was 10.58 times. In the year 2009 was 18.67 times. The equity share is 594 and 684 in 2009. Significance of Price Earnings Ratio: Price earnings ratio helps the investor in deciding whether to buy or not to buy the shares of a particular company at a particular market price. Generally, higher the price earnings ratio the better it is. If the P/E ratio falls, the management should look into the causes that have resulted into the fall of this ratio. One of the reasons that a companys earnings may be expected to grow is if a large proportion of earnings are retained and effectively invested back into the business. This means that it is usually (but not always) the case that companies which retain earnings rather than paying out high dividends will have higher PE ratios than those with a high dividend payout. undervalued relative to bonds.  Market-to-Book Ratio Definition: Market-to-Book Ratio is the ratio of the current share price to the book value per share. It measures the worth of the company at that moment in comparison with the amount of capital invested by current and past shareholders into it. Formula of Market-to-Book Ratio: Following formula is used to calculate market-to-book ratio: [Market-to-Book Ratio: PE Ratio * Return on Equity] The equity return in the year 2010 is 0.32% and 23 % in the year 2009. A ratio used to find  the value of a  company by  comparing the book value of a firm to its market value.  Book value is calculated by looking at the firms  historical  cost, or accounting value. Significance of Market-to-Book Ratio: The book-to-market ratio attempts to identify undervalued  or overvalued  securities by taking the book value and dividing it by market value.  If your business has a low market/book ratio, its considered a good investment opportunity. In basic terms, if the ratio is above 1 then the stock is undervalued; if it is less than 1, the stock is overvalued. Operating Performance Ratio: Sales/Revenue per Employee As a gauge of personnel productivity, this indicator simply measures the amount of dollar sales, or revenue, generated per employee. The higher the dollars figure the better. Here again, labour-intensive businesses (ex. mass market retailers) will be less productive in this metric than a high-tech, high product-value manufacturer. Formula for Sales /Revenue per Employee: Following formula is used to calculate Sales / Revenue: [Sales /Revenue per Employee: Sales Revenue /Average Number of Employees] The operating performance ratio is beneath sales and revenue on employee. In the year 2009 the company has reduce 200 employees from 28,208 which is total number of the employees. In the year of 2010 the total number of the employee was 13988 instead of 15624. Which is 49% in the year of 2010? Significance of Sales /Revenue per Employee: The Higher the ratio better it is for the company. This ratio is a measure of how efficiently the company is making profit by using the total assets of the company. Companies want this ratio to be higher as this ratio is directly dependent on profit. National Grid was able to achieve a higher ratio for the year 2009 than 2008 which would be of significant consideration for everybody to understand that company is strongly footed even in tough economic period. Management is highly efficient and so are the policies of the company. Return on Assets This ratio indicates the profitability of a company relative to its total assets. The return on assets (ROA) ratio illustrates how efficiently the management is employing the total assets of company to make the profit. More higher the return, the more efficient management is in utilizing the asset base. The ROA ratio is calculated by comparing net income to average total assets, and is expressed in percentage. Formula of Return on Assets Ratio: Following formula is used to calculate Return on Asset Ratio: [Return on Asset: Net Income / Average Total Assets] The net income of the company in the 2010 is 2,193 and in the year 2009 is 1,394 and the average total assets 43,553 in the year 2010 and 44,464 in the year 2009. The Return on Assets of national grid in the year 2010 is 5.03% and 3.31% in the year 2009. Significance of Return to Asset Ratio: The need for investment in current and non-current assets varies greatly among companies. Capital-intensive businesses (with a large investment in fixed assets) are going to be more asset heavy than technology or service businesses. Return on assets measures how effectively a company has used the total assets at its disposal to generate earnings. Because the ROA formula reflects total revenue, total cost, and assets deployed, the ratio itself reflects a managements ability to generate income during the course of a given period, usually a year. The possible financial performance A climbing return on assets usually indicates a climbing stock price, because it tells investors that a management is skilled at generating profits from the resources that a business owns The business activities carried out by National Grids power and distribution network are nearly 95% regulated, their revenues and cash flow are almost predictable and the group henceforth do not find themselves into troubled water of fluctuating prices. Henceforth the financing position is only the most likely cause of its weakness. For the year 2008-09 the net debt rose by 29% to almost  £23bn, which reflects large currency movements which follows the acquisition of US business Keyspan in 2007 for  £3.8 bn. There is also a twist in the tale as the appreciation of dollar may have increased the sterling value of National Grids net debt by  £4bn, but in return it has also increased the sterling value of US assets by  £4.5 bn. To add more, National Grids business model is very rob ust and thus it can support such high amount of debts. The annual investment of  £3bn is typically funded half by cash and half by debt, resulting that debts are always increasing constantly, but then the asset base also grows at the same time. National Grids US subsidiaries have requested to their own regulators requesting for higher authorised returns. If it would be allowed, than it would improve earnings and cash flow in the future. The Grid is very confident in sticking to its policy of increasing the dividend by 8 percent every year till 2012.But there are two small caveats first of all the share buyback programme has been suspended to save costs, and secondly, investors are being offered the option of taking payment as scrip dividend. Conclusion: In the year 2008 the company earnings per share was 122.3p and in the year 2009 it was 38.5p in the year 2009 the share the company earnings per share value is get down to 47% of share value this was due to recession. In the year 2010 the company earnings per share is 56.1p. so on the average of the value is 21.5% has increased. The cost of sales in the year 2009 was 8,534 and in the year 2010 it was 10,714 so the profit after the taxation the company profit was 1,386 in 2010 and 947 in 2009. The National Grid is clearly on the right path after looking at the ratios calculated. These ratios are not the actual mirror to the performance of the company but it shows the trend where it might head into the future taking into considerations the competitive market and fluctuating market conditions.