Comparison of Accounting Standards of Coal India Ltd in India and Ceylon Steel Corporation in Sri Lanka

This research project is conducted to learn accounting standards and norms typically followed in India and Sri Lanka. The purpose of the research is to evaluate the accounting standards of Sri Lanka and India. Thus, identify the standards and their impact on the organizations, the research considers two different organizations such Coal India Limited in India and Ceylon Steel Corporation in Sri Lanka.

Running head: RESEARCH REPORT
Research Report
Name of the Student
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Abstract
This research project is conducted to learn accounting standards and norms typically followed
in India and Sri Lanka. The purpose of the research is to evaluate the accounting standards of
Sri Lanka and India. Thus, identify the standards and their impact on the organizations, the
research considers two differentorganizations such Coal India Limited in India and Ceylon
Steel Corporation in Sri Lanka. The review of literature indicates that both the nations
conduct accounting operation on the basis of Global Accounting Standards. The review of
literature also indicates that the major features of “Sri Lanka Accounting Standards” consists
of the accounting procedures which is prefixed with SLFRS and LKAS and LKAS is the
main accounting standards in Sri Lanka. The review of literature has been observed with the
Ind AS being named and number conforming to International Financial Reporting Standards
(IFRS). The research includes a secondary analysis which is conducted by collecting
secondary data from peer reviewed journals, blogs and annual report of the selected
organizations. To derive the outcome from the data findings, thematic data analysis has been
performed. The findings indicate that there are several differences in accounting standards in
India and Sri Lanka. However, the despite the differences in the accounting standa4rds,
organizations follow global accounting standards to make understandable accounting
standards format, which is further represented to investors for taking investment decisions.

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Table of Contents
1.0 Introduction..........................................................................................................................3
1.1 Background to the research..............................................................................................4
1.2 Research Questions and Explanation...............................................................................4
2.0 Literature Review.................................................................................................................5
2.1 Accounting standards followed both in India and Sri Lanka...........................................6
2.2 Dissimilarities between the accounting standards both India and Sri Lanka...................7
3.0 Research Methodology.........................................................................................................8
3.1 Research philosophy........................................................................................................8
3.2 Research approach...........................................................................................................8
3.3 Data collection.................................................................................................................9
3.4 Qualitative data collection method...................................................................................9
3.5 Ethical consideration......................................................................................................10
3.6 Research limitation.........................................................................................................10
4.0 Investigation and Research Findings.................................................................................10
Theme 1: Comparison of Accounting Standards Followed in Sri Lanka and India............10
Theme 2: Similarity in Accounting Standards of Coal India Ltd and Ceylon Steel
Corporation..........................................................................................................................14
Theme 3: Differences in Accounting Standards of Coal India Ltd and Ceylon Steel
Corporation..........................................................................................................................17
5. Ratio Analysis of Coal India Ltd in India and Ceylon Steel Corporation...........................20

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5.1. Profitability Ratios........................................................................................................20
5.2. Efficiency Ratios...........................................................................................................21
5.3. Liquidity Ratios.............................................................................................................21
5.4. Solvency Ratios.............................................................................................................22
6.0 Conclusion..........................................................................................................................23
References and Bibliography...................................................................................................25

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Topic: Comparison of accounting standards of Coal India Ltd in India and Ceylon Steel
Corporation in Sri Lanka
1.0 Introduction
This research report is based on financial accounting procedures standards of India
and Sri Lanka. It has been identified that the recent paradigm in the economic environment in
India in the last few years led to extending attention being put forward to account standards
as the base towardsensuring potent as well as transparent financial reporting by corporates.As
mentionedby Brown, PreiatoandTarca (2014), accounting standards are the documented or
written statementsconsistingof rules and instructions which is further issued by the
accounting institutions, for the preparation of uniform as well as consistent financial
statements. This may further havefurther impact on different users of accounting information.
Wang (2014) mentioned that the fact that “International Financial Reporting Standards”
(IFRSs), issued by International Accounting Standards Board, as the uniform language of
business to protect the interest of international investor brought into the focus of IAS/IFRS. A
two decades ago, “The Institute of Chartered Accountants” in India become a premier
accounting body in the nation, took upon itself the leadership role by developing Accounting
Standards Board in the year 1997. Nonetheless, Today in India, the accounting standards
have come a long way (Pacter, 2014). However, the effectiveness of developed accounting
standards in India have not been assessed as required.
On the other side, the accounting standards in Sri Lanka observed some significant
changes based on the objectives set by nation itself. Sri Lanka is determined to makes
changes in the accounting standards with objective of developing understandable, enforceable
accounting standards that needs high quality transparent as well as comparable information in
the financial statement. The government of the nation is making effort to promote theuse as

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well as rigorous applications those standards. Thus, to identify the effectiveness of
accounting standards of both the nations, this research report performs a comparative analysis
involving two different organizations namely Coal India Limited and Ceylon Steel
Corporation in Sri Lanka.
1.1 Background to the research
As put forward by Preiato, Brown and Tarca (2015) Accounting Standards are
formed with the focus to harmonize different accounting policies as well as practices in the
use in a nation. Therefore, the major goal of Accounting Standard is, to minimize the
accounting alternatives in the making of financial statements within the grounds of
rationality. Thus, ensuring comparability of financial statements of differentorganizationsas
with the focus to deliver meaningful information to different users of financial statements to
allow to make informed economic decisions. As put forward by Mora and Walker (2015) The
Companies Act and several other statutes in Indian mentions that the financial statement of an
organizations should deliver a true as well as fair view of its financial stateas well as working
outcome. Theprinciple of this act also reveals that thisnecessity is implicit even in the absent
of a particular statutory provisions to this effect. According to Crawford et al., (2014),
financialreporting framework Sri Lanka indicates that Institute of CharteredAccount of Sri
Lanka made a significant decisions to converge with all pronouncements imposed by IASB.
1.2 Research Questions and Explanation
1. What are aspects based on which the differences in the accounting standards between
India and Sri Lanka can be compared?
This research question is appropriate because as the topic revolves around the differences and
similarities of accounting standards of two difference nations. This research question helps to
know all differences in accounting standards followed by India and Sri Lanka.

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2. What are the similarities in Accounting Standards of Coal India Ltd and Ceylon Steel
Corporation?
There are many differences existing in the accounting standards of India and Sri
Lanka but the exact differences are not yet reviewed. So, identifying the accounting standards
of Coal India and Ceylon Steel Corporation will help to know how the similarities and norms
create impact on the organizational operation.
3. What are the differences in the accounting standards Coal India Ltd and Ceylon Steel
Corporation?
This research question is designed to identify how the differences create the barriers
and breakthrough for the organizations. The research question will help to learn how the
organizations in India and Sri Lanka are dealing with the accounting barriers.
2.0 Literature Review
This section of the report provides a comparative analysis of the accounting standards
of two nations namely India and Sri Lanka. To conduct the analysis, twenty different peer-
review journals performed on accounting standards of India and Sri Lanka. Likewise, in order
to make the analysis and critical, booth advantages and disadvantage of accounting standard
produced developed by the nation. As mentioned by Nurunnabi (2015) “Indian Accounting
Standard” is considered as the primary “Accounting Standards Board (ASB). It is identified
that ASB is observed to be a group under the “Institute of Chartered Accountants of India”
which further contains different representatives from governmental stake and academicians
from some relevant professional bodies like ICAI. Likewise, the compare the accounting
standards of both the nations in the review, this section of the research includes facts and
findings of scholarly researched papers.

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2.1 Accounting standards followed both in India and Sri Lanka
As mentioned by Vijitha and Nimalathasan (2014) a reliable and uniform financial
reporting is a significant aspect of a good corporate governance around the world. The author
has mentioned that different nations have different sets of accounting standards to operate
and control the financial reporting by their corporate sector. Nonetheless, with the advent of
globalization, the investment beyond limits as well as trading has enhanced. Therefore, the
author has suggested that the investors require a uniform globally accepted set of Accounting
Standards followed by the organizations; thereby, the comparison across the organization
internationally is facilitated. Therefore, initiative, many nations with the inclusion of India
have positively responded to such requirements. The International Accounting Standards
(IASB) is identified as an international “Accounting Standard” setter. Similarly, Sri Lanka
also follow the global accounting standards to modernize the accounting programs
(Abayadeera&Watty, 2014). In this context, Nagendrakumar, Fonseka and Dissanayake
(2015) commented that modern economic usually rely on the cross border transactions and
the free flow of International Capital. It is identified that a large percentage of all financial
transactions take place across the boarders and this number is expected to increase.
In addition, in Sri Lanka, the major governing body for the accounting standards have
been observed to be separated in the form of convergence of “Sri Lanka Accounting
Standards” as well as “International Financial Reporting Standards” (IFRSs) for generating
high quality solutions. Furthermore, it has also been identified that the fundamental feature of
“Sri Lanka AccountingStandards’” may include some accounting procedures which is
prefixed with SLFRS. As put forward by Albu, Albu and Alexander (2014), SLFRS is
referred as the major accounting standards in Sri Lanka which could correspond to IFRS as
well as LKAS. So, as both the nations are identified to prepare their financial reports
according to “International Financial Reporting Standards” the accounting procedures are

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observed to be based on multiple types of he consideration which are further identified to be
considered as per the prescribed by the regulations of the board. For example, Indian
accounting standards SLFRS 3 is observed to be as the major accounting standards for the
business combination. On the basis of different sorts of similarities under this standards.
Hence, SLFRS focuses on recognizing and measuring different types of financial statements,
as per the identifiable assets needed for the liabilities considered.
2.2 Dissimilarities between the accounting standards both India and Sri Lanka
According to Vijitha and Nimalathasan (2014) the most significant difference in the
accounting procedures followed in Sri Lanka and India is observed with the “Accounting
Policies”, “Changes in Accounting Estimates” as well as “Errors”. Furthermore, it has also
been identified that the implementation of LKAS 8 corresponds to theapplication of
“accounting policies and changes pertaining to the tax effect of the correction prior to the
retrospectiveadjustment which are further considered to be applied to the changes in the
accounting policies (Abayadeera&Watty, 2014). Furthermore, it is also identified that prior
errors are observed with the “exclusion from and mis-statements” that are considered to be
available as derived and taken onto account while preparing the financial statements. Such
errors are observed to be considered with the mistake in using the accounting policies. Some
major differences are explained here with AS 24 Related Party Disclosure and “LKAS 24
Related Party Disclosure”. Some of the disclosure under AS24 Related Party Disclosure has
been mentioned with the disclosure made by the parent organization for the joint venture,
associated and subsidiaries that are known as the related parties (Vijitha&Nimalathasan,
2014). The application of such standards is observedwith the major objectives of improving
the reliability as well as relevance of entity’s financial statements.

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3.0 Research Methodology
To conduct research, the detailed analysis has been conducted by considering the
secondary data. The secondary data has been collected from the reliable secondary sources
such as books, peer reviewed journal articles, newspaper articles, blogs and annual report of
the organization. The following section and paragraph provides the detailed description of the
research methodologies used in the research.
3.1 Research philosophy
According to Mkansi and Acheampong (2012), there are three different types of
research philosophies such as positivism, interpretivism, and pragmatism. According to the
principle of positivism, the knowledge can be driven through the generation of hypothesis
and this further lead to the creation of generalisation of validated patterns of evidences with
the core belief of deduction. On the other side, in interpretivism, the knowledge can be gained
through meaning-rich context sensitive as well as subjectively constructed accounts of the
study considering the principle of induction.
Unlike positivism and interpretivism, pragmatism focuses on developing knowledge that will
have practical bearing and frame relevant action. However, in the present research,
interpretivism research philosophy will be used because in interpretivism research
philosophy, the research findings are usually judged against the criteria of meaning and
casual adequacy and transferability.
3.2 Research approach
There are two different types of research approaches namely deductive and inductive
research approaches. The major difference between this inductive and deductive research
approach functionally aims new theory and test theory while the inductive theory is
concerned with the development of new theory which emerges from the data. As put forward

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by Maxwell (2012), a deductive research approach typically begins with the hypothesis but
the inductive research approach use the research questions to decrees the scope of the study.
However, for the current study, inductive research has been applied.
Justifying the research approaches
Even though, the study does not form new theories, the study is based on the inductive
research approach because with the help of exiting theories, the research questions have been
answered. On the basis of the theoretical underpinning with research to corporate social
responsibility and its impact on the organizational performance.
3.3 Data collection
There are two different types of data such as primary data and secondary data. The
primary data are usually a fresh and they are collected for the first time and thus, they are
original in content (Neuman 2013). Unlike primary data, the secondary data are those which
have been collected by a parties and which already been used, analysed and passed through
the statistical process. However, for the present research, the secondary data has been
collected from the reliable secondary sources such as peer reviewed journals conducted on
CSR and its impact, books on CSR management. In addition, the newspaper articles have
also been used to collect the statistical information. The annual reports of Coal India Ltd
and Ceylon Steel Corporation have been used as the real-world evidences in the analysis.
3.4 Qualitative data collection method
Qualitative data collection techniques are usually explanatory in type and they are
majorly concerned with deriving insights and understanding on the underlying factors and
motivations. Therefore, the qualitative research method has been used in the research because
it is often considered to be providing rich data regarding the existence of real life people to

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understand the behaviour within its broader context. However, in the present study, thematic
analysis has been conducted.
3.5 Ethical consideration
Ethical consideration is another significant challenge that researcher often faces
during the making of the project. The principle of Data Collection Act 1998, the data has
been kept confidential and the identity of the respondents has not been disclosed or
mentioned anywhere in the research work. When it comes to primary secondary data
collection, there is no such major challenge that researches faces but as the secondary data
has been collected, data provided by other researchers have clearly been acknowledge to
avoid the copyright issue. To avoid any challenges from the external parties, all
organizational data have been taken from organization’s corporate websites and annual
report.
3.6 Research limitation
The present research is limited to secondary analysis only, the study lacks a primary
analysis. In addition to this, time and budget is another significant limitation that the research
faces because due to lack of time, the entire research work process have been narrowed
down. More rich content would has been collected if some more time was given to the
research. Thereby, the research lacks consistency and the scope for future research is limited.
4.0 Investigation and Research Findings
Theme 1: Comparison of Accounting Standards Followed in Sri Lanka and India
From analyzing the gathered data from Institute of Charter Accountants in India and Sri
Lankan Accounting Standards Committee it has been gathered that both the countries follow
accounting standards that has both similar and different attributes. From analyzing the Indian

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accounting standards described in the figure below it can be observed that the accounting
standards board carries out the function of following the accounting standards
(Abayadeera&Watty, 2014). The Indian accounting standards described below also takes into
consideration the applicable laws, customs, usages as well as business environment. IFRS
accounting standards are followed in India that ensures suitable representation of companies
financial statements to all the parties interested. The accounting standards board of India is
observed to include industry representatives, Central board of direct taxes and Controller and
Auditor General of India (Abayadeera&Watty, 2014). Moreover, certain accounting
standards such as IASC and ICAI consider accuracy and consistency to be the vital aspects of
financial statements. In addition, it has also been assumed that the financial statements are
drawn on accrual basis without any changes within the accounting policies. Moreover, these
Indian accounting standards also make sure that there is a necessity of liquidating or winding
up the substantial aspects of the company. The accounting standards ranging from AS-1 to
AS-22 provides vita considerations that support the selection and application of suitable
accounting policies (Das, 2015).

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Accounting Standards Followed in India
From analyzing the accounting standards of Sri Lanka that is mentioned under LKAS, the
chartered accountants of the nation indicated that the nation follows accounting standards
under Auditing Standards Act No 15 of 1995 (Dewi, 2015). This authorizes Institute of
Chartered Accountants of Sri Lanka for issuing relevant accounting standards and needs
particular business enterprises for developing and presenting the financial statements in
adherence with Sri Lankan Accounting Sanders. Accounting standards of Sri Lanka is
observed to include accounting standards that is different from Indian standards and is

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explained as SLFRS and LKAS. In addition, the nation has also implemented IFRIC and
SICS pronouncements that are issued by the IASB. Accounting standards of Sri Lanka further
considers the fact that all the companies operating within this nation must follow “Statements
of Recommended Practices”, “financial Reporting Guidelines” and “Statement of Alternate
Treatment” those are issued by the accounting institute (Dissanayake, 2017).
Accounting Standards Followed in Sri Lanka
Sri Lankan accounting standards LKAS 1 “Presentation of Financial Statements” is explained
within the paragraphs of 1-139. All the paragraphs mentioned within the accounting
standards list are deemed to have equal opportunity. Under SLFRS accounting standard,
presentation of general purpose financial statements must ensure comparability both with an
organizational financial statements and financial statements of other organizations
(Abayadeera&Watty, 2014). It is made sure by the Sri Lankan accounting standards that an
organization whose financial statements are in alignment with SLFRS must ensure an explicit
along with unreserved statement of the compliance within the notes made by the company.
Moreover, following this accounting standard an organization must not explain financial

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statements as complying with SLFRS standards unless they are aligned with all the
requirements of the accounting standards. Opposing to the Indian accounting standards, the
SLFRS ensures that an organization cannot rectify the accounting policies either through
disclosure of the accounting policies or by means of exploratory materials or notes
(Abayadeera&Watty, 2014). On the other hand, IFRS followed by India ensures that an
organization must follow accounting disclosure policies mentioned under AS-1. This
facilitates in dealing with disclosure of considerable accounting policies followed by Indian
organizations in development of their financial statements.
Differences in Accounting Standards of Both Nations (IFRS and SLFRS)
Theme 2: Similarity in Accounting Standards of Coal India Ltd and Ceylon Steel
Corporation
Accounting Standards Followed in Coal India Ltd and Ceylon Steel Corporation is observed
to have similar accounting standards based on the qualitative aspects (Abayadeera & Watty,
2014). Both the accounting standards of Sri Lanka and Australia much as IFRS and SLFRS is
observed to be similar based on certain qualitative characteristics that must be followed by
the organizations in preparation of their financial statements. Coal India Ltd of India and
Ceylon Steel Corporation of Sri Lanka is observed to maintain compliance with the
accounting standards and qualitative characteristics within AASB framework and SLFRS
(Khan, 2016).

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 Faithful Representation- Coal India Ltd of India and Ceylon Steel Corporation of
Sri Lanka are observed to prepare transparent and fair financial statements
representation within the annual report prepared by these companies. For making sure
that faithful representation of financial statements, both these companies ensure that
shareholder confidence has a significant role focused on the perception of the
organization (Abayadeera&Watty, 2014). Audit report prepared by KMPG for these
companies also takes into account the faithful representation of financial report is
maintained by Coal India Ltd of India and Ceylon Steel Corporation of Sri Lanka.
This is for the reason that these companies follow important accounting standards
faithfully and considerably (Doliya& Singh, 2016).
 Relevance- Based on such accounting standards set by SLFRS and AASB, it can be
observed that Coal India Ltd of India and Ceylon Steel Corporation of Sri Lanka
provide relevant information in supporting the better decision making process of the
organization. Considering the case of these companies, it is gathered that they follow
the relevancy standards set by AASB, IFRS and SLFRS. These companies also take
into consideration the current depreciation rates and tax along with other aspects. This
is the reason for which the financial decisions taken by Coal India Ltd of India and
Ceylon Steel Corporation of Sri Lanka are deemed to maintain valuable aspect that is
also reflected in their financial statements (Kamath, 2017).
 Verifiability- Coal India Ltd of India and Ceylon Steel Corporation of Sri Lanka is
observed to maintain the qualitative aspect of verifiability within their financial
statements in consideration to the accounting standards followed within their
respective countries such as IFRS, AASB and SLFRS. Complying by these standards,
the companies are observed to maintain their financial data in a manner that the
investors remain able to verify the same in an effective manner (Abayadeera&Watty,

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2014). In order to make sure that financial statements verifiability is maintained Coal
India Ltd of India and Ceylon Steel Corporation of Sri Lanka considers preparing a
section where notes will be explained in the organization’s annual report along with
all their financial statements.
 Comparability- Based on the accounting standards followed in India and Sri Lanka
such as IFRS, AASB and SLFRS, it is mentioned that these companies provides
increased opportunities to all its stakeholders that can facilitate them in understanding
the differences as well as similarities and deviations in the financial information
explained within their financial reports (Ratnatunga&Tse, 2017). Certain vital
information is provided to the users by Coal India Ltd of India and Ceylon Steel
Corporation of Sri Lanka Coal India Ltd of India and Ceylon Steel Corporation of Sri
Lanka through charts as well as tables. This enhances understanding of the financial
statements represented by companies which can further facilitate them in better
decision making. Financial position of Coal India Ltd of India and Ceylon Steel
Corporation of Sri Lanka can also be compared with its competitors within the market
that facilitates representing real financial position of these organizations
(Abayadeera&Watty, 2014).
 Understandability- AASB, IFRS and SLFRS ensures that the Coal India Ltd of India
and Ceylon Steel Corporation of Sri Lanka complies with understandability
qualitative aspects of these standards in order to prepare financial information in a
manner that makes it simple for the investors to understand financial statements in an
effective manner. Coal India Ltd of India and Ceylon Steel Corporation of Sri Lanka
reports their financial statements in a format that is aligned with financial reporting
conceptual framework mentioned under AASB, IASB and SLFRS accounting

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conceptual framework which supports its investors in understanding them in an
efficient way (Abayadeera&Watty, 2014).
 Timeliness- Coal India Ltd of India and Ceylon Steel Corporation of Sri Lanka
follows the accounting standards of AASB, IASB and SLFRS in making their
financial statements highly reliable and of better quality based on which investors can
take better decision making regarding their further investment within these
organizations. Quarterly along with the annual reports of Coal India Ltd of India and
Ceylon Steel Corporation of Sri Lanka are prepared in a manner so that it offers to its
investors a proper view regarding the situation of the companies (Saggar& Singh,
2017). Considering the same, accounting standards followed by both of these
companies belonging to different companies are similar. This is because they comply
by the accounting standards of timely information disclosure that can facilitate them
in obtaining a fair perception concerning the performance and position of companies
in the market.
Theme 3: Differences in Accounting Standards of Coal India Ltd and Ceylon Steel
Corporation
Based on several amendments made in the accounting standards followed in India and Sri
Lanka it has been gathered that there are certain differences within the accounting standards
followed by Coal India Ltd of India and Ceylon Steel Corporation of Sri Lanka. It has been
evidenced that Ceylon Steel Corporation of Sri Lanka puts an increased focus on the balance
sheet in comparison to historical focus on profit and loss account. These new standards are
prefixed to be SLFRS in accordance with LKAS and corresponding to IAS (Bhatt & Olive,
2016).
On the other hand, Coal India Ltd of India follows IFRS and AASB that has certain different
accounting standards complaisance in comparison to the Sri Lankan ones. For instance, Coal

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India Ltd of India follows “AS 22- Accounting for Taxes on Income”, based on which the
debt and securities of this company is deemed to be listed within recognized stock exchange
of India. Considering the same accounting standard, Coal India Ltd of India considers that
takes on income is acquired within a definite financial period as the expenses and revenue are
related and the company also considers that taxable income might significantly be different
from accounting income (Kraal, Yapa& Joshi, 2015).
Moreover, it has been observed in case of Coal India Ltd of India that it follows “IAS
8 Accounting Policies, Changes in Accounting Estimates and Errors” that is associated with
the changes associated with the misstatement or omission of items based on their nature or
size, collectively or individually. In Coal India Ltd previous period errors are observed in the
“misstatements and omissions form” within its financial statements. The company considers
that this takes place from the “misuse, failure or offering unreliable information” that is
deemed to be attained and taken into consideration while developing financial statements of
this company (Kuruppu, Oyelere& Al-Jabri, 2015).

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In contrast, Ceylon Steel Corporation of Sri Lanka is observed to follow “LKAS 8 -
Accounting Policies, Changes in Accounting Estimates and Errors” that is different from the
Indian accounting standards. The implementation of LKAS 8 in the company corresponds to
the implementation of the accounting policies. Moreover, Ceylon Steel Corporation considers
conducting changes focused on tax impacts of the corrections before the retrospective
adjustments (Perera& Chand, 2015). This is observed to be applied within the accounting
policy changes that are observed to be accounted based on the disclosers prepared in
compliance with LKAS 12 Income Taxes.
Certain differences in the implementation of accounting standards by Ceylon Steel
Corporation and Coal India Ltd are observed through measuring differences in its standards.
Coal India Ltd follows “Ind AS 24 Related Party Disclosures” and Ceylon Steel Corporation
follows “LKAS 24-Related Party Disclosures”. Different disclosures that are made by Coal
India Ltd based on “Ind AS 24 Related Party Disclosures” that considers disclosure can be
made by the organization for joint venture, subsidiaries and associated referred as related
parties (Ratnatunga, Balachandran&Tse, 2017). Differing the same, Ceylon Steel Corporation
follows “LKAS 24-Related Party Disclosures” that ensures prescribed criteria for choosing

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and changing accounting policies along with ensuring changes within accounting
anticipations focused on error corrections.
5. Ratio Analysis of Coal India Ltd in India and Ceylon Steel Corporation
5.1. Profitability Ratios
Profitability Ratio Analysis:-
Coal India Ltd Ceylon Steel Corporation
Particulars 2017 2016 2017 2016
Revenue (A) 83,808.00 83,560.00 55475 53473
Net Profit/Loss after Tax (D) 9266 14267 1422.1 726.3
Ordinary Equity(H) 24872 34937 1533.5 -1234.8
Total Assets (G) 116078.87 112828.2 22915.8 23502.2
Net Profit Margin (D/A) 11.06% 17.07% 2.56% 1.36%
Return on Equity (A/H)) 37.25% 40.84% 92.74% -
58.82%
Return on Assets (G/D) 7.98% 12.64% 6.21% 3.09%
Net profit margin of Coal India Ltd is observed to decrease from the years from 2017
to 2016. This is for the reason that the company is not able to use its assets in a better manner
for increasing its profitability that indicates poor performance of the company in earning
profits (Abayadeera & Watty, 2014). On the other hand net profit margin of Ceylon Steel
Corporation is observed to increase in 2017 in comparison to 2016. This is for the reason that
the company has been capable to be highly effective in turning sales into real profit.

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Return on assets of Coal India Ltd is observed to decrease from the years from 2017
to 2016. This is for the reason that it is not being able to attain enough profit in comparison to
its overall resources. On the other hand return on assets of Ceylon Steel Corporation is
observed to increase in 2017 in comparison to 2016. This is for the reason that it is highly
capable to increase its profit margin through employing its assets and increasing sales (Bhatt
& Olive, 2016).
5.2. Efficiency Ratios
Coal India Ltd Ceylon Steel Corporation
Particulars 2017 2016 2017 2016
Cost of Goods
Sold(A)
122,294.46 108,147.54 39739.7 38538.6
Inventory (H) 8,945.27 7,569.17 4080.4 4558.5
Revenue (A) 83,808.00 83,560.00 55475 53473
Total Assets
(G)
116078.87 112828.2 22915.8 23502.2
Inventory
Turnover
Ratio (A/H))
13.67 14.29 9.74 8.45
Total Asset
Turnover
Ratio (A/G)
0.72 0.74 2.42 2.28
Inventory turnover ratio of Coal India Ltd is observed to decrease from the years from
2017 to 2016. This is for the reason that the company is not that able to manage its inventory

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through considering the cost of goods sold (Abayadeera & Watty, 2014). On the other hand
inventory turnover ratio of Ceylon Steel Corporation is observed to increase in 2017 in
comparison to 2016. This is for the reason that the company is efficient in selling its
inventory through increase sales or by offering huge discounts.
Total asset turnover of Coal India Ltd is observed to decrease from the years from
2017 to 2016. On the other hand total assets turnover of Ceylon Steel Corporation is observed
to increase in 2017 in comparison to 2016. This is for the reason that both the companies
indicate increased sales and less accumulation of inventory (Bhatt & Olive, 2016). This also
serves as an effective measure of business performance as this signifies that these companies
are making high profit on each sale.
5.3. Liquidity Ratios
Short-Term Liquidity Ratio Analysis:-
Coal India Ltd Ceylon Steel Corporation
2017 2016 2017 2016
Total Current Assets (A) 68263.06 72326.52 6994.2 7427
Receivables (D) 10735.85 11447.61 744.7 763.9
Cash and equivalents (B) 3579.93 4876.4 909.4 948.1
Total Current Liabilities (F) 42,231.98 31,354.16 8824.2 8992.7
Current Ratio (A/F) 1.62 2.31 0.79 0.83
Quick Ratio [(B+D)/F) 0.34 0.52 0.19 0.19
Current ratio of Coal India Ltd is observed to decrease from the years from 2017 to
2016. This is for the reason that the company has attained increased capability to pay its short

24RESEARCH REPORT
term along with long term obligations. This also indicates enhanced company operations
through addressing liabilities. On the other hand current ratio of Ceylon Steel Corporation is
observed to increase in 2017 in comparison to 2016. This is for the reason that it indicates
under trading and over capitalization done by the company and this also signifies that the
company has high solvency (Abayadeera & Watty, 2014).
Quick ratio of Coal India Ltd is observed to decrease from the years from 2017 to
2016. On the other hand net profit margin of Ceylon Steel Corporation is observed to remain
constant in 2017 in comparison to 2016. This is for the reason that both the companies are
observed to depend excessively on inventory along with other assets to address its short term
liabilities (Bhatt & Olive, 2016). This also indicates that the company does not have enough
assets to pay off its creditors.
5.4. Solvency Ratios
Debt Equity Ratio
Coal India Ltd Ceylon Steel Corporation
2017 2016 2017 2016
Total Liabilities (A) 42,231.98 31,354.16 13039.7 14720.
3
Total Assets (B) 116078.87 112828.2 22915.8 23502.
2
Total Equity (C ) 24872 34937 1533.5 -
1234.8
Debt-to-total Assets Ratio (A/B) 0.36 0.28 0.57 0.63
Debt to Equity Ratio (A/C) 1.70 0.90 8.50 -11.92

25RESEARCH REPORT
Debt to total assets ratio of Coal India Ltd is observed to increase from the years from
2017 to 2016. On the other hand net profit margin of Ceylon Steel Corporation is observed to
decrease in 2017 in comparison to 2016. This is for the reason that both the companies have
less amount total assets that are financed by its liabilities, debt and creditors. It also signifies
that both the organizations are sluggish in enhancing its profitability and acquiring increased
assets with time (Abayadeera & Watty, 2014).
Debt to equity ratio of Coal India Ltd is observed to decrease from the years from
2017 to 2016. On the other hand debt to equity ratio of Ceylon Steel Corporation is observed
to increase in 2017 in comparison to 2016. This is for the reason that both the companies are
not that capable to attain enough cash for addressing all its debt obligations and the company
has increased assets that are debt financed (Bhatt & Olive, 2016).
6.0 Conclusion
This research report was based on financial accounting procedures standards of India and Sri
Lanka. It has been identified that the recent paradigm in the economic environment in India
in the last few years led to extending attention being put forward to account standards as the
base towards ensuring potent as well as transparent financial reporting by corporate. It was
gathered from the paper that Accounting Standards are formed with the focus to harmonize
different accounting policies as well as practices in the use in a nation. Therefore, the major
goal of Accounting Standard is, to minimize the accounting alternatives in the making of
financial statements within the grounds of rationality. Thus, ensuring comparability of
financial statements of different organizations focus to deliver meaningful information to
different users of financial statements and allow making informed economic decisions. It is
also gathered that Coal India Ltd of India and Ceylon Steel Corporation of Sri Lanka is
observed to prepare transparent and fair financial statements representation within the annual

26RESEARCH REPORT
report prepared by these companies. For making sure that faithful representation of financial
statements, both these companies ensure that shareholder confidence has a significant role
focused on the perception of the organization. Audit report prepared by KMPG for these
companies also takes into account the faithful representation of financial report is maintained
by Coal India Ltd of India and Ceylon Steel Corporation of Sri Lanka. Analysis of the
research indicated that Ceylon Steel Corporation of Sri Lanka puts an increased focus on the
balance sheet in comparison to historical focus on profit and loss account. These new
standards are prefixed to be SLFRS in accordance with LKAS and corresponding to IAS.

27RESEARCH REPORT
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