Abstract:
Capital efficiency indicates the efficiency of an organization in terms of efficient utilization of its money to generate profit. Simply defined, capital efficiency measures the quantum of investment made by an organization and the amount of return it generates from that investment. In financial management, capital efficiency is generally measured through ROCE. Thus, ROCE is a pecuniary proportion which is used to evaluate the profit rate and wealth effectiveness of an enterprise. It helps us to comprehend how fine an enterprise is generating profits from its invested capital. The CPSEs were considered to serve as an engine for fiscal intensification of the country. They make available essential goods and services and occupy a noteworthy market place in various important sectors (i.e., both manufacturing sector and service sector) of the economy. In the above context, the study attempts to scan the capital efficiency of selected service industries in Indian CPSEs during 2010-11 to 2019-20. Overall, the service industries produce confirmatory as well as cynical returns on their capital invested in the business. However, on the average, all the service industries (except telecommunication & information technology industry) display optimistic ROCE, thereby indicating that these service industries have employed their capital effectively in producing profit. However, negative ROCE on a consistent basis as observed in telecommunication & information technology industry implies that this sector is not able to compete with the private players in the market.
|