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Cox & Kings Financial Ratios


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  • 1. DAYANANDA SAGAR COLLEGE OF ENGINEERINGFinancial Ratio AnalysisSubmitted To:Mrs. PadmaFaculty MemberDepartment of MBA-VTUSubmitted By:Mr.Santosh Hegde1DS12MBA62MBA 2ndSemester
  • 2. CONTENTS1. About Cox & Kings2. Balance Sheet for 2009-20123. Profit & Loss Account for 2009-20124. Cash Flow Statement for 2009-20125. Financial RatiosLiquidity RatioCurrent RatioQuick RatioLong Term Solvency RatioDebt Equity RatioInterest Coverage RatioTurnover RatioStock Turnover RatioDebtor’s Turnover RatioTotal Assets Turnover RatioFixed Assets Turnover RatioProfitability RatiosGross Profit RatioNet Profit RatioOperating Profit RatioReturn On Capital EmployedEarnings per ShareDividend Payout Ratio6. Conclusion7. Bibliography
  • 3. About Cox & Kings LtdCox And Kings is the longest established travel company in the world, its history stretching backto 1758 when Richard Cox was appointed as regimental agent to the Foot Guards in India underthe command of Lord Ligonier.By 1878, C&K were agents for most British regiments posted overseas, including the RoyalCavalry, Artillery and Infantry, as well as the Royal Wagon Train and the Household Brigade.The Royal Navy was next and in 1912, The Royal Air Force came under its wings.Between 1750s and 1950s, Cox & Kings was witness to an exciting era in Indian history, and, inits own way, helped to shape it. In 1947, the British administration departed, but bound by strongties to India, Cox & Kings stayed on and flourished. Today, Cox & Kings is a premium brand inall travel related services in the Indian subcontinent, employing over 5000 trained professionals.Its India operations are headquartered in Mumbai and have the status of a limited company. Ithas over 12 fully owned offices in India across key cities such as New Delhi, Chennai,Bangalore, Kolkata, Ahmedabad, Kochi, Hyderabad, Pune, Goa, Nagpur and Jaipur.The worldwide offices are located in UK, USA, Japan, Russia, Singapore and Dubai. It hasassociate offices in Germany, Italy, Spain, South Africa, Sweden and Australia.The principal services offered by the company are:Destination ManagementOutbound TourismBusiness TravelIncentive & Conference SolutionsDomestic HolidaysNRITrade FairsForeign ExchangeInsurance
  • 4. Balance Sheet Of Cox & Kings ---------------in Rs.Cr.------------------Particulars Mar’12 Mar’11 Mar’1012mnths 12mnths 12mnthsSources Of FundsTotal Share Capital 68.26 68.26 62.92Equity Share Capital 68.26 68.26 62.92Share Application Money 0.00 0.00 0.00Preference Share Capital 0.00 0.00 0.00Init. Contribution Settler 0.00 0.00 0.00Pref Share Application Money 0.00 0.00 0.00Employee Stock Option 0.00 0.00 0.00Reserves 1,124.11 1,136.25 744.14Revaluation Reserves 0.00 3.34 3.05Net worth 1,192.37 1,207.85 810.11Secured Loans 3,271.27 544.33 294.60Unsecured Loans 434.90 300.00 209.73Total Debt 3,706.17 844.33 504.33Minority Interest 0.00 0.00 0.00Policy Holders Funds 0.00 0.00 0.00Group Share in Joint Venture 0.00 18.13 4.75Total Liabilities 4,898.54 2,070.31 1,319.19Mar’12 Mar’11 Mar’10Application Of FundsGross Block 5,137.91 401.56 351.22Less: Accum. Depreciation 560.30 81.94 61.54Net Block 4,577.61 319.62 289.68Capital Work in Progress 123.75 64.12 20.45Investments 304.17 211.23 258.38Inventories 17.26 7.20 6.56Sundry Debtors 715.06 407.74 302.04Cash and Bank Balance 1,053.27 352.45 287.59Total Current Assets 1,785.59 767.39 596.19Loans and Advances 858.72 374.13 265.34Fixed Deposits 0.00 606.51 85.76Total CA, Loans & Advances 2,644.31 1,748.03 947.29Deferred Credit 0.00 0.00 0.00Current Liabilities 2,673.17 259.12 176.95Provisions 78.13 35.00 34.37Total CL & Provisions 2,751.30 294.12 211.32Net Current Assets -106.99 1,453.91 735.97Minority Interest 0.00 0.00 0.00Group Share in Joint Venture 0.00 19.78 12.65Miscellaneous Expenses 0.00 1.65 2.08Total Assets 4,898.54 2,070.31 1,319.21Contingent Liabilities 149.84 15.02 15.75Book Value (Rs) 87.34 176.45 128.26
  • 5. Profit & Loss Account Of Cox & Kings ---------------in Rs.Cr.--------------Particulars Mar’12 Mar’11 Mar’1012mnths 12mnths 12mnthsIncomeSales Turnover 837.94 495.61 399.66Excise Duty 0.00 0.00 0.00Net Sales 837.94 495.61 399.66Other Income 134.85 37.03 41.52Stock Adjustments 0.00 0.00 0.00Total Income 972.79 532.64 441.18ExpenditureRaw Materials 0.00 0.00 0.00Power & Fuel Cost 0.00 0.00 0.00Employee Cost 385.16 129.70 99.48Other Manufacturing Expenses 0.00 0.00 0.00Selling and Admin Expenses 0.00 115.35 92.69Miscellaneous Expenses 285.47 21.54 20.45Preoperative Exp Capitalized 0.00 0.00 0.00Total Expenses 670.63 266.59 212.62Mar’12 Mar’11 Mar’10Operating Profit 167.31 229.02 187.04PBDIT 302.16 266.05 228.56Interest 184.29 54.39 26.97PBDT 117.87 211.66 201.59Depreciation 49.13 18.55 15.07Other Written Off 0.00 0.00 0.00Profit Before Tax 68.74 193.11 186.52Extra-ordinary items -2.15 -0.54 0.00PBT (Post Extra-ord Items) 66.59 192.57 186.52Tax 39.64 62.63 51.69Reported Net Profit 26.98 130.59 134.81Minority Interest 0.00 0.00 0.00Share Of P/L Of Associates -14.62 1.50 0.96Net P/L After Minority Int & Share Of Associates 74.90 128.97 133.85Total Value Addition 670.63 266.59 212.63Preference Dividend 0.00 0.00 0.00Equity Dividend 13.65 6.83 6.29Corporate Dividend Tax 2.21 1.11 1.05Per share data (annualized)Shares in issue (lakhs) 1,365.28 682.64 629.23Earnings Per Share (Rs) 1.98 19.13 21.42Equity Dividend (%) 0.00 0.00 0.00Book Value (Rs) 87.34 176.45 128.26
  • 6. Financial RatiosUse of Financial Ratios: Liquidity Position Solvency Position Operating Efficiency ProfitabilityLimitations of Financial Ratios: Calculated from financial statements which are themselves subject to many limitations For analysis, many ratios & factors are to be considered Calculated ratios require comparison Various terms are to be explained for inter-firm comparison Price level to be considered while making comparison Ratio analysis is based on judgment of the analystCash Flow Of Cox & Kings --------------in Rs.Cr.----------------Particulars Mar’12 Mar’11 Mar’1012mnths 12mnths 12mnthsNet Profit Before Tax 68.74 193.10 186.51Net Cash From Operating Activities -136.58 95.05 51.22Net Cash (used in)/from Investing Activities -2660.39 -81.34 -339.92Net Cash (used in)/from Financing Activities 2483.64 573.25 591.19Net (decrease)/increase In Cash and Cash Equivalents -313.33 586.96 302.49Opening Cash & Cash Equivalents 1327.73 373.85 71.36Closing Cash & Cash Equivalents 1014.40 960.81 373.85
  • 7. LIQUIDITY RATIOS / SHORT TERM SOLVENCY RATIOSCurrent Ratio: The current ratio is popular financial ratio used to test a company’s liquidity byderiving the proportion of current assets available to cover current liabilitiesFormula:Analysis: The Standard ratio in this case is 2:1. In the year 2010-2011, the ratio is higher than2011-2012. It reflects under trading or unemployed or unutilized resources. This is a very badsign of management. It indicates a decrease in the working capital of Cox & Kings to pay out itscurrent obligations as compared to 2010-2011Cause: In 2010-2011, Current Assets are proportionately higher than the years 2009-2010 &2011-2012.01234567Mar10 Mar11 Mar12Current RatioCurrent Ratio Of Cox & Kings -------in Rs.Cr.--------Particulars Mar’12 Mar’11 Mar’10Current Ratio 0.85 5.94 4.48
  • 8. Quick Ratio / Acid Test Ratio: Quick Ratio is the ratio of quick assets (generally current assetless inventory) to current liabilities; indicates a company’s ability to satisfy current liabilitieswith its most liquid assetsFormula:Analysis: The standard ratio in this case is 1:1. This means for every Re.1 of Current Liabilities,there should be Re.1 of Current Assets. This ratio is also used for testing the solvency of theenterprise. The quick ratio value being higher than 1 indicates that the quick assets are enough topay out the quick liabilities. Its value in 2011-2012 has decreased over its value in 2009-2011indicating a fall in the capacity of the company to pay out the obligations. Since the ratio is 0.95the company needs to work on its liquidity ratioCause: In 2011-2012, the Liquid Assets are proportionately lower than the year 2009-2010 &2010-2011.01234567Mar12 Mar11 Mar10Qucik RatioQuick Ratio Of Cox & Kings -------in Rs.Cr.--------Particulars Mar’12 Mar’11 Mar’10Quick Ratio 0.95 5.91 4.44
  • 9. LONG TERM SOLVENCY RATIODebt Equity Ratio: Debt to Equity ratio indicates the relationship between the external equitiesor outsiders funds and the internal equities or shareholders funds.Formula:Analysis: The standard ratio in this case is 0.5:1(Long-Term Debt: Shareholder’s Fund). Theposition of the creditors will be uncomfortable if the ratio is higher than this.00.511.522.533.5Mar12 Mar11 Mar10Debt Equity RatioDebt Equity Ratio Of Cox & Kings -------in Rs.Cr.--------Particulars Mar’12 Mar’11 Mar’10Debt Equity Ratio 3.11 0.70 0.62
  • 10. Interest Coverage Ratio: This ratio is used to determine how easily a company can pay intereston outstanding debt.Formula:Analysis: The lower the ratio, the more the company is burdened by debt expenses. The ratio isdecreasing year by year. If the company’s ratio is 1.5 or lower, its ability to meet interestexpenses may be questionable.Cause: Due to less in earnings.02468Mar12 Mar11 Mar10Interest Coverage RatioInterest Coverage Ratio Of Cox & Kings -------in Rs.Cr.-----Particulars Mar’12 Mar’11 Mar’10Interest Coverage Ratio 1.54 4.31 6.86
  • 11. ACTIVITY / TURNOVER RATIOSInventory Turnover Ratio / Stock Turnover Ratio: It is the ratio of cost of goods sold toinventory. This ratio indicates how many times inventory is created and sold during the period. Itindicates whether investment in inventory is efficiently used or not.Formula:Analysis: In 2011-2012, the ratio is higher than in the year 2010-2011. It shows a good sign ofthe management.Cause: The turnover on the year 2011-2012, is higher than in the year 2010-2011, 2009-2010.0102030405060Mar12 Mar11 Mar10Stock Turnover RatioStock Turnover Ratio Of Cox & Kings -------in Rs.Cr.--------Particulars Mar’12 Mar’11 Mar’10Stock Turnover Ratio 48.55 32.73 31.58
  • 12. Debtor’s Turnover Ratio: The ratio reveals the number of days the debtors enjoyed as creditperiod allowed to them. It shows how receivables or debtors are converted into cash. It is a testof the liquidity of the debtors of a firm. This ratio is also analyzed to study the debt collectionpolicy of an enterprise. A large credit period indicates a very bad collection policy.Formula:Analysis: Allowing the customers extended time to pay is essentially providing them free credit.If customers fail to pay or take their time in paying, it could cost the business in bad debtexpenses or, if the inventory to create the goods or the labor for the services was financed, inhigh interest expense - all of which hurts business profits. To improve this ratio, collect fromcustomers as soon as possible.1.351.41.451.51.55Mar12 Mar11 Mar10Debtors Turnover RatioDebtor’s Turnover Ratio Of Cox & Kings -----in Rs.Cr.----Particulars Mar’12 Mar’11 Mar’10Debtor’s Turnover Ratio 1.49 1.40 1.50
  • 13. Total Assets Turnover Ratio: This ratio is used for comparing Sales to the total assets of thebusiness. It also reveals the extent of utilization of the total assets in the business. The ratioproves the efficiency of the management operational activities. The higher the ratio the larger isthe rate of return on capital invested in total assets.Formula:Total Asset Turnover = Sales/Total AssetsAnalysis: During 2009-2010 and 2010-2011 the ratio proves the inefficiency of the managementin operational activities. The rate of return on capital investment is not sufficient of the companyin the year 2011-2012.Cause: Comparing 2009-2010 and 2010-2011, we see that Total Assets (especially Fixed Assets)is proportionately higher in the year 2009-2010.’12 Mar’11 Mar’10Total Asset Turnover RatioTotal Asset Turnover Ratio Of Cox & Kings -----in Rs.Cr.----Particulars Mar’12 Mar’11 Mar’10Total Asset Turnover Ratio 0.38 0.27 0.37
  • 14. Fixed Asset Turnover Ratio: This ratio reveals the relationship between the Fixed Assets andProprietors’ fund of concern. It also shows whether the financial planning of a concern is soundor not or how much of the fixed assets are converted by the Proprietors’ fund. The ratio isapplicable for the purpose of testing the solvency position and efficiency of the managementFormula:Where,Fixed Assets = Gross Block – Depreciation + Net Block + Capital Work In ProgressProprietor’s Fund = Equity Share Capital + Preference Share Capital + Reserves and SurplusAnalysis: There has been a decrease in the value of the ratio in 2011-2012 as compared to 2010-2011 & 2009-2010. Since the ratio is declining over time, the company has either over investedin fixed assets or it needs to issue new products to revive its sales.Cause: Since the efficiency of the firm to generate revenues from investments in fixed assets hasgone down.01234Mar12 Mar11 Mar10Fixed Assets RatioFixed Assets Ratio Of Cox & Kings -------in Rs.Cr.--------Particulars Mar’12 Mar’11 Mar’10Fixed Assets Ratio 0.34 3.16 3.51
  • 15. PROFITABILITY RATIOSGross Profit Ratio: The gross profit ratio shows the proportion of profits generated by the saleof products or services, before selling and administrative expenses. In essence, it reveals theability of a business to create sellable products in a cost effective manner.Formula:Analysis: The value of the ratio has been decreased for the financial year 2011-2012 compared toits value in 2009-2010 and 2010-2011 indicating that it has made less profit.Cause: Decrease in the ratio may be:Purchase of raw materials at unfavorable ratesOver investment or inefficient use of resourcesExcessive competition, compelling to sell at reduced prices01020304050Mar12 Mar11 Mar10Gross Profit RatioGross Profit Ratio Of Cox & Kings -------in Rs.Cr.--------Particulars Mar’12 Mar’11 Mar’10Gross Profit Ratio (%) 14.10 42.46 43.02
  • 16. Net Profit Ratio: The ratio indicates the ratio of the net profit to net sales. The amount left outof the proprietors’ fund may be known from the ratio. The ratio is very helpful for measuring theprofitability of the business. It is also helpful to measure the operational efficiency of themanagement of the concern. The more the ratio, greater is the profitability of the business.Formula:Analysis: The ratio of 2011-2012 is less than 20009-2010 and 2010-2012. This means that theprofit position has decreased from the previous years.Cause: This has happened due to more than proportionate increase in :Material Price andDirect expenditure010203040Mar12 Mar11 Mar10Net Profit RatioNet Profit Ratio Of Cox & Kings -------in Rs.Cr.--------Particulars Mar’12 Mar’11 Mar’10Net Profit Ratio (%) 4.14 24.84 32.43
  • 17. Operating Profit Ratio: This ratio indicates the profitability of current operations. This ratiodoes not take into account the company’s capital and tax structure.Formula:Analysis: Operating Profit Ratio is supposed to be below 70%. Here the ratio is well below 70%.This is favorable for the company as it provides larger margin of profit to meet operationexpenses.8.599.51010.511Mar12 Mar11 Mar10Operating Profit RatioOperating Profit Ratio Of Cox & Kings -------in Rs.Cr.--------Particulars Mar’12 Mar’11 Mar’10Operating Profit Ratio (%) 9.43 10.67 10.23
  • 18. Return on Capital Employed: Return on Capital Employed is a measure of the returns that abusiness is achieving from that capital employed, usually expressed in percentage terms. Capitalemployed equals a company’s equity plus Non- current liabilities (or Total Assets – CurrentLiabilities)Formula:Analysis: If the company’s ratio is 20% or more is considered very well. Since the company haslower value of ROCE which indicates lower profitability.051015Mar12 Mar11 Mar10Return on Capital EmployedReturn on Capital Employed Of Cox & Kings -----in Rs.Cr.----Particulars Mar’12 Mar’11 Mar’10Return on Capital Employed (%) 5.80 11.44 14.10
  • 19. Earnings per Share: The term Earnings per Share represents the portion of the company’searnings, net of taxes and preferred stock dividends, that is allocated to each share of commonstock.Formula:Analysis: The Earning per Share is the indicator of what the shareholders are earning. Here theEPS has dropped from 11.24 in 2011 to 5.69 in 2012. A decrease in the EPS value in the year2011-2012, over the previous year indicates a low earning value for the share holders.Cause: Due to decrease in total earnings of the company EPS has been decreased051015Mar12 Mar11 Mar10Earnings per ShareEarnings per Share Of Cox & Kings --------in Rs.Cr.--------Particulars Mar’12 Mar’11 Mar’10Earnings per Share 5.69 11.24 7.96
  • 20. Dividend Payout Ratio: The dividend payout ratio is the amount of dividends paid tostockholders relative to the amount of total net income of a company. The amount that is not paidout in dividends to stockholders is held by the company for growth. The amount that is kept bythe company is called retained earnings.Formula:Analysis: The Dividend payout value jumped by a margin of around 10% in 2011-2012, ascompared to its previous year value.Cause: Dividend Payout value has increased due to adoption of liberal dividend policy.0510152025Mar12 Mar11 Mar10Dividend Payout RatioDividend Payout Ratio Of Cox & Kings --------in Rs.Cr.--------Particulars Mar’12 Mar’11 Mar’10Dividend Payout Ratio 20.41 10.34 14.65
  • 21. CONCLUSIONThe current short term solvency ratios have fallen drastically the long term solvency ratios arestill well in place. The company is struggling to create a net profit. Though Cox & Kings has agood operating profit scenario the company seems to fail somehow to produce substantial netand gross profits.The company needs to think out their options to take an early control of the degrading situation.At present the short term solvency seems to be a problem. If the situation is not handled wellthen it will not take time to effect on the long term existence of the company.The Earning per Share of the company seems to have drastically fallen in the year 2011-2012compared to the year 2010-2011. This can be due to the knowledge of the shareholders about thedepleting short term solvency capacity of the company.The company needs to focus on improving sales and generating more revenue. They shouldimprove their current assets situation and reach a level where they can cover their currentliabilities with their current assets.This can not only improve their short term solvency problems but also create a better conceptionin the shareholders’ mind about the company; resulting to increase in the share prices and growthin the EPS.
  • 22. BIBLIOGRAPHYhttp://www.coxandkings.comhttp://www.moneycontrol.comhttp://accountingexplained.com