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Financial Accounting Ratio analysis of Indian companies
Financial Accounting Ratio analysis of Indian companies
Financial Accounting Ratio analysis of Indian companies
Financial Accounting Ratio analysis of Indian companies
Financial Accounting Ratio analysis of Indian companies
Financial Accounting Ratio analysis of Indian companies
Financial Accounting Ratio analysis of Indian companies
Financial Accounting Ratio analysis of Indian companies
Financial Accounting Ratio analysis of Indian companies
Financial Accounting Ratio analysis of Indian companies
Financial Accounting Ratio analysis of Indian companies
Financial Accounting Ratio analysis of Indian companies
Financial Accounting Ratio analysis of Indian companies
Financial Accounting Ratio analysis of Indian companies
Financial Accounting Ratio analysis of Indian companies
Financial Accounting Ratio analysis of Indian companies
Financial Accounting Ratio analysis of Indian companies
Financial Accounting Ratio analysis of Indian companies
Financial Accounting Ratio analysis of Indian companies
Financial Accounting Ratio analysis of Indian companies
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Financial Accounting Ratio analysis of Indian companies

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  • FormulasPROFIT MARGIN = net profit/net revenuePROFIT ON ASSET = NET INCOME / TOTAL ASSETSRETURN ON EQUITY = net income/avg stockholder's equity
  • FormulasINVENTORY TURNOVER RATIO = COST OF GOODS SOLD/AVG INVENTORYASSET TURNOVER RATIO = SALES REVENUE/TOTAL ASSETS
  • Formulas:.Debt Capitalisation = LONG TERM DEBT/ TOTAL INVESTED CAPITAL(EQUITY).Debt Equity = TOTAL LIABILITIES/EQUITY
  • Analysis:The net Income is reducing which shows that the organisation is not doing wellThe Operating Working Capital is negative due to higher Current Liabilities than Current Assets. If it can Wipe of this debt then it’ll make good profits.The Operating Cash is Directly proportional to Net Income and follows the same trend.Formulas:Operating Cash = NOPAT + Depreciation & Amortization.NET WORKING CAPITAL = CURRENT ASSETS - CURRENT LIABILITIES
  • Formulas
  • FormulasPROFIT MARGIN = net profit/net revenuePROFIT ON ASSET = NET INCOME / TOTAL ASSETSRETURN ON EQUITY = net income/avg stockholder's equity
  • FormulasINVENTORY TURNOVER RATIO = COST OF GOODS SOLD/AVG INVENTORYASSET TURNOVER RATIO = SALES REVENUE/TOTAL ASSETS
  • Formulas:Operating Cash = NOPAT + Depreciation & Amortization.NET WORKING CAPITAL = CURRENT ASSETS - CURRENT LIABILITIESAnalysis:The net Income is reducing which shows that the organisation is not doing wellThe Operating Working Capital is negative due to higher Current Liabilities than Current Assets. If it can Wipe of this debt then it’ll make good profits.The Operating Cash is Directly proportional to Net Income and follows the same trend.
  • AnalysisFormulas:.Debt Capitalisation = LONG TERM DEBT/ TOTAL INVESTED CAPITAL(EQUITY).Debt Equity = TOTAL LIABILITIES/EQUITY
  • FormulasAnalysis:The current ratio has shown an increasing trend from 2010, which shows sound liquidity position of the bank. The current ratio of the bank is much higher than the standard ratio of the bank.
  • FormulasPROFIT MARGIN = net profit/net revenuePROFIT ON ASSET = NET INCOME / TOTAL ASSETSRETURN ON EQUITY = net income/avg stockholder's equity
  • Analysis:. Asset Turn Over Ratio: The decrease in the ratio shows that the bank is struggling to manipulate its assets to improve the turn over. The ratio has shown a decreasing trend after2009FormulasINVENTORY TURNOVER RATIO = COST OF GOODS SOLD/AVG INVENTORYASSET TURNOVER RATIO = SALES REVENUE/TOTAL ASSETS
  • Formulas:.Debt Capitalisation = LONG TERM DEBT/ TOTAL INVESTED CAPITAL(EQUITY).Debt Equity = TOTAL LIABILITIES/EQUITYAnalysis:The debt equity ratio has increased from 2010 to 2011 which indicates increase in volume of deposits and borrowings of the bank.
  • Formulas:Operating Cash = NOPAT + Depreciation & Amortization.NET WORKING CAPITAL = CURRENT ASSETS - CURRENT LIABILITIES
  • Transcript

    • 1. Financial AccountingRatio AnalysisManufacturing : Birla EricssonBANK: ICICIIT: Wipro
    • 2. BIRLA ERICSSON
    • 3. Liquidity Ratio Year Current Ratio Quick Ratio MAR08 3.848605578 1.804211725 MAR09 3.494907658 2.291859166 MAR10 4.482485756 3.189312903 MAR11 1.51559245 0.994797229 MAR12 1.258695258 0.87981811Analysis: The ratios in 2009 & 2010 (3.4*4.48) show a very strong liquidity position of the company. In 11 & 12 the decrease in ratio may be due to the reduction in cash balances, the company may have utilised these funds for the purchase of fixed assets
    • 4. Profitability Ratio 1.4Year Profit Margin POA ROE 1.2 1MAR09 -0.048069897 1.32549442 1.111651789 0.8 Profit Margin 0.6 POAMAR10 0.028679927 1.118506349 0.983608547 ROE 0.4MAR11 -0.062407124 0.754407331 0.577992019 0.2 0MAR12 -0.06235176 0.734744716 0.510221794 MAR09 MAR10 MAR11 MAR12 -0.2 Analysis:  Profit Margin: After a increase in 2010 the profit margin has decreased considerably. This is due to decrease in turn over of the company.  Return on Equity: The ratio of the company has been on a decreasing trend due to decrease in the amount of net income of the company. This indicates low managerial efficiency and low productivity of the capital utilized.
    • 5. Turnover Ratio 7Year Inventory Turnover Ratio Asset Turnover Ratio 6 5MAR09 5.958472531 1.308147749 4 Inventory Turnover Ratio 3 Asset Turnover RatioMAR10 4.13772068 1.098216194 2 1MAR11 3.444529835 0.729297431 0 MAR09 MAR10 MAR11 MAR12MAR12 3.530779271 0.713254882 Analysis:  Inventory Turn over Ratio: this ratio has decreased from 4137 to 3.44 in 2009 & 2010 resp. This may be due to high inventory/reduction in selling price and the accumulation of stocks.  Asset Turn Over Ratio: The decrease in the ratio from the year 2010 to 2011 shows the inability of the company to use its assets to efficiently generate sales.
    • 6. Solvency Ratio 1.2 1Year DEBT CAPITILISATION DEBT EQUITY 0.8MAR09 0.421715314 0.393392767 DEBT 0.6 CAPITILISATION DEBT EQUITYMAR10 0.366285409 0.338435846 0.4 0.2MAR11 0.027432388 0.943972875 0 MAR09 MAR10 MAR11 MAR12MAR12 0.012714786 0.984717786 Analysis:  The debt equity ratio of the company is less than 1, which indicates that the majority of the assets are financed through equity and not by debt.  This shows that the common share holder has low risk in investing in the company.
    • 7. Income and Funds Flow 5000 4500Year Operating working capital Operating Cash 4000 3500Mar09 4331.01 404.75 3000 Operating working 2500 capitalMar10 4290.91 449.33 2000 Operating Cash 1500Mar11 1462.71 267.88 1000 500Mar12 1198.68 167.7 0 Mar09 Mar10 Mar11 Mar12Analysis: Operating working capital is reducing over the years, because of increasing current liabilities.
    • 8. WIPRO
    • 9. Liquidity Ratio 2.5Year Current Ratio Quick Ratio 2Mar08 2.176285102 2.042985483 1.5Mar09 1.103857733 1.021259802 Current Ratio 1 Quick RatioMar10 1.971297854 1.846785113 0.5Mar11 1.968147448 1.831115312 0Mar12 2.359647071 2.228451589 Mar08 Mar09 Mar10 Mar11 Mar12Analysis:CURRENT RATIO: The current ratio of the company fell from 2.1 times to 1.1 times in the year2008-09, but has shown an increasing trend in the next 3 years. In the year 2012 the current ratiohas improved to 2.35 which indicates the company has worked on its liquidity management in apositive way.QUICK RATIO: The increasing trend in quick ratio after a fall in 2009, is a positive working capitalindicator. In the year 2012, the quick ratio has risen to 2.2 which shows the strong cash position inmanaging the day to day affairs of the company.
    • 10. Profitability Ratio 1.4Profit Margin ROA ROE 1.2 0.1701219 1.166745502 0.958062645 1 0.8 0.141453924 1.199339377 0.910358736 Profit Margin 0.6 ROA ROE 0.204939811 1.029165805 0.850626054 0.4 0.2 0.179826548 1.033393439 0.859046404 0 0.145667835 1.086742331 0.903962631 Mar08 Mar09 Mar10 Mar11 Mar12 Analysis: PROFIT MARGIN RATIO: This ratio of the company has been consistent over past five year though a good sign but the company has made investments and has expanded its production thereby using its profits efficiently. RETURN ON EQUITY: The ROE ratio of the company has to steady at 0.9 over the past five years. This is almost to the standard ratio level of 1:1..this states that the company is giving steady results to its shareholders.
    • 11. Turnover Ratio 9 8Year Inventory Turnover Ratio Asset Turnover Ratio 7Mar08 7.005132783 1.144170646 6 5 Inventory TurnoverMar09 7.817232376 1.232980963 Ratio 4 Asset Turnover RatioMar10 6.442906574 0.99069433 3 2Mar11 5.525313836 1.012898523 1Mar12 6.264552286 1.074595296 0 Mar08 Mar09 Mar10 Mar11 Mar12 Analysis: INVENTORY TURNOVER RATIO : Company shows control over its stocks and material management.The inventory turnover ratio of 7times, 6times and 5.7 times over the last 5 years shows the company has control over its stock and material management. the conversion of stock into finished product which is more than the standard of 4times, shows the efficiency of production of the company. ASSET TURNOVER RATIO : This ratio signifies the relationship between asset and turnover. The ratio of 1and above for the past five years shows that assets are optimally utilized to get proportionate sales. The operating income has been efficiently applied in assets.
    • 12. Income and Funds Flow 30000Year OWC Operating Cash 25000Mar08 3954.2 16045.83708 20000Mar09 577.896 18648.54571 15000 OWC Operating CashMar10 4734.3 20387.19459 10000 5000Mar11 5121.5 23013.37174 0Mar12 8136.4 25915.22883 Mar08 Mar09 Mar10 Mar11 Mar12Analysis: Company made considerable investments in buying assets, but in turn the liabilities of the company are not increased , thus the operating working capital of the company is strong. Net operating profit of the company is increased marginally over the years. Since the operating income of the company is increased, the company has strong base of operating cash.
    • 13. ICICI
    • 14. Solvency Ratio 1.6Year DEBT CAPITILISATION DEBT EQUITY 1.4Mar08 0.32921357 1.32921357 1.2 1Mar09 0.400631243 1.400631243 DEBT 0.8 CAPITILISATION 0.6 DEBT EQUITYMar10 0.312581958 1.312593262 0.4Mar11 0.222509369 1.222509369 0.2 0Mar12 0.215304384 1.215304384 Mar08 Mar09 Mar10 Mar11 Mar12 Analysis:  Majority of the assets are financed through equity and not by debt.  Debt/Asset ratio increased in the year 2009, in this year company made investments and changes in business plans.  The consistent Debt/asset ratio shows that the company is in line with the industry. There is considerable drop in the ratio from 40% to 21%
    • 15. Liquidity Ratio Year Current Liabilities Current Ratio Mar08 42895.39 1.335629773 Mar09 43746.43 1.196391797 Mar10 15501.18 3.613464265 Mar11 15896.35 3.003678203 Mar12 17576.98 3.171438438Analysis: The current ratio has shown an increasing trend from 2010, which shows sound liquidity position of the bank. The current ratio of the bank is much higher than the standard ratio of the bank.
    • 16. Profitability Ratio 0.9 0.8 PROFIT RETURN ON RETURN ONYear MARGIN EQUITY ASSSETS 0.7Mar0 0.6 PROFIT MARGIN8 0.104815088 0.847223667 0.099218807 0.5Mar0 RETURN ON 0.49 0.095845455 0.786045231 0.103375193 EQUITY 0.3Mar1 RETURN ON0 0.121971456 0.639294887 0.090807337 0.2 ASSSETSMar1 0.11 0.155710674 0.600515548 0.081438252 0Mar1 Mar08 Mar09 Mar10 Mar11 Mar122 0.1559745 0.68621105 0.087513997 Analysis:  The ROE has fallen from 2008 to 2009 but has shown improvement in 2011 to 2012 which indicates the bank is trying to utilise the capital in an optimal way.  The profit margin has increased minimally but the proportion to net income which acts as a sound indicator of consistency.
    • 17. Turnover Ratio 500000 450000Year TOTAL ASSETS ASSET TURNOVER RATIO 400000 350000Mar08 399795.07 0.099218807 300000 TOTAL ASSETSMar09 379300.96 0.103375193 250000 200000 ASSET TURNOVER RATIOMar10 363399.71 0.090807337 150000 100000Mar11 406233.67 0.081438252 50000 0Mar12 473647.09 0.087513997 Mar08 Mar09 Mar10 Mar11 Mar12 Analysis:.  Asset Turn Over Ratio: The decrease in the ratio shows that the bank is struggling to manipulate its assets to improve the turn over. The ratio has shown a decreasing trend after2009
    • 18. Solvency Ratio DEBT EQUITY RATIOYear DEBT EQUITY RATIO 6.8 6.6Mar08 6.622769953 6.4 6.2Mar09 5.726828688 6 DEBT EQUITYMar10 5.739820339 5.8 RATIO 5.6Mar11 6.083694539 5.4Mar12 6.550173536 5.2 Mar08 Mar09 Mar10 Mar11 Mar12 Analysis:  The debt equity ratio has increased from 2010 to 2011 which indicates increase in volume of deposits and borrowings of the bank.
    • 19. Income and Funds Flow OPERATING CASH 15000 Year OPERATING CASH 10000 Mar08 -11631.15 5000 Mar09 -14188.49 0 Mar08 Mar09 Mar10 Mar11 Mar12 OPERATING CASH -5000 Mar10 1869.21 -10000 Mar11 -6908.52 -15000 Mar12 9683.75 -20000Analysis:
    • 20. Presented By- Hitesh Makhijani Ankit BhatiaShweta Gundewar Anuradha Pai Kandarp Desai - Thank You

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