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Corrected afs ppt

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    Corrected afs ppt Corrected afs ppt Presentation Transcript

    • Ratio AnalysisThere are total 5 types of ratios•Liquidity Ratios•Leverage Ratios•Asset Management Ratios•Profitability Ratios•Operating Ratios•Market Based Ratios
    • Liquidity Ratios• Liquidity ratios provide information about a firm’ s ability to meet its short-term financial obligations.• They are of particular interest to those extending short-term credit to the firm.
    • Liquidity RatiosCurrent Ratio = Total current assets Total current liabilitiesTata Motors = 7,133.06 = 0.45 15,740.69 6,443.10Maruti = = 1.48 4,331.00
    • Liquidity Ratios Current assets - Inventory – prepaid expensesQuick Ratio= Current liabilities – Bank overdraft 14,775.61 - 3,891.39 - 0Tata motors = = 0.57 18,963.40– 0 6,443.10 - 1,415.00 – nilMaruti = = 1.16 4,331.00– nil
    • Leverage Ratios• Leverage ratios provide an indication of the long-term solvency of the firm.• Leverage ratios measure the extent to which the firm is using long term debt.
    • Leverage RatiosDebt- Equity Ratio = Long Term Debt (sec.& unsec. Loan) Shareholders Fund 15,898.75 0.79Tata Motors = 19,986.05 309.3 Maruti = 0.022 13,867.50
    • Leverage RatiosCapital Gearing Ratio F = interest Bearing Funds ixed Equity shareholders Funds 15898.75Tata Motors = 0.79 20013.30 309.30Maruti = 0.02 13867.50
    • Leverage Ratios P DIT BInterest Coverage Ratio = Interest 5,047.25Tata Motors = = 3.64 1,383.79 4,258.20Maruti = =173.5 24.4
    • Asset Management Ratios• Asset Management Ratios are the key to analyzing how effectively & efficiency your small business is managing its assets to produce sales.• Asset Management Ratios are also called “ Turnover Ratios” or “ Efficiency Ratios” .
    • Asset Management Ratios COGSInventory Turnover Ratio = Average Inventory 5,047.25Tata Motors = = 14.25 480.425 4,258.20Maruti = = 31.07 274.1
    • Asset Management Ratios SalesTotal Asset Turnover Ratio = Total Assets 47,957.24Tata Motors = = 1.33 35,912.1 36,561.50Maruti = = 2.48 14,722.70
    • Profitability Ratios• Profitability ratios measure the companys use of its assets and control of its expenses to generate an acceptable rate of return• They are of great importance to investors since they measure how effectively A firms management is generating profits on sales, total assets, and stockholders investment.
    • Profitability Ratios Sales - COGSGross Profit Margin = * 100 Sales 47,957 – 43606Tata Motors = * 100 0.089 % 47,957 36561.5- 4258.2Maruti = *100 0.088% 36561.5
    • Profitability Ratios E IT BNet Profit Margin = * 100 Sales 3686Tata Motors = * 100 0.0769 % 47957 2419Maruti = * 100 0.066% 36561.50
    • Operating Ratios• 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 Ratios Material ConsumedMaterial Cost Ratio = * 100 Sales 35,047.05Tata Motors = * 100 0.73 % 47,957.24 28,880.00Maruti = * 100 0.78% 36,561.50
    • Operating Ratios Admin expensesAdministrative Expenses Ratio = * 100 Sales 2,790.19Tata Motors = * 100 0.058 % 47,957.24 1,153.87Maruti = * 100 0.0315 % 36,561.50
    • Operating Ratios COGS + operating expensesOperating Ratio = * 100 Sales 5047 + 36996Tata Motors = * 100 47,957.24 = 0.87% 29,768.10 + 4258.20Maruti = * 100 36,561.50 = 0.93 %
    • Operating Ratios S & D expensesSelling and Distribution Ratio = * 100 Sales 2,790.19Tata Motors = * 100 0.05 % 47,957.24 1,153.87Maruti = * 100 0.03% 36,561.50
    • Market Based Ratios• A market-based ratio is a metric used to gauge a companys viability in terms of such variables as profitability and the market valuation of its stock.• Different ratios indicate a companys viability, or financial health, where asset values, revenue, income, and ability to pay bills are concerned.
    • Market Based Ratios PATRONetWorth = 100 * Net worth Tata Motors Maruti 258 3220.3= 1 *100 = * 10 20,013.3 13867.50 0= 0.12 * 100= 12.89 = 2.32