Cipla Balance Sheet analysis


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Cipla Balance Sheet analysis

  1. 1. NewGate India Hyderbad, Andhra Pradesh- 500038 Website: Email: contact@newgate.inSlideshare URL : CIPLA LTD Financial Statement & Ratio Analysis 1
  2. 2. Table of Contents 1. Introduction ……………………………………………….3 2. Financial Statement………………………………………..4 2.1 Balance Sheet overview 2007-2009…………….4 2.2 P&L Account overview 2007-2009…………......7 3. Financial Analysis………………………………………….8 3.1 Horizontal Analysis……………………………...8 3.1.1 Analysis of Balance sheet………………8 3.1.2 Analysis of P&LD account…………….11 3.2 Ratio Analysis…………………………………...13 3.2.1 Liquidity Ratio……………………….....16 3.2.2 Solvency Ratio………………………….17 3.2.3 Turnover Ratio………………………….18 3.2.4 Profitability Ratio…………………….....194. Conclusion……………………………………………………22 Appendix – 1……………………………………………….25 Appendix – 2……………………………………………….26 Appendix – 3……………………………………………….27 Appendix – 4………………………………………………..28 Appendix – 5………………………………………………..29 Accounting Glossary……………………………………….31 Bibliography…………… …………………………………33 2
  3. 3. 1. INTRODUCTIONCipla, originally founded by Khwaja Abdul Hamied as The Chemical, Industrial &Pharmaceutical Laboratories is a prominent Indian pharmaceutical company, best-knownoutside its home country for manufacturing low-cost anti-AIDS drugs for HIV-positive patientsin developing countries. Cipla makes drugs to treat cardiovascular disease, arthritis, diabetes,weight control, depression and many other health conditions, and its products are distributed inmore than 180 countries worldwide. Among the hundreds of generic medications it producesfor international distribution are atorvastatin, amlodipine, fluoxetine, venlafaxinehydrochloride and metformin.Cipla offers services like consulting, commissioning, engineering, project appraisal, qualitycontrol, know-how transfer, support, and plant supply.Apart from its presence in the Indian market, Cipla also has an export market and regularlyexports to more than 150 countries in regions such as North America, South American, Asia,Europe, Middle East, Australia, and Africa. For the year ended 31 March, 2007 Cipla’sexports were worth approximately Rs. 17,500 million. Cipla is also considerably well-knownfor its technological innovation and processes for which the company received know-howloyalties to the tune of Rs. 750 million during 2006-07. Cipla has been approved by regulatorybodies such as:  World Health Organization  Food and Drug Administration (FDA), USA  Therapeutic Goods Administration (TGA), Australia  Pharmaceutical Inspection Convention (PIC), Germany  National Institute of Pharmacy (NIP), Hungary  The Medicines and Healthcare products Regulatory Agency (MHRA) is the UK government agencyCipla has recently launched I-Pill which is a single dose emergency contraceptive and hasacquired a great deal of popularity in a short span of time. Other latest launches of Cipla includeproducts such as Nova, Moxicip, Flomex, Fullform, Montair LC, and Imicrit. Founded : 1935 Headquarters : Mumbai, India Key people : Y. K. Hamied (CMD) Chairman Industry : Pharmaceuticals Revenue : ▲ Rs.37.6 billion (~939M USD) (2006) Net income : ▲ Rs. 9.1 billion (2006) Employees over : 7,000 Website : 3
  4. 4. 2. FINANCIAL STATEMENTTo get a better idea about the current financial status of Cipla, we went through followingfinancial statements  BALANCE SHEET of 2007,2008,2009  PROFIT & LOSS Statements of 2007,2008,20092.1 BALANCHE SHEET OVERVIEW from 2007-2009A standard company balance sheet has three parts  Assets ( Fixed Assets, Current Assets,Investments,Profit & Loss)  Liabilities ( Debts, provisions)  Ownership equity (Share Capital,Reserves,Surplus)The main categories of assets are usually listed first and typically in order of liquidity. Assetsare followed by the liabilities. The difference between the assets and the liabilities is known asequity or the net assets or the net worth or capital of the company and according to theaccounting equation net worth must equal assets minus liabilities.[2.1.1 TOTAL ASSETS of CIPLA ( 2007,2008,2009) Figure 2.1. Total Asset = Total Current Asset + Total Fixed AssetsThe current assets as well as fixed assets & work in progress have tremendously increasedover 3 years but the investments have decreased with an average rate of ( -16.86 %). Figure 2.1. 4
  5. 5. 2.1.2 DEBT & NET WORTH of CIPLA ( 2007,2008,2009) Figure 2.3The equity has increased showing a good hold on share holders. The Equity/net worth includesCapital shares, reserves & surplus which have increased significantly over years with anaverage rate of (+15.9 %)Total debts have increased over years. Debts are the loans payable to the creditors. This arebasically of two types  Secured loan  Unsecured loan.We know that more is the unsecured loan, more is the credit risk. From the below graphs (Figure2.4) it is quite clear that the credit risk have increased significantly over past three years and thesecured loan have become almost negligible at 2009.The company is having more credit risk. 2007 2008 2009 Figure 2.4 5
  6. 6. 2.1.3 TOTAL LIABILILTIESTotal Liabilities includes share capital, reserves, surplus, equity share warrants,Shareholders fund, secured & unsecured loans. The liability has increased over 3 year butthe distribution of each element per year for liabilities is shown below.200920082007 6
  7. 7. 2.2 PROFIT & LOSS ACCOUNT OVERVIEW from 2007-2009Income statement, also referred as profit and loss statement (P&L), earnings statement,operating statement or statement of operations is a companys financial statement thatindicates how the revenue (money received from the sale of products and services beforeexpenses are taken out, also known as the "top line") is transformed into the net income (theresult after all revenues and expenses have been accounted for, also known as the "bottomline"). It displays the revenues recognized for a specific period, and the cost and expensescharged against these revenues, including write-offs (e.g., depreciation and amortization ofvarious assets) and taxes The purpose of the income statement is to show managers andinvestors whether the company made or lost money during the period being reported.Basically we will discuss upon  Total Income  Total Expenditure  Profits o Operating Profit o Net Profit ( Profit after tax)2.2.1 TOTAL INCOME Figure 2.5 Total Income has increased at an average rate of (22.3 %)With time both income and expenditure have increased. Rise was also found in tax as well asdepreciation charges and interest charged upon various items. 7
  8. 8. 2.2.2 TOTAL EXPENDITURE Figure 2.6 Total expenditure has increased at an average rate of ( 26.7 %)2.2.3 OPERATING PROFIT Figure 2.7 Total operating profit has increased at an average by ( 9.5 %)2.2.4 PROFIT AFTER TAX Figure 2.8 Total Income has increased at an average by ( 7.32 %) 8
  9. 9. 3. FINANCIAL ANALYSISFinancial analysis (also referred to as financial statement analysis or accounting analysis)refers to an assessment of the viability, stability and profitability of a business, sub-businessor project.It is performed by professionals who prepare reports using ratios that make use of informationtaken from financial statements and other reports. These reports are usually presented to topmanagement as one of their bases in making business decisions. Based on these reports,management may:  Continue or discontinue its main operation or part of its business;  Make or purchase certain materials in the manufacture of its product;  Acquire or rent/lease certain machineries and equipment in the production of its goods;  Issue stocks or negotiate for a bank loan to increase its working capital;  Make decisions regarding investing or lending capital;  Other decisions that allow management to make an informed selection on various alternatives in the conduct of its business.There are basically two type of financial Analysis  Horizontal Analysis  Ratio Analysis3.1 HORIZONTAL ANALYSISFinancial analysts can also use percentage analysis which involves reducing a series of figuresas a percentage of some base amount. When proportionate changes in the same figure over givetime period expressed as a percentage is know as horizontal analysis[It can be done on the basis of  Past Performance - Across historical time periods for the same firm (the last 3 years for example),  Future Performance - Using historical figures and certain mathematical and statistical techniques, including present and future values, This extrapolation method is the main source of errors in financial analysis as past statistics can be poor predictors of future prospects.  Comparative Performance - Comparison between similar firms.We will undergoHORIZOMTAL ANALYSIS FOR BALANCE SHEET  % ANALYSIS of FIXED ASSETS  % ANALYSIS of CURRENT ASSETS  % ANALYSIS of TOTAL LIABILITY  % ANALYSIS of EQUITY 9
  10. 10. HORIZOMTAL ANALYSIS FOR P&L ACCOUNT  % ANALYSIS of INCOME  % ANALYSIS of EXPENDITURE  % ANALYSIS of TAX,INTEREST,DEPRECIATION HORIZONTAL ANALYSIS FOR BALANCE SHEET3.1.1 HORIZONTAL ANALYSIS of FIXED ASSETS & INVESTMENT  From the graph it is clear that the Investments have decreased over 2007-2008 and 2008-2009 by an average rate of ( -16.8 %).  However capital work in progress have given a major contribution to the assets with an average increase in 19 %3.1.2 HORIZONTAL ANALYSIS of CURRENT ASSETS 10
  11. 11.  From the graph its clear that the current assets have increased at an average rate of 24%  Inventories have increased at an average rate of 17%  Sundry Debtors have increased at an average rate of 34%  Cash and bank balance have decreased at an average rate of 32%  Loans & advances initially had increased significantly by 65 % and than went down by 1.6%3.1.3 HORIZONTAL ANALYSIS of TOTAL LIABILITIES  Total Liabilities have increased at an average rate of 24.5%  Secured loan first increased by 94% and than decreased -84 %by in next year  Unsecured loan increased first year by 352% and 78% than by next year  Total Debt increased first year by 337 % and than 73 %by next year3.1.4 HORIZONTAL ANALYSIS of EQUITY  The Equity Share increased in 2008 by 16 % 11
  12. 12. HORIZONTAL ANALYSIS of P&L ACCOUNT3.1.5 HORIZONTAL ANALYSIS of INCOME  Sales turnover have increased at an average rate 17%  Excise duty have decreased at an average rate 18%  Net sales have increased at an average rate 20%  Other income increased at an average rate 27 %  Stock Adjustment firstly decreased by -234 % and than increased by 174 % next year  Total Income increased at an average rate 22%3.1.6 HORIZONTAL ANALYSIS of EXPENDITURE  Raw Material Increased by 20%  Power and fuel cost decreased by 13 % and than increased by 22 %  Employee cost increased by 23 %  Miscellaneous expense firstly decreased 30% by and than increased 542 %by 12
  13. 13. 3.1.7 HORIZONTAL ANALYSIS of TAX,Depreciation,Interest  Deferred Tax increased by increased by 148% and than decreased by -58%  Interest increased at an average rate of 127 %  Operating profit increased at an average rate of 9 %  Depreciation increased at an average rate of 21 %  Tax first decreased by 22 % and than increased by 7%3.2 RATIO ANALAYSISWe will take following factors into considerations while doing financial analysis through ratioanalysis  LIQUIDITY  SOLVENCY  STABILITY  PROFITIBILITY3.2.1 LIQUIDITY RATIO ANALYSISIn business, economics or investment, market liquidity is an assets ability to be sold withoutcausing a significant movement in the price and with minimum loss of value. Money, or cash onhand, is the most liquid asset. An act of exchange of a less liquid asset with a more liquid assetis called liquidation. Liquidity also refers both to a businesss ability to meet its paymentobligations, in terms of possessing sufficient liquid assets, and to such assets themselves.Liquidity is measured using following ratios  Current Ratio  Quick Ratio  Working Capital  Cash Ratio  Interval Measures 13
  14. 14. Current ratio = current Asset / Current LiabilityLiquidity (current ratio) had suddenly fallen down to 2.9 in 2008 compared to 3.01 of 2007.However current ratio increased significantly in 2009 to around 3.14 showing a good sign ofliquidity and the ability to meet current obligations easily. Current ratio also satisfies theminimum required ratio that is 2:1 for better safety precautions. The current assets is almost 3times over current liabilities which is sufficient to meet the current liabilities in case of any riskarises to repay the amount. Company is having good Liquidity compared to previous year. Quick Ratio = [ Current Asset – ( Inventory + pre loans or advances) ]/ Current LiabilityAbsolute Liquidity (Quick ratio) have significantly increased in 2009.It is a good sign ofliquidity and the ability to meet current obligations easily. Quick ratio also satisfies theminimum required ratio that is 1:1 for better safety precautions.It shows that company has sufficient amount of immediate funds to deal with its totalliabilities in case of any emergency. Company is having good Liquidity compared to previous year. 14
  15. 15. Working Capital = Current Asset – Current LiabilityWorking capital has increased with time showing that company has more current assets(liquid) over current liability and the substantial amount have shown improvement withcompany’s progress. Company is having good Liquidity compared to previous year. Cash Ratio = Cash / Current liabilitiesThe cash in the company has gone down indicating that company is not in the proper state tohold and make any hard core transactions immediately. More has to be done on credit basis. Company is not susceptible to any immediate hard core cash transactions. 15
  16. 16. Interval Measures = [ Current Asset – ( Inventory + pre loans or advances) ]/ Average daily operating expensesInterval measures is the number of days the company can withstand without any profit onthe basis of absolute liquid present in the company.Interval measures had suddenly increased significantly over years from 2007 to 2009. Theability to sustain in case a company receives no cash is only of maximum 5 days. Company is not susceptible to sustain for a long time in case company doesn’t receives any cash for continuously 5 days.3.2.2 SOLVENCY RATIO ANALYSISIn finance or business, solvency is the ability of an entity or individual to pay debts. Solvencycan also be described as the ability of a corporation to meet its long-term fixed expenses and toaccomplish long-term expansion and growth. The better a companys solvency, the better it isfinancially. When a company is insolvent, it means that it can no longer operate and isundergoing bankruptcy.Solvency is measured using following ratios  Debt Equity Ratio  Long Term Debt Equity Ratio  Interest Coverage Ratio 16
  17. 17. Debt Equity Ratio = Debt/ Net Worth Long Term Debt Equity Ratio = Long Term Debt/ Net WorthThe increase in debt Ratio shows that the amount invested by the creditors in the business ismore than the owners. The company is more dependent on the creditors than its own net worth.Graph says clearly that where 96.2 % of business were financed by the owners in 2007,whichreduced to 86% in 2008 and finally to 79% in 2009.Company is liable to pay more debts to creditors than before. Hence Company’s solvency has decreased than previous years. 17
  18. 18. Interest Coverage = EBIDTA/ InterestThe decrease in interest coverage ratio shows that the earning before tax, interest anddepreciation is sufficient to what extent to meet the interest demand. Company’s extent to payinterest over earnings have decreased with time. Hence Company’s solvency has decreased than previous years..3.2.3 TURN OVER RATIOS  Turnover is sometimes a synonym for revenue (or in certain contexts, sales), especially in European and South African usage. Services sold by a company during a particular period of time.  Turnover is sometimes the name for a measure of how quickly inventory is sold. A high turnover means that goods are sold quickly, while a low turnover means that goods are sold more slowly.Turnover is measured using following ratios  Debtor Turnover Ratio  Collective Ratio  Stock Turnover Ratio  Days of Inventory Holding 18
  19. 19. DEBT TURNOVER & COLLECTIVE DAYS Debtors Turnover = Net Sales/ Average debtorsHigher the debtor turnover ratio means better is the management of credit.The graphs shows thatmanagement of credit has depraved indicating more credit risk. Collective days = 365/ Debtors Turnover RatioHowever collective ratio shows the average number of days for which debtors remain outstanding.Lesser is the number of outstanding days more less is the credit risk. But graph shows that outstandinghave increased , means more risk in credit management. The company is having more credit risk and hence is less stable.Stock Turnover Ratio & Days of Inventory Holding 19
  20. 20. Stock Turnover = Net Sales/ Average Inventory Average inventory = ( Opening Stock +Closing Stock) /Higher the Stock turnover ratio means better is the management sales and cost management.More is the ratio more is the efficiency in production and selling. The graphs shows thatmanagement of sales has fallen down in 2009 leading to less sales over the average inventory Days of Inventory Holding = 365/ Stock TurnoverHowever Inventory Holding ratio shows the average number of days for which inventoryremains outstanding in the company .More is the number of outstanding days more is the delay of conversion to liquid and more lessis the efficiency. But inventory outstanding have increased in 2009 compared to 2008. The company is having less efficiency in productions and sales.3.2.4 PROFITIBALITY RATIOProfit generally is the making of gain in business activity for the benefit of the owners of thebusiness. The word comes from Latin meaning "to make progress", and is defined in twodifferent ways, one for economics and one for accounting.Solvency is measured using following ratios  Gross Profit Ratio  Net Profit ratio  Operating Profit ratio  Return on Asset  Return on Equity  Earning Per Share 20
  21. 21. Operating Profit = ( Sales – COGS – Operating Expenses)/ salesGross profit increases consistently from 2007 to 2009 showing that company is having moreoperating income over the same sales value. Gross Profit = ( sales – COGS )/ salesGross profit increases consistently fro 2007 to 2009 showing that company is having moretrading income over the same sales value. 21
  22. 22. Net Profit = Profit After Tax/SalesNet profit decreases consistently from 2007 to 2009 showing that company is having lessincome over the same sales value. Since the tax and differed tax have increased in 2009leading to less net profit to previous year. Hence profitability of the company has degraded compared to previous year. Return On Asset = Profit after Tax/ Total AssetReturn on Asset has consistently degraded from 2007 to 2009 showing that company ishaving less income over the same sales value of assets. Hence profitability of the company has degraded compared to previous year. 22
  23. 23. Return On Equity = Profit after Tax/ Total EquityReturn on Equity has consistently degraded from 2007 to 2009 showing that company ishaving less income over the same value of equity. Hence profitability of the company has degraded compared to previous year.ERANING PER SHARE EPS = Profit After Tax/Number of share Outstanding PER( Price Earning Ratio) = Market Value per share/ EPSEPS per share is more indicating that Price Earning ratio is reduced thus indicating decrease inthe profitability of the company. 23
  24. 24. 4. CONCLUSIONThough overall liquidity condition of company have improved but solvencyratio has gone down in 2009.The credit risk has become a major issue. Thecompany’s efficiency upon sale and production have depraved and companyseems to be less stable in replaying the debts and having more productivity overcost.The profitability of company has also degraded.So as a whole we come to the conclusion that company’s financial status is notthat good in 2009 as it was suppose to be in 2007. 24
  25. 25. APPENIDIX-1 CIPLA: BALANCE SHEET Year Mar 09(12) Mar 08(12) Mar 07(12)(Rs in Crs) SOURCES OF FUNDS : Share Capital 155.46 155.46 155.46 Reserves Total 4,195.29 3,600.36 3,080.81 Equity Share Warrants 0 0 0 Equity Application Money 0 0 0 Total Shareholders Funds 4,350.75 3,755.82 3,236.27 Secured Loans 2.79 14.09 7.25 Unsecured Loans 937.45 526.36 116.31 Total Debt 940.24 540.45 123.56 Total Liabilities 5,290.99 4,296.27 3,359.83 APPLICATION OF FUNDS : Gross Block 2,693.29 2,201.79 1,799.71Less : Accumulated Depreciation 700.8 540.43 411.64 Less: Impairment of Assets 0 0 0Net Block 1,992.49 1,661.36 1,388.07 Lease Adjustment 0 0 0Capital Work in Progress 366.32 233.12 73.19 Investments 81.32 94.75 117.8 Current Assets, Loans & AdvancesInventories 1,398.32 1,120.49 978.6 Sundry Debtors 1,837.15 1,393.91 1,028.78Cash and Bank 53 79.28 131.49 Loans and Advances 1,131.10 1,150.30 695.81 Total Current Assets 4,419.57 3,743.98 2,834.68 Less : Current Liabilities and Provisions Current Liabilities 1,012.85 870.98 528.13Provisions 391.71 416.81 413.13 Total Current Liabilities 1,404.56 1,287.79 941.26 Net Current Assets 3,015.01 2,456.19 1,893.42 Deferred Tax Assets 0 0 0 Deferred Tax Liability 164.15 149.15 112.65 Net Deferred Tax -164.15 -149.15 -112.65 Total Assets 5,290.99 4,296.27 3,359.83 25
  26. 26. APPENDIX-2 CIPLA: P&L ACCOUNT Year Mar 09(12) Mar 08(12) Mar 07(12)INCOME :Sales Turnover 5,021.64 4,088.56 3,533.17 Excise Duty 61.04 90.66 94.93Net Sales 4,960.60 3,997.90 3,438.24Other Income 366.17 340.31 230.55Stock Adjustments 113.55 41.37 -30.73 Total Income 5,440.32 4,379.58 3,638.06EXPENDITURE :Raw Materials 2,460.95 2,084.08 1,694.85Power & Fuel Cost 91.71 74.69 86.71Employee Cost 242.86 186.47 162.05Other Manufacturing Expenses 364.34 304.85 299.87Selling and Administration Expenses 856.45 707.78 401.08Miscellaneous Expenses 318.68 49.58 70.99Less: Pre-operative Expenses Capitalized 0 0 0 Total Expenditure 4,334.99 3,407.45 2,715.55Operating Profit 1,105.33 972.13 922.51Interest 52.23 17.51 11.16Gross Profit 1,053.10 954.62 911.35Depreciation 151.79 116.26 103.37Profit Before Tax 901.31 838.36 807.98Tax 101 94 121.75Fringe Benefit tax 8.5 6.43 3.5Deferred Tax 15 36.5 14.7Reported Net Profit 776.81 701.43 668.03Extraordinary Items -3.09 0.94 0.66Adjusted Net Profit 779.9 700.49 667.37Adjst. below Net Profit 0 0 0P & L Balance brought forward 509.9 390.35 304.2Statutory Appropriations 0 0 0Appropriations 331.88 581.88 581.88 P & L Balance carried down 954.83 509.9 390.35Dividend 155.46 155.46 155.46Preference Dividend 0 0 0Equity Dividend % 100 100 100Earnings Per Share-Unit Curr 9.65 8.68 8.25Earnings Per Share(Adj)-Unit Curr 9.65 8.68 8.25Book Value-Unit Curr 55.86 48.2 41.52 26
  27. 27. APPENDIX – 3 CIPLA: HORIZONTAL % ANALYSIS BALANCE SHEET % change in % change in Year 2008-2009 2007-2008(Rs in Crs) SOURCES OF FUNDS : Share Capital 0 0 Reserves Total 16.52418092 16.86407146 Equity Share Warrants 0 0 Equity Application Money 0 0 Total Shareholders Funds 15.84021598 16.05397572 Secured Loans -80.1987225 94.34482759 Unsecured Loans 78.10053955 352.5492219 Total Debt 73.97354057 337.3988346 Total Liabilities 23.15310723 27.87164827 APPLICATION OF FUNDS : Gross Block 22.32274649 22.34137722Less : Accumulated Depreciation 29.67451844 31.28704693 Less:Impairment of Assets 0Net Block 19.93126114 19.68848833 Lease Adjustment 0 0Capital Work in Progress 57.1379547 218.5134581 Investments -14.17414248 -19.56706282 Current Assets, Loans & AdvancesInventories 24.79540201 14.49928469Sundry Debtors 31.7983227 35.4915531Cash and Bank -33.14833502 -39.70644155Loans and Advances -1.669129792 65.31811845 Total Current Assets 18.04470109 32.07769484 Less : Current Liabilities andProvisions Current Liabilities 16.28854853 64.91772859Provisions -6.021928457 0.890760777 Total Current Liabilities 9.067472181 36.81554512 Net Current Assets 22.75149724 29.72240707 Miscellaneous Expenses not written 0 0 Deferred Tax Assets 0 0 27
  28. 28. APPENDIX – 4 CIPLA: HORIZONTAL % ANALYSIS of P&L ACCOUNT % change in % change in Year 2008-2009 2007-2008 INCOME :Sales Turnover 22.82172696 15.71931155 Excise Duty -32.67151996 -4.498051196 Net Sales 24.08014207 16.27751408 Other Income 7.598953895 47.60789417Stock Adjustments 174.4742567 -234.6241458 Total Income 24.2201307 20.38229166 EXPENDITURE :Raw Materials 18.08327895 22.96545417 Power & Fuel Cost 22.78752176 -13.86229962Employee Cost 30.2407894 15.06942302 Other Manufacturing Expenses 19.51451534 1.660719645Selling and Administration Expenses 21.00511458 76.46853496 Miscellaneous Expenses 542.7591771 -30.15917735Less: Pre-operative ExpensesCapitalised 0 0 Total Expenditure 27.22094235 25.4791847 Operating Profit 13.70187115 5.378803482 Interest 198.2866933 56.89964158 Gross Profit 10.31614674 4.747901465 Depreciation 30.56081197 12.46976879 Profit Before Tax 7.508707477 3.759994059 Tax 7.446808511 -22.7926078Fringe Benefit tax 32.19284603 83.71428571 Deferred Tax -58.90410959 148.2993197 Reported Net Profit 10.74661762 4.999775459 Extraordinary Items -428.7234043 42.42424242 Adjusted Net Profit 11.33635027 4.962764284 P & L Balance brought forward 30.62636096 28.32018409Appropriations -42.96418506 0 P & L Balance carried down 87.25828594 30.62636096 Earnings Per Share-Unit Curr 11.17511521 5.212121212 Earnings Per Share(Adj)-Unit Curr 11.17511521 5.212121212 Book Value-Unit Curr 15.89211618 16.08863198 28
  29. 29. APPENDIX -5 RATIO ANALYSIS Mar Mar Mar 09(12) 08(12) 07(12)Equity Paid Up 155.46 155.46 155.46Networth 4341.78 3746.85 3227.3Capital Employed 5282.02 4287.3 3350.86Gross Block 2684.32 2192.82 1790.74Net Working Capital ( Incl. Def. Tax) 2850.86 2307.04 1780.77Current Assets ( Incl. Def. Tax) 4419.57 3743.98 2834.68Current Liabilities and Provisions ( Incl. Def. 1568.71 1436.94 1053.91Tax)Total Assets/Liabilities (excl Reval & 6850.73 5724.24 4404.77Gross Sales 5021.64 4088.56 3533.17Net Sales 4960.6 3997.9 3438.24Other Income 366.17 340.31 230.55Cost of Production 3340.28 2792.33 2371.29PBIDT 1105.33 972.13 922.51PBDT 1053.1 954.62 911.35PBIT 953.54 855.87 819.14PBT 901.31 838.36 807.98PAT 776.81 701.43 668.03Book Value (Unit Curr) 55.86 48.2 41.52CEPS (annualised) (Unit Curr) 11.61 10.18 9.58EPS (annualised) (Unit Curr) 9.65 8.68 8.25Dividend (annualised%) 100 100 100Payout (%) 20.72 23.03 24.23 Appendix-5 Contd……………………………….. 29
  30. 30. Key RatiosLiquidirty ratioCurrent Ratio 3.14 2.9 3.01Quick Ratio 1.34 1.14 1.23Cash Ratio 0.037 0.61 0.139Interval Measure 5.17 4.49 3.17Solvency RatioDebt Equity Ratio 0.216 0.143 0.038Long term Debt Equity ratio 0.215 0.14 0.035Interest Coverage 21.25 57.17 83.8Turnover ratioDebt Turnover ratio 5.27 7.4 27.9Stock Turnover ratio 3.54 3.56 3.51Collective days ratio 69 49 13Profitability RatioGross Profit ratio 4.71 4.18 3.77Operation Profit ratio 4.48 4.11 3.72Net Profit ratio 0.156 0.175 0.194Return on Asset ratio 0.146 0.163 0.198Return on Equity ratio 0.178 0.186 0.206 30
  31. 31. Accounting Glossary ACCOUNT - A fiscal and accounting entity with a self-balancing set of general ledger codes in which cash and other financial resources, together with all related liabilities and residual equities or balances, and changes therein, are recorded and segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations. For reporting purposes, the state identifies certain accounts as major funds, and administratively combines all remaining accounts into roll-up funds. Refer to MAJOR FUND, and ROLL-UP FUND. ACCOUNTS PAYABLE - Amounts owed to private persons or organizations for goods and/or services received by the state. Accounts Payable does not include amounts due to other agencies, funds, or other governments. Refer to DUE TO. ACCOUNTS RECEIVABLE - Amounts due from private persons or organizations for goods, and/or services furnished by the state. Accounts Receivable does not include amounts due from other agencies, funds, or other governments. Refer to DUE FROM. APPROPRIATION - A legislative authorization for an agency to make expenditures for specific purposes from designated resources available or estimated to be available during a specified time period. ASSETS - A probable future economic benefit obtained or controlled by a particular entity as a result of past transactions or events. These economic resources can be tangible or intangible. BALANCE SHEET - A financial statement that discloses the assets, liabilities, and equities of an entity at a specified date in conformity with generally accepted accounting principles (GAAP). CREDIT CARD - A card entitling the holder to buy services or goods on credit. CURRENT ASSETS - Resources that are available, or can readily be made available, to meet the cost of operations or to pay current liabilities. CURRENT LIABILITIES - Those obligations which are payable within one year from current assets or current resources. DEBIT CARD - A card that draws funds directly from a deposit account. DEBT - An obligation resulting from the borrowing of money or from the purchase of goods and services. Debts of the state include bonds, accounts payable, and other liabilities. Refer to BONDS PAYABLE, ACCOUNTS PAYABLE, LIABILITIES, LONG- TERM OBLIGATIONS and GENERAL LONG-TERM OBLIGATIONS. DEFICIT - (1) The excess of the liabilities and reserves of a fund over its assets. (2) The excess of expenditures over revenues during an accounting period or, in the case of proprietary funds, the excess of expenses over revenues during an accounting period. DEPRECIATION - The portion of the cost of a capital asset representing the expiration in the useful life of the capital asset attributable to wear and tear, deterioration, action of the physical elements, inadequacy, and obsolescence which is charged off during a particular period. In accounting for depreciation, the cost of a capital asset, less any salvage value, is prorated over the estimated useful life of such an asset. Refer to COMPOSITE METHOD and STRAIGHT-LINE METHOD. DIRECT COSTS - Costs that include direct materials and labor. Refer to DIRECT EXPENSES. DIRECT EXPENSES - Expenses which are charged directly as a part of the cost of a product or service, or of a department or operating unit, as distinguished from overhead and other indirect costs which must be prorated among several products or services, departments, or operating units. FIXED ASSETS - Refer to CAPITAL ASSETS. FUND - For state purposes, a fund is referred to as an account. Refer to ACCOUNT. 31
  32. 32.  FUND BALANCE - In governmental funds, this is the difference between fund assets and fund liabilities. Governmental fund balances should be segregated into reserved and unreserved amounts. Refer to RESERVED FUND BALANCE and UNRESERVED FUND BALANCE. FUND CAPITAL ASSET - Capital assets recorded in proprietary and trust funds and used in the production of the goods or services provided or sold. Depreciation on fund capital assets is charged as an expense of the fund. FUND EQUITY - The difference between a funds assets and liabilities. In governmental funds, it is referred to as fund balance. In proprietary funds, it is referred to as net assets. Refer to FUND BALANCE and NET ASSETS. LIABILITIES – Probable future sacrifices of economic benefits, arising from present obligations of a particular entity to transfer assets or provide services to other entities in the future as a result of past transactions or events. The term does not include encumbrances. LIQUIDATION - Payment of debt, cancellation of encumbrance, or conversion into cash. NET ASSETS - The difference between assets and liabilities. Refer to FUND EQUITY. NET BOOK VALUE - Refer to BOOK VALUE. NET INCOME - A term used in accounting for proprietary funds to designate the excess of total revenues and operating transfers in over total expenses and operating transfers out for an accounting period. RECEIVABLES - Amounts due from private persons, businesses, agencies, funds, or governmental units that are expected to be collected in the form of moneys, goods, and/or services. SHORT-TERM LIABILITIES - Short-term liabilities are legal obligations of the state that arise upon the receipt of goods or services. In governmental fund type accounts, they are payable from current financial resources. In proprietary fund type accounts, short-term liabilities are payable within one year. TAXES - Compulsory charges levied by a government for the purpose of financing services performed for the common benefit. TAXES RECEIVABLE - An asset account reflecting the uncollected portion of taxes that have been levied. 32
  33. 33. BIBLIOGRAPHY: Ratio Analysis PPT (by Prof Ruchi Mehrotra, Alliance Business School) Financial Accounting for Management ( N Ramachandran,Ram Kumar Kakani), 2nd Edition,McGraw Hill Financial Management( I M PANDEY), 9th Edition,Vikas Publishing House PVT LTD 33