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Ma

  1. 1. 1. A RATIO is a expression relating onenumber to another .2. It can be expressed in decimal or fractionor pure ratio or as an absolute terms.3. It is one of the powerful tool offinancial analysis.
  2. 2. Shareholders Investors And Lenders Creditors ManagementGovernment
  3. 3.  Tata Iron and Steel Company was established by Dorabji Tata on August 26, 1907, as part of his father Jamsetji’s Tata Group Tata Steel Limited)) is an Indian multinational steel-making company headquartered in Mumbai, Maharashtra, India,
  4. 4.  Itis the 12th-largest steel producing company in the world, Tata Steel is listed on the Bombay Stock Exchange, where it is a constituent of the BSE SENSEX index, and the National Stock Exchange of India
  5. 5. VERTICAL INCOME STATEMENT 2004 2003 RS RS Particulars Gross Sales 3,47,000 2,71,450Less : Sales return 5000 10,050Net Sales 3,42,000 2,61,400Less :COST OF GOODS SOLD : Opening Stock 1,00,000 99,000Add : Purchases 1,98,000 1,40,000Add : Depreciation on Machinery 8,000 7,000Less : Closing Stock 62,000 1,00,000 COST OF GOODS SOLD 2,44,000 1,46,000GROSS PROFIT 98,000 1,15,000Less :OPERATING EXPENSES ADMINISTRATIVE EXPENSES : salaries 28,000 22,000 office rent 16,000 14,000 total administration expenses 44,000 36,000 SELLING AND DISTRIBUTION EXPENSES : sales expenses 4,000 6,000Total operating expenses 48,000 42,000Operating net profit 50,000 73,400Add : NON-OPERATING INCOME
  6. 6. 2004 2003 RS RS Profit on sale of land 9,000 - 71,000 83,200LESS : NON-OPERATING EXPENSES : - loss in sale of plant 4,200 loss by fire 2,800 1,200 goodwill written off 10,000 10,000 EBIT 54,000 72,000Less :Interest on mortgage loan 9,000 10,000EBT 45,000 62,000Less : Tax provision 22,000 28,000 EAT 23,000 34,000Less : APPROPRIATIONS : preference dividend 3,000 4,000 proposed equity dividend 20,000 30,000 - -
  7. 7. VERTICAL BALANCE SHEET PARTICULARS 2004 2003SOURCES OF FUNDSOWNERS FUNDS:equity share capital 100000 100000+ profit and loss a/c 38000 40000equity share holders 138000 140000+ preference capital 30000 40000 168000 180000BORROWED FUNDS: mortgage loan 80000 100000 TOTAL CAPITAL EMPLOYED 248000 280000APPLICATION OF FUNDSFIXED ASSETS: goodwill 10000 machinery at cost 110000 100000 - depreciation (28000) (20000) wdv machinery 82000 80000 + land 100000 100000 NET FIXED ASSETS 182000 190000
  8. 8. PARTICULARS YEAR 2004 2003WORKING CAPITAL : CURRENT ASSETS QUICK ASSETS debtors 80000 60000 Marketable securities 20000 20000 cash 2000 30000 NON QUICK ASSETS stock 62000 100000 TOTAL CURRENT ASSETS 164000 210000- CURRENT LIABILITIES QUICK LIABILITIES creditors 42000 60000 bills payable 18000 10000 taxes payable 38000 50000 TOTAL CURRENT LIABILITIES 98000 120000WORKING CAPITAL (CURRENT ASSETS-CURRENT LIABILITIES) 66000 90000 TOTAL NET ASSET OWNED 248000 280000
  9. 9.  Current Ratio Quick ratio StockTo Working Capital ratio Proprietor’s Ratio
  10. 10. RATIOS FORMULAE YEAR 2004 2003CURRENT RATIO Current Assets 164000 210000 Current Liabilites 98000 120000 =1.67 =1.75QUICK RATIO Quick Assets 102000 140000 Quick Liabilities 98000 140000 =1.04 =1STOCK TO Closing Stock × 100 62000 ×100 100000 × 100WORKING CAPITAL Working Capital 66000 90000RATIO =93.94% =111.11%PROPRIETOR’S Proprietors Funds ×100 168000 ×100 180000 ×100RATIO Total Assets 346000 400000 =48.55% =45%
  11. 11.  Capital Gearing Ratio Debt Equity Ratio Gross Profit Ratio Operating Ratio
  12. 12. RATIOS FORMULAE YEAR 2004 2003CAPITAL GEARING Fixed Interest 1,10,000 1,40,000RATIO Bearing Securities 1,38,000 1,40,000 Non-Fixed Interest =0.8:1 =1:1 Bearing SecuritiesDEBT EQUITY Long Term Debt 80,000 1,00,000RATIO Proprietors Equity 1,68,000 1,80,000 =0.47 =5.55GROSS PROFIT Gross Profit × 100 98,000 × 100 1,15,400 ×100 Net Sales 3,42,000 2,61,400 =28.65% =44.14%OPERATING RATIO Operating Profit×100 50,000 ×100 73,400 ×100 Net Sales 3,42,000 2,61,400 =14.61% =28.07
  13. 13.  Expenses Ratio Net Profit Ratio StockTurnover Ratio COMPOSITE RATIOS Return On Capital Employed
  14. 14. RATIOS FORMULAE YEAR 2003 2004EXPENSES RATIO Operating Expenses × 100 73400 ×100 50000 ×100 Net Sales 261400 342000 =28.08% 14.26%NET PROFIT RATIO NAPT × 100 34000 × 100 23000×100 Net Sales 261400 342000 =13% 6.72%STOCK TURNOVER COGS 146000 24400 0RATIO Average Stock 99500 81000 =1.46 tms =3.01 tmsRETURN ON NPBIT ×100 72000 ×100 54000 ×100CAPITAL Capital Employed 280000 248000EMPLOYED =25.71% =21.77%
  15. 15.  Return On Proprietor’s Funds Ratio Earnings Per Share Ratio Debtors Turnover Ratio Creditors Turnover Ratio
  16. 16. RATIOS FORMULAE YEAR 2004 2003RETURN ON NPAT 13.7 % 18.9 %PROPRIETOR’S PROPRIETORS *100FUNDS RATIO FUNDEARNING PER NPAT – PREFERENCE RS. 2 PER SHARE RS. 3 PER SHARESHARE RATIO DIVDEND NO. OF EQUITY SHARESDEBTORS NET CREDIT SALES 4.8857 TIMES 4.36 TIMESTURNOVER AVG. ASSETRATIO RECEIVABLESCREDITORS NET CREDIT 3.05 TIMES 2 TIMESTURNOVER PURCHASESRATIO AVG CREDITORS

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