ratio analysis of entertainment industry

1. ACKNOWLEDGEMENT
We would like to extend our gratitude and sincere thanks to our respected
professorDr SIKHA BHATIA , who gave us this opportunity to learn more about
the entire financial statements and their analysis of BALAJI TELEFILMS. This
project has helped us to learn and understand the key aspects such as DOL,
Operating cycle, DFL, DPO by providing the practical insights of the industry
and working on this project.
Once again,
Thank You.

2. BALAJI TELEFILMS
DOL 9.0111966
DFL (2015) -2.03188
DFL (2016) 0.8733208
CAPITAL STRUCTURE
The Balaji telefilms DOL is 9.0111% which indicates that the
company’s EBIT is very volatile but the company’s ITR is nil due to
it’s a service company so they have minimum inventories in 2016 as
compared to 42.21 in 2015 which shows that the company’s selling less
inventory but looking at sales figures of the company which shows that
there is marginal increase of 32% which is higher. The company have
increasing its sales from last 5 years so we can assume that it’s a
profitable firm.
DFL in 2016 0.8733208% is as compared to -2.03188 % in 2015,
which also indicates that the company’s EBIT has increased this year
because of the main reason that the company’s debts has decreased

3. which leads to less interest payment and hence higher income.
Company’s debt equity ratio is nil because it’s a highly profitable firm
and has very less debts with it and they are running their main business
from equity. The firm is not that risky because of its nil debt equity
ratio because its long term debt equity ratio which is very high as
compared to short term debt Also, DTR is 3.8% which is very low for
a cashless company.
DIVIDEND
The interest leverage ratio is nil in 2016 and 54.92% in 2015, which is
a positive sign for the company. This also means that the company paid
all its debts in previous year and it’s able to cover its interst. And also
debt to the owners fund is also very less in all years and insignificant
values so this is a good sign but it also means that the firm is exercising
more financing from inside the company which is internal financing
and their ability to raise debt is no longer feasible for it has been
declining since past five years.
The company’s EBIT has seen a drastic increase in its growth from
2012 to 2015 but there is only a marginal increase in 2016 from 2015.
This is because of the rise in interest payment and paying huge taxes of
16.05 crores as compared to 2.79 crores in 2015 and very less in
previous years. Keeping this in mind, the company’s profit margins are
very good in gross but on net profit, a clear decline has been observed
because of there are more expenses and operating expenses are
increasing every year. Their net returning worth has seen a steady
increment since 2012 and so does the return on long term funds their
dividend declared is 17.39%.

4. WORKING CAPITAL
Since Balaji telefilms is a good company for entertainment and has a
reputed image in market due to its good market price. Basically
focusing their movies now rather than TV serials. So, there is no
seasonal requirements the company needs permanent working capital
in order to keep up with the demand. The company’s source of working
capital is secured loans and reserves firms within.
OC = 96 in 2016 as compared to 87 in 2015
It means cash has recovered faster in 2016 as compared to 2015.

5. -Submitted by
Divyanshi Dayalani
PGFA 1646