Upcoming SlideShare
×

# Financial ratios: Westcoast Paper Limited

1,286 views

Published on

Financial Ratios (West Coast Paper Ltd.) : 2013 vs 2012

Published in: Economy & Finance, Business
2 Likes
Statistics
Notes
• Full Name
Comment goes here.

Are you sure you want to Yes No
• Be the first to comment

Views
Total views
1,286
On SlideShare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
54
0
Likes
2
Embeds 0
No embeds

No notes for slide
• Cash flow ratios focuses on cash flow and how solvent, liquid, and viable the company is.
• ### Financial ratios: Westcoast Paper Limited

1. 1. Financial Ratios (West Coast Paper Ltd.) Group-12 Harshit Garg, Pawan Kumar, Pratik Mukherjee, Rahul Sah, Sayantan Ghosh, Shrikant Gupta
2. 2. Company’s Overview  One of the oldest and largest producers of paper for business stationary  Recent results : : 71% increase in revenues and a 65% increase in their PAT  Target industries in India:  Printing,  Writing, and  Packaging
3. 3. Liquidity Ratios • Quick Ratio The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets. Quick ratio = (current assets – inventories) / current liabilities = (Cash & Cash Equivalents + Trade Receivables)/Current Liabilities = (577.72 + 8236.26)/67124.28 = 0.131
4. 4. Liquidity Ratios (cont.)  Cash Ratio The cash ratio is most commonly used as a measure of company liquidity. Cash Ratio = Total Cash & Cash Equivalents/ Current Liabilities = 577.72/ 67124.28 = 0.0086
5. 5. Profitability Ratios Gross Profit Ratio A financial metric used to assess a firm's financial health by revealing the proportion of money left over from revenues after accounting for the cost of goods sold. Gross Profit Ratio = (Revenue – COGS)/Revenue = (Revenue-(Total Expense-other expensefinance cost-Depreciation/Ammortization))/Revenue o = 0.359
6. 6. Profitability Ratios (cont.)  Return On Asset An indicator of how profitable a company is relative to its total assets. ROA gives an idea as to how efficient management is at using its assets to generate earnings. ROA = Net Income/Total Assets = 0.0093
7. 7. Efficiency Ratios  Fixed Asset Turnover The fixed-asset turnover ratio measures a company's ability to generate net sales from fixed-asset investments. Fixed Asset Turnover = Net Sales/Fixed Assets = 1.10
8. 8. Efficiency Ratios (cont.)  Inventory Turnover A ratio showing how many times a company's inventory is sold and replaced over a period. Inventory Turnover = COGS/Avg. Inventory = 93597.44/30070.33 = 3.113
9. 9. Capital Structure Ratio  Debt/Equity Ratio A measure of a company's financial leverage calculated by dividing its total liabilities by stockholders' equity. Debt/Equity Ratio = Total Liabilities/ Shareholder’s Equity = 135981.19/59775.58 = 2.275
10. 10. Capital Structure Ratio (cont.)  Debt Ratio A measure of a company's leverage. The higher this ratio the greater financial risk the company suffers. Debt Ratio = Total Debt/Total Assets = (Current+non Current Liabilities)/Total Assets = 0.456
11. 11. Cash Flow Ratios  Operating Cash Flow Ratio A measure of how well current liabilities are covered by the cash flow generated from a company's operations. OCF Ratio = Cash Flow From Operations/ Current Liabilities = 0.391
12. 12. Cash Flow Ratios (cont.)  Operating Cash Flow to Sales Ratio A comparison of a company's cash flow to its sales. Lower ratios are more favorable and are indicative of positive financial strength within a company. OCF to Sales Ratio = Total Operating Cash Flow/ Total Sales = 0.18
13. 13. Earning Per Share(EPS) Earnings per share serves as indicator of a company's profitability. an EPS = (Net Income- Dividends On Preferred Stock-Divident Distribution Tax)/ Average Outstanding Shares = (1811.29*105-0)/66048908 = 2.742
14. 14. Price/Earning Ratio A valuation ratio of a company's current share price compared to its pershare earnings. Price/Earning Ratio = Market Value Per Share/EPS = 63.8/2.74 = 23.28
15. 15. 2013 vs. 2012 Ratios 2013 2012 Quick Ratio 0.132 0.125 Cash Ratio 0.009 0.019 Gross Profit Ratio 0.359 0.376 Return On Asset 0.009 - 0.016 1.101 0.897 Inventory Turnover Ratio 3.115 2.612 Capital Structure Ratios Debt to Equity Ratio 2.283 2.715 Debt Ratio 0.456 0.480 Cash Flow Ratios OCF Ratio 0.392 0.253 OCF to Sales Ratio 0.181 0.148 Earning Per Share (EPS) 2.746 - 5.491 Price/ Earning Ratio 23.282 -11.626 Liquidity Ratios Profitability Ratios Efficiency Ratios Fixed Asset Turnover
16. 16. West Coast Paper vs. JK Paper (FY 12-13) Ratios West Coast Paper JK Paper Liquidity Ratios Quick Ratio 0.132 0.279 Cash Ratio 0.009 0.064 Profitability Ratios Gross Profit Ratio 0.359 0.288 Return On Asset 0.009 0.012 Efficiency Ratios Fixed Asset Turnover 1.101 1.908 Inventory Turnover Ratio 3.115 4.846 Capital Structure Ratios Debt to Equity Ratio 2.283 2.500 Debt Ratio 0.456 0.522 Cash Flow Ratios OCF Ratio 0.392 0.221 OCF to Sales Ratio 0.181 0.084 2.746 2.759 23.282 10.185 Earning Per Share (EPS) Price/ Earning Ratio
17. 17. Inference  Company has performed better than last financial year.  Return on Assets has been improved. EPS and P/E ratios have been improved significantly. These encourage investors to be bullish on this stock.  But the investors have to be cautious about the overvaluation of this stock and should keep in mind of future correction.  Fixed Assets and inventory turnover improvement indicates better utilization of resources.  Debt figures has also been meliorated.  Net cash flow figures has also been satisfactory this year and substantial investment in R&D explores future opportunities, that makes top executive position of this company really really lucrative.