This document provides a 3 paragraph summary of ratio analysis. It defines ratio analysis as a tool used by lenders to evaluate the liquidity, profitability, solvency, financial stability, and management quality of a business. 20 specific financial ratios are then defined that are commonly used in ratio analysis, including current ratio, debt-to-equity ratio, gross profit ratio, return on assets, and debt service coverage ratio. Finally, ratios are categorized as belonging to balance sheet ratios, income statement ratios, or composite ratios that use figures from both statements.
Here are the key ratios calculated from the financial information provided:
1. Tangible Net Worth for 2005-06: Capital (300) + Reserves (140) - Goodwill (50) = 390
2. Current Ratio for 2006-07: Current Assets (170 + 30 + 170 + 20 + 240 + 190) / Current Liabilities (580 + 70 + 80 + 70) = 820/800 = 1.02
3. Debt Equity Ratio for 2005-06: Total Debt (Bank Term Loan 320 + Unsec. Long Term Loan 150) / Tangible Net Worth (390) = 470/390 = 1.2
The document discusses how bankers evaluate business loan requests, including analyzing financial statements and ratios to assess expense control, operating efficiency, and profitability. It also covers different methods used by banks to price business loans, such as cost-plus pricing, price leadership models, and customer profitability analysis. The goal is for banks to understand borrowers' ability to repay and set appropriate interest rates to achieve the bank's profit and risk management objectives.
Here are the key steps to solve this problem:
1) The monthly interest rate (i) is given as 0.287% per month. To convert to a decimal, we divide by 100: i = 0.00287
2) To find the equivalent annual rate (EAR), we use the compound interest formula:
(1 + i)^12 - 1 = EAR
(1 + 0.00287)^12 - 1 = 0.0347 = 3.47%
So the equivalent annual rate for an interest rate of 0.287% per month, compounded monthly, is 3.47%.
3) To find the future value (FV) of €100 after 1 year:
This chapter discusses nondeposit sources of funds that financial institutions can use to finance their activities. It covers liability management, alternative nondeposit funding sources like federal funds, repurchase agreements, federal home loans, certificates of deposit, and long-term funding. The document also discusses measuring a bank's funds gap, choosing the lowest cost funding sources, and determining the overall cost of funds. It provides examples of calculating interest costs and effective rates for different borrowing options.
1) New River National Bank has $1,465 million in total assets and $115 million in total capital.
2) Its risk-weighted assets are calculated to be $1,024.5 million.
3) With $115 million in total capital and risk-weighted assets of $1,024.5 million, New River National Bank's total capital to risk-weighted assets ratio is 11.2%, above the minimum requirement of 8%. Therefore, the bank does not appear to have a capital deficiency.
This document discusses bonds and debentures. It defines bonds as a debt investment where an investor loans money to an entity for a fixed period at a fixed interest rate. Debentures are defined as unsecured debt instruments backed by the creditworthiness of the issuer. The key differences between bonds and debentures are that bonds are more secure since they are collateralized, while debentures carry higher interest rates due to being unsecured. The document also provides an example calculation of valuing a bond.
Meeting 2 - Leverage Ratios (Financial Reporting and Analysis)Albina Gaisina
This document discusses various leverage and solvency ratios used to evaluate a company's financial position, including:
- Total debt to equity ratio, which compares a company's total liabilities to shareholders' equity. A high ratio indicates more risk.
- Total debt to total assets ratio, which indicates the percentage of assets financed through debt. A ratio over 50% suggests high leverage.
- Long-term debt ratios, which evaluate a company's long-term obligations relative to equity or total assets.
- Times interest earned and operating cash to interest ratios, which measure a company's ability to meet interest payments from earnings or cash flows. Ratios below 2.5 generally indicate higher risk.
The document also discusses
Ratios and formulas in customer financial analysisNajib Baig
The document provides an overview of various financial ratios used in analyzing customer financial statements. It discusses liquidity ratios, profitability ratios, leverage ratios, and efficiency ratios. For each type of ratio, it provides the calculation formulas and explains what each ratio measures. The ratios can be used to evaluate aspects of a company's operations, such as its ability to meet current obligations, generate profits, utilize debt, and manage assets and expenses.
Here are the key ratios calculated from the financial information provided:
1. Tangible Net Worth for 2005-06: Capital (300) + Reserves (140) - Goodwill (50) = 390
2. Current Ratio for 2006-07: Current Assets (170 + 30 + 170 + 20 + 240 + 190) / Current Liabilities (580 + 70 + 80 + 70) = 820/800 = 1.02
3. Debt Equity Ratio for 2005-06: Total Debt (Bank Term Loan 320 + Unsec. Long Term Loan 150) / Tangible Net Worth (390) = 470/390 = 1.2
The document discusses how bankers evaluate business loan requests, including analyzing financial statements and ratios to assess expense control, operating efficiency, and profitability. It also covers different methods used by banks to price business loans, such as cost-plus pricing, price leadership models, and customer profitability analysis. The goal is for banks to understand borrowers' ability to repay and set appropriate interest rates to achieve the bank's profit and risk management objectives.
Here are the key steps to solve this problem:
1) The monthly interest rate (i) is given as 0.287% per month. To convert to a decimal, we divide by 100: i = 0.00287
2) To find the equivalent annual rate (EAR), we use the compound interest formula:
(1 + i)^12 - 1 = EAR
(1 + 0.00287)^12 - 1 = 0.0347 = 3.47%
So the equivalent annual rate for an interest rate of 0.287% per month, compounded monthly, is 3.47%.
3) To find the future value (FV) of €100 after 1 year:
This chapter discusses nondeposit sources of funds that financial institutions can use to finance their activities. It covers liability management, alternative nondeposit funding sources like federal funds, repurchase agreements, federal home loans, certificates of deposit, and long-term funding. The document also discusses measuring a bank's funds gap, choosing the lowest cost funding sources, and determining the overall cost of funds. It provides examples of calculating interest costs and effective rates for different borrowing options.
1) New River National Bank has $1,465 million in total assets and $115 million in total capital.
2) Its risk-weighted assets are calculated to be $1,024.5 million.
3) With $115 million in total capital and risk-weighted assets of $1,024.5 million, New River National Bank's total capital to risk-weighted assets ratio is 11.2%, above the minimum requirement of 8%. Therefore, the bank does not appear to have a capital deficiency.
This document discusses bonds and debentures. It defines bonds as a debt investment where an investor loans money to an entity for a fixed period at a fixed interest rate. Debentures are defined as unsecured debt instruments backed by the creditworthiness of the issuer. The key differences between bonds and debentures are that bonds are more secure since they are collateralized, while debentures carry higher interest rates due to being unsecured. The document also provides an example calculation of valuing a bond.
Meeting 2 - Leverage Ratios (Financial Reporting and Analysis)Albina Gaisina
This document discusses various leverage and solvency ratios used to evaluate a company's financial position, including:
- Total debt to equity ratio, which compares a company's total liabilities to shareholders' equity. A high ratio indicates more risk.
- Total debt to total assets ratio, which indicates the percentage of assets financed through debt. A ratio over 50% suggests high leverage.
- Long-term debt ratios, which evaluate a company's long-term obligations relative to equity or total assets.
- Times interest earned and operating cash to interest ratios, which measure a company's ability to meet interest payments from earnings or cash flows. Ratios below 2.5 generally indicate higher risk.
The document also discusses
Ratios and formulas in customer financial analysisNajib Baig
The document provides an overview of various financial ratios used in analyzing customer financial statements. It discusses liquidity ratios, profitability ratios, leverage ratios, and efficiency ratios. For each type of ratio, it provides the calculation formulas and explains what each ratio measures. The ratios can be used to evaluate aspects of a company's operations, such as its ability to meet current obligations, generate profits, utilize debt, and manage assets and expenses.
This document provides an overview of interest rates, bond valuation, and bond features. It discusses how interest rates are determined by the relationship between the supply and demand of funds. It also explains how nominal interest rates are comprised of expected inflation and risk premiums. The document covers bond valuation techniques, such as using the yield-to-maturity approach. Additionally, it describes various bond characteristics like call provisions, conversion features, and indentures.
Modes of Financing
Purpose of Term Loans
Types and Features of Term Loans
Procedures Associated with Term Loans
Pros and Cons of Term Loans
Appraisal of Project
Repayment Schedule
Syndicated Loans
A debenture is a certificate issued by a company to acknowledge its debt obligation. It provides details of the loan terms including the amount owed and interest rate. Debentures can be classified in several ways such as secured vs unsecured, redeemable vs non-redeemable, registered vs bearer, convertible vs non-convertible, and by coupon/interest rate. Companies issue debentures to borrow money which becomes part of their capital structure.
Cost of Capital for State Owned Enterprises Stephen Labson slEconomicsStephen Labson
slEconomics is a boutique economics consulting firm based in Sydney, Australia that provides specialized advice to governments, regulators, and corporate clients in the areas of utilities and infrastructure. The document summarizes a workshop on estimating the cost of capital for regulated state-owned enterprises in South Africa. It discusses key determinants of the cost of debt and equity and how they apply in the context of state-owned enterprises, focusing on risk-adjusted rates of return and benchmarking to private sector costs of capital.
Contingent convertible (CoCo) bond issuance has exceeded $20 billion annually since 2012. CoCo bonds can absorb losses when a bank's capital falls below certain levels. While CoCo bonds are an evolving asset class, regulations like the EU's CRD IV will recognize them as additional tier 1 capital. Valuation challenges exist due to unique bond features and lack of market data. Risks include uncertainty around triggers, pricing dependence on models, and rollover risks near maturity.
This document outlines various types of financial ratios used to analyze a company's performance and financial health. It provides the formulas, components, and significance of 35 key ratios including current ratio, acid test ratio, inventory turnover ratio, debtors turnover ratio, return on assets, return on equity, earnings per share, price earnings ratio, and more. The ratios can help evaluate a company's liquidity, operational efficiency, profitability, and returns generated relative to assets and equity.
The document discusses options for debt and equity finance in the South West region. It begins with an introduction to the speakers and their backgrounds. Richard Davis then discusses various debt financing options available from Lloyds TSB Commercial such as overdrafts, term loans, and the Enterprise Finance Guarantee Scheme. Bruce Colley then presents on alternative funding sources to fill the gap between traditional bank lending and equity finance. He discusses the current lending context and median interest rates.
This document discusses debentures and term loans as methods for companies to raise finance. It defines debentures as a type of loan issued by companies that pays a fixed rate of interest but does not give the holder ownership in the company. Term loans are defined as loans that must be repaid in regular installments over a set period of time at a specified interest rate. The document outlines the key features, types, advantages and disadvantages of both debentures and term loans as financing options for companies.
This document discusses debentures and compares them to bonds. It defines debentures as an acknowledgement of debt issued by a company under its common seal. Debentures can be secured or unsecured, whereas bonds are generally more secure. Debentures are issued by companies to raise funds, while bonds are typically issued by governments or large corporations. Debentures carry higher risk than bonds but also offer higher interest rates. The document outlines the key characteristics of debentures, including different types classified by security, redemption period, negotiability, priority, coupon rates, and convertibility. It also compares debenture holders to shareholders.
The document discusses proposed reforms to South Africa's retirement fund system. Key points include making fund membership compulsory, requiring preservation of benefits in retirement funds rather than withdrawals, improving portability between funds, and providing better retirement products like low-cost living annuities. The proposals aim to improve retirement savings and outcomes by nudging members towards preservation and ensuring adequate retirement incomes. Public feedback will be gathered before finalizing any legislative changes.
This document discusses sources of current liabilities for businesses, including accounts payable and accruals which arise from normal business operations. It also discusses strategies for managing accounts payable, such as taking advantage of cash discounts and stretching payment terms. The document outlines various sources of short-term financing including bank loans, lines of credit, commercial paper, and secured loans using accounts receivable or inventory as collateral.
The document discusses debentures, which are debt instruments issued by companies to raise funds. It covers the meaning and types of debentures, the distinction between debentures and shares, and accounting entries for issuing debentures under different scenarios such as when issued at par, premium, or discount and redeemable at par, premium or discount. The key learning points are types of debentures, features of debentures, differences between debentures and shares, and journal entries for issuing debentures in various situations.
Liquidity needs in the post crisis world and liquidity provision for bank res...AEI
- Current regulations like the LCR and NSFR require banks to self-insure against prolonged periods of liquidity stress, which is expensive and restricts credit provision.
- The author proposes that the Federal Reserve sell "systemic liquidity options" to provide liquidity insurance at a lower cost. These would allow holders to repo eligible collateral with the Fed for a month.
- For resolving large, complex banks, relying on the FDIC's SPOE approach may be difficult if a bank suffers large losses and a deposit run exceeding the FDIC's guarantee capacity. The Wells Fargo example shows how losses and deposits fleeing could leave a bridge bank undercapitalized and struggling to fund itself.
Change in ddt on debt mf schemes from june 2013 onwards – how to copeDhuraivel Gunasekaran
1) From June 2013, the dividend distribution tax (DDT) on debt mutual funds was increased from 12.5% to 25% for individual and HUF investors, making the dividend option less attractive.
2) Investors can opt for the growth option and benefit from long-term capital gains tax of 10-20% after holding the funds for over 1 year.
3) Systematic withdrawal plans (SWPs) provide regular income from debt funds in a tax efficient manner by withdrawing after a 1 year holding period.
This document discusses accounting issues related to troubled debt restructurings (TDRs) and allowance for loan losses. It covers the differences between loan modifications and TDRs, accounting for TDRs including impairment measurement, and components of the allowance for loan losses such as historical loss rates, impaired loans, and qualitative factors. Regulatory reporting considerations for TDRs and ensuring adequate allowance levels are also addressed.
This document defines debentures and outlines their key characteristics. It notes that debentures are debt instruments used by companies to borrow money at a fixed interest rate. Debentures can be secured or unsecured, registered or bearer, redeemable or irredeemable, and convertible or non-convertible. The document also discusses statutory provisions regarding debenture issuance, conditions for valid issuance, procedures for issuance, conversion to shares, and redemption.
Econ315 Money and Banking: Learning Unit #12: Risk Structure of Interest Ratessakanor
This document discusses why there are different interest rates in the economy. It explains that interest rates vary based on the risk, liquidity, and tax attributes of different financial instruments. Bonds have different interest rates depending on their default risk, with riskier corporate bonds paying higher rates than safer Treasury bonds. Liquidity also impacts rates, with less liquid bonds paying more than more liquid ones. Tax attributes matter as well, as tax-exempt municipal bonds pay lower rates than taxable bonds. The document provides examples of how risk premiums, liquidity premiums, and tax premiums contribute to the different interest rates observed in the market.
Prior to 1990, most developing firms obtained term loans from banks and insurance companies, but there was a "flight to quality" in 1990 where insurance companies and banks reduced lending. Today, insurance companies and banks have much smaller portions of their portfolios in below-investment-grade loans. While banks prefer short-term assets and liabilities, insurance companies match long-term assets with long-term loans. When negotiating loans, borrowers should consider their earnings history, asset types, and liquidation value to strengthen their bargaining position, while also allowing management flexibility to avoid default.
The document provides an introduction to financial statement analysis. It discusses that financial statement analysis involves reviewing a company's financial statements, including the income statement, balance sheet, and statement of cash flows, to assess performance. The document outlines the objectives and scope of analyzing the financial statements of Sitaram Textiles Ltd over a 5-year period from 2011-2015. It describes the sources of data, research methodology, limitations, and timeline of the study. Finally, it provides a literature review on financial statement analysis and what financial statements are.
This document is a project report submitted by Mr. Ojas Nitin Narsale, an M.Com student at the Parle Tilak Vidyalaya Association's M.L. Dahanukar College of Commerce in Mumbai, India. The report is on the topic of ratio analysis and was completed in the 2016-2017 academic year under the guidance of Prof. Karim. The report includes an introduction, objectives, methodology, literature review on ratio analysis, calculations of key financial ratios for a company, analysis of the results, and a summary.
A project report on ratio analysis at haripriya organic chemical pvt ltdBabasab Patil
1) The document analyzes the long term financing needs and sources for Haripriya Organic Chemical Pvt Ltd, an Indian chemical company. It discusses the company profile, objectives of the study, research methodology, findings and suggestions.
2) Key findings include that the company has low equity capital resulting in high interest costs, financing expenses exceed manufacturing expenses, and fixed assets are underutilized.
3) Suggestions are to increase equity capital, establish own manufacturing to ensure market and survival, and better utilize production capacity.
This document provides an overview of interest rates, bond valuation, and bond features. It discusses how interest rates are determined by the relationship between the supply and demand of funds. It also explains how nominal interest rates are comprised of expected inflation and risk premiums. The document covers bond valuation techniques, such as using the yield-to-maturity approach. Additionally, it describes various bond characteristics like call provisions, conversion features, and indentures.
Modes of Financing
Purpose of Term Loans
Types and Features of Term Loans
Procedures Associated with Term Loans
Pros and Cons of Term Loans
Appraisal of Project
Repayment Schedule
Syndicated Loans
A debenture is a certificate issued by a company to acknowledge its debt obligation. It provides details of the loan terms including the amount owed and interest rate. Debentures can be classified in several ways such as secured vs unsecured, redeemable vs non-redeemable, registered vs bearer, convertible vs non-convertible, and by coupon/interest rate. Companies issue debentures to borrow money which becomes part of their capital structure.
Cost of Capital for State Owned Enterprises Stephen Labson slEconomicsStephen Labson
slEconomics is a boutique economics consulting firm based in Sydney, Australia that provides specialized advice to governments, regulators, and corporate clients in the areas of utilities and infrastructure. The document summarizes a workshop on estimating the cost of capital for regulated state-owned enterprises in South Africa. It discusses key determinants of the cost of debt and equity and how they apply in the context of state-owned enterprises, focusing on risk-adjusted rates of return and benchmarking to private sector costs of capital.
Contingent convertible (CoCo) bond issuance has exceeded $20 billion annually since 2012. CoCo bonds can absorb losses when a bank's capital falls below certain levels. While CoCo bonds are an evolving asset class, regulations like the EU's CRD IV will recognize them as additional tier 1 capital. Valuation challenges exist due to unique bond features and lack of market data. Risks include uncertainty around triggers, pricing dependence on models, and rollover risks near maturity.
This document outlines various types of financial ratios used to analyze a company's performance and financial health. It provides the formulas, components, and significance of 35 key ratios including current ratio, acid test ratio, inventory turnover ratio, debtors turnover ratio, return on assets, return on equity, earnings per share, price earnings ratio, and more. The ratios can help evaluate a company's liquidity, operational efficiency, profitability, and returns generated relative to assets and equity.
The document discusses options for debt and equity finance in the South West region. It begins with an introduction to the speakers and their backgrounds. Richard Davis then discusses various debt financing options available from Lloyds TSB Commercial such as overdrafts, term loans, and the Enterprise Finance Guarantee Scheme. Bruce Colley then presents on alternative funding sources to fill the gap between traditional bank lending and equity finance. He discusses the current lending context and median interest rates.
This document discusses debentures and term loans as methods for companies to raise finance. It defines debentures as a type of loan issued by companies that pays a fixed rate of interest but does not give the holder ownership in the company. Term loans are defined as loans that must be repaid in regular installments over a set period of time at a specified interest rate. The document outlines the key features, types, advantages and disadvantages of both debentures and term loans as financing options for companies.
This document discusses debentures and compares them to bonds. It defines debentures as an acknowledgement of debt issued by a company under its common seal. Debentures can be secured or unsecured, whereas bonds are generally more secure. Debentures are issued by companies to raise funds, while bonds are typically issued by governments or large corporations. Debentures carry higher risk than bonds but also offer higher interest rates. The document outlines the key characteristics of debentures, including different types classified by security, redemption period, negotiability, priority, coupon rates, and convertibility. It also compares debenture holders to shareholders.
The document discusses proposed reforms to South Africa's retirement fund system. Key points include making fund membership compulsory, requiring preservation of benefits in retirement funds rather than withdrawals, improving portability between funds, and providing better retirement products like low-cost living annuities. The proposals aim to improve retirement savings and outcomes by nudging members towards preservation and ensuring adequate retirement incomes. Public feedback will be gathered before finalizing any legislative changes.
This document discusses sources of current liabilities for businesses, including accounts payable and accruals which arise from normal business operations. It also discusses strategies for managing accounts payable, such as taking advantage of cash discounts and stretching payment terms. The document outlines various sources of short-term financing including bank loans, lines of credit, commercial paper, and secured loans using accounts receivable or inventory as collateral.
The document discusses debentures, which are debt instruments issued by companies to raise funds. It covers the meaning and types of debentures, the distinction between debentures and shares, and accounting entries for issuing debentures under different scenarios such as when issued at par, premium, or discount and redeemable at par, premium or discount. The key learning points are types of debentures, features of debentures, differences between debentures and shares, and journal entries for issuing debentures in various situations.
Liquidity needs in the post crisis world and liquidity provision for bank res...AEI
- Current regulations like the LCR and NSFR require banks to self-insure against prolonged periods of liquidity stress, which is expensive and restricts credit provision.
- The author proposes that the Federal Reserve sell "systemic liquidity options" to provide liquidity insurance at a lower cost. These would allow holders to repo eligible collateral with the Fed for a month.
- For resolving large, complex banks, relying on the FDIC's SPOE approach may be difficult if a bank suffers large losses and a deposit run exceeding the FDIC's guarantee capacity. The Wells Fargo example shows how losses and deposits fleeing could leave a bridge bank undercapitalized and struggling to fund itself.
Change in ddt on debt mf schemes from june 2013 onwards – how to copeDhuraivel Gunasekaran
1) From June 2013, the dividend distribution tax (DDT) on debt mutual funds was increased from 12.5% to 25% for individual and HUF investors, making the dividend option less attractive.
2) Investors can opt for the growth option and benefit from long-term capital gains tax of 10-20% after holding the funds for over 1 year.
3) Systematic withdrawal plans (SWPs) provide regular income from debt funds in a tax efficient manner by withdrawing after a 1 year holding period.
This document discusses accounting issues related to troubled debt restructurings (TDRs) and allowance for loan losses. It covers the differences between loan modifications and TDRs, accounting for TDRs including impairment measurement, and components of the allowance for loan losses such as historical loss rates, impaired loans, and qualitative factors. Regulatory reporting considerations for TDRs and ensuring adequate allowance levels are also addressed.
This document defines debentures and outlines their key characteristics. It notes that debentures are debt instruments used by companies to borrow money at a fixed interest rate. Debentures can be secured or unsecured, registered or bearer, redeemable or irredeemable, and convertible or non-convertible. The document also discusses statutory provisions regarding debenture issuance, conditions for valid issuance, procedures for issuance, conversion to shares, and redemption.
Econ315 Money and Banking: Learning Unit #12: Risk Structure of Interest Ratessakanor
This document discusses why there are different interest rates in the economy. It explains that interest rates vary based on the risk, liquidity, and tax attributes of different financial instruments. Bonds have different interest rates depending on their default risk, with riskier corporate bonds paying higher rates than safer Treasury bonds. Liquidity also impacts rates, with less liquid bonds paying more than more liquid ones. Tax attributes matter as well, as tax-exempt municipal bonds pay lower rates than taxable bonds. The document provides examples of how risk premiums, liquidity premiums, and tax premiums contribute to the different interest rates observed in the market.
Prior to 1990, most developing firms obtained term loans from banks and insurance companies, but there was a "flight to quality" in 1990 where insurance companies and banks reduced lending. Today, insurance companies and banks have much smaller portions of their portfolios in below-investment-grade loans. While banks prefer short-term assets and liabilities, insurance companies match long-term assets with long-term loans. When negotiating loans, borrowers should consider their earnings history, asset types, and liquidation value to strengthen their bargaining position, while also allowing management flexibility to avoid default.
The document provides an introduction to financial statement analysis. It discusses that financial statement analysis involves reviewing a company's financial statements, including the income statement, balance sheet, and statement of cash flows, to assess performance. The document outlines the objectives and scope of analyzing the financial statements of Sitaram Textiles Ltd over a 5-year period from 2011-2015. It describes the sources of data, research methodology, limitations, and timeline of the study. Finally, it provides a literature review on financial statement analysis and what financial statements are.
This document is a project report submitted by Mr. Ojas Nitin Narsale, an M.Com student at the Parle Tilak Vidyalaya Association's M.L. Dahanukar College of Commerce in Mumbai, India. The report is on the topic of ratio analysis and was completed in the 2016-2017 academic year under the guidance of Prof. Karim. The report includes an introduction, objectives, methodology, literature review on ratio analysis, calculations of key financial ratios for a company, analysis of the results, and a summary.
A project report on ratio analysis at haripriya organic chemical pvt ltdBabasab Patil
1) The document analyzes the long term financing needs and sources for Haripriya Organic Chemical Pvt Ltd, an Indian chemical company. It discusses the company profile, objectives of the study, research methodology, findings and suggestions.
2) Key findings include that the company has low equity capital resulting in high interest costs, financing expenses exceed manufacturing expenses, and fixed assets are underutilized.
3) Suggestions are to increase equity capital, establish own manufacturing to ensure market and survival, and better utilize production capacity.
Project on Comparative Analysis of Bajaj Auto & Hero MotoCorp.Jamshed Khan
This document is a project proposal by a student named Aamir Firoz for a comparative analysis of Bajaj Auto and Hero MotoCorp. It includes an approval form signed by the student and principal approving the project. It also includes an index outlining the sections to be covered in the project such as the introduction, research methodology, objectives, limitations, data analysis, findings, conclusion and recommendations. The introduction provides a brief history and profile of both Bajaj Auto and Hero MotoCorp, including details on their founding, key people, products launched over time, and other relevant information.
presentation on financial statement of hero moto corpsayed124
This document outlines an internship project completed by Sayed Nabil at Hero MotoCorp Ltd. It includes an acknowledgment, declaration, objectives, introduction to the company, milestones, leadership team, product line, organizational structure, and employees profile. The project analyzed Hero MotoCorp's financial statements over five years including the profit and loss account, balance sheet, and cash flow statement to understand the company's financial performance and position. Key ratios were calculated and trends analyzed. The document provides an overview of Hero MotoCorp as the background for Nabil's financial analysis internship project.
Analysis of financial statement @ kirloskar project report mba financeBabasab Patil
The document provides an analysis of the financial statements of Kirloskar Electric Company Limited (KEC). It discusses KEC's industry profile, company profile, objectives of the study, scope, and methodology. It highlights that KEC is a pioneer in manufacturing electric motors, generators, and other equipment in India. It was established in 1946 and has since diversified and grown into a multibillion conglomerate through innovation and technological advancements. The document aims to analyze KEC's financial performance and position over the past 4 years through a study of its financial statements using ratio analysis.
A project report on ratio analysis at the gadag co operative textile mill ltdBabasab Patil
This document provides an overview and background of the Gadag Co-operative Textile Mill Ltd located in Hulkoti, Karnataka, India. It discusses the company's history, facilities, production process, competitors, and administrative functions. The key points are:
1) The mill was established in 1972 with 25,000 spindles and produces and sells cotton yarn.
2) It has over 3,000 member shareholders and employs around 650 people.
3) The production process involves mixing, cleaning, carding, and spinning cotton into yarn of various counts on ring frames.
4) The mill's main competitors are three other local cooperative spinning mills.
Comparative analysis: Bajaj Auto v/s Hero MotoCorp.Jamshed Khan
The document provides a comparative analysis of Bajaj Auto and Hero MotoCorp, two major Indian motorcycle manufacturers. It discusses the history and operations of both companies. Bajaj Auto was founded in 1945 and is a global leader in motorcycles and three-wheelers. Hero MotoCorp was formed in 1984 as a joint venture between Hero Group and Honda that became the largest motorcycle manufacturer globally by 2001. The document also outlines research methodology used including primary and secondary data collection through surveys. Key findings indicate that Hero MotoCorp's Splendor and Passion models and Bajaj's Discover and Pulsar are most popular. Price, mileage, and quality are main factors influencing purchase decisions.
Project on financial statement analysis of hero moto corp ltd.CHIRANJIBI BISOI
- Hero MotoCorp is an Indian motorcycle manufacturer and the largest two-wheeler company in the world.
- The document certifies that a student completed a project report on the financial statement analysis of Hero MotoCorp under the supervision of their professor.
- It includes the student's declaration that the work is their own and has not been previously submitted for another degree or qualification.
We have picked up HUL balance sheets of years from ACE-Equity and applied some ratio analysis to analyze the trend and predict next year results of the company.
Maruti Suzuki India Ltd Financial Statement AnalysisMaruthi Nataraj K
Maruti Suzuki India Ltd Financial Statement Analysis
We have considered Tata Motors in whole as its competitor but it is advised to take the related segments for better results.
The document provides information about Axis Bank's products and services. It describes various retail banking facilities like ATMs, internet banking, loans, and cash management services. The cash management services help corporate customers in managing receivables through collection solutions and payments through options like bulk payments. It also discusses managing resources through liquidity management and managing taxes using CBDT and CBEC collection services.
3 years comparative ratio, trend analysis and common size statement of bajaj ...Jay Savani
The document provides financial information for two automobile companies - Bajaj Auto Ltd and Hero Motocorp Ltd. It includes profit and loss statements, common sized analyses, and definitions. The common sized analyses show that while Hero Motocorp saw 6.34% growth in net sales from 2012-2014, Bajaj Auto only saw 0.76% growth. Material costs as a percentage of net sales decreased more for Bajaj Auto (2.91%) than Hero Motocorp (1.02%) over the same period. The document also provides key financial metrics like revenues, profits, assets, and subsidiaries for both companies.
Project Report on Financial Statement Analysisarijitbhowmick
This document is a project report submitted in partial fulfillment of a post graduate diploma in management. It provides an acknowledgment and outlines the contents which will include an abstract, executive summary, introduction, literature review, research methodology, analysis, results and conclusions on the financial statement analysis and cost-volume-profit analysis of Coal India Limited. It also discusses the company's vision for coal production through 2025 and initiatives in coal bed methane, underground coal gasification, coal liquefaction, and over ground coal gasification.
Pidilite Industries Limited has been a pioneer in consumer and specialties chemicals in India since 1959. It is the market leader in India for adhesives, sealants, construction chemicals, and other products. The company has an annual turnover of about $350 million and is focused on growing internationally through acquisitions and new facilities. Pidilite prioritizes strong customer relationships and innovation to drive its success.
Financial ratios analysis project at Nestle and Engro Foodsraboz
Nestle and Engro Foods are analyzed in the document. Nestle has been operating in Pakistan since 1988 and has a wide range of food products. It aims to be the leading nutrition, health and wellness company in Pakistan. Engro Foods also offers various food products and was the first company to use bactofuge technology. Through financial analysis, it is found that while Nestle has been in business longer, Engro has grown efficiently and increased its share price significantly despite being newer. The document examines the companies' financial statements and ratios to compare their financial performance and positions.
Project report on Financial Statement Analysis and interpretation of A CompanyPinkey Rana
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The document discusses the life insurance sector in India, noting that it is one of the two largest markets for life insurance products growing at 15% annually due to factors like a large insurable population, high savings rate of 25%, and low insurance penetration of 2.3%. It also briefly compares India's life insurance market to China's, noting both have low insurance penetration rates while China has a higher savings rate of 35%.
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Ratio analysis is an important tool for financial analysis that allows assessment of key financial metrics like liquidity, profitability, solvency, and risk. It involves calculating and analyzing relationships between items and groups of items from financial statements. Common ratios used in ratio analysis include the current ratio, quick ratio, debt-equity ratio, and profitability ratios. Ratio analysis is useful for lenders in evaluating the financial position, performance, strengths, and weaknesses of a business. It provides insights into the liquidity, operational efficiency, and credit risk of companies.
This document provides information on ratio analysis for financial statement evaluation. It defines various types of ratios including liquidity, activity, profitability, leverage and market ratios. Specific ratios discussed include current ratio, quick ratio, debt-equity ratio, gross profit ratio, return on equity, earnings per share and price-earnings ratio. The purpose, calculation and ideal levels of these ratios are explained. Sample balance sheet formats and ratio calculations are also presented to illustrate the concepts.
This document discusses financial statement analysis. It provides an overview of key topics including the purpose of financial statement analysis, the primary tools used, important financial statements and ratios analyzed, sources of financial data, why analysis is needed, and who uses financial statement analysis information both internally and externally. Key ratios discussed include liquidity, leverage, profitability and turnover ratios. Limitations of financial statement analysis are also covered.
Ratio Analysis By- Ravi Thakur From CMD Ravi Thakur
Ratio analysis is a technique used to analyze financial statements and evaluate the performance, financial position, and cash flows of a business or corporation. Ratios can be used to compare a company's performance over several years, compare a company to other companies, and assess its operating and financial efficiency. Some key points covered in the document include:
- Ratio analysis involves calculating and interpreting various financial ratios to analyze trends, evaluate performance, assess risk, and make comparisons.
- Common types of ratios include liquidity ratios, leverage ratios, activity ratios, and profitability ratios.
- Ratio analysis helps lenders and others evaluate a company's liquidity position, profitability, solvency, financial stability, management quality, and risk.
Ratio analysis is an important tool for financial analysis that involves calculating and analyzing relationships between key financial data points from statements. It helps assess a company's liquidity, profitability, solvency, financial stability, and risk. When using ratios, it is important to compare the same company over multiple years, against industry benchmarks, and be aware of factors like accounting differences that could distort comparisons. Key ratios include current ratio, acid test ratio, debt-equity ratio, proprietary ratio, and gross profit ratio.
This document provides information on ratio analysis including its definition, purpose, types of ratios, and how they are calculated and interpreted. Ratio analysis is a technique used to analyze financial statements and evaluate the performance, financial position, and viability of a business entity. It involves calculating various financial ratios using data from the income statement, balance sheet, and cash flow statement, and comparing them over time and against industry benchmarks to gain insight into the entity's profitability, liquidity, leverage, and operating efficiency. The document outlines various financial ratios that can be computed such as the current ratio, quick ratio, debt-to-equity ratio, and discusses how ratios are expressed and important considerations in their use and interpretation.
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Ratio analysis measures relationships between financial variables to show how a firm's situation compares to its past, other firms, and the industry. Ratios are used to identify performance, standardize information, provide early warnings, and enable trend spotting. Key types of ratios include liquidity, activity, debt, and profitability. Liquidity ratios measure a firm's ability to pay obligations and include current, quick, and cash ratios. Activity ratios evaluate efficiency through measures like inventory turnover, accounts receivable period, and asset turnover.
Ratio analysis is a tool used to analyze financial statements and determine a firm's liquidity, profitability, and financial stability. It involves calculating various ratios using data from the income statement and balance sheet, and comparing them over time and against industry benchmarks. The document discusses various types of ratios like liquidity, leverage, asset utilization, and market valuation ratios. It also provides the formulas to calculate important ratios like current ratio, debt-to-equity, return on equity, and earnings per share. The document is intended to explain the concept of ratio analysis and its importance for financial statement evaluation.
The document discusses ratio analysis and various types of financial ratios used to analyze the financial performance and position of a company. It defines key liquidity ratios like current ratio and quick ratio. It also explains leverage ratios such as debt-equity ratio and total debt ratio that measure the use of debt financing. Further, it covers activity ratios including inventory turnover ratio and debtors' turnover ratio that assess efficiency of inventory and receivables management. The document emphasizes the importance of ratio analysis and interpretation of ratios with industry benchmarks.
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Solvency ratio By Deepak Madan (Mcom B.ed)deepak madan
This document defines and explains several financial ratios used to analyze a company's solvency, debt levels, and profitability:
- Solvency Ratio measures long-term debt compared to shareholder equity. A ratio of 2:1 is generally considered acceptable.
- Total Assets to Debt Ratio expresses total assets relative to long-term debt. A ratio of 1:1 or 2:1 indicates a sufficient margin of safety for long-term lenders.
- Proprietary Ratio indicates the proportion of total assets funded by shareholders. Generally a higher percentage shows a stronger financial position.
- Interest Coverage Ratio measures profit before interest and taxes relative to fixed interest charges. A ratio of 6
Ratio analysis is used to evaluate a company's financial health and performance. Ratios are calculated using numbers from financial statements and compared over time and against industry benchmarks. The document discusses various types of ratios like liquidity, profitability, and solvency ratios and their formulas and interpretations. It also covers the uses and limitations of ratio analysis as well as break-even analysis which is used to evaluate sales volumes required to cover costs and make a profit.
This document provides an overview of financial statement analysis and ratio analysis for assessing the financial health of a company. It discusses the different types of financial statements, including the balance sheet, income statement, cash flow statement, and statement of retained earnings. It then outlines various ratios that can be calculated from the financial statements to evaluate a company's liquidity, profitability, leverage, investment returns, and operating efficiency. Examples are provided of common liquidity ratios like the current ratio and acid test ratio, as well as profitability, leverage, and turnover ratios. The document emphasizes that ratio analysis allows for comparison of a company's performance over time, against industry benchmarks, and between peer companies. It concludes with exercises calculating various ratios from sample financial
This document discusses various financial ratios used to analyze different types of financial companies, including banks, insurance companies, investment banks, and more. It provides the calculations and interpretations for key ratios in categories such as liquidity, profitability, management efficiency, and financial risk. Specific metrics and issues to examine are outlined for different industries. The document also discusses how to analyze trends in ratios over time and compares companies' ratios to industry averages.
The following is Investopedia's Financial Ratios Tutorial (Eng), made into a PPTx for easy use where internet services are limited. The information only covers the formulas presented, but not the whole process of usage, nor the file the site provides.
Also, it comes with a translated (Spa) chart of the most common financial ratios used in Mexican accounting.
This content is property of the original authors and I claim no ownership over it. Hopefully, it will serve as a tool for promoting knowledge and internationalization.
The document discusses financial statements and balance sheets. It explains that public companies must produce four financial statements: the balance sheet, income statement, statement of cash flows, and statement of stockholders' equity. The balance sheet lists a company's assets, liabilities, and stockholders' equity at a point in time. It is divided into current and long-term assets and current and long-term liabilities. The difference between assets and liabilities is the stockholders' equity. While the balance sheet provides information, it does not always accurately reflect the true value of a company's equity.
Provides information on balance sheets. Topics include what a balance sheet looks like, attributes of a balance sheet, major components of a balance sheet, and key characteristics in the evaluation of inventory.
Ratio analysis is a method used to interpret financial statements and assess the strengths and weaknesses of a firm. Ratios measure the relationship between different financial metrics and can be used to compare performance over time, between firms, or against standards. Key types of ratios include liquidity, capital structure, profitability, and activity ratios which analyze different aspects of a firm's financial health and operations. Calculating ratios on its own does not provide value; analysis and comparison are required to draw meaningful conclusions.
1. A PROJECT REPORT ON RATIO ANALYSIS
OF
PREPARED BY
EKTA K PATEL.
•CLASS: M.B.A. SEM. -1
•Roll No: 38
•COLLEGE : PARUL INSTITUTE OF MANAGEMENT
•SUBMITTED TO : PARUL INSTITUTE OF MANAGEMENT
• GUIDED BY:
PROFESSOR PRIYANKA V. MOHILE
2. GENERAL INFORAMATION
LG Electronics is a global electronics and telecommunications company
headquartered in Yeouido, Seoul, South Korea. The company operates its
business through five divisions: mobile communications, home entertainment,
home appliance, air conditioning and business solution. LG Electronics is the
world's second-largest manufacturer of television sets] and third-largest
producer of mobile phones. It is a flagship subsidiary company of LG Group,
one of the world's largest electronic
conglomerates.
The company has 75 subsidiaries worldwide that design and manufacture
televisions, home appliances, and telecommunications devices. LG Electronics
owns Zenith Electronics and controls 37.91 percent of LG Display. Its
mobile communications division provides mobile communication terminals,
personal computers and communication devices. The home entertainment
division offers liquid crystal display (LCD) televisions (TVs), plasma display
panel (PDP) TVs, PDP modules, and audio, video and storage devices. The
home appliance division provides refrigerators, washing machines, microwave
ovens, cleaners, compressors, motors and others. The air conditioning
division provides air conditioners and solar cells. Its business solution
division provides integrated solutions of hardware, software, network,
contents and systems.
3. COMPANY PROFILE:
Type: Public
Traded as: KRX: 066570 LSE: LGLD
Consumer electronics
Industry: Home appliances
Telecommunications
Founded: 1958
Headquarters: Seoul, South Korea
Area served: Worldwide
Koo Bon-joon
Key people:
(Vice Chairman and CEO)
Computer monitors
Flash memory
Televisions
Smartphones
Tablets
Mobile phones
DVD players
Blu-ray players
Product:s
Home Cinema systems
Movie projectors
Laptops
CD and DVD drives
Refrigerators
Washing machines
Vacuum cleaners
Air conditioners
Revenue: US$ 48.2 billion (2010)
Net income: US$ 1.1 billion (2010)
Employees: 82,772
Parent: LG Group
www.lge.com
Website
www.lg.com
4. VISION & MISSION:
LG Electronics will focus its management efforts on stakeholder value creation by connecting the
essence of corporate management with the principles, strategies, and tools of CSM.
5.
6. • Lenders’ need it for carrying out the
following
• Technical Appraisal
• Commercial Appraisal
• Financial Appraisal
• Economic Appraisal
• Management Appraisal
7. It’s a tool which enables the banker or
lender to arrive at the following factors :
• Liquidity position
• Profitability
• Solvency
• Financial Stability
• Quality of the Management
• Safety & Security of the loans & advances
to be or already been provided
8. As Percentage - such as 25% or 50% .
For example if net profit is Rs.25,000/- and
the sales is Rs.1,00,000/- then the net profit
can be said to be 25% of the sales.
As Proportion - The above figures may be
expressed in terms of the relationship
between net profit to sales as 1 : 4.
As Pure Number /Times - The same can
also be expressed in an alternatively way such
as the sale is 4 times of the net profit or
profit is 1/4th of the sales.
9. Balance Sheet P&L Ratio or Balance Sheet
Ratio Income/Revenue and Profit &
Statement Ratio Loss Ratio
Financial Ratio Operating Ratio Composite Ratio
Current Ratio Gross Profit Ratio Fixed Asset
Quick Asset Operating Ratio Turnover Ratio,
Ratio Expense Ratio Return on Total
Proprietary Ratio Net profit Ratio Resources Ratio,
Debt Equity Ratio Stock Turnover Return on Own
Ratio Funds Ratio,
Earning per Share
Ratio, Debtors’
Turnover Ratio,
10. LIABILITIES ASSETS
NET WORTH/EQUITY/OWNED FUNDS FIXED ASSETS : LAND & BUILDING,
Share Capital/Partner’s Capital/Paid up PLANT & MACHINERIES
Capital/ Owners Funds Original Value Less Depreciation
Reserves ( General, Capital, Revaluation & Net Value or Book Value or Written down
Other Reserves) value
Credit Balance in P&L A/c
LONG TERM LIABILITIES/BORROWED NON CURRENT ASSETS
FUNDS : Term Loans (Banks & Investments in quoted shares & securities
Institutions) Old stocks or old/disputed book debts
Debentures/Bonds, Unsecured Loans, Long Term Security Deposits
Fixed Deposits, Other Long Term Other Misc. assets which are not current
Liabilities or fixed in nature
CURRENT LIABILTIES CURRENT ASSETS : Cash & Bank
Bank Working Capital Limits such as Balance, Marketable/quoted Govt. or
CC/OD/Bills/Export Credit other securities, Book Debts/Sundry
Sundry /Trade Creditors/Creditors/Bills Debtors, Bills Receivables, Stocks &
Payable, Short duration loans or deposits inventory (RM,SIP,FG) Stores & Spares,
Expenses payable & provisions against Advance Payment of Taxes, Prepaid
various items expenses, Loans and Advances recoverable
within 12 months
INTANGIBLE ASSETS
11. • Liabilities have Credit balance and Assets have Debit
balance
• Current Liabilities are those which have either become
due for payment or shall fall due for payment within 12
months from the date of Balance Sheet
• Current Assets are those which undergo change in their
shape/form within 12 months. These are also called
Working Capital or Gross Working Capital
• Net Worth & Long Term Liabilities are also called
12. • Assets other than Current Assets are Long Term Use of
Funds
• Installments of Term Loan Payable in 12 months are to be
taken as Current Liability only for Calculation of Current
Ratio & Quick Ratio.
• If there is profit it shall become part of Net Worth under
the head Reserves and if there is loss it will become part of
Intangible Assets
• Investments in Govt. Securities to be treated current only
if these are marketable and due. Investments in other
securities are to be treated Current if they are quoted.
Investments in allied/associate/sister units or firms to be
treated as Non-current.
13. 1. Current Ratio : It is the relationship between the
current assets and current liabilities of a concern.
Current Ratio = Current Assets/Current
Liabilities
If the Current Assets and Current Liabilities of a
concern are Rs.4,00,000 and Rs.2,00,000
respectively, then the Current Ratio will be :
Rs.4,00,000/Rs.2,00,000 = 2 : 1
The ideal Current Ratio preferred by Banks
is 1.33 : 1
2. Net Working Capital : This is worked out as surplus of Long Term Sources
over Long Tern Uses, alternatively it is the difference of Current Assets and
Current Liabilities.
NWC = Current Assets – Current Liabilities
14. 3. ACID TEST or QUICK RATIO : It is the ratio between Quick Current
Assets and Current Liabilities.
Quick Current Assets : Cash/Bank Balances + Receivables upto 6 months +
Quickly realizable securities such as Govt. Securities or quickly marketable/quoted
shares and Bank Fixed Deposits
Acid Test or Quick Ratio = Quick Current Assets/Current Liabilities
Example :
Cash 50,000
Debtors 1,00,000
Inventories 1,50,000 Current Liabilities 1,00,000
Total Current Assets 3,00,000
Current Ratio = > 3,00,000/1,00,000 = 3:1
Quick Ratio => 1,50,000/1,00,000 = 1.5 : 1
15. 4. DEBT EQUITY RATIO : It is the relationship between
borrower’s fund (Debt) and Owner’s Capital (Equity).
Long Term Outside Liabilities / Tangible Net Worth
Liabilities of Long Term Nature
Total of Capital and Reserves & Surplus Less Intangible Assets
For instance, if the Firm is having the following :
Capital = Rs. 200 Lacs
Free Reserves & Surplus = Rs. 300 Lacs
Long Term Loans/Liabilities = Rs. 800 Lacs
Debt Equity Ratio will be => 800/500 i.e. 1.6 : 1
16. 5. PROPRIETARY RATIO : This ratio indicates the extent to which
Tangible Assets are financed by Owner’s Fund.
Proprietary Ratio = (Tangible Net Worth/Total Tangible
Assets) x 100
The ratio will be 100% when there is no Borrowing for
purchasing of Assets.
6. GROSS PROFIT RATIO : By comparing Gross Profit percentage to
Net Sales we can arrive at the Gross Profit Ratio which indicates the
manufacturing efficiency as well as the pricing policy of the concern.
Gross Profit Ratio = (Gross Profit / Net Sales ) x 100
Alternatively , since Gross Profit is equal to Sales minus Cost of
Goods Sold, it can also be interpreted as below :
Gross Profit Ratio = [ (Sales – Cost of goods sold)/ Net Sales]
x 100
A higher Gross Profit Ratio indicates efficiency in production of the unit.
17. 7. OPERATING PROFIT RATIO :
It is expressed as => (Operating Profit / Net Sales ) x 100
Higher the ratio indicates operational efficiency
8. NET PROFIT RATIO :
It is expressed as => ( Net Profit / Net Sales ) x 100
It measures overall profitability.
18. 9. STOCK/INVENTORY TURNOVER RATIO :
(Average Inventory/Sales) x 365 for days
(Average Inventory/Sales) x 52 for weeks
(Average Inventory/Sales) x 12 for months
Average Inventory or Stocks = (Opening Stock + Closing
Stock)
-----------------------------------------
2
. This ratio indicates the number of times the inventory is
rotated during the relevant accounting period
19. 10. DEBTORS TURNOVER RATIO : This is also called Debtors
Velocity or Average Collection Period or Period of Credit given .
(Average Debtors/Sales ) x 365 for days
(52 for weeks & 12 for months)
11. ASSET TRUNOVER RATIO : Net Sales/Tangible Assets
12. FIXED ASSET TURNOVER RATIO : Net Sales /Fixed Assets
13. CURRENT ASSET TURNOVER RATIO : Net Sales / Current Assets
14. CREDITORS TURNOVER RATIO : This is also called Creditors
Velocity Ratio, which determines the creditor payment period.
(Average Creditors/Purchases)x365 for days
(52 for weeks & 12 for months)
20. 15. RETRUN ON ASSETS : Net Profit after Taxes/Total Assets
16. RETRUN ON CAPITAL EMPLOYED :
( Net Profit before Interest & Tax / Average Capital Employed) x 100
Average Capital Employed is the average of the equity share
capital and long term funds provided by the owners and the
creditors of the firm at the beginning and end of the accounting
period.
21. Composite Ratio
17. RETRUN ON EQUITY CAPITAL (ROE) :
Net Profit after Taxes / Tangible Net Worth
18. EARNING PER SHARE : EPS indicates the quantum of net profit
of the year that would be ranking for dividend for each share of
the company being held by the equity share holders.
Net profit after Taxes and Preference Dividend/ No. of Equity
Shares
19. PRICE EARNING RATIO : PE Ratio indicates the number of times
the Earning Per Share is covered by its market price.
Market Price Per Equity Share/Earning Per Share
22. 20. DEBT SERVICE COVERAGE RATIO : This ratio is one of the most
important one which indicates the ability of an enterprise to
meet its liabilities by way of payment of installments of Term
Loans and Interest thereon from out of the cash accruals and
forms the basis for fixation of the repayment schedule in
respect of the Term Loans raised for a project. (The Ideal DSCR
Ratio is considered to be 2 )
PAT + Depr. + Annual Interest on Long Term Loans &
Liabilities
---------------------------------------------------------------------------------
Annual interest on Long Term Loans & Liabilities + Annual
Installments payable on Long Term Loans & Liabilities
( Where PAT is Profit after Tax and Depr. is Depreciation)