The document discusses various financial ratios used to analyze the financial performance of Tata Steel Limited for the years 2004 and 2003. It provides the formulas and calculations for current ratio, quick ratio, stock to working capital ratio, and other key ratios. The ratios analyzed include profitability, liquidity, leverage, efficiency, and return measures.

3. 1. A RATIO is a expression relating one
number to another .
2. It can be expressed in decimal or fraction
or pure ratio or as an absolute terms.
3. It is one of the powerful tool of
financial analysis.

9. Shareholders
 Investors And Lenders
 Creditors
 Management
Government

10.  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,

11.  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

12. VERTICAL INCOME STATEMENT 2004 2003
RS RS
Particulars
Gross Sales 3,47,000 2,71,450
Less : Sales return 5000 10,050
Net Sales 3,42,000 2,61,400
Less :COST OF GOODS SOLD :
Opening Stock 1,00,000 99,000
Add : Purchases 1,98,000 1,40,000
Add : Depreciation on Machinery 8,000 7,000
Less : Closing Stock 62,000 1,00,000
COST OF GOODS SOLD 2,44,000 1,46,000
GROSS PROFIT 98,000 1,15,000
Less :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 6,000
Total operating expenses 48,000 42,000
Operating net profit 50,000 73,400
Add : NON-OPERATING INCOME

13. 2004 2003
RS RS
Profit on sale of land 9,000 -
71,000 83,200
LESS : 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 72,000
Less :Interest on mortgage loan 9,000 10,000
EBT 45,000 62,000
Less : Tax provision 22,000 28,000
EAT 23,000 34,000
Less : APPROPRIATIONS :
preference dividend 3,000 4,000
proposed equity dividend 20,000 30,000
- -

14. VERTICAL BALANCE SHEET
PARTICULARS
2004 2003
SOURCES OF FUNDS
OWNERS FUNDS:
equity share capital 100000 100000
+ profit and loss a/c 38000 40000
equity share holders 138000 140000
+ preference capital 30000 40000
168000 180000
BORROWED FUNDS:
mortgage loan 80000 100000
TOTAL CAPITAL EMPLOYED 248000 280000
APPLICATION OF FUNDS
FIXED ASSETS:
goodwill 10000
machinery at cost 110000 100000
- depreciation (28000) (20000)
wdv machinery 82000 80000
+ land 100000 100000
NET FIXED ASSETS 182000 190000

15. PARTICULARS YEAR
2004 2003
WORKING 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 120000
WORKING CAPITAL (CURRENT ASSETS-CURRENT LIABILITIES) 66000 90000
TOTAL NET ASSET OWNED 248000 280000

16.  Current Ratio
 Quick ratio
 StockTo Working Capital ratio
 Proprietor’s Ratio

17. RATIOS FORMULAE YEAR
2004 2003
CURRENT RATIO Current Assets 164000 210000
Current Liabilites 98000 120000
=1.67 =1.75
QUICK RATIO Quick Assets 102000 140000
Quick Liabilities 98000 140000
=1.04 =1
STOCK TO Closing Stock × 100 62000 ×100 100000 × 100
WORKING CAPITAL Working Capital 66000 90000
RATIO
=93.94% =111.11%
PROPRIETOR’S Proprietors Funds ×100 168000 ×100 180000 ×100
RATIO Total Assets 346000 400000
=48.55% =45%

18.  Capital Gearing Ratio
 Debt Equity Ratio
 Gross Profit Ratio
 Operating Ratio

19. RATIOS FORMULAE YEAR
2004 2003
CAPITAL GEARING Fixed Interest 1,10,000 1,40,000
RATIO Bearing Securities 1,38,000 1,40,000
Non-Fixed Interest =0.8:1 =1:1
Bearing Securities
DEBT EQUITY Long Term Debt 80,000 1,00,000
RATIO Proprietors Equity 1,68,000 1,80,000
=0.47 =5.55
GROSS 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

20.  Expenses Ratio
 Net Profit Ratio
 StockTurnover Ratio
COMPOSITE RATIOS
 Return On Capital Employed

21. RATIOS FORMULAE YEAR
2003 2004
EXPENSES 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 0
RATIO Average Stock 99500 81000
=1.46 tms =3.01 tms
RETURN ON NPBIT ×100 72000 ×100 54000 ×100
CAPITAL Capital Employed 280000 248000
EMPLOYED
=25.71% =21.77%

22.  Return On Proprietor’s Funds Ratio
 Earnings Per Share Ratio
 Debtors Turnover Ratio
 Creditors Turnover Ratio

23. RATIOS FORMULAE YEAR
2004 2003
RETURN ON NPAT 13.7 % 18.9 %
PROPRIETOR’S PROPRIETORS *100
FUNDS RATIO FUND
EARNING PER NPAT – PREFERENCE RS. 2 PER SHARE RS. 3 PER SHARE
SHARE RATIO DIVDEND
NO. OF EQUITY
SHARES
DEBTORS NET CREDIT SALES 4.8857 TIMES 4.36 TIMES
TURNOVER AVG. ASSET
RATIO RECEIVABLES
CREDITORS NET CREDIT 3.05 TIMES 2 TIMES
TURNOVER PURCHASES
RATIO AVG CREDITORS