This report analyzes and compares the financial performance and ratios of several companies, including HUL, Tata Motors, Reliance Industries, Mindtree, and Whirlpool India. Key highlights include: - HUL has the highest ROE of 77%, while Tata Motors has a negative ROE, as it is currently incurring losses. - An analysis of cash flows shows Whirlpool, RIL, HUL and Mindtree have positive cash flows from operations, while Tata Motors has a negative CFO. - A DuPont analysis finds HUL to be the best investment based on its high ROE, while Tata Motors should be avoided due to its volatile performance and losses.

1. FSA Report
Project Report
Submitted To
Dr. D.V. Ramana
(Course Instructor in Financial Statement Analysis)
Xavier Institute of Management, Bhubaneswar
Submitted By
Group 4, Section C
MBA BM 2019-21
Name Roll No.
Ananya Mahalik UM19146
Aneek Mandal UM19147
Biswadeep Ghosh Hazra UM19148
Manya Bajpai UM19165

2. HUL Analysis
Liquidity Ratio
1. Current Ratio
(Current Assets / Current Liabilities)
This ratio reflects the number of times short-term assets cover short-term liabilities and is
a fairly accurate indication of a company's ability to service its current obligations.
The current ratio (for year 2019) for HUL is 1.375, which compared to the year 2015 of
1.084 indicates the company's ability to service short-term obligations has increased over
the course of five years.
2. Liquid Ratio
(Cash + Marketable Securities + Account Receivables) / Current Liabilities
This ratio, also known as the acid test ratio, measures immediate liquidity - the number of
times cash, accounts receivable, and marketable securities cover short-term obligations.
The quick ratio for HUL is 1.852, compared to 1.258 in 2015. It indicates the company’s
efficiency to pay its daily expenses has decreased.
Profitability Ratio
1. Gross Margin
(Gross profit / Sales)
The gross profit margin ratio analysis is an indicator of a company’s financial health. It
tells investors how much gross profit every dollar of revenue a company is earning. The
margin has increased over the years (0.60 to 0.64), thereby indicating an increase in
profits.
2. Net Profit Ratio
(Net Profit / Net Sales)
The higher the ratio, the more effective a company is at cost control. Compared with
industry average, it tells investors how well the management and operations of
a company are performing against its competitors. Compared with different industries, it

3. tells investors which industries are relatively more profitable than others. The net profit
ratio of HUL for 2019 has increased with respect to 2015, from 0.140 to 0.157 due to the
increase in sales.
3. ROE
(PAT / Equity)
Return on equity is a measure of a company’s annual return (net income) divided by the
value of its total shareholders’ equity, expressed as a percentage (e.g. 10%). Positive
ROE is considered a good return. This means that the total cost of the investment was
recouped in addition to some profits left over. A positive return on investment means that
the revenues were even enough to cover the total costs.
The decrease for HUL means its PAT on its share capital has decreased; PAT has
decreased due to an increase in the interest and taxes. ROE provides a simple metric for
evaluating returns. By comparing a company’s ROE to the industry’s average, it is
possible to pinpoint a company’s competitive advantage (or lack of competitive
advantage). As it uses net income as the numerator, return on equity (ROE) looks at the
firm’s bottom line to gauge overall profitability for the firm’s owners and investors.
4. ROCE
(EBIT/Capital Employed)
The return on capital employed shows how much operating income is generated for each
dollar invested in capital. A higher ROCE is always more favourable as it implies that
more profits are generated per dollar of capital employed. As seen in the case of HUL,
the ROCE though momentarily falls in 2016, it steadily increases after that to 92.27 from
88.95 in 2015.
SolvencyRatio
1. Debt/Equity:
The debt-to-equity ratio is a leverage ratio that calculates the proportion of total debt and
liabilities versus total shareholders’ equity. The ratio compares whether a company’s
capital structure utilizes more debt or equity financing. A higher debt-equity ratio
indicates a levered firm – a firm that is financed with debt. The company has lower
debt/equity, thus indicating a more financially stable business. The debt to equity is
almost approaching 0 indicating superb financial stability of HUL.
2. Debt/TA:

4. The company has low debt to TA ratio (almost); thus, it has taken debts to issue its assets,
which is a good sign for a company. This indicates that the company has a stronger
financial structure.
TATA MOTORS
Liquidity Ratio
3. Current Ratio
(Current Assets / Current Liabilities)
This ratio reflects the number of times short-term assets cover short-term liabilities and is
a fairly accurate indication of a company's ability to service its current obligations.
The current ratio (for year 2019) for Tata Motors is 0.58, which compared to the year 2015
of 0.42 indicates the company's ability to service short-term obligations has increased over
the five years.
4. Quick Ratio
(Cash + Marketable Securities + Trade Accounts Receivable) / Current Liabilities
This ratio, also known as the acid test ratio, measures immediate liquidity - the number of
times cash, accounts receivable, and marketable securities cover short-term obligations.
The quick ratio for Tata Motors is 0.37, compared to 0.19 in 2015. It indicates the
company’s efficiency to pay its daily expenses has decreased.
Profitability Ratio
5. Gross Margin
(Gross profit / Sales)
The gross profit margin ratio analysis is an indicator of a company’s financial health. It
tells investors how much gross profit every dollar of revenue a company is earning. The
margin has reduced over the years, thereby indicating a decrease in profits.
6. Net Profit Ratio
(Net Profit / Net Sales)
The higher the ratio, the more effective a company is at cost control. Compared with
industry average, it tells investors how well the management and operations of
a company are performing against its competitors. Compared with different industries, it
tells investors which industries are relatively more profitable than others.
The net profit ratio of Tata Motors for 2019 has decreased wrt to 2015, due to the
reduction in sales.
7. ROE

5. (PAT / Equity)
Positive ROE is considered a good return. This means that the total cost of the investment
was recouped in addition to some profits left over. A negative return on investment
means that the revenues weren’t even enough to cover the total costs.
The decrease for Tata Motors means its PAT on its share capital has decreased; PAT has
decreased due to an increase in the interest and taxes.
SolvencyRatio
3. Debt/Equity :
The company has higher debt/equity, thus indicating trouble for the company.
4. Debt/TA :
The company has high debt to TA ratio, thus it has taken debts to issue its assets, which is
not a good sign for a company.
RELIANCE INDUSTRIES LIMITED
Liquidity Ratio
5. Current Ratio
(Current Assets / Current Liabilities)
This ratio reflects the number of times short-term assets cover short-term liabilities and is
a fairly accurate indication of a company's ability to service its current obligations.
The current ratio (for year 2019) for Reliance Industries Limited is 0.76, which compared
to the year 2015 of 1.27 indicates the company's ability to service short-term obligations
has decreased over the five years.
6. Liquid Ratio
(Cash + Marketable Securities + Account Receivables) / Current Liabilities
This ratio, also known as the acid test ratio, measures immediate liquidity - the number of
times cash, accounts receivable, and marketable securities cover short-term obligations.
The quick ratio for Reliance Industries Limited is 0.54, compared to 0.87 in 2015. It
indicates the company’s efficiency to pay its daily expenses has increased.
Profitability Ratio
8. Gross Margin
(Gross profit / Sales)

6. The gross profit margin ratio analysis is an indicator of a company’s financial health. It
tells investors how much gross profit every dollar of revenue a company is earning. The
margin has increased over the years, thereby indicating an increase in profits.
9. Net Profit Ratio
(Net Profit / Net Sales)
The higher the ratio, the more effective a company is at cost control. Compared with
industry average, it tells investors how well the management and operations of
a company are performing against its competitors. Compared with different industries, it
tells investors which industries are relatively more profitable than others.
The net profit ratio of Reliance Industries Limited for 2019 has increased wrt to 2015,
due to the increase in sales.
10. ROE
(PAT / Equity)
Positive ROE is considered a good return. This means that the total cost of the investment
was recouped in addition to some profits left over. A positive return on investment means
that the revenues were even enough to cover the total costs.
The decrease for RIL means its PAT on its share capital has decreased; PAT has
decreased due to an increase in the interest and taxes. For 4 years ROE has remained
same and for the year 2019 ROE has decreased.
SolvencyRatio
5. Debt/Equity:
The company has lower debt/equity, thus indicating a more financially stable business.
6. Debt/TA:
The company has low debt to TA ratio; thus, it has taken debts to issue its assets, which is
a good sign for a company. This indicates that the company has a stronger financial
structure.
MINDTREE
Analysis of Solvency Ratios
On analyzing the solvency of the companies, it could be seen that Infosys fares better
than other companies owing to its zero-leverage policy. It’s driven almost entirely by its
equity capital, and it has the least Debt to Equity ratio among the five companies.
Mindtree’s high Interest Coverage Ratio signifies the presence of very low Interest-
bearing Liabilities. TCS has a fair amount of leverage in its books but its consistently
high Interest Coverage Ratio suggests that the company is generating enough Operating
profits to cover its interest expenses. Year on year, L&T Infotech has consistently
lowered its dependence on debt. Its D/E ratio is showing a downtrend, while it Interest

7. Coverage Ratio is on an uptrend, indicating a healthy solvency. It could be inferred that
Wipro is underperforming compared to the other four in terms of solvency, as signified
by its high D/E ratio and significantly low Interest Coverage Ratio. Equity/TA is showing
a similar pattern for all the companies. Examining the CE/TA ratio tells us that,
consistently, about 70 percent or more of total assets for all the companies have been
funded by long term capital.
Analysis of Liquidity Ratios
On analyzing the Liquidity ratios, it could be seen that TCS, Wipro and Infosys have
substantially high working capital, (in the range of 220000-700000 million INR) while
Mindtree and L&T Infotech have relatively lower working capital (in the range of 10,000
to 30,000 million INR). The Current and Quick ratios are in similar ranges across the five
companies. Also, the negligible difference between these two ratios suggests that all these
five companies carry almost no inventory. On examining the absolute cash ratio, it could
be seen that except Infosys and Mindtree, the other companies have reduced the
proportion of Cash in 2019 compared to 2015. Infosys has a significant accumulation of
cash, which could otherwise have been invested in profit generating assets. The relatively
large proportion of Debtors in the case of L&T Infotech and Mindtree suggests that their
management of receivables needs to improve. Across the five years, the proportion of
Current Investments of Mindtree have remained steady while Infosys has showed a
decrease. For the other three companies, the proportion of Current Investments has
significantly increased in 2019 compared to 2015.
Analysis of Market BasedRatio
The Price to Earnings ratio of Infosys and Mindtree have come down in 2019, indicating
that they are currently undervalued and there’s a chance that their market prices might
move up. Wipro’s current P/E ratio is moderate, making it difficult to comment on
whether the company is overvalued or undervalued. The P/E ratio of L&T Infotech and
TCS are higher than the average of the five companies, indicating the possibility of their
market prices to move down.
Analysis of Profitability Ratios
On looking at the Profitability ratios across the five years, one could immediately deduce
that TCS is the best performing company among the five as the average Earnings per
Share is the highest in addition to consistently high Return on Equity and Return on
Capital Employed. L&T Infotech has the second highest average EPS and average ROE,
as well as the highest average Return on Capital Employed. Mindtree has the third
highest average EPS, followed by Infosys and Wipro as the fourth and fifth highest,
respectively. It must be noted that Wipro has the lowest average values in all these three
ratios.
WHIRLPOOL INDIA PVT. LTD.:

8. Liquidity Ratio:
1. Current Ratio:
(Current Assets / Current Liabilities)
This ratio represents the company’s ability to meet short term liabilities or those within
1 year. Whirlpool India’s Current Ratio is 1.80 in 2019 as opposed to 1.64 in 2015. This
implies that the ability of Whirlpool to pay off their short term obligations has relatively
stayed the same.
2. Absolute Cash Ratio:
This ratio, representing the amount of cash the company has at disposal to pay off their
short-term liabilities is 0.78 for Whirlpool in 2019 as opposed to 0.63 in 2015. The ratio
has shown considerable growth over the past 5 years, especially in 2016, when it
reached 0.86. Therefore, the cash to current liabilities has definitely improved for
Whirlpool India.
SolvencyRatio:
1. Capital Employed / Total Assets:
The one ratio that has significantly improved for Whirlpool India is its Capital Employed /
Total Assets. This ratio represents the company’s financial leverage. The lower the ratio
is, the more financially stable the company is. For Whirlpool, this financial leverage has
shown decrement in 2019 as compared to 2015 because the ratio as gone up from 0.54
to 0.63.
2. Debt Ratio (Long- term Debt/ Equity):
This ratio measures the relationship between Long-term debt and Equity. A low ratio
means that the company is more financially secure. However, it would also mean that
the company’s equity is diluted. The Debt Ratio of Whirlpool has stayed consistently
quite low (0.09) through the past 5 years which is a good sign.
Profitability Ratio:
Return On Equity:
(PAT / Equity)
This is an important ratio because it tells an investor how efficient is the company in
handling their money. It represents the return that the company made on the available
fund (equity) available at its disposal. Whirlpool has a ROE ranging from ~ 19% to ~ 23%

9. which is makes it a very good investment from the perspective of ROE. A ROE above
20% is usually considered good across industries.
1. Earnings per Share:
The other important profitability metric for an investor is Earnings per Share (EPS) of a
company. Whirlpool’s EPS has improved leaps and bounds, from 2015 (165.90) to 2019
(320.80). This drastic jump over the past 5 years shows that Whirlpool shows promise in
terms of profitability.
Inter-company Analysis
Dupont Analysis
Company ROE PAT/Sales Sales/TA TA/Equity
Whirlpool 0.19 0.08 1.46 1.73
Tata Motors -0.02 -0.07 0.11 2.75
RIL 0.09 0.09 0.48 1.91
Mindtree 0.27 0.15 1.37 1.32
HUL 0.77 0.157 2.077 2.368
Return on Equity (ROE) for a company is defined as the ratio of net income (PAT) to total
equity. Among the 5 companies being compared above, we find that HUL has the highest ROE
value (77%) whereas Tata Motors has a negative ROE (-0.02) as it is currently incurring losses.
Generally companies having ROE>18% are considered as good investments. As a result,
Investing in HUL will be a good decision, we can invest in Mindtree(27%) and Whirlpool(19%)
too.. For the others, the ROE is not satisfactory whereas considering the volatile environment;
Tata Motors has to be avoided.
Analysis of Cash-flow
Company CFO CFI CFF
Whirlpool 4024.80 -2619.00 -619.20
Tata Motors -6292.63 -3820.55 -2529.7
RIL 328,280 -575,860 257,950
Mindtree 6304 -5221 -1933
HUL 5977 -2098 -1376

10. From the cash flows of the above-mentioned companies we can observe that Whirlpool, RIL,
HUL and Mindtree have a positive CFO, thus are generating cash from the business to finance its
investments and redeem debts; whereas for Tata Motors the debtors are going up owing to a
negative CFO.
The CFI values for all the companies are negative which indicates that the companies are
investing more money to create more assets and are on a growth process.
The CFF value for RIL is positive indicating accumulation of debt by the companies through
finance or equity. Further, the negative value of CFF for the other four companies indicates
buyback of shares, dividend distribution and payment of liabilities.
CONCLUSION
Of the sectors chose , FMCG and IT service sectors are doing comparatively better currently,
with a growth rate of 9% and 9.1% respectively and correspondingly, Mindtree, Whirlpool and
HUL having comparatively high ROE and optimistic cash flows i.e. a positive CFO, a negative
CFF and a negative CFI, which is the case for Nifty 50 companies, were considered ideal for
investments.
Since, HUL has a higher ROI and has a positive CFO combined with a negative CFI and
CFF, The business is funding its operations through its own finances and buying assets.