Download pptx - Financial Accounting Ratio analysis of Indian companies

Financial AccountingRatio AnalysisManufacturing : Birla Ericsson

BANK: ICICI

IT: Wipro

BIRLA ERICSSON

Liquidity Ratio

Analysis:

The ratios in 2009 & 2010 (3.4*4.48) show a very strong liquidity position of the company.

In 11 & 12 the decrease in ratio may be due to the reduction in cash balances, the company may have utilised these funds for the purchase of fixed assets

Year Current Ratio Quick Ratio

MAR'08 3.848605578 1.804211725

MAR'09 3.494907658 2.291859166

MAR'10 4.482485756 3.189312903

MAR'11 1.51559245 0.994797229

MAR'12 1.258695258 0.87981811

Profitability Ratio

Analysis:

Profit Margin: After a increase in 2010 the profit margin has decreased considerably. This is due to decrease in turn over of the company.

Return on Equity: The ratio of the company has been on a decreasing trend due to decrease in the amount of net income of the company. This indicates low managerial efficiency and low productivity of the capital utilized.

MAR'09 MAR'10 MAR'11 MAR'12-0.2

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

Profit Margin

POA

ROE

Year Profit Margin POA ROE

MAR'09 -0.048069897 1.32549442 1.111651789

MAR'10 0.028679927 1.118506349 0.983608547

MAR'11 -0.062407124 0.754407331 0.577992019

MAR'12 -0.06235176 0.734744716 0.510221794

Turnover Ratio

Analysis: Inventory Turn over Ratio: this ratio has decreased from 4137 to 3.44 in 2009 &

2010 resp. This may be due to high inventory/reduction in selling price and the accumulation of stocks.

Asset Turn Over Ratio: The decrease in the ratio from the year 2010 to 2011 shows the inability of the company to use its assets to efficiently generate sales.

MAR'09 MAR'10 MAR'11 MAR'120

1

2

3

4

5

6

7

Inventory Turnover Ratio

Asset Turnover Ratio

Year Inventory Turnover Ratio Asset Turnover Ratio

MAR'09 5.958472531 1.308147749

MAR'10 4.13772068 1.098216194

MAR'11 3.444529835 0.729297431

MAR'12 3.530779271 0.713254882

Solvency Ratio

Analysis:

The debt equity ratio of the company is less than 1, which indicates that the majority of the assets are financed through equity and not by debt.

This shows that the common share holder has low risk in investing in the company.

MAR'09 MAR'10 MAR'11 MAR'120

0.2

0.4

0.6

0.8

1

1.2

DEBT CAPITILISATION

DEBT EQUITY

Year DEBT CAPITILISATION DEBT EQUITY

MAR'09 0.421715314 0.393392767

MAR'10 0.366285409 0.338435846

MAR'11 0.027432388 0.943972875

MAR'12 0.012714786 0.984717786

Income and Funds Flow

Analysis: Operating working capital is reducing over the years, because of increasing

current liabilities.

Mar'09 Mar'10 Mar'11 Mar'120

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

Operating working capital

Operating Cash

Year Operating working capital Operating Cash

Mar'09 4331.01 404.75

Mar'10 4290.91 449.33

Mar'11 1462.71 267.88

Mar'12 1198.68 167.7

WIPRO

Liquidity Ratio

Analysis: CURRENT RATIO: The current ratio of the company fell from 2.1 times to 1.1 times in the year 2008-09, but has shown an increasing trend in the next 3 years. In the year 2012 the current ratio has improved to 2.35 which indicates the company has worked on its liquidity management in a positive way.QUICK RATIO: The increasing trend in quick ratio after a fall in 2009, is a positive working capital indicator. In the year 2012, the quick ratio has risen to 2.2 which shows the strong cash position in managing the day to day affairs of the company.

Mar'08 Mar'09 Mar'10 Mar'11 Mar'120

0.5

1

1.5

2

2.5

Current Ratio

Quick Ratio

Year Current Ratio Quick Ratio

Mar'08 2.176285102 2.042985483

Mar'09 1.103857733 1.021259802

Mar'10 1.971297854 1.846785113

Mar'11 1.968147448 1.831115312

Mar'12 2.359647071 2.228451589

Profitability Ratio

Analysis:PROFIT MARGIN RATIO: This ratio of the company has been consistent over past five year though a good sign but the company has made investments and has expanded its production thereby using its profits efficiently. RETURN ON EQUITY: The ROE ratio of the company has to steady at 0.9 over the past five years. This is almost to the standard ratio level of 1:1..this states that the company is giving steady results to its shareholders.


0.2

0.4

0.6

0.8

1

1.2

1.4

Profit Margin

ROA

ROE

Profit Margin ROA ROE

0.1701219 1.166745502 0.958062645

0.141453924 1.199339377 0.910358736

0.204939811 1.029165805 0.850626054

0.179826548 1.033393439 0.859046404

0.145667835 1.086742331 0.903962631

Turnover Ratio

Analysis:INVENTORY TURNOVER RATIO : Company shows control over its stocks and material management.The inventory turnover ratio of 7times, 6times and 5.7 times over the last 5 years shows the company has control over its stock and material management. the conversion of stock into finished product which is more than the standard of 4times, shows the efficiency of production of the company.ASSET TURNOVER RATIO : This ratio signifies the relationship between asset and turnover. The ratio of 1and above for the past five years shows that assets are optimally utilized to get proportionate sales. The operating income has been efficiently applied in assets.


1

2

3

4

5

6

7

8

9

Inventory Turnover Ratio

Asset Turnover Ratio

Year Inventory Turnover Ratio Asset Turnover Ratio

Mar'08 7.005132783 1.144170646

Mar'09 7.817232376 1.232980963

Mar'10 6.442906574 0.99069433

Mar'11 5.525313836 1.012898523

Mar'12 6.264552286 1.074595296



5000

10000

15000

20000

25000

30000

OWC

Operating Cash

Year OWC Operating Cash

Mar'08 3954.2 16045.83708

Mar'09 577.896 18648.54571

Mar'10 4734.3 20387.19459

Mar'11 5121.5 23013.37174

Mar'12 8136.4 25915.22883

Analysis: Company made considerable investments in buying assets, but in turn the liabilities of the company are not increased , thus the operating working capital of the company is strong. Net operating profit of the company is increased marginally over the years. Since the operating income of the company is increased, the company has strong base of operating cash.

ICICI

Solvency Ratio

Analysis: Majority of the assets are financed through equity and not by debt. Debt/Asset ratio increased in the year 2009, in this year company made investments and changes in business plans. The consistent Debt/asset ratio shows that the company is in line with the industry. There is considerable drop in the ratio from 40% to 21%


0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

DEBT CAPITILISATION

DEBT EQUITY

Year DEBT CAPITILISATION DEBT EQUITY

Mar'08 0.32921357 1.32921357

Mar'09 0.400631243 1.400631243

Mar'10 0.312581958 1.312593262

Mar'11 0.222509369 1.222509369

Mar'12 0.215304384 1.215304384

Liquidity Ratio

Analysis:

The current ratio has shown an increasing trend from 2010, which shows sound liquidity position of the bank. The current ratio of the bank is much higher than the standard ratio of the bank.

Year Current Liabilities Current Ratio

Mar'08 42895.39 1.335629773

Mar'09 43746.43 1.196391797

Mar'10 15501.18 3.613464265

Mar'11 15896.35 3.003678203

Mar'12 17576.98 3.171438438

Profitability Ratio

Analysis: The ROE has fallen from 2008 to 2009 but has shown improvement in

2011 to 2012 which indicates the bank is trying to utilise the capital in an optimal way.

The profit margin has increased minimally but the proportion to net income which acts as a sound indicator of consistency.

YearPROFIT MARGIN

RETURN ON EQUITY

RETURN ON ASSSETS

Mar'08 0.104815088 0.847223667 0.099218807

Mar'09 0.095845455 0.786045231 0.103375193

Mar'10 0.121971456 0.639294887 0.090807337

Mar'11 0.155710674 0.600515548 0.081438252

Mar'12 0.1559745 0.68621105 0.087513997 Mar'08 Mar'09 Mar'10 Mar'11 Mar'12

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

PROFIT MARGIN

RETURN ON EQUITY

RETURN ON ASSSETS

Turnover Ratio

Analysis:. Asset Turn Over Ratio: The decrease in the ratio shows that the bank is

struggling to manipulate its assets to improve the turn over. The ratio has shown a decreasing trend after2009

Year TOTAL ASSETS ASSET TURNOVER RATIO

Mar'08 399795.07 0.099218807

Mar'09 379300.96 0.103375193

Mar'10 363399.71 0.090807337

Mar'11 406233.67 0.081438252

Mar'12 473647.09 0.087513997Mar'08 Mar'09 Mar'10 Mar'11 Mar'12

0

50000

100000

150000

200000

250000

300000

350000

400000

450000

500000

TOTAL ASSETS

ASSET TURNOVER RATIO

Solvency Ratio

Analysis:

The debt equity ratio has increased from 2010 to 2011 which indicates increase in volume of deposits and borrowings of the bank.

Mar'08 Mar'09 Mar'10 Mar'11 Mar'125.2

5.4

5.6

5.8

6

6.2

6.4

6.6

6.8

DEBT EQUITY RATIO

DEBT EQUITY RATIO

Year DEBT EQUITY RATIO

Mar'08 6.622769953

Mar'09 5.726828688

Mar'10 5.739820339

Mar'11 6.083694539

Mar'12 6.550173536


Analysis:

Year OPERATING CASH

Mar'08 -11631.15

Mar'09 -14188.49

Mar'10 1869.21

Mar'11 -6908.52

Mar'12 9683.75


-20000

-15000

-10000

-5000

0

5000

10000

15000

OPERATING CASH

OPERATING CASH

Presented By-

Hitesh Makhijani Ankit Bhatia

Shweta GundewarAnuradha Pai

Kandarp Desai

- Thank You