MA ASSIGNMENT-2

Analysis of Tata Global Beverages Lt

Submitted by:Prateek Anand 63

Ratio Analysis
Liquidity Ratios
Current Ratio:

Interpretation:1. The current ratio of the company has reduced from the previous year 2. The current liability of the company over the previous year has doubled due to Maturities of Long term debt and increase in working capital facilities. 3. On the other hand the current assets of the company have not increased int the same proportion of current liability.

Quick Ratio:

Interpretation: 1. The ability of the company to meet its immediate current liability is not good. 2. As the company current assets comprises of inventory which cannot be readily convertible in cash . 3. The current liability of the company has risen significantly over the previous year because of the maturity of long term debenture.

Capital Structure Ratios

Debt to Total Funds Ratio:

Interpretation:

1. The debt to total fund ratio has decrease from 0.17 in the previous year to
0.073. 2. Since the long term debentures have matured and the company has not left with any long term debts in the current year . 3. Therefore the debt to total fund have decrease and has become negligible.

Total Debt-Equity Ratio:

Interpretation: 1. The total debt equity ratio of the company has decreased from 0.195 in the previous year to 0.08 . 2. Since the long term debentures have matured and the company has not left with any long term debts in the current year .

Long term to Equity Ratio :

Interpretation: 1. The long term to equity ratio have decrease and become nil 2. Since the company has paid all his long term debentures.

Proprietary Ratio:

Interpretation: 1. The company has a low proprietary ratio i.e the company is dependent on external borrowing . 2. The company has taken loan to finance their some parts of the assets

Profitability Ratios based on Sales

Gross Profit Ratio:

Interpretation: 1. The gross profit of the company has reduced from 10.79 in the previous year to 9.54 in the current year . 2. Since the cost of material have increase which has resulted in increasing the expenses overall. 3. The revenue from the operation has also decrease which has resulted in less income. 4. Therefore the overall gross profit decreased .

Net Profit Ratio:

Interpretation: 1. The net profit ratio of the company has decreased from 14.21 in the previous year to 11.21 in the current year. 2. Since the expenses of the company increase as the company made provision for bad debts and company also made loss on sale of fixed assets . 3. Also other expenses of the company increased .

Turnover/Activity/Performance Ratios
Finished Goods or Stock Turnover Ratio:

=154927.11/39084.24=3.96
Interpretation: 1. The company stock turnover ratio has increase to 3.96 in the current year . 2. It indicates that the company is able to sell fast. 3. It also indicates that how the inventory has been efficiently used over the previous year.

Debtors Turnover Ratio:

Interpretation: 1. The company debtors turnover ratio has increase to 23.29 in the current year. 2. It indicates the speed at which the amount is collected from debtors. 3. The company debtors turnover ratio is 23.29 which means that amount from debtors is being collected quickly which heps in the liquidity of the company.

Fixed Assets Turnover Ratio:

Interpretation: 1. The fixed assets turnover ratio of the company has increased from 12.34 in the previous year to 15.46 in the current year. 2. Its show the ability to generate sales per rupee of fixed assets.

Overall Return Ratios

Return on Investment (ROI) / Return on Capital Employed (ROCE):
Pre-Tax ROCE:

Interpretation : 1. The return on investment of the company has increased from 12.35 to 14.03 in the current year . 2. It indicates the overall profitability of the company to the total fund 3. As the company roi is good it indicates that the companies investment is being appreciated and the capital employed is increasing .

Return on Equity (ROE) / Return on Net Worth (RONW):

a) Pre-Tax ROE:

Interpretation: 1. Return on equity has increased over the previous year to 13.07 in the current year . 2. This show that the profitability of the company of the owners fund invested in the business. 3. As the company has paid its debts and the company has to pay less interest . 4. Bad-debts written off also has contributed towards it .

Return on Assets (ROA):

a) Pre-Tax ROA:

Interpretation: 1. The return on assets has increased over the previous year to 9.18 in the current year. 2. This show net income per rupee of average total assets of the company.

Earnings per Share (EPS):

Interpretation: 1. The earning per share of the company has reduced from 4.89 in the previous year to 4.18 in the current year. 2. As the company has paid all its long term debts which has reduced the earning per share.

Coverage Ratio

Interpretation: 1. The interest coverage ratio has decreased from 11.34 in the previous year to 10.96 in the current year. 2. This indicates that the company has raised additional loan from bank 3. A decreased ratio over the previous year indicates the company is unable to raise sufficient cash-flows to meet the interest expense.