Berger paints

(2011-12 & 2012-13)

Types of ratios 2012-2013 2011-2012

1 Return on investment ratio

a Return on asset 12.87% 13.22%

b Return on invested capital 12.95% 20.44%

c Return on net worth 209.80 117.39

2 Activity / Turnover ratio

a Total activity turnover ratio 1.675 1.72

b Invested capital turnover ratio 2.9838 3.068

c Average collection period 39.17 41.840

d Inventory turnover ratio 5.238 5.56

f Working capital turnover ratio 7.995 6.53

g Days inventory 70.5996 65.64

h Average credit period 544.372 717.08

3 Liquidity ratio

a Current ratio 1.458 1.633

b Acid test ratio .969 1.097

4 Solvency test ratio

a Debt equity ratio .029 .025

b Debt to total equity capital .028 .025

c Interest coverage ratio 13.92 12.77

5 Profitability ratio

a Gross profit ratio 30.06% 27.91%

b Net profit ratio 6.937% 6.663%

c Operating profit ratio 9.69% 9.32%

Return on investment ratio

 Return on asset: An indicator of how profitable a company is relative to its total
assets. ROA gives an idea as to how efficient management is at using its assets to
generate earnings.
In the above table ROA has fallen from 13.22% to 12.87% means that
management is little bit less efficient in using its assets to generate earning.

 Return on invested capital: The return on invested capital measure gives a sense of
how well a company is using its money to generate returns. Comparing a company's
return on capital (ROIC) with its cost of capital (WACC) reveals whether invested
capital was used effectively.
In the above table ROAC has fallen from 20.44%
to 12.55% reveals that the company’s capital was not used effectively.

 Return on net worth: it is used to measure the company’s profitability. it reveals

how much profit the company generates with the money that the equity share holder
has invested.
 RONW in above table has increased from 117.39 to 209.80 which reveals
that company’s profitability has increased.

25.00%
20.44%
20.00%

15.00% 13.22% 12.87% 12.95% 2011-2012

2012-2013
10.00%

5.00%

0.00%
Return on asset Return on invested capital

250
209.8
200

150
117.39 2011-2012
100 2012-2013

50

0
Return on net worth

Activity/Turnover ratio

 Total activity turnover ratio: Companies will typically try to turn their production
into cash or sales as fast as possible because this will generally lead to higher revenues.
Such ratios are frequently used when performing fundamental analysis on different
companies.
Total activity turnover ratio as fallen 1.72 to 1.675 reveals that the
company this year was little bit less efficient to turn their production to cash and sales.

 Invested capital turnover ratio: A ratio of how effectively a publicly-traded

company manages the capital invested in it to produce revenues, there is a slight
decrease in the ratio from 3.06 to 2.98 A high ratio indicates that the company is using
its capital well, while a low ratio indicates the opposite. It is also called equity turnover.
  Average collection period: Due to the size of transactions, most businesses allow
customers to purchase goods or services via credit, but one of the problems with
extending credit does not know when the customer will make cash payments.in the
above table it has fallen from 41.840 to 39.17. Therefore, possessing a lower average
collection period is seen as optimal, because this means that it does not take a company
very long to turn its receivables into cash.

 Inventory turnover ratio: A ratio showing how many times a company's inventory
is sold and replaced over a period. It has fallen from 5.56 to 5.238. A low turnover is
usually a bad sign because products tend to deteriorate as they sit in a warehouse.

 Working capital turnover ratio: The working capital turnover ratio is used to analyse
the relationship between the money used to fund operations and the sales generated
from these operations. In the above table working capital turnover ratio has increased
from 6.53 to 7.995 the higher the working capital turnover, the better because it means
that the company is generating a lot of sales compared to the money it uses to fund the
sales.

 Day’s inventory: Days in inventory (DII) is an efficiency ratio that measures the
average number of days the company holds its inventory before selling it. In the above
table it has increased from 65.64 to 70.59 so the company is taking a little bit longer
than the previous figure to turn its inventory in to cash it is holding for larger time

9 7.995
8
7 6.53
6 5.56 5.238
5
4 2011-2012
3.0682.9838
3 2012-2013
1.72 1.675
2
1
0
Total activity Invested capital Inventory turnover Working capital
turnover ratio turnover ratio ratio turnover ratio
80 70.59
70 65.64
60
50 41.84 39.71
40 2011-2012
30 2012-2013
20
10
0
Average collection period Day’s inventory

Liquidity ratio
 Current ratio: A liquidity ratio that measures a company's ability to pay short-term
obligations. In the above table current ratio of bereger paints has fallen from 1.633 to
1.4583 The higher the current ratio, the more capable the company is of paying its
obligations. A ratio under 1 suggests that the company would be unable to pay off its
obligations if they came due at that point.

 Acid test ratio: A stringent indicator that determines whether a firm has enough short-
term assets to cover its immediate liabilities without selling inventory. In the above
table acid test ratio has fallen from 1.0971 to .969 Companies with ratios of less than 1
cannot pay their current liabilities and should be looked at with extreme caution.
Furthermore, if the acid-test ratio is much lower than the working capital ratio, it means
current assets are highly dependent on inventory.
2
1.633
1.458
1.5
1.097
0.969
1 2011-2012
2012-2013
0.5

0
Current ratio Acid test ratio

Solvency ratio
 Debt equity ratio: A measure of a company's financial leverage calculated by
dividing its total liabilities by stockholders' equity. It indicates what proportion of
equity and debt the company is using to finance its assets.
The debt equity ratio has
increased from 2.58% to 2.90% A high debt/equity ratio generally means that a
company has been aggressive in financing its growth with debt. This can result in
volatile earnings as a result of the additional interest expense.
  Debt to total invested capital: Companies can finance their operations through
either debt or equity. The debt-to-capital ratio gives users an idea of a company's
financial structure, or how it is financing its operations, along with some insight into its
financial strength.
There is a slight increase from 2.586% to 2.87% The higher the debt-
to-capital ratio, the more debt the company has compared to its equity. This tells
investors whether a company is more prone to using debt financing or equity financing.

 Interest coverage ratio: A ratio used to determine how easily a company can pay
interest on outstanding debt. The ratio has increased from 12.77% to 13.92% means
that the company is very healthy in regard of paying its debt. When a company's interest
coverage ratio is 1.5 or lower, its ability to meet interest expenses may be questionable.

16.00%
13.92%
14.00% 12.77%
12.00%
10.00%
8.00% 2011-2012
6.00%
2012-2013
4.00% 2.58% 2.90% 2.59% 2.87%
2.00%
0.00%
Debt equity ratio Debt to total invested Interest coverage ratio
capital

Profitability ratio
 Gross profit ratio: It is not an exact estimate of the company's pricing strategy but it
does give a good indication of financial health. A company's gross profit margin should
be stable. It should not fluctuate much from one period to another, unless the industry
it is in has been undergoing drastic changes which will affect the costs of goods sold or
pricing policies. This year company’s gross profit ratio is 30.06%. Around 33% gross
margin means products are marked up 50% and so on.

 Net profit ratio: net profits to revenues for a company or business segment - typically
expressed as a percentage – that shows how much of each dollar earned by the company
is translated into profits. There is a slight increase in the net profit ratio 6.663%to 6.93%
it varies from company to company.

 Operating profit ratio: This measure is helpful to management, providing insight

into how much profit is being produced per rupee of sales. There is a slight increase
from 9.32% to 9.69% An increasing OPR indicates the company is growing more
efficient, while a decreasing OPR could signal looming financial troubles.
 35.00%
30.06%
30.00% 27.91%

25.00%
20.00%
2011-2012
15.00%
9.69% 9.32% 2012-2013
10.00% 6.66% 6.93%
5.00%
0.00%
gross profit ratio net profit ratio operating profit ratio

http://www.bergerpaints.com/id/127/Annual-Reports