NAME: MAUSAM SURELIA

BATCH: BBA 2016-2019

SUBJECT: FINANCIAL

MANAGEMENT-III
INTRODUCTION
Fundamental analysis is an analytical method where
investors use to value companies based on a study of
corporate profitability and financial measures. One way
to do this is to look at the general, qualitative factors of a
company – for example what industry or sector the
company is in, who are their competitors, and if they
have a recognizable brand name. Another approach to
fundamental analysis considers tangible and
measurable quantitative factors. This means, for
instance, crunching the numbers and closely analyzing
financial statements such as the balance sheet and
income statement. When used in conjunction with other
methods, quantitative analysis can produce excellent
results and give patient investors an edge over time.
Ratio analysis is one way to make sense of these
corporate data. Looking at ratios is more involved than
simply comparing different figures from the balance
sheet, income statement and cash flow statement. It
requires relating these calculated ratios against previous
years, other companies, the industry the company is in,
and even the economy at large. Ratios can give you a
glimpse into the relationships among and between
individual values that relate to a company’s operations
and link them to how a company has performed in the
past, and how it might perform in the future. The result is
a potentially robust method of valuing the shares of a
company.
For example, a piece of data such as current assets,
which appears on the balance sheet, cannot by itself tell
us a whole lot – but when we divide current assets
by current liabilities we get important information about a
company – namely, whether it has enough money to
cover short-term debts. Then, compare one company’s
assets-to-debts with another in the same industry to
determine if one is on more stable financial footing than
the other. We can also compare that figure against the
industry average to see if a stock may outperform its
peers.
In this tutorial, we'll show you how to use ratio analysis
to analyze a company’s financial reports and go over a
number of commonly used and helpful ratios. This
tutorial intends to shed some light on how this process
can be done and, ultimately, help you to make more
informed decisions as an investor.

FINDING THE DATA

Before we consider the various ratios used by
fundamental analysts and how they work, it’s useful to
briefly discuss where you can find the data needed for
these ratios.
For the ratios we will be looking at in this tutorial, we will
be using the example of a fictitious company that we’ve
made up: Cory's Tequila Co (CTC). All the data for
these examples will be provided using made-up financial
statements and sources, but when you decide to go out
and do this on your own, you’ll need to know where to
look to find the latest financial figures for a particular
company.
Luckily, finding financial reports is easier than ever
thanks to the Internet. Using the following resources,
we’ll extract [1] the balance sheet, [2] income statement
and [3] statement of cash flows. The balance sheet
summarizes a company’s assets & liabilities and
represents a snapshot in time of its financial status. The
income statement shows a company’s profit & loss over
a reporting period, and the cash flow statement shows
where money flows within a company. Some ratios will
draw on figures found from multiple sources – for
example a ratio’s numerator may come from the income
statement while the denominator from the balance
sheet.

USING FINANCIAL ANALYSIS

Now that you’ve got your hands on the financial
statements you’ll be working with, it is important to know
exactly what to do with this data and how to interpret it.
By itself, a ratio is not very useful, but when compared to
other companies in the same economic sector, to the
broader market, or changes over time – then ratios
become a powerful tool to evaluate how attractive a
potential investment might be.
As for the ratios you’ll be calculating from these sources,
there are dozens that investors and analysts use, but
we've chosen 30 important measurements that are the
most relevant to the investing process and organized
them into six main categories as per the following list.
The ratios are presented in a simplified manner to make
them easier to understand. These ratios come in a
number varieties – some to analyze liquidity some
profitability, and some use of debt, for example – but by
the end you will understand the basic premise and
reasons for fundamental analysis.

ABOUT ICICI BANK

ICICI Bank Limited (Industrial Credit and Investment
Corporation of India) is
an Indian multinational banking and financial
services company headquartered
in Mumbai, Maharashtra with its registered office
in Vadodara, Gujarat. As of 2018, ICICI Bank is the
second largest bank in India in terms of assets
and market capitalisation. It offers a wide range of
banking products and financial services for corporate
and retail customers through a variety of delivery
channels and specialised subsidiaries in the areas
of investment banking, life, non-life insurance, venture
capital and asset management. The bank currently has
a network of 4867 branches and 14367 ATMs across
India and has a presence in 17 countries including India.
ICICI Bank is one of the Big Four banks of India. The
bank has subsidiaries in the United Kingdom and
Canada; branches in United States, Singapore, Bahrain,
Hong Kong, Sri Lanka, Qatar, Oman, Dubai International
Finance Centre, China and South Africa; and
representative offices in United Arab Emirates,
Bangladesh, Malaysia and Indonesia. The company's
UK subsidiary has also established branches in Belgium
and Germany.
FINANCIAL ANALYSIS OF ICICI BANK
Rs.(in cr) Mar 31, 18 Mar 31, 17 Mar 31, 16 Mar 31, 15 Mar 31, 14
Per Share Ratios
Adjusted 10.54 16.83 16.73 19.28 85.04
EPS(Rs.)
Adjusted Cash 11.76 18.13 17.93 20.41 90.04
EPS(Rs.)
Reported 10.54 16.83 16.73 19.28 85.04
EPS(Rs.)
Reported Cash 11.76 18.13 17.93 20.41 90.04
EPS(Rs.)
Dividend Per 1.50 2.50 5.00 5.00 23.00
Share
Operating Profit 12.61 13.29 15.89 14.15 58.45
Per Share(Rs.)
Book
Value(Excl Rev 158.91 166.37 149.47 138.72 634.60
Res) Per
Share(Rs.)
Book Value(Incl
Rev Res)Per 163.59 171.59 154.31 138.72 634.60
Share(Rs.)
Net Operating
Income Per 85.51 92.98 90.70 84.68 382.96
Share(Rs.)
Free Reserves 0.00 0.00 0.00 0.00 0.00
Per Share(Rs.)
Profitability Ratios
Operating 14.74 14.29 17.51 16.70 15.26
Margin(%)
Adjusted Cash 10.44 14.33 15.31 19.31 19.02
Margin(%)
Adjusted Return
on Net 6.63 10.11 11.19 13.89 13.40
Worth(%)
Reported
Return on Net 6.63 10.11 11.19 13.89 13.40
Worth(%)
Return on Long 38.54 45.09 50.29 57.03 56.92
Term Funds(%)
Leverage Ratios
Long Term 0.00 0.00 0.00 0.00 0.00
Debt/Equity
Owners Fund as
% of Total 15.40 16.50 17.09 18.19 18.07
Source
Fixed Assets 0.07 0.08 0.08 0.08 0.08
Turnover Ratio
Rs.(in cr) Mar 31, 18 Mar 31, 17 Mar 31, 16 Mar 31, 15 Mar 31, 14
Liquidity Ratios
Current Ratio 2.38 1.83 1.66 0.79 0.94
Current
Ratio(Inc. ST 0.12 0.12 0.13 0.06 0.09
Loans)
Quick Ratio 20.44 16.31 14.97 13.81 11.31
Fixed Assets 0.07 0.08 0.08 0.08 0.08
Turnover Ratio
Payout Ratios
Dividend
Payout 19.28 0.00 27.89 24.49 25.57
Ratio(Net
Profit)
Dividend
Payout 19.28 0.00 27.89 24.49 25.57
Ratio(Cash
Profit
Earning 78.50 100.00 70.11 74.07 72.93
Retention Ratio
Cash Earnings 80.72 100.00 72.11 75.51 74.43
Retention Ratio
Coverage Ratios
Adjusted Cash 74.22 46.41 40.43 30.55 31.96
Flow Time
Total Debt
Financial
Charges 1.80 1.84 1.78 1.68 1.62
Coverage Ratio
Fin. Charges
Cov. Ratio(Post 1.24 1.33 1.33 1.39 1.37
Tax)
Component Ratios
Material Cost
Component(% 0.00 0.00 0.00 0.00 0.00
Earnings)
Selling Cost 0.73 0.53 0.40 0.00 0.00
Component
Exports as % of 0.00 0.00 0.00 0.00 0.00
Total Sales
Import Comp.
in Raw Mat. 0.00 0.00 0.00 0.00 0.00
Consumed
Long Term
Assets/Total 0.75 0.73 0.74 0.88 0.85
Assets
Bonus
Component in 9.06 0.00 0.00 0.00 0.00
Equity
Capital(%)