Professional Documents
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ACCOUNTING
RATIO ANALYSIS
THE RAYMOND
KATHIRVEL S
Table of Contents
1 LIQUIDITY RATIOS............................................................................................2
1.1 Current Ratio.............................................................................................2
1.2 Quick Ratio................................................................................................2
2 LEVERAGE RATIOS...........................................................................................3
2.1 Debt Ratio.................................................................................................3
2.2 Debt to Equity Ratio..................................................................................3
2.3 Coverage ratio..........................................................................................3
3 TURNOVER RATIOS..........................................................................................4
3.1 Inventory Turnover Ratio..........................................................................4
3.2 Debtors’ turnover ratio..............................................................................4
3.3 Investment Turnover Ratio........................................................................4
3.4 Total assets turnover ratio........................................................................5
4 PROFITABILITY RATIOS....................................................................................5
4.1 Gross profit Margin ratio...........................................................................5
4.2 Net Profit Margin ratio...............................................................................5
4.3 Operating Profit Margin.............................................................................6
4.4 Return on Assets.......................................................................................6
4.5 Earnings per share (EPS)...........................................................................6
5 APPENDICES....................................................................................................7
5.1 Balance Sheet of Raymond.......................................................................7
5.2 Profit & Loss account of Raymond.............................................................8
5.3 Cash Flow of Raymond..............................................................................9
5.4 Yearly Results of Raymond.......................................................................9
5.5 Key Financial Ratios of Raymond............................................................10
Key Financial Ratios of Raymond
1 LIQUIDITY RATIOS
Liquidity ratios measure the amount of cash or investments that can be converted to
cash to pay expenses and short-term debts. Liquidity ratios determine your ability to meet
current liabilities.
Year on year increase in ratio indicates that liquidity status of Raymond is good.
A 1.0 ratio is usually preferred. Since it has increased in 2010 as compared to 2009,
sales are strong enough to meet daily cash obligations.
2 LEVERAGE RATIOS
Risk ratios measure what portion of the company belongs to people outside the
company including how much money the owners could lose to creditors.
As this number is increasing, the company’s ability to obtain financing decreases. The
debt to equity is increasing due to the increase in the debts of the company.
In the year 2010 the ratio is almost decreased to half which means that the company
cannot pay the interest for its borrowings with ease.
3 TURNOVER RATIOS
Efficiency ratios tell how well business is being conducted. These ratios measure how
quickly inventory moves, how well the company collects its accounts receivable, and what
kind of sales a company’s assets generate.
The increase in the turnover conveys that the inventory is being managed efficiently
by Raymond.
The collecting period has been reducing a little year on year. Raymond is effective in
collecting money from the debtors.
The assets turnover is decreasing across the 2 years, which indicates that the assets
which were paying for themselves quickly have now slowed down.
4 PROFITABILITY RATIOS
Profitability ratios help us evaluate the profitability of a business. By comparing
certain numbers, these ratios can help identify elevated expenses, inefficient operations, and
profitable margins.
During the 2008-09 the ratio has risen from 0.78 to 2.18, which means that the profit
percentage of Raymond after subtraction of its’ directs costs is increasing. Whereas during
the next fiscal there is a dip in the ratio which implies rising direct costs associated with the
production of goods and services.
The fall in the ratio from 2008 to 2009 (4.71 to -18.34) indicates that the company’s
costs have risen drastically. During the next year the rise in the ratio to 1.87 means that the
company has got the costs under control to a little extent.
Year on year, the operational efficiency has improved. Although there is dip in the
gross profit in the year 2010, operational efficiency has improved a little. This shows that the
company has been able to control the indirect costs during this period.
Profit against asset has drastically come down in the year 2009. This shows that
effectiveness in generating profits with its available assets has reduced. During the next year
2010 effectiveness has increased a little.
Since the company has gone into the loss during the year 2008-2009, the share
holders wouldn’t receive any benefits. In the next year company has able to show a little
profit
5 APPENDICES
5.1 Balance Sheet of Raymond
Balance Sheet of
Raymond ------------------- in Rs. Cr. -------------------
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
12 mths 12 mths 12 mths 12 mths 12 mths
Sources Of Funds
Total Share Capital 61.38 61.38 61.38 61.38 61.38
Equity Share Capital 61.38 61.38 61.38 61.38 61.38
Share Application Money 0 0 20.87 20.87 0
Preference Share Capital 0 0 0 0 0
Reserves 1,128.56 1,294.78 1,336.90 1,065.60 1,111.53
Revaluation Reserves 0 0 0 0 0
Net worth 1,189.94 1,356.16 1,419.15 1,147.85 1,172.91
Secured Loans 546.68 566.86 504.98 868.85 756.96
Unsecured Loans 221.2 220.75 382.03 476.22 495.75
Total Debt 767.88 787.61 887.01 1,345.07 1,252.71
Total Liabilities 1,957.82 2,143.77 2,306.16 2,492.92 2,425.62
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
12 mths 12 mths 12 mths 12 mths 12 mths
Application Of Funds
Gross Block 1,366.73 1,230.03 1,345.40 1,700.64 1,713.39
Less: Accum. Depreciation 677.66 553.98 625.88 701.6 772.98
Net Block 689.07 676.05 719.52 999.04 940.41
Capital Work in Progress 156.05 85.69 13.58 62.11 41.64
Investments 736.6 984.48 1,047.30 888.59 889.54
Inventories 319.04 283.66 329.74 340.4 284.5
Sundry Debtors 248.47 268.77 289.89 304.48 296.94
Cash and Bank Balance 24.12 24.69 20.9 35.79 17.67
Total Current Assets 591.63 577.12 640.53 680.67 599.11
Loans and Advances 197.19 265.77 324.07 361.59 402.17
Fixed Deposits 0.92 0.92 0.93 11 8.89
Total CA, Loans & Advances 789.74 843.81 965.53 1,053.26 1,010.17
Deferred Credit 0 0 0 0 0
Current Liabilities 345.91 365.63 364.23 450.43 403.04
Provisions 67.71 80.64 75.54 59.67 53.11
Total CL & Provisions 413.62 446.27 439.77 510.1 456.15
Net Current Assets 376.12 397.54 525.76 543.16 554.02
Miscellaneous Expenses 0 0 0 0 0
Total Assets 1,957.84 2,143.76 2,306.16 2,492.90 2,425.61
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
12 mths 12 mths 12 mths 12 mths 12 mths
Cash Flow of
Raymond ------------------- in Rs. Cr. -------------------
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
12 mths 12 mths 12 mths 12 mths 12 mths
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
Investment Valuation
Ratios
Face Value 10 10 10 10 10
Dividend Per Share 5 5 2.5 -- --
Operating Profit Per Share (Rs) 32.12 24.22 14.91 19.44 20.97
Net Operating Profit Per Share
(Rs) 217.41 211.85 217.91 228.12 221.03
Free Reserves Per Share (Rs) 179.55 206.35 215.57 171.33 175.41
Bonus in Equity Capital 69.28 69.28 69.28 69.28 69.28
Profitability Ratios
Operating Profit Margin (%) 14.77 11.43 6.84 8.52 9.48
Profit Before Interest And Tax
Margin (%) 9.07 6.38 0.74 2.07 1.23
Gross Profit Margin (%) 14.55 10.59 0.78 2.18 1.28
Cash Profit Margin (%) 14.21 19.72 5.71 9.16 6.14
Adjusted Cash Margin (%) 11.45 7.66 5.71 9.16 6.14
Net Profit Margin (%) 8.91 15.01 4.71 -18.34 1.87
Adjusted Net Profit Margin (%) 6.15 2.96 4.71 -18.34 1.87
Return On Capital Employed
(%) 8.28 5.84 3.25 4.18 2.75
Return On Net Worth (%) 10.28 14.84 4.72 -23.99 2.24
Adjusted Return on Net Worth
(%) 7.09 2.92 -0.06 4.11 -2.12
Return on Assets Excluding
Revaluations 5.16 220.94 227.8 183.61 191.09
Return on Assets Including
Revaluations 5.16 220.94 227.8 183.61 191.09
Return on Long Term Funds
(%) 8.71 6.4 3.6 4.64 2.93
Liquidity And Solvency
Ratios
Current Ratio 1.3 1.02 1.23 1.36 1.6
Quick Ratio 1.09 1.21 1.4 1.26 1.42
Debt Equity Ratio 0.65 0.58 0.63 1.19 1.07
Long Term Debt Equity Ratio 0.56 0.44 0.49 0.99 0.94
Debt Coverage Ratios
Interest Cover 4.62 2.7 1.25 1.27 0.68
Total Debt to Owners Fund 0.65 0.58 0.63 1.19 1.07
Financial Charges Coverage
Ratio 6.48 3.88 2.59 2.27 1.82
Financial Charges Coverage
Ratio Post Tax 6.38 6.44 3.44 -1.13 2.4
Management Efficiency
Ratios
Inventory Turnover Ratio 4.3 4.72 4.35 4.39 5.12
Debtors Turnover Ratio 5.62 5.03 4.79 4.71 4.51
Investments Turnover Ratio 4.63 4.92 4.35 4.39 5.12
Fixed Assets Turnover Ratio 1.89 1.63 1.01 0.83 0.8
Total Assets Turnover Ratio 0.68 0.61 0.58 0.57 0.56
Asset Turnover Ratio 0.98 1.07 1.01 0.83 0.8
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10