Description
This is a spreadsheet about financial analysis of Sun Pharmaceuticals Industries.
SUN PHARMACEUTICALS LIMITED IN
RATIO ANALYSIS FOR SUN PHARMACEUTICALS LIMITED INDUSTRIES
FROM AKSHITA GOEL MBA-BIOTECH SEC-A,ROLL NO-32
USTRIES
SUN PHARMACEUTICAL LIMITED
Balace Sheet (Figurs in Crores)
Mar '05 12 mths Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities 94.16 92.76 0.01 1.4 1,011.28 0 1,105.45 13.92 1,800.73 1,814.65 2,920.10 Mar '05 12 mths Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs) 612.05 172.9 439.15 47.94 985.24 186.62 234.97 4.01 425.6 445.55 886.02 1,757.17 0 224.95 84.45 309.4 1,447.77 0 2,920.10 39.77 59.51 744.26 208.07 536.19 30.8 779.62 263.41 256.47 11.26 531.14 509.25 1,219.56 2,259.95 0 273.3 122.5 395.8 1,864.15 0 3,210.76 39.76 78.8 838.7 249.41 589.29 1,057.49 333.38 310 35.69 679.07 345.82 1,166.99 2,191.88 0 345.23 7.7 352.93 1,838.95 0 3,517.64 107.62 126.58 935.03 304.99 630.04 33.43 1,843.57 389.63 1,055.44 23.29 1,468.36 394.13 1,049.13 2,911.62 0 845.73 262.79 1,108.52 1,803.10 0 4,310.14 72.08 203.15 1,061.90 362.64 699.26 75.95 2,694.59 486.74 680.03 20.17 1,186.94 311.42 1,245.30 2,743.66 0 696.34 342.1 1,038.44 1,705.22 0 5,175.02 85.36 248.72 94.27 92.87 0 1.4 1,370.67 0 1,464.94 18.23 1,727.59 1,745.82 3,210.76 Mar '06 12 mths 98.07 96.7 0 1.37 2,351.42 0 2,449.49 20.39 1,047.76 1,068.15 3,517.64 Mar '07 12 mths 103.56 103.56 0 0 4,104.06 0 4,207.62 22.88 79.64 102.52 4,310.14 Mar '08 12 mths 103.56 103.56 0 0 5,047.86 0 5,151.42 23.6 0 23.6 5,175.02 Mar '09 12 mths Mar '06 12 mths Mar '07 12 mths Mar '08 12 mths Mar '09 12 mths
PROFIT AND LOSS STATEMENTS (FIG IN CRORES)
Mar '05 12 mths Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses Mar '05 12 mths Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) 120.03 352.9 0 352.9 32.83 2.45 317.62 12.45 330.07 17.77 305.71 323.05 0.08 69.57 9.91 1855.11 16.48 Mar '06 12 mths Mar '07 12 mths Mar '08 12 mths
1056.01 48.73 1007.28 232.87 -0.45 1239.7 563.75 14.48 82.78 24.97 163.72 37.1 0 886.8
1353.01 61.37 1291.64 525.55 57.23 1874.42 899.67 25.55 82.01 23.11 287.47 15.97
1722.13 59.57 1662.56 750.26 41.41 2454.23 1214.48 31.14 98.87 25.08 370.2 18.85
2427.35 58.84 2368.51 914.83 17.38 3300.72 1564.61 37.36 120.2 35.21 415.35 14.62
0 0 0 1333.78 1758.62 2187.35 Mar '06 Mar '07 Mar '08 12 mths 15.09 540.64 11.23 529.41 40.73 0 488.68 0 488.68 27.39 461.29 434.11 0.08 102.3 14.36 1857.32 24.83 12 mths -54.65 695.61 8.8 686.81 46.27 0 640.54 -0.05 640.49 11.61 628.93 544.14 0.08 130.01 18.25 1934.02 32.52 12 mths 198.54 1113.37 5.06 1108.31 56.11 0 1052.2 0 1052.2 38.16 1014.04 622.74 0.05 217.47 37.2 2071.16 48.96
Equity Dividend (%) Book Value (Rs)
75 59.51
110 78.8
135 126.58
210 203.15
RORES) Mar '09 12 mths
2833.65 59 2774.65 1276.22 23.78 4074.65 1961.89 50.44 148.31 43.93 494.98 18.06 0 2717.61 Mar '09 12 mths 80.82 1357.04 2.77 1354.27 58.86 0 1295.41 11.7 1307.11 30.12 1265.29 755.72 0 284.79 48.4 2071.16 61.09
275 248.72
RATIO ANALYSIS Short term liquidity
Current ratio Measures the ability to pay current liabilities out of current assets. Current assets / Current liabilities = Current ratio 1.89 1.94 1.97 1.73620423 Mar '05 Mar '06 Mar '07 Mar '08
425.6 224.95
531.14 273.3
679.07 345.23
1,468.36 845.73
Quick ratio (Acid Test) Measures the ability to pay current liabilities out of the most liquid of current assets. (Cash + Marketable secrities + Accounts receivable) / Current liabilities = Quick ratio 3.Accounts receivable turnover
Mar'05
Mar'06
Mar'07
Mar'08
4 235 224.95 1.06
11 256 273.3 0.98
36 310 345.23 1.00
23.29 1,055 845.73 1.27550164
Mar'05 Measures the ability to collect from customers. Annual net credit sales / Average net account receivables = Accounts receivable turnover
Mar'06
Mar'07
Mar'08
1,007.28
1,291.64
1,662.56 310 5.3630968
2,368.51 1,055.44 2.24409725
234.97 256.47 4.286845129 5.0362226
4.Average collection period (Days Mar'05 Mar'06 Mar'07 Mar'08 Sales Outstanding) Measures the average number of day that it takes to collect accounts receivable. 365 365 365 365 365 days 4.286845 5.036223 5.363097 2.244097 / Accounts receivable turnover = Average collection period (Days 85.14420279 72.474948 68.057691 162.648941 Sales Outstanding)
Mar'05 Inventory turnover Measures the saleability of inventory. Indicates the number of time inventory is sold or "turned" per year. Net sales / Average inventory = Inventory turnover Days sales in inventory Measures inventory levels based on days sales. 365 days / Inventory turnover Days sale in inventory
Mar'06
Mar'07
Mar'08
1,007.28 1,291.64 186.62 263.41 5.39749223 4.9035344 Mar'05 Mar'06
1,662.56 333.38 4.9869818 Mar'07
2,368.51 389.63 6.0788697 Mar'08
365 365 5.39749223 4.9035344 67.6239973 74.436104
365 4.9869818 73.190562
365 6.0788697 60.0440572
LONG TERM SOLVENCY RATIOS
Debt ratio Indicates the percentage of assets financed with debt or liabilities Total liabilities / Total assets = Debt ratio Times interest earned - income (interest coverage) Measures the ability to pay interest out of profits. Net income before interest expense and taxes / Interest expense = Times interest earned - income (interest coverage) Mar'05 Mar'06 Mar'07 Mar'08
309.40 2,920.10 0.11
2,259.95 3,210.76 0.70
679.07 3,517.64 0.19
1,468.36 4,310.14 0.34067571
Mar'05
Mar'06
Mar'07
Mar'08
320.07 0
499.91 11.23 44.515583
649.34 8.8 73.788636
1,057.26 5.06 208.944664
Total asstes to equity Total assets / Total stockholders equity = Total assets to equity Total liabilities to total assets Total liabilities
Mar'05 Mar'06 Mar'07 Mar'08 2,920.10 3,210.76 3,517.64 4,310.14 94.16 94.27 98.07 103.56 31.01210705 34.059192 35.868665 41.6197374 Mar'05 Mar'06 Mar'07 Mar'08 309.40 2,259.95 679.07 1,468.36
/ Total assets = Total liabilities to total assets
2,920.10 0.11
3,210.76 0.70
3,517.64 0.19
4,310.14 0.34067571
Total liabilities to equity
Total liabilities / Total stockholders equity = Total liabilities to equity
Mar'05 Mar'06 Mar'07 Mar'08 309.40 2,259.95 679.07 1,468.36 94.16 94.27 98.07 103.56 3.29 23.97 6.92 14.1788335
DEBT-EQUITY RATIO Outsiders Fund Total shareholders fund D/E ratio Propreitory Equity ratio Shareholder fund /Total Assets Propreitory Equity ratio
Mar'05 Mar'06 Mar'07 Mar'08 2,039.60 2,019.12 1,413.38 948.25 1,105.44 1,464.94 2,449.49 4,207.62 1.845057172 1.3782954 0.5770099 0.22536493 Mar'05 Mar'06 Mar'07 Mar'08 2,812.01 3,098.26 3,399.18 4,183.70 309.40 2,259.95 679.07 1,468.36 9.088590821 1.3709418 5.0056401 2.84923316
PROFITABILITY RATIOS
Return on assets Measures the effectiveness of assets used to produce profits. Net income / Average total assets = Return on assets Return on equity Measures the profitibility of owners investments. Net income / Average stockholders equity = Return on equity Gross margin Gross profit / Sales = Gross margin % Operating margin Operating profit / Sales = Operating margin Profit margin Measures the % of each $1 of revenue that is left over as profit. Mar'05 Mar'06 Mar'07 Mar'08
305.71 461.29 628.93 1,014.04 309.40 2,259.95 679.07 1,468.36 0.988073691 0.2041151 0.9261637 0.69059359 Mar'05 Mar'06 Mar'07 Mar'08
305.71 94.16 3.246707732 Mar'05 321.30 1,007.28 0.318977841 Mar'05 120.03 1,007.28 0.119162497 Mar'05
461.29 628.93 1,014.04 94.27 98.07 103.56 4.8932852 6.4130723 9.79181151 Mar'06 Mar'07 Mar'08 261.30 292.99 611.13 1,291.64 1,662.56 2,368.51 0.202301 0.1762282 0.25802298 Mar'06 Mar'07 Mar'08 15.09 -54.65 198.54 1,291.64 1,662.56 2,368.51 0.0116828 -0.032871 0.08382485 Mar'06 Mar'07 Mar'08
Net income / Sales = Profit margin Total asset turnover Measures the efficiency of assets used to produce sales. Sales / Average total assets = Total asset turnover Fixed assets turnover Measures the efficiency of fixed assets used to produce sales. Sales / Average fixed assets = Fixed asset turnover Current asset turnover Sales / Average current assets = Current asset turnover DuPont Return on Investment Net income / Average total assets = Return on investment or Net profit margin / Total asset turnover = Return on investment Modified DuPont - Return on Equity Net profit after tax / Average stockholders equity = Return on equity or Average total assets / Average equity = Equity mutliplier x ROI = Return on equity
305.71 461.29 628.93 1,014.04 1,007.28 1,291.64 1,662.56 2,368.51 0.303500516 0.3571351 0.3782901 0.42813414 Mar'05 Mar'06 Mar'07 Mar'08
1,007.28 1,291.64 1,662.56 2,368.51 2,920.10 3,210.76 3,517.64 4,310.14 0.344947091 0.4022848 0.4726351 0.54952043 Mar'05 Mar'06 Mar'07 Mar'08
1,007.28 1291.64 1662.56 2368.51 439.15 536.19 589.29 630.04 2.293703746 2.4089222 2.8212934 3.759301 Mar'05 Mar'06 Mar'07 Mar'08 1007.28 1291.64 1662.56 2368.51 425.6 531.14 679.07 1,468.36 2.366729323 2.4318259 2.4482896 1.61303086
Mar'05 Mar'06 Mar'07 Mar'08 305.71 461.29 628.93 1,014.04 2,920.10 3,210.76 3,517.64 4,310.14 10.5% 14.4% 17.9% 23.526846 0.303500516 0.3571351 0.34 0.40 10.5% 14.4% 0.3782901 0.47 17.9% 0.42813414 0.54952043 77.9105048
306 94 324.7% 2,920 94 31.01 10.5% 324.7%
461 94 489.3% 3,211 94 34.06 14.4% 489.3%
629 98 641.3% 3,518 98 35.87 17.9% 641.3%
1,014.04 103.56 979.181151 4,310.14 103.56 41.6197374 23.526846 979.181151
Mar '09
1,186.94 696.34 1.70
Mar'09
20.17 680 696.34 1.01
Mar'09
2,774.65 680.03 4.080187639
Mar'09
365 4.080188 89.45666229
Mar'09
2,774.65 486.74 5.700476641 Mar'09
365 5.700476641 64.02973348
Mar'09
1,186.94 5,175.02 0.23
Mar'09
1,298.18 2.77 468.6570397
Mar'09 5,175.02 103.56 49.97122441 Mar'09 1,186.94
5,175.02 0.23 Mar'09 1,186.94 103.56 11.46
Mar'09 719.94 5,151.42 0.13975564 Mar'09 5,047.86 1,186.94 4.252835021
Mar'09
1,265.29 1,186.94 1.066010076 Mar'09
1,265.29 103.56 12.21794129 Mar'09 570.08 2,774.65 0.205460148 Mar'09 80.82 2,774.65 0.029127998 Mar'09
1,265.29 2,774.65 0.456017876 Mar'09
2,774.65 5,175.02 0.536162179 Mar'09
2774.65 699.26 3.967980436 Mar'09 2774.65 1,186.94 2.337649755 Mar'09 1,265.29 5,175.02 24.44995382 0.456017876 0.54 85.05
1,265.29 103.56 1221.8% 5,175.02 104 49.97 2445.0% 1,221.79
ANALYSIS OF FINANCIAL RATI
1.LIQUIDITY RATIOS
These ratios indicate the ease of turning assets into cash. These ratios are important in measuring the ability of a company to meet both its short term and long term obligations.
CURRENT RATIO
The ratio is regarded as a test of liquidity for a company. It expresses the 'working capital relationship of current assets available to meet the company's current obligations. Current Ratio = Total Current Assets/ Total Current Liabilities
Year Current Ratio
Mar’05 1.89
Mar’06 1.94
Mar’07 1.97
Mar’08 1.74
Mar’09 1.7
Current Ratio
2 1.95 1.9 1.85 1.8 1.75 1.7 1.65 0 1 2 3 4 5 6 Mar’08, 1.74 Mar’09, 1.7 Mar’05, 1.89 Mar’07, 1.97 Mar’06, 1.94
Generally acceptable current ratio is 2 to 1. But also depends on the nature of the business and the characteristics of its current assets and liabilities. Company is never at an optimal figure and has seen decline in its ratio which is risky. Company should increase its current assets by either taking debt or converting non into current one so
increase its current assets by either taking debt or converting non into current one so as to have a safety cover and credit worthiness.
QUICK RATIO
The Quick Ratio is sometimes called the "acid-test" ratio and is one of the best measures of liquidity. Quick Ratio = Cash + Government Securities + Receivables / Total Current Liabilities It is measure of true working capital and readiness of them to be converted into liquid assets without obsolete inventory.
Year Quick Ratio Mar’05
1.06
Mar’06
0.98
Mar’07
1
Mar’08
Mar’09
1.275502 1.01
Quick Ratio
1.4 1.2 1 0.8 0.6 0.4 0.2 0 0 1 2 3 4 5 6 Mar’05, 1.06 Mar’06, 0.98 Mar’07, 1 Mar’08, 1.27550164 Mar’09, 1.01
INTERPRETATION An acid-test of 1:1 is considered satisfactory .It is maintaining optimal ratio with huge amount of receivables. They have to maintain control over their collection policy so as to meet its requirements.
2.SOLVENCY RATIOS
DEBT-EQUITY RATIO This Debt/Equity indicates the extent to which the business is reliant on debt financing Debt/Equity Ratio = Total Liabilities / Net Worth
Year D/E Ratio Mar’05 Mar’06 Mar’07 Mar’08 Mar’09
1.845057 1.378295 0.57701
0.225365 0.139756
D/E Ratio
2 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 0 1 2 3 4 5 Mar’08, 0.22536493 Mar’09, 0.13975564 Mar’07, 0.5770099 Mar’06, 1.3782954 Mar’05, 1.845057172
INTERPRETATION Generally, the higher this ratio, the more risky a creditor will perceive its exposure in your business, making it correspondingly harder to obtain credit. But it is beneficial from owner point of view as cost of debt is lower than equity but exposes firm to distress costs. Over the years firm is moving towards the lower debt may be as a measure to trade off between risk and debt.
DEBT RATIO
This ratio determines proportionate of debt in financing total assets of company. DEBT RATIO = Total debt (secured loans +unsecured loans + C.liabilities)/Total Assets
DEBT RATIO = Total debt (secured loans +unsecured loans + C.liabilities)/Total Assets
Year Debt ratio
Mar’05
0.11
Mar’06
0.7
Mar’07
0.19
Mar’08
Mar’09
0.340676 0.23
Debt ratio
0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 0 1 2 3 4 5 Mar’05, 0.11 Mar’07, 0.19 Mar’08, 0.34067571 Mar’09, 0.23 Mar’06, 0.7
INTERPRETATION This ratio is important from investors point as it helps in calculating leverage factor for firm and thus determines borrower ability to pay back. Owners generally prefer high values as it reduces their cost but trade off has to be maintained so as to balance both benefit and costs of debt. Over the years, company has reduce the level of debt in their capital mix may be to save itself from bankruptcy or to increase their worthiness in market.
INTEREST COVERAGE RATIOS
Interest coverage is a financial ratio that provides a quick picture of a company’s ability to the interest charges on its debt. The 'coverage' aspect of the ratio indicates how many tim the interest could be paid from available earnings, thereby providing a sense of the safet margin a company has for paying its interest for any period. Ratio=PBIT/total interest expenses
Year
Mar’05
Mar’06
Mar’07
Mar’08
Mar’09
Coverage ratio
0
44.51558 73.78864 208.9447 468.657
Coverage ratio
500 450 400 350 300 250 200 150 100 50 0 0 1 Mar’09, 468.6570397
Mar’08, 208.944664
Mar’07, 73.788636 Mar’06, 44.515583 Mar’05, 0 2 3 4 5 6
A higher value indicates firm healthy position to face turbulent time. Owing to low interest charges and low debt, it has higher coverage ratio improvising over years
NCIAL RATIOS
3.PROFITABILITY RATIOS
GROSS MARGIN RATIO
os are important in long term
It measures the percentage of sales remaining (after obtaining or manufac goods sold) available to pay the overhead expenses of the company. Gross Margin Ratio = Gross Profit / Net Sales
Year Gross margin Mar’05 Mar’06 Mar’07 Mar’08 Mar’09
s the 'working capital' nt obligations.
0.318978 0.202301 0.176228 0.258023 0.20546
Gross margin
0.35 0.3 0.25 0.2 0.15 0.1 0.05 0 0 1 2 3 4 Mar’05, 0.318977841 Mar’08, 0.25802298 Mar’06, 0.202301 Mar’07, 0.1762282
Current Ratio
NET MARGIN
6
nature of the ompany is never ompany should to current one so
This ratio is the percentage of sales dollars left after subtracting the Cost o expenses, except income taxes. It provides a good opportunity to compare "return on sales" with the performance of other companies in your industr before income tax because tax rates and tax liabilities vary from company wide variety of reasons, making comparisons after taxes much more difficu Net Profit Margin Ratio = Net Profit Before Tax / Net Sales
to current one so
Year Mar’05 Mar’06 Mar’07 NET MARGI 0.303501 0.357135 0.37829 N Mar’08 Mar’09
0.428134 0.456018
of the best
0.5 0.45 0.4 0.35 0.3 0.25 0.2 0.15 0.1 0.05 0 0 1
NET MARGIN
Mar’08, 0.42813414 Mar’07, 0.3782901 Mar’06, 0.3571351 Mar’05, 0.303500516
rrent Liabilities nverted into liquid
2
3
4
Over the years.net profit has increased showing growth as well as better e reflected in the lower operating costs. Return on Assets Ratio
Quick Ratio
This measures how efficiently profits are being generated from the assets the business when compared with the ratios of firms in a similar business. Return on Assets = Net Profit Before Tax / Total Assets
6
Year ROA
Mar’05
Mar’06
Mar’07
Mar’08
Mar’09
0.988074 0.204115 0.926164 0.690594 1.06601
al ratio with huge ection policy so as
ROA
1.2 1 Mar’05, 0.988073691
1 0.8 0.6 0.4 0.2 0 0 1
Mar’05, 0.988073691
Mar’07, 0.9261637 Mar’08, 0.69059359
on debt financing
Mar’06, 0.2041151 2 3 4
INTERPRETATION Barring first year, has performed well over the last years reaching at a arou indicating around more than 100% growth on the invested fund.
RETURN ON INVESTMENT
D/E Ratio
Mar’09, 0.13975564 6
The ROI is perhaps the most important ratio of all. It is the percentage of re invested in the business by its owners. In short, this ratio tells the owner wh all the effort put into the business has been worthwhile. Return on Investment = Net Profit before Tax / Net Worth
Year ROI Mar’05 Mar’06 Mar’07 Mar’08 Mar’09
0.988074 0.204115 0.926164 0.690594 1.06601
ROI
1.2 1 0.8 Mar’08, 0.69059359 0.6 0.4 0.2 0 0 1 2 3 4 Mar’06, 0.2041151 Mar’05, 0.988073691 Mar’07, 0.9261637
ve its exposure in t it is beneficial poses firm to may be as a
of company. ties)/Total Assets
ties)/Total Assets
0
1
2
3
4
Over the last 5years, company has seen increase in return over the investm in the net value addition rising to around 24% in last fiscal year.
4.EFFICIENCY RATIOS
Inventory Turnover Ratio
Debt ratio
Mar’09, 0.23
This ratio reveals how well inventory is being managed. It is important bec more times inventory can be turned in a given operating cycle, the greate
Inventory Turnover Ratio = Net Sales / Average Inventory at Cost
6
Year I.T.R D.S.O
80 70 60 50 40 30 20 10 0
Mar’05
Mar’06
Mar’07
Mar’08
Mar’09
5.397492 4.903534 4.986982 6.07887 5.700477 67.624 74.4361 73.19056 60.04406 64.02973
everage factor for rally prefer high as to balance both evel of debt in their r worthiness in
a company’s ability to pay dicates how many times g a sense of the safety
0
1
2
3
4
5
INTERPRETATION Company is maintaining on an average around 5 its conversion ratio wh effect on its cash conversion cycle as it increase a lot due to higher days inventory.
ACCOUNTS RECEIVABLE RATIO
9, 468.6570397
An accounting measure used to quantify a firm's effectiveness in extend well as collecting debts. The receivables turnover ratio is an activity rat how efficiently a firm uses its assets. A.R.T=Net sales/Avg accounts receivable
Coverage ratio
Year A.R.T D.S.O
Mar’05
Mar’06
Mar’07
Mar’08
Mar’09
4.286845 5.036223 5.363097 2.244097 4.080188 85.1442 72.47495 68.05769 162.6489 89.45666
. Owing to low ng over years
180 160 140 120 100 80 60 40 20 0 0 1
Chart Title
Mar’08, 162.648941
Mar’05, 85.14420279 Mar’06, 72.474948 Mar’07, 68.057691
Mar’07, 5.3630968 Mar’06, Mar’05, 4.286845129 5.0362226 Mar’08, 2.24409725 2 3 4
Company has low receivable turn–over ratio giving to increase or decre different years. But no major improvement is seen indicating poor perf company in realising their receivable which is also reflected in high coll needs to work on its collection policy albeit it will have far effect on its find itself unable to finance its requirements.
r obtaining or manufacturing the of the company.
Mar’08, 0.25802298 Mar’09, 0.205460148 Gross margin
5
6
subtracting the Cost of Goods sold and all pportunity to compare your company's mpanies in your industry. It is calculated es vary from company to company for a axes much more difficult.
Mar’09, 0.456017876 Mar’08, 0.42813414
NET MARGIN
5
6
wth as well as better efficiency as
erated from the assets employed in s in a similar business.
Mar’09, 1.066010076
Mar’09, 1.066010076 Mar’08, 0.69059359 ROA
5
6
ears reaching at a around 1.1 ratio vested fund.
s the percentage of return on funds atio tells the owner whether or not
Mar’09, 1.066010076
Mar’08, 0.69059359 ROI
5
6
5
6
eturn over the investment i.e increase fiscal year.
ged. It is important because the ating cycle, the greater the profit.
ntory at Cost
Year I.T.R D.S.O
5
6
7
its conversion ratio which ultimately has its a lot due to higher days outstanding sales in
effectiveness in extending credit as r ratio is an activity ratio, measuring
Mar’08, 162.648941
Mar’09, 89.45666229
07, 68.057691
A.R.T D.S.O
07, 5.3630968 Mar’09, Mar’08, 2.24409725 4.080187639 5 6
ng to increase or decrease way in en indicating poor performance of so reflected in high collection period. It ll have far effect on its schedules or will
SUMMARY Company has increased its return on assessment as well as the profitability but it has very low re turnover ratio. It needs to work on its collection policy so as to realise its receivable early or lest crunch. It also needs to convert its non-current assets to current so as to finance its working cap
ability but it has very low receivable accounts its receivable early or lest he will face financial to finance its working capital efficiently
doc_514641203.xlsx
This is a spreadsheet about financial analysis of Sun Pharmaceuticals Industries.
SUN PHARMACEUTICALS LIMITED IN
RATIO ANALYSIS FOR SUN PHARMACEUTICALS LIMITED INDUSTRIES
FROM AKSHITA GOEL MBA-BIOTECH SEC-A,ROLL NO-32
USTRIES
SUN PHARMACEUTICAL LIMITED
Balace Sheet (Figurs in Crores)
Mar '05 12 mths Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities 94.16 92.76 0.01 1.4 1,011.28 0 1,105.45 13.92 1,800.73 1,814.65 2,920.10 Mar '05 12 mths Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs) 612.05 172.9 439.15 47.94 985.24 186.62 234.97 4.01 425.6 445.55 886.02 1,757.17 0 224.95 84.45 309.4 1,447.77 0 2,920.10 39.77 59.51 744.26 208.07 536.19 30.8 779.62 263.41 256.47 11.26 531.14 509.25 1,219.56 2,259.95 0 273.3 122.5 395.8 1,864.15 0 3,210.76 39.76 78.8 838.7 249.41 589.29 1,057.49 333.38 310 35.69 679.07 345.82 1,166.99 2,191.88 0 345.23 7.7 352.93 1,838.95 0 3,517.64 107.62 126.58 935.03 304.99 630.04 33.43 1,843.57 389.63 1,055.44 23.29 1,468.36 394.13 1,049.13 2,911.62 0 845.73 262.79 1,108.52 1,803.10 0 4,310.14 72.08 203.15 1,061.90 362.64 699.26 75.95 2,694.59 486.74 680.03 20.17 1,186.94 311.42 1,245.30 2,743.66 0 696.34 342.1 1,038.44 1,705.22 0 5,175.02 85.36 248.72 94.27 92.87 0 1.4 1,370.67 0 1,464.94 18.23 1,727.59 1,745.82 3,210.76 Mar '06 12 mths 98.07 96.7 0 1.37 2,351.42 0 2,449.49 20.39 1,047.76 1,068.15 3,517.64 Mar '07 12 mths 103.56 103.56 0 0 4,104.06 0 4,207.62 22.88 79.64 102.52 4,310.14 Mar '08 12 mths 103.56 103.56 0 0 5,047.86 0 5,151.42 23.6 0 23.6 5,175.02 Mar '09 12 mths Mar '06 12 mths Mar '07 12 mths Mar '08 12 mths Mar '09 12 mths
PROFIT AND LOSS STATEMENTS (FIG IN CRORES)
Mar '05 12 mths Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses Mar '05 12 mths Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) 120.03 352.9 0 352.9 32.83 2.45 317.62 12.45 330.07 17.77 305.71 323.05 0.08 69.57 9.91 1855.11 16.48 Mar '06 12 mths Mar '07 12 mths Mar '08 12 mths
1056.01 48.73 1007.28 232.87 -0.45 1239.7 563.75 14.48 82.78 24.97 163.72 37.1 0 886.8
1353.01 61.37 1291.64 525.55 57.23 1874.42 899.67 25.55 82.01 23.11 287.47 15.97
1722.13 59.57 1662.56 750.26 41.41 2454.23 1214.48 31.14 98.87 25.08 370.2 18.85
2427.35 58.84 2368.51 914.83 17.38 3300.72 1564.61 37.36 120.2 35.21 415.35 14.62
0 0 0 1333.78 1758.62 2187.35 Mar '06 Mar '07 Mar '08 12 mths 15.09 540.64 11.23 529.41 40.73 0 488.68 0 488.68 27.39 461.29 434.11 0.08 102.3 14.36 1857.32 24.83 12 mths -54.65 695.61 8.8 686.81 46.27 0 640.54 -0.05 640.49 11.61 628.93 544.14 0.08 130.01 18.25 1934.02 32.52 12 mths 198.54 1113.37 5.06 1108.31 56.11 0 1052.2 0 1052.2 38.16 1014.04 622.74 0.05 217.47 37.2 2071.16 48.96
Equity Dividend (%) Book Value (Rs)
75 59.51
110 78.8
135 126.58
210 203.15
RORES) Mar '09 12 mths
2833.65 59 2774.65 1276.22 23.78 4074.65 1961.89 50.44 148.31 43.93 494.98 18.06 0 2717.61 Mar '09 12 mths 80.82 1357.04 2.77 1354.27 58.86 0 1295.41 11.7 1307.11 30.12 1265.29 755.72 0 284.79 48.4 2071.16 61.09
275 248.72
RATIO ANALYSIS Short term liquidity
Current ratio Measures the ability to pay current liabilities out of current assets. Current assets / Current liabilities = Current ratio 1.89 1.94 1.97 1.73620423 Mar '05 Mar '06 Mar '07 Mar '08
425.6 224.95
531.14 273.3
679.07 345.23
1,468.36 845.73
Quick ratio (Acid Test) Measures the ability to pay current liabilities out of the most liquid of current assets. (Cash + Marketable secrities + Accounts receivable) / Current liabilities = Quick ratio 3.Accounts receivable turnover
Mar'05
Mar'06
Mar'07
Mar'08
4 235 224.95 1.06
11 256 273.3 0.98
36 310 345.23 1.00
23.29 1,055 845.73 1.27550164
Mar'05 Measures the ability to collect from customers. Annual net credit sales / Average net account receivables = Accounts receivable turnover
Mar'06
Mar'07
Mar'08
1,007.28
1,291.64
1,662.56 310 5.3630968
2,368.51 1,055.44 2.24409725
234.97 256.47 4.286845129 5.0362226
4.Average collection period (Days Mar'05 Mar'06 Mar'07 Mar'08 Sales Outstanding) Measures the average number of day that it takes to collect accounts receivable. 365 365 365 365 365 days 4.286845 5.036223 5.363097 2.244097 / Accounts receivable turnover = Average collection period (Days 85.14420279 72.474948 68.057691 162.648941 Sales Outstanding)
Mar'05 Inventory turnover Measures the saleability of inventory. Indicates the number of time inventory is sold or "turned" per year. Net sales / Average inventory = Inventory turnover Days sales in inventory Measures inventory levels based on days sales. 365 days / Inventory turnover Days sale in inventory
Mar'06
Mar'07
Mar'08
1,007.28 1,291.64 186.62 263.41 5.39749223 4.9035344 Mar'05 Mar'06
1,662.56 333.38 4.9869818 Mar'07
2,368.51 389.63 6.0788697 Mar'08
365 365 5.39749223 4.9035344 67.6239973 74.436104
365 4.9869818 73.190562
365 6.0788697 60.0440572
LONG TERM SOLVENCY RATIOS
Debt ratio Indicates the percentage of assets financed with debt or liabilities Total liabilities / Total assets = Debt ratio Times interest earned - income (interest coverage) Measures the ability to pay interest out of profits. Net income before interest expense and taxes / Interest expense = Times interest earned - income (interest coverage) Mar'05 Mar'06 Mar'07 Mar'08
309.40 2,920.10 0.11
2,259.95 3,210.76 0.70
679.07 3,517.64 0.19
1,468.36 4,310.14 0.34067571
Mar'05
Mar'06
Mar'07
Mar'08
320.07 0
499.91 11.23 44.515583
649.34 8.8 73.788636
1,057.26 5.06 208.944664
Total asstes to equity Total assets / Total stockholders equity = Total assets to equity Total liabilities to total assets Total liabilities
Mar'05 Mar'06 Mar'07 Mar'08 2,920.10 3,210.76 3,517.64 4,310.14 94.16 94.27 98.07 103.56 31.01210705 34.059192 35.868665 41.6197374 Mar'05 Mar'06 Mar'07 Mar'08 309.40 2,259.95 679.07 1,468.36
/ Total assets = Total liabilities to total assets
2,920.10 0.11
3,210.76 0.70
3,517.64 0.19
4,310.14 0.34067571
Total liabilities to equity
Total liabilities / Total stockholders equity = Total liabilities to equity
Mar'05 Mar'06 Mar'07 Mar'08 309.40 2,259.95 679.07 1,468.36 94.16 94.27 98.07 103.56 3.29 23.97 6.92 14.1788335
DEBT-EQUITY RATIO Outsiders Fund Total shareholders fund D/E ratio Propreitory Equity ratio Shareholder fund /Total Assets Propreitory Equity ratio
Mar'05 Mar'06 Mar'07 Mar'08 2,039.60 2,019.12 1,413.38 948.25 1,105.44 1,464.94 2,449.49 4,207.62 1.845057172 1.3782954 0.5770099 0.22536493 Mar'05 Mar'06 Mar'07 Mar'08 2,812.01 3,098.26 3,399.18 4,183.70 309.40 2,259.95 679.07 1,468.36 9.088590821 1.3709418 5.0056401 2.84923316
PROFITABILITY RATIOS
Return on assets Measures the effectiveness of assets used to produce profits. Net income / Average total assets = Return on assets Return on equity Measures the profitibility of owners investments. Net income / Average stockholders equity = Return on equity Gross margin Gross profit / Sales = Gross margin % Operating margin Operating profit / Sales = Operating margin Profit margin Measures the % of each $1 of revenue that is left over as profit. Mar'05 Mar'06 Mar'07 Mar'08
305.71 461.29 628.93 1,014.04 309.40 2,259.95 679.07 1,468.36 0.988073691 0.2041151 0.9261637 0.69059359 Mar'05 Mar'06 Mar'07 Mar'08
305.71 94.16 3.246707732 Mar'05 321.30 1,007.28 0.318977841 Mar'05 120.03 1,007.28 0.119162497 Mar'05
461.29 628.93 1,014.04 94.27 98.07 103.56 4.8932852 6.4130723 9.79181151 Mar'06 Mar'07 Mar'08 261.30 292.99 611.13 1,291.64 1,662.56 2,368.51 0.202301 0.1762282 0.25802298 Mar'06 Mar'07 Mar'08 15.09 -54.65 198.54 1,291.64 1,662.56 2,368.51 0.0116828 -0.032871 0.08382485 Mar'06 Mar'07 Mar'08
Net income / Sales = Profit margin Total asset turnover Measures the efficiency of assets used to produce sales. Sales / Average total assets = Total asset turnover Fixed assets turnover Measures the efficiency of fixed assets used to produce sales. Sales / Average fixed assets = Fixed asset turnover Current asset turnover Sales / Average current assets = Current asset turnover DuPont Return on Investment Net income / Average total assets = Return on investment or Net profit margin / Total asset turnover = Return on investment Modified DuPont - Return on Equity Net profit after tax / Average stockholders equity = Return on equity or Average total assets / Average equity = Equity mutliplier x ROI = Return on equity
305.71 461.29 628.93 1,014.04 1,007.28 1,291.64 1,662.56 2,368.51 0.303500516 0.3571351 0.3782901 0.42813414 Mar'05 Mar'06 Mar'07 Mar'08
1,007.28 1,291.64 1,662.56 2,368.51 2,920.10 3,210.76 3,517.64 4,310.14 0.344947091 0.4022848 0.4726351 0.54952043 Mar'05 Mar'06 Mar'07 Mar'08
1,007.28 1291.64 1662.56 2368.51 439.15 536.19 589.29 630.04 2.293703746 2.4089222 2.8212934 3.759301 Mar'05 Mar'06 Mar'07 Mar'08 1007.28 1291.64 1662.56 2368.51 425.6 531.14 679.07 1,468.36 2.366729323 2.4318259 2.4482896 1.61303086
Mar'05 Mar'06 Mar'07 Mar'08 305.71 461.29 628.93 1,014.04 2,920.10 3,210.76 3,517.64 4,310.14 10.5% 14.4% 17.9% 23.526846 0.303500516 0.3571351 0.34 0.40 10.5% 14.4% 0.3782901 0.47 17.9% 0.42813414 0.54952043 77.9105048
306 94 324.7% 2,920 94 31.01 10.5% 324.7%
461 94 489.3% 3,211 94 34.06 14.4% 489.3%
629 98 641.3% 3,518 98 35.87 17.9% 641.3%
1,014.04 103.56 979.181151 4,310.14 103.56 41.6197374 23.526846 979.181151
Mar '09
1,186.94 696.34 1.70
Mar'09
20.17 680 696.34 1.01
Mar'09
2,774.65 680.03 4.080187639
Mar'09
365 4.080188 89.45666229
Mar'09
2,774.65 486.74 5.700476641 Mar'09
365 5.700476641 64.02973348
Mar'09
1,186.94 5,175.02 0.23
Mar'09
1,298.18 2.77 468.6570397
Mar'09 5,175.02 103.56 49.97122441 Mar'09 1,186.94
5,175.02 0.23 Mar'09 1,186.94 103.56 11.46
Mar'09 719.94 5,151.42 0.13975564 Mar'09 5,047.86 1,186.94 4.252835021
Mar'09
1,265.29 1,186.94 1.066010076 Mar'09
1,265.29 103.56 12.21794129 Mar'09 570.08 2,774.65 0.205460148 Mar'09 80.82 2,774.65 0.029127998 Mar'09
1,265.29 2,774.65 0.456017876 Mar'09
2,774.65 5,175.02 0.536162179 Mar'09
2774.65 699.26 3.967980436 Mar'09 2774.65 1,186.94 2.337649755 Mar'09 1,265.29 5,175.02 24.44995382 0.456017876 0.54 85.05
1,265.29 103.56 1221.8% 5,175.02 104 49.97 2445.0% 1,221.79
ANALYSIS OF FINANCIAL RATI
1.LIQUIDITY RATIOS
These ratios indicate the ease of turning assets into cash. These ratios are important in measuring the ability of a company to meet both its short term and long term obligations.
CURRENT RATIO
The ratio is regarded as a test of liquidity for a company. It expresses the 'working capital relationship of current assets available to meet the company's current obligations. Current Ratio = Total Current Assets/ Total Current Liabilities
Year Current Ratio
Mar’05 1.89
Mar’06 1.94
Mar’07 1.97
Mar’08 1.74
Mar’09 1.7
Current Ratio
2 1.95 1.9 1.85 1.8 1.75 1.7 1.65 0 1 2 3 4 5 6 Mar’08, 1.74 Mar’09, 1.7 Mar’05, 1.89 Mar’07, 1.97 Mar’06, 1.94
Generally acceptable current ratio is 2 to 1. But also depends on the nature of the business and the characteristics of its current assets and liabilities. Company is never at an optimal figure and has seen decline in its ratio which is risky. Company should increase its current assets by either taking debt or converting non into current one so
increase its current assets by either taking debt or converting non into current one so as to have a safety cover and credit worthiness.
QUICK RATIO
The Quick Ratio is sometimes called the "acid-test" ratio and is one of the best measures of liquidity. Quick Ratio = Cash + Government Securities + Receivables / Total Current Liabilities It is measure of true working capital and readiness of them to be converted into liquid assets without obsolete inventory.
Year Quick Ratio Mar’05
1.06
Mar’06
0.98
Mar’07
1
Mar’08
Mar’09
1.275502 1.01
Quick Ratio
1.4 1.2 1 0.8 0.6 0.4 0.2 0 0 1 2 3 4 5 6 Mar’05, 1.06 Mar’06, 0.98 Mar’07, 1 Mar’08, 1.27550164 Mar’09, 1.01
INTERPRETATION An acid-test of 1:1 is considered satisfactory .It is maintaining optimal ratio with huge amount of receivables. They have to maintain control over their collection policy so as to meet its requirements.
2.SOLVENCY RATIOS
DEBT-EQUITY RATIO This Debt/Equity indicates the extent to which the business is reliant on debt financing Debt/Equity Ratio = Total Liabilities / Net Worth
Year D/E Ratio Mar’05 Mar’06 Mar’07 Mar’08 Mar’09
1.845057 1.378295 0.57701
0.225365 0.139756
D/E Ratio
2 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 0 1 2 3 4 5 Mar’08, 0.22536493 Mar’09, 0.13975564 Mar’07, 0.5770099 Mar’06, 1.3782954 Mar’05, 1.845057172
INTERPRETATION Generally, the higher this ratio, the more risky a creditor will perceive its exposure in your business, making it correspondingly harder to obtain credit. But it is beneficial from owner point of view as cost of debt is lower than equity but exposes firm to distress costs. Over the years firm is moving towards the lower debt may be as a measure to trade off between risk and debt.
DEBT RATIO
This ratio determines proportionate of debt in financing total assets of company. DEBT RATIO = Total debt (secured loans +unsecured loans + C.liabilities)/Total Assets
DEBT RATIO = Total debt (secured loans +unsecured loans + C.liabilities)/Total Assets
Year Debt ratio
Mar’05
0.11
Mar’06
0.7
Mar’07
0.19
Mar’08
Mar’09
0.340676 0.23
Debt ratio
0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 0 1 2 3 4 5 Mar’05, 0.11 Mar’07, 0.19 Mar’08, 0.34067571 Mar’09, 0.23 Mar’06, 0.7
INTERPRETATION This ratio is important from investors point as it helps in calculating leverage factor for firm and thus determines borrower ability to pay back. Owners generally prefer high values as it reduces their cost but trade off has to be maintained so as to balance both benefit and costs of debt. Over the years, company has reduce the level of debt in their capital mix may be to save itself from bankruptcy or to increase their worthiness in market.
INTEREST COVERAGE RATIOS
Interest coverage is a financial ratio that provides a quick picture of a company’s ability to the interest charges on its debt. The 'coverage' aspect of the ratio indicates how many tim the interest could be paid from available earnings, thereby providing a sense of the safet margin a company has for paying its interest for any period. Ratio=PBIT/total interest expenses
Year
Mar’05
Mar’06
Mar’07
Mar’08
Mar’09
Coverage ratio
0
44.51558 73.78864 208.9447 468.657
Coverage ratio
500 450 400 350 300 250 200 150 100 50 0 0 1 Mar’09, 468.6570397
Mar’08, 208.944664
Mar’07, 73.788636 Mar’06, 44.515583 Mar’05, 0 2 3 4 5 6
A higher value indicates firm healthy position to face turbulent time. Owing to low interest charges and low debt, it has higher coverage ratio improvising over years
NCIAL RATIOS
3.PROFITABILITY RATIOS
GROSS MARGIN RATIO
os are important in long term
It measures the percentage of sales remaining (after obtaining or manufac goods sold) available to pay the overhead expenses of the company. Gross Margin Ratio = Gross Profit / Net Sales
Year Gross margin Mar’05 Mar’06 Mar’07 Mar’08 Mar’09
s the 'working capital' nt obligations.
0.318978 0.202301 0.176228 0.258023 0.20546
Gross margin
0.35 0.3 0.25 0.2 0.15 0.1 0.05 0 0 1 2 3 4 Mar’05, 0.318977841 Mar’08, 0.25802298 Mar’06, 0.202301 Mar’07, 0.1762282
Current Ratio
NET MARGIN
6
nature of the ompany is never ompany should to current one so
This ratio is the percentage of sales dollars left after subtracting the Cost o expenses, except income taxes. It provides a good opportunity to compare "return on sales" with the performance of other companies in your industr before income tax because tax rates and tax liabilities vary from company wide variety of reasons, making comparisons after taxes much more difficu Net Profit Margin Ratio = Net Profit Before Tax / Net Sales
to current one so
Year Mar’05 Mar’06 Mar’07 NET MARGI 0.303501 0.357135 0.37829 N Mar’08 Mar’09
0.428134 0.456018
of the best
0.5 0.45 0.4 0.35 0.3 0.25 0.2 0.15 0.1 0.05 0 0 1
NET MARGIN
Mar’08, 0.42813414 Mar’07, 0.3782901 Mar’06, 0.3571351 Mar’05, 0.303500516
rrent Liabilities nverted into liquid
2
3
4
Over the years.net profit has increased showing growth as well as better e reflected in the lower operating costs. Return on Assets Ratio
Quick Ratio
This measures how efficiently profits are being generated from the assets the business when compared with the ratios of firms in a similar business. Return on Assets = Net Profit Before Tax / Total Assets
6
Year ROA
Mar’05
Mar’06
Mar’07
Mar’08
Mar’09
0.988074 0.204115 0.926164 0.690594 1.06601
al ratio with huge ection policy so as
ROA
1.2 1 Mar’05, 0.988073691
1 0.8 0.6 0.4 0.2 0 0 1
Mar’05, 0.988073691
Mar’07, 0.9261637 Mar’08, 0.69059359
on debt financing
Mar’06, 0.2041151 2 3 4
INTERPRETATION Barring first year, has performed well over the last years reaching at a arou indicating around more than 100% growth on the invested fund.
RETURN ON INVESTMENT
D/E Ratio
Mar’09, 0.13975564 6
The ROI is perhaps the most important ratio of all. It is the percentage of re invested in the business by its owners. In short, this ratio tells the owner wh all the effort put into the business has been worthwhile. Return on Investment = Net Profit before Tax / Net Worth
Year ROI Mar’05 Mar’06 Mar’07 Mar’08 Mar’09
0.988074 0.204115 0.926164 0.690594 1.06601
ROI
1.2 1 0.8 Mar’08, 0.69059359 0.6 0.4 0.2 0 0 1 2 3 4 Mar’06, 0.2041151 Mar’05, 0.988073691 Mar’07, 0.9261637
ve its exposure in t it is beneficial poses firm to may be as a
of company. ties)/Total Assets
ties)/Total Assets
0
1
2
3
4
Over the last 5years, company has seen increase in return over the investm in the net value addition rising to around 24% in last fiscal year.
4.EFFICIENCY RATIOS
Inventory Turnover Ratio
Debt ratio
Mar’09, 0.23
This ratio reveals how well inventory is being managed. It is important bec more times inventory can be turned in a given operating cycle, the greate
Inventory Turnover Ratio = Net Sales / Average Inventory at Cost
6
Year I.T.R D.S.O
80 70 60 50 40 30 20 10 0
Mar’05
Mar’06
Mar’07
Mar’08
Mar’09
5.397492 4.903534 4.986982 6.07887 5.700477 67.624 74.4361 73.19056 60.04406 64.02973
everage factor for rally prefer high as to balance both evel of debt in their r worthiness in
a company’s ability to pay dicates how many times g a sense of the safety
0
1
2
3
4
5
INTERPRETATION Company is maintaining on an average around 5 its conversion ratio wh effect on its cash conversion cycle as it increase a lot due to higher days inventory.
ACCOUNTS RECEIVABLE RATIO
9, 468.6570397
An accounting measure used to quantify a firm's effectiveness in extend well as collecting debts. The receivables turnover ratio is an activity rat how efficiently a firm uses its assets. A.R.T=Net sales/Avg accounts receivable
Coverage ratio
Year A.R.T D.S.O
Mar’05
Mar’06
Mar’07
Mar’08
Mar’09
4.286845 5.036223 5.363097 2.244097 4.080188 85.1442 72.47495 68.05769 162.6489 89.45666
. Owing to low ng over years
180 160 140 120 100 80 60 40 20 0 0 1
Chart Title
Mar’08, 162.648941
Mar’05, 85.14420279 Mar’06, 72.474948 Mar’07, 68.057691
Mar’07, 5.3630968 Mar’06, Mar’05, 4.286845129 5.0362226 Mar’08, 2.24409725 2 3 4
Company has low receivable turn–over ratio giving to increase or decre different years. But no major improvement is seen indicating poor perf company in realising their receivable which is also reflected in high coll needs to work on its collection policy albeit it will have far effect on its find itself unable to finance its requirements.
r obtaining or manufacturing the of the company.
Mar’08, 0.25802298 Mar’09, 0.205460148 Gross margin
5
6
subtracting the Cost of Goods sold and all pportunity to compare your company's mpanies in your industry. It is calculated es vary from company to company for a axes much more difficult.
Mar’09, 0.456017876 Mar’08, 0.42813414
NET MARGIN
5
6
wth as well as better efficiency as
erated from the assets employed in s in a similar business.
Mar’09, 1.066010076
Mar’09, 1.066010076 Mar’08, 0.69059359 ROA
5
6
ears reaching at a around 1.1 ratio vested fund.
s the percentage of return on funds atio tells the owner whether or not
Mar’09, 1.066010076
Mar’08, 0.69059359 ROI
5
6
5
6
eturn over the investment i.e increase fiscal year.
ged. It is important because the ating cycle, the greater the profit.
ntory at Cost
Year I.T.R D.S.O
5
6
7
its conversion ratio which ultimately has its a lot due to higher days outstanding sales in
effectiveness in extending credit as r ratio is an activity ratio, measuring
Mar’08, 162.648941
Mar’09, 89.45666229
07, 68.057691
A.R.T D.S.O
07, 5.3630968 Mar’09, Mar’08, 2.24409725 4.080187639 5 6
ng to increase or decrease way in en indicating poor performance of so reflected in high collection period. It ll have far effect on its schedules or will
SUMMARY Company has increased its return on assessment as well as the profitability but it has very low re turnover ratio. It needs to work on its collection policy so as to realise its receivable early or lest crunch. It also needs to convert its non-current assets to current so as to finance its working cap
ability but it has very low receivable accounts its receivable early or lest he will face financial to finance its working capital efficiently
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