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14
NET DEBT TO EQUITY
1.4
1.21
1.2
0.98
1
0.82
0.8 0.73
0.63 0.61
0.55
0.6 0.45
0.35 SIDHICK
0.4 PLATE
0.2 0.07 INDUSTRY
0
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015
-0.2 -0.12
-0.18
-0.4 -0.32
-0.38
-0.6 -0.47
INTERPRETATION:
The debt-equity ratio is calculated to assess the firms ability to meet its long term
liabilities. Generally, a ratio of 2:1 is considered to be safe for the long term lenders and
a ratio below 2:1 provides sufficient protection to the long term lenders and thus they are
more secure and a higher ratio thus would indicate a more risky financial position of the
firm.
The debt- equity ratio for all the year and of all the three companies has been less than
2:1 and this is indicative of a sound financial position of the firm.
This ratio helps to determine how much shareholders would receive in the event
of a company-wide liquidation. It represents the amount of assets on which shareholders
have a residual claim. The higher the ratio the more shareholders may receive and vice-
versa.
TOTAL ASSETS
FINANCIAL YEAR 2010-2011
CHART
0.2
0.18
0.18
0.16 0.15
0.14 0.132
0.12 0.11
0.11
SIDHICK PLATE INDUSTRY
0.1
PAPER
0.08
0.08 0.07 PLATES
0.06 0.049
0
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015
INTERPRETATION:
A ratio used to help determine how much shareholders would receive in the event of a
company-wide liquidation. The ratio is calculated by dividing total shareholders' equity
by total assets of the firm, and it represents the amount of assets on which shareholders
have a residual claim.
The lower the ratio, the better it is for the company since the company would be then
able to pay off to its shareholders in case of liquidation without any burden.
IZON TECHNOLOGYINDUSTRY has made efforts to lower the ratio and finally
succeeded to do so. If we consider the ratios for the year 2014-2015, we can see that
IZON TECHNOLOGY INDUSTRY is in a better position than the other two companies.
1. DEBT TO NET WORTH RATIO -The net debt to net worth
ratio has significance to lenders, analysts and business managers. If affects the
ability of a company to borrow money and to finance its growth. A business
owner needs to know the optimal debt to net worth ratio for the benefit of its
company. The net debt should never be higher than the net worth; it is a bad
sign for the company.
1.4
1.21
1.2
0.98
1
0.82
0.8 0.73
0.67
0.61
0.6 0.55
0.45 SIDHICK PLATE INDUSTRY
0.36
0.4 PAPER
PLATES
0.2
0.07
0
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015
-0.2 -0.125
-0.18
-0.4 -0.32
-0.38
-0.47
-0.6
INTERPRETATION:
This ratio is used in the analysis of financial statements to show the amount
of protection available to creditors. A high ratio usually indicates that the
business has a lot of risk because it must meet principal and interest on its
obligations.
IZON TECHNOLOGYINDUSTRY has a fluctuating ratio throughout the
five years. But anyhow it has tried to maintain its position by reducing the debts
and increasing the net worth of the company.
SOFTWAREhas a negative ratio but in the year 2014-2015 it has finally
achieved a positive ratio.
SOFTWAREhas a fluctuating graph throughout the five years but in the
year 2014-2015, it has been able to lower the ratio and thus reduce the risk
involved in the business.
2. FIXED ASSETS TO LONG TERM RATIO - This ratio
indicates the proportion of long-term funds deployed in fixed assets. The higher
the ratio, the safer will be the funds available in case of liquidation. It also
indicates the proportion of funds that is invested in working capital.
It indicates the level of fixed assets owned by a company in relation to the
long-term debts of the company. The higher the ratio the better it is for a
company and the assets which are debt free and fully owned by the company.
FORMULA = FIXED ASSETS
CHART
0.9 0.84
0.79
0.8 0.74
0.72
0.68
0.7
0.6 0.54
0.4
PAPER
0.35
0.28 0.27
PLATES
0.3 0.25 0.26 0.25 0.26
0.2
0.1
0
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015
INTERPRETATION:
This is a difficult set of ratios to interpret as asset values are based on the
historical cost. An increase in the fixed asset figure may result from the
replacement of an asset at an increased price or the purchase of an additional
asset intended to increase the production capacity.
A latter transaction might be expected to result in increased sales.
3. PROPERITARY RATIO- This ratio indicates the proportion of long-term funds
deployed in fixed assets. The higher the ratio, the safer will be the funds available in
case of liquidation. It also indicates the proportion of funds that is invested in
working capital.
It indicates the level of fixed assets owned by a company in relation to the long-term
debts of the company. The higher the ratio the better it is for a company and the assets
which are debt free and fully owned by the company.
CHART
0.9
0.83
0.8 0.75 0.76
0.7 0.65
0.63
0.6
0.57 0.58
0.6 0.54 0.55
0.52
0.5
0.5 0.47 SIDHICK PLATE INDUSTRY
0.42
0.39 PAPER
0.4
PLATES
0.3
0.2
0.1
0
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015
INTERPRETATION:
FORMULA = PBIT
INTEREST
FINANCIAL YEAR 2010-2011
COMPANY PBIT INTEREST INTEREST
COVER
IZON 6435.55 173.90 37.01
TECHNOLOGYINDUSTRY
SOFTWARE 9754.75 332.13 29.37
SOFTWARE 2314.72 399.54 5.79
50 46.7
45
37.01 38.13
40
35
29.37
30 26.2 SIDHICK PLATE INDUSTRY
25 PAPER
20 16.15 PLATES
15
9.04 8.52
10 5.79 6.64 7.35 5.78 5
4.28
5 1.85
0
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015
INTERPRETATION:
The interest cover ratio is used to determine how easily a company can be
relieved of its burden to pay interest expenses on outstanding debt. The lower
the ratio, the more the company is burdened by debt expense. When a
company's interest coverage ratio is only 1.5 or lower, its ability to meet interest
expenses may be questionable.
IZON TECHNOLOGY INDUSTRY has had a steep fall in the ratio from
the year 2010-2011(37.01) to the year 2011-2012(9.04) and this was mainly
because the interest expenses had risen by leaps and bounds. And thereafter the
interest expenses continued to rise.
SOFTWAREhas a fluctuating ratio. The rise in the ratio was because of the
reduction in the interest expenses and a sudden fall was when the interest
expenses were high.
SOFTWARE has witnessed a ratio of 1.85 for the year 2012-2013 because
this year the profit before interest and tax was 1474.88 which was quite less as
compared to the previous year and the interest expenses were 797.25 which had
risen by 1.8 times as compared to the previous year.
5. DIVIDEND COVER RATIO -It measures the ability of a firm to pay dividend on
preference shares which carry a stated rate of return. This ratio is the ratio of net
profits after taxes (EAT) and the amount of preference dividend. The higher the
coverage the better it is and vice versa
CHART
20
18 17.3
16
14
12
SIDHICKPLATE INDUSTRY
10
8.4 PAPER
8 7.16 PLATES
6.48
5.75 5.74
6 4.92 5.25
4.22 4.25 4.26
3.824.2 3.49
4 3.36
0
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015
INTERPRETATION:
The dividend cover ratio means that how easily the company can be relieved
of its burden of paying the dividends to the company.
SOFTWARE had paid a very high dividend for the year 2011-2012,
which means that the company had declared ala large part of its profit as
dividend and thus following a liberal approach for paying the dividends.
TURNOVER
CHART
0.5
0.44
0.45
0.4 0.4
0.4 0.38 0.38
0.35
0.31 0.32 0.31 0.31
0.3 0.27
0.26 SIDHICK PLATE INDUSTRY
0.24
0.25
PAPER
0.2 0.21
0.2 PLATES
0.16
0.15
0.1
0.05
0
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015
INTERPRETATION:
EBIDTA to turnover ratio signifies that higher the ratio the better it is. Since
it means that earnings before interest, depreciation and taxation.
IZON TECHNOLOGY INDUSTRY has maintained a positive rising graph
throughout. And it has a ratio better than the other two companies.
7. EARNING PER SHARE -This ratio measures the profitability on
a per share basis i.e. the amount that they can get on every share held. The
higher the ratio the more amount the equity shareholders receive.
FORMULA = PROFIT ATTRIBUTABLE TO SHAREHOLDERS
CHART
97.17
2014-2015 11.87
75.63
106.34
2013-2014 16.35
60.26
22.7 PLATES
2012-2013 14.95
69.45 PAPER
SIDHICK PLATE INDUSTRY
95.26
2011-2012 18.25
67.17
80.11
2010-2011 15.02
73.76
0 20 40 60 80 100 120
INTERPRETATION:
The ratio is helpful in the determination of the market price of the equity
share of the company. The ratio is also helpful in estimating the capacity of
company to declare dividends on equity shares.
the highest EPS as compared to the other two firms. And IZON
TECHNOLOGY INDUSTRY has been quite consistent in maintaining its ratio
throughout.
40 37.52
35.06 34.99
35 33.55
31.44
30
25.36
25.29 25.46
25 23.35
20.2 SIDHICK PLATE INDUSTRY
20 18.63
17.3 PAPER
14.32 13.79 PLATES
15 12.42
10
0
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015
INTEPRETATION:
The ratio measures the margin of profit available on sales. The higher the
ratio the better it is. The ratio of IZON TECHNOLOGY INDUSTRY has been
fluctuating but it has been on a constant platform. The sales figures have been
rising so the fluctuations in the ratio can be attributed to the difference in the
prices of the raw materials, freights and wages.
The gross profit ratio of SOFTWARE has been falling and which is again
because of the rise in the prices of the raw materials, wages and freight which
have ultimately reduced the margin of the gross profit.
The gross profit margin of SOFTWAREhas also decreased since the selling
prices have not risen in the same proportion to the increase in the cost of the raw
materials and other expenses.
IZON TECHNOLOGY INDUSTRY has a much favourable ratio as
compared to the other two companies. PAPER can take some measures such as
procure raw materials at a cheaper price or to increase the selling price in order
to improve its gross profit margin.
0
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015
INTERPRETATION:
Net profit ratio reflects the net profit margin on the total sales after
deducting all the expenses but before deducting the interest and taxation. This
ratio measures the efficiency of the operation of the company.
The trend of the graph of the net profit ratio is quite similar to that of the
gross profit margin ratio. Higher the ratio the better it is. IZON
TECHNOLOGY INDUSTRY has been quite efficient in managing the
operating expenses of the firm.
30 28.72 28.38
27.25
25.4
24.5
25
21.85 22.2
20.93 21.15 19.95
20
17.29
17.28 SIDHICK PALTE INDUSTRY
14.95
14.63
15 PAPER
PLATES
10 9.38
0
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015
INTERPRETATION:
The ratio measures the cash generation in the business as a result of the
operation expressed in terms of sales. The cash profit ratio is more reliable
indicator of performance where there are sharp fluctuations in profit before tax
and the net profit from year to year owing to the difference in depreciation.
It facilitates the inter firm comparison of performance since different
methods of depreciation may be adopted by different companies.
IZON TECHNOLOGY INDUSTRY is ahead of the other two companies
and has a better graph as compared to PAPER and PLATES.
11. RETURN ON ASSETS -Here the profitability is measured in
terms of the relationship between net profits and assets. The ROA may be also
called as profit-to-asset ratio. It can be interpreted in two ways. First, it
measures managements ability and efficiency in using the firms assets to
generate (operating) profits. Second, it reports the total return accruing to all
providers of capital (debt and equity), independent of the source of capital.
FORMULA = EBIT
AVERAGE TOTAL ASSETS
CHART
0.4
0.35 0.32
0.3
0.3
SIDHICK PALTE INDUSTRY
0.24
0.25
0.21 0.21 PAPER
0.2 0.17 PLATES
0.16 0.150.14
0.14 0.13
0.15
0.1 0.08
0.05
0
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015
INTERPRETATION:
The ratio indicates how profitable a company is relative to its total assets.
The ratio illustrates how well management is employing companys total assets
to make a profit. The higher the return, the more efficient management is in
utilizing the assets base.
Here we can conclude that SOFTWARE has not been utilizing its asset
base efficiently and so the graph has taken a downward trend.
0.45 0.42
0.4 0.38
0.36
0.35
0.3
0.26
0.23 0.24 SIDHICK PALTE INDUSTRY
0.25 0.220.23
PAPER
0.2 0.18
0.15 0.16 PLATES
0.14 0.15
0.15 0.12
0.1
0.05
0
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015
INTERPRETATION:
CHART
0.5 0.47
0.46
0.45
0.4
0.35 0.32
0.3
0.3
SIDHICK PLATE INDUSTRY
0.24
0.25 0.22 0.22 PAPER
0.2 0.17 PLATES
0.16 0.16
0.14 0.14
0.15 0.13
0.1 0.08
0.05
0
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015
INTERPRETATION:
Return on average capital employed ratio narrows the focus to gain a better
understanding of a company's ability to generate returns from its available
capital base.
By comparing net income to the sum of a company's debt and equity capital,
investors can get a clear picture of how the use of leverage impacts a company's
profitability. Financial analysts consider the ROCE measurement to be a more
comprehensive profitability indicator because it gauges management's ability to
generate earnings from a company's total pool of capital.
14. DIVIDEND PAYOUT RATIO -This ratio indicates the
percentage PAT distributed as dividends to equity shareholders. It is also known
as pay-out ratio. For instance PAT are Rs. 500000 and the dividend is Rs.
300000 then the dividend pay -out ratio would be 60%. This implies that 40% of
the profits of the firm are retained (retention ratio) and 60% distributed as
dividends. Therefore, the higher the ratio the more dividends can be received.
FORMULA= DIVIDEND (EQUITY)/ PROFIT AFTER TAX
29.73
30 28.69
26.16
25 23.89 23.71 23.55 23.5
20.3
20 19.05
17.41 17.41 SRI MEENAKSHI GARMENTS
15.43 CLOTHS
15 13.97
11.97 TEXTILES
10
5.78
5
0
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015
INTERPRETATION:
This ratio identifies the percentage of earnings (net income) per common
share allocated to paying cash dividends to shareholders. The dividend payout
ratio is an indicator of how well earnings support the dividend payment.
CHART