Академический Документы
Профессиональный Документы
Культура Документы
By : Apurva Kale Ayushi Chandra Naveen Kadyan Sahil Gambhir Shri harsh
Indian tyre industry size estimated to be around Rs 35300 Cr, dominated by truck and bus category
Key Financial Data
J.K. Tyre
Financial Parameters (in Cr) Turnover Gross Profit Profit After Tax Total Debt Net Worth(Equity) 2010-2011 2009-2010
Apollo Tyres
2010-2011 2009-2010
Liquidity Ratios: Provides information on a companys ability to meet its short term, immediate obligations
Current Ratio Cash ratio
Quick ratio
Overall Apollo Tyres has better ability to meet its short term obligations, although both companies have very low cash ratio
Profitability Ratios: Provides information on the amount of income from each dollar of sales
J.K. Tyre
Apollo Tyres
Financial Parameters
Operating Profit Margin(%) ROE Gross Profit Margin(%) Net Profit Margin(%)
20112012
5% -5% 25% -1%
20102011
5% 7% 22% 1%
2011-2012
10% 15% 30% 3%
20102011
11% 18% 37% 5%
ROA
-1%
1%
5%
6%
Overall Apollo Tyres is more profitable than JK Tyre mainly due to higher gross margins
Activity Ratio: Relates information on a companys ability to manage its resources(its assets) efficiently
J.K. Tyre
Financial Parameters Asset Turnover Ratio Account receivable turnover ratio Accounts payable turnover Inventory Turnover Ratio Average age of inventory 2012-2011 1.47 2011-2010 1.50
Apollo Tyres
2012-2011 1.55 2011-2010 1.32
6.89
2.32 6.49
7.16
2.92 5.96
10.60
3.48 4.37
9.30
3.02 3.49
56.23
61.24
83.57
104.60
J.K. Tyre is better at managing inventory and thus has better working capital management. Also higher asset turnover for J.K. Tyre shows higher utilization of assets. Both the companies have low receivables turnover ratio.
Solvency Ratios: Solvency ratios provides information on a companys ability to meet its long term obligations
Both the companies have high leverage although J.K. Tyres debt/equity ratio is unusually high, and thus poses very high risk of insolvency.
Shareholder ratio: A shareholder ratio describes the companys financial condition in terms of amounts per share of stock
J.K. Tyre
Financial Parameters EPS P/E Book value per share Dividend yield Dividend payout ratio 2012-2011 (9.31) (9.13) 183.96 0.12 -27% 2011-2010 15.23 6.15 209.05 0.13 20%
Apollo Tyres
2012-2011 8.18 9.70 56.20 0.32 6% 2011-2010 8.75 7.95 47.87 0.36 6%
J.K. tyres is incurring losses and thus destroying shareholder wealth. Even though J.K. has very high leverage as well as net losses, it continues give dividends.
Dupont Analysis
The ROE of either companies can be calculated as follows : (Total Sales / Assets) ROE = (PAT/Totalon Sales X Asset Turnover X Leverage Return Sales) (Assets / Equity)
JK Tyre Factors ROS 20112012 -0.55% 1.47 6.81 -5.06% 20102011 1.05% 1.51 5.02 7.29% Factors ROS Apollo Tyres 20112012 3.39% 1.55 2.96 14.55% 20102011 4.99% 1.32 3.04 18.27%
ATO Leverage
ROE
ATO Leverage
ROE
The main reason for negative ROE is negative returns on sales and high leverage. Also, high degree of leverage poses financial risk
Even tough Return on assets in only 3% for 2011-12, ROE is much higher due to high leverage
Bibliography
Financial Ratios for JK Tyres
Formulas Mar '12 Liquidity Ratios Mar '11 Mar '10 Mar '09 Liquidity Ratios
Current Ratio
0.87
1.06
0.91
1.32
1.43
1.28
1.30
(Current asset-prepaid expensesQuick ratio inventory)/Current liability Cash+Cash advances/Current Liabilities Cash ratio
0.51 0.05
0.57 0.07
0.51 0.06
0.53 0.07
0.56 0.09
0.67 0.18
A higher Quick ratio further empahises the fact that 0.52 Apollo Tyres has a better managed liquidity prospects than JK tyres. Apollo tyres has a higher cash ratio than JK Tyres for all 0.24 the years
5% -5.06%
5% 7.29%
13% 25.85%
10%
11%
15%
9% Average op. Margin is higher for Apollo Apollo tyres has a higher ROE than JK Tyres for all the years Apollo tyres has a higher Gross Profit Margin(%) than JK Tyres for all the years Apollo tyres has a higher Net Profit Margin(%) than JK Tyres for all the years Apollo tyres has a higher Return On Capital Employed(%) than JK Tyres for all the years Apollo tyres has a higher ROA than JK Tyres for all the years
Gross Profit/Net Sales PAT/Net Sales Profit+Interest(after tax)/Debt+Net worth Net Profit/Total Assets
Gross Profit Margin(%) Net Profit Margin(%) Return On Capital Employed(%) ROA
25% -1% 1%
22% 1% 5%
33% 5% 18%
22% Gross Profit Margin(%) -2% Net Profit Margin(%) -3% Return On Capital Employed(%)
30% 3% 12%
37% 5% 12%
41% 8% 22%
28% 3% 11%
-1%
1%
7%
-4% ROA
5%
6%
11%
4%
Activity Ratios
Activity Ratios Apollo tyres has a higher Asset Turnover Ratio than JK Tyres for all the years
Net Sales/Asset
1.47
1.51
1.33
1.55
1.32
1.68
2.82
6.89
7.16
7.28
10.06
10.60
9.30
10.32
22.23
COGS/Accounts payable
2.32
2.92
2.18
3.48
3.02
2.89
4.51
Apollo tyres has a higher Accounts payable turnover than JK Tyres for all the years
COGS/Average Inventory
6.49
5.96
5.45
4.37
3.49
4.69
5.74
Apollo tyres has a lower Inventory Turnover Ratio than JK Tyres for all the years
56.23
61.24
66.91
83.57
104.60
77.84
63.59
Apollo tyres has a higher Average age of inventory than JK Tyres for all the years
Debt/Assets Debt ratio 0.82 0.76 0.71 0.76 Debt ratio 0.60 0.62 0.54 0.48
Apollo tyres has a higher Debt ratio than JK Tyres for all the years