PROJECT PRESENTATION ON

RATIO ANALYSIS OF COMPANIES

Submitted t0 Miss Twesha mam

Submitted by Arpit Shivhare Himanshu Kaladia Pratibha Chandil Shivani Jain Sumit Chourasiya

ABOUT STUDY
We have taken 5 companies of paints sector.

ASIAN PAINTS .
KANSAI Nerolac. BERGER PAINTS.(BPL)

SHALIMAR PAINTS.(SL)
AKOZ NOBEL.

INTRODUCTION FORMULA RATIO..............

Introduction Ratio
Ratios are an analysts microscope. They allow us get a better view of the firms financial health than just looking at the raw financial statements. Ratios are useful both to internal and external analysts of the firm

Uses Of Ratios
For INTERNAL PURPOSE ratios can be useful in planning for the future, setting goals, and evaluating the performance of managers.

EXTERNAL PURPOSE use ratios to decide whether to grant credit, to monitor financial performance, to forecast financial performance, and to decide whether to invest in the company.

Types Of Ratios
Liquidity ratios describe the ability of a firm to meets its current obligations. Efficiency ratios describe how well the firm is using its investment in assets to produce sales. Leverage ratios reveal the degree to which debt has been used to finance the firms asset purchases.

Coverage ratios are similar to liquidity ratios in that they describe the ability of a firm to pay certain expenses.
Profitability ratios provide indications of how profitable a firm has been over a period of time.

FORMULA
Current Ratio = Current Assets Current Liabilities Quick Ratio = Current Assets - Inventories

Current Liabilities
Inventory Turnover Ratio = Cost of Goods Sold Inventory

Total Asset Turnover =

Sales Total Asset

Total Debt Ratio =

Total Debt Total Assets

Debt to Equity =

Total Debt Total Equity

Times Interest Earned =

EBIT

Interest Expense

Operating Profit Margin

Net Operating Income

Sales

 Return on Total Assets =

Net Income Total Assets

RATIO ANALYSIS WITH INTERPRETATON

CURRENT RATIO
CURRENT RATIO
2.5

Axis Title

1.5

0.5

0 ASAIN PAINTS BERGER PAINTS SHALIMAR PAINTS KANSAI Nerolac AKOZ NOBEL

2011 0.935218776 1.96025922 1.566570605 1.518438591 0.846899225

2010 0.890191168 1.800547279 1.582186377 1.439742433 0.72690662

2009 1.132802535 2.181399669 1.877043269 1.548075756 0.787421082

2008 1.017635263 2.212050209 1.73773213 1.891302631 0.81033279

2007 1.236165825 2.099954874 1.87817522 2.287912633 0.806009031

Interpretation
Current ratio measures whether or not a company has enough resources to pay its debt over the next business cycle. High ratio indicates under trading and over capitalization. Low ratio indicates over trading and under capitalization. From 2007 to 2011, The higher current ratio BERGER PAINTSLtd. is more capable than other companies Asian paints Ltd , kansai Nerolac, Shalimar paints Ltd. & Akoznobel. Ltd. BERGER PAINTS Ltd. is to pay its obligations current liabilities exceed current assets. This shows that the company may have problems paying its Liabilities on time.

QUICK RATIO
2.5 2

1.5 Axis Title

0.5

0 ASAIN PAINTS

2011 0.935116051 1.736348042 1.566570605

2010 0.890178123 1.765369413 1.58192338

2009 1.132599621 2.149456851 1.877043269

2008 1.017615602 2.21041841 1.73773213

2007 1.236137382 2.098871841 1.87817522

BERGER PAINTS
SHALIMAR PAINTS KANSAI Nerolac AKOZ NOBEL

0.134645086
0.301679587

0.134646222
0.2438963

0.294251548
0.278883295

0.233588751
0.177720891

0.319285182
0.132098819

INTEREPRETATION
Conventionally a Quick ratio of 1:1 ideal ratio is considered satisfactory A high acid test ratio is an indication that the firm is liquid and has ability to meet its current or liquid liabilities in time and on the other hand a low quick ratio represent that the firms liquidity position is not good.

From 2007 TO 2011 The higher the QUICK RATIO, BERGER PAINTS INDICATE The firm is liquid and has ability to meet its current or liquid liability in time. It indicate the Berger co. position is good to pay all current liability on time. The lower quick ratio KANSIA NEROLAC company it represent that company liquidity position in 2011 & 2010 is not good and other year company do well in comparisons to 2011 & 2010. Other three year 2007 -08-09 AKOZNOBEL low quick ratio.

TOTAL ASSEST TURN OVER RATIO

4
3.5 3 2.5 Axis Title 2 1.5 1 0.5 0 ASAIN PAINTS BERGER PAINTS SHALIMAR PAINTS KANSAI Nerolac AKOZ NOBEL

2011 3.23911839 3.097673659 3.563580247 2.261786029 1.109472334

2010 3.306243879 3.182077163 3.695634681 2.055641142 1.049087794

2009 3.88883907 3.210232222 3.360730133 1.976686362 0.933341572

2008 3.574440799 2.867787175 3.070726714 1.907727897 1.221070291

2007 3.467739852 2.780886619 2.849383539 2.070819662 1.020950957

Interpretation

Ideal ratio: 2 times

High ratio indicates efficient utilization and ratio less than 2 indicates under utilization
SHALIMAR PAINTS ratio is high for ideal ratio it indicates efficient utilization.

ASIAN PAINT RATIO is also high for ideal ratio it indicates efficient utilization.
KANSAI NEROLAC ratio is ideal ratio for 2011 & 2010 &2007 but in the year of 2009 ,2008 is less than 2 it indicate the

INTERPRETATION
A debt ratio of greater than 1 indicates that a company has more debt than assets, meanwhile, a debt ratio of less than 1 indicates that a company has more assets than debt. Used in conjunction with other measures of financial health, the debt ratio can help investors determine a company's level of risk

From 2007 -2011 Shalimar paints are high ratio in comparision to Berger paints ,ASIAN PAINTS , KANSAI NEROLAC & AKOZ NOBEL. HIGH RATIO indicates the company has more than debt than assest. AKOZNOBEL ratio is zero that indicate the company financial position .

TOTAL DEBT RATIO

0.7 0.6 0.5

Axis Title

0.4

0.3

0.2

0.1

0 ASAIN PAINTS BERGER PAINTS SHALIMAR PAINTS KANSAI Nerolac AKOZ NOBEL

2011 0.031444752 0.098006437 0.526366843 0.082592326 0

2010 0.040831285 0.037590865 0.541038021 0.124580879 0

2009 0.05629613 0.155127186 0.605889472 0.125150389 0

2008 0.076946018 0.257303969 0.621392016 0.14161787 0

2007 0.126340014 0.294789856 0.659224703 0.176928521 0

NET PROFIT MARGIN RATIO

1.2 1

0.8 Axis Title

0.6

0.4

0.2

0 ASAIN PAINTS BERGER PAINTS SHALIMAR PAINTS KANSAI Nerolac AKOZ NOBEL

2011 1.034804618 1.052162112 0.028878276 0.091193646 0.145817852

2010 1.052431945 1.020555417 0.027216809 0.091198642 0.153055342

2009 1.005425576 1.026340869 0.010682671 0.066674331 0.325032548

2008 1.023971431 1.020927281 0.031932269 0.090785764 0.064627968

2007 1.035850571 1.041254268 0.018516353 0.083621366 0.505051415

Interpretation
Higher the ratio better is the profitability BERGER PAINTS is higher the ratio in comparisons to other company. In 2008 BERGER paint is little bit decrease in the net profit margin in comparisons to 2007 which is good sign of the co. efficiency &also show that co. reduces its expenses .IN 2009 BERGER paints RATIO is as same as 2008 not more not less in 2008 net profit. In 2010 Ratio is also same as 2009 but 2011 BERGER paints ratio is increase in comparisons to 2010 it indicate that good sign of the company efficiently .

RETURN ON TOTAL ASSEST

4.5 4 3.5 3 Axis Title 2.5 2 1.5

1
0.5 0 ASAIN PAINTS BERGER PAINTS SHALIMAR PAINTS KANSAI Nerolac AKOZ NOBEL

2011 3.351854667 2.737094239 3.700440917 2.380667708 0.449021103

2010 3.479596676 2.645391815 3.773083887 2.131977798 0.551592798

2009 3.909938263 3.081796502 3.239612747 2.002285913 0.996616936

2008 3.660125261 2.909735078 3.102354145 1.933767079 0.192130959

2007 3.592060305 3.087560078 2.945351549 2.118638615 1.207767722

Return on Assets shows how many rupee of earnings result from each rupee of assets the company controls. The higher the return on assets ratio, the more efficiently the company is using its asset base to generate sales. INTERPRETATION From 2007 to 2011 ASIAN PAINT & SHALIMAR PAINTS BOTH two companies are high ratio.

.ASIAN PAINT RATIO is high in the year of 2007, 2008 & 2009.
SHALIMAR RATIO is high in the year of 2011 & 2010 ASIANPAINT ratio return on total assest increase from 2007to 2008 to 2009 which indicates the company is efficiently use its assest to generate profit but 2010 &2011 Asian paint ratio decrease from 2009 which indicates that company is not efficiently use its assets to generate profit .

DEBT TO EQUITY
18 16 14 12 Axis Title 10 8 6 4 2 0 ASAIN PAINTS BERGER PAINTS SHALIMAR PAINTS

2011 0.668577982 1.135096084 15.74934037 1.530525144 0

2010 0.691096747 0.353417136 14.19261214 4.080890538 0

2009 0.680671393 1.224086561 15.85224274 3.473840445 0

2008 0.806922435 1.896189431 16.01846966 3.634508349 0

2007 1.12176814 1.80821703 15.65963061 4.312034496 0

KANSAI Nerolac
AKOZ NOBEL

 This ratio indicates the relationship between the outsider funds & the shareholders funds Ideal ratio: 2:1
It means for every 2 shares there is 1 debt. If the debt is less than 2 times the equity, it means the creditors are relatively less and the financial structure is sound. If the debt is more than 2 times the equity, the state of long term creditors are more and indicate weak financial structure. This ratio also indicates standard should be applied having regard to size and type and nature of business and the degree of risk involved.

INTERPRETATION

Shalimar paints IN 2011 to 2007 debt to equity is high in comparision to all company so we can say that the Shalimar company is very high risk involved in 5 year .it indicate the weak financial structure.
ASIAN PAINTS in 2011 to 2007 there is a fall in debt to equity ratio as compare to KANSAI Nerolac & BERGER paints. It is the strength of company. It indicate the very well position of financial structure in comparision to KANSAI NEROLAC & BERGER PAINTS. AKOZ NOBEL debt to equity is zero so we can say that the company is very well position .

TIME INTEREST EARNED RATIO

300 250

200
Axis Title

150

100

50

0 ASAIN PAINTS BERGER PAINTS SHALIMAR PAINTS KANSAI Nerolac AKOZ NOBEL

2011 75.49877601 20.79228243 3.395459976 276.0813008 161.7333333

2010 61.96701571 42.22105263 3.432894737 173.3292683 200.8181818

2009 38.83029541 9.984344423 2.537124803 79.62831858 137.2457338

2008 46.19465082 11.75821596 3.827419355 117.3701657 39.20677966

2007 30.68187744 12.884273 3.020599251 147.1654135 207.3288136

INTERPRETATION

Time interest earned ratio also known as interest coverage ratio. Times Interest Earned is a great tool to measure a company's ability to meet its debt obligations. IF there is ratio increase, It shows that the company has generating enough cash from its operations EBIT to meet its interest obligations.

RETURN ON EQUITY RATIO

80 70 60 50 Axis Title 40 30 20 10 0 -10 ASAIN PAINTS BERGER PAINTS SHALIMAR PAINTS KANSAI Nerolac AKOZ NOBEL

2011 71.26709758 31.7006213 0.488126649 44.11634812 2.970108696

2010 58.89449541 24.87111689 -0.047493404 69.83710575 2.513586957

2009 47.27470809 24.31801788 -0.474934037 55.57810761 7.732072498

2008 38.38323603 21.44315509 0.511873351 49.62857143 0.435904117

2007 31.89376564 18.93884272 0.406332454 51.63465308 12.50379251

INTERPRETATION
This ratio establishes the relationship between net profit available to equity shareholders .the amount of capital invested by them. It is used to compare the performance of company's equity capital with those of other companies, and thus help the investor in choosing a company with higher return on equity capital. IN the year 2007 ,and 2011 is Asian paint return on equity is high but in the year 2008, 2009 &2010 Kansai Nerolac ratio is high in compression to Asian paint. In the current year over all 5 companies Asian paint ratio is high If the return on equity increases that indicate the company stock holder return on investment, It tells the rate that shareholder are earning on their shares. If the company earning more on shareholders equity as compare to previous year. It shows the strength of company & its vice versa

OPERATION MARGIN RATIO

0.2 0.18 0.16 0.14 Axis Title 0.12 0.1 0.08 0.06 0.04

0.02
0 ASAIN PAINTS BERGER PAINTS SHALIMAR PAINTS KANSAI Nerolac AKOZ NOBEL 2011 0.175789659 0.102132618 0.065749425 0.128870019 0.11006523 2010 0.192439248 0.104543891 0.071498558 0.145581688 0.123366641 2009 0.131688292 0.084330492 0.053593398 0.107196959 0.118906812 2008 0.158388332 0.100828729 0.072630912 0.142972989 0.106189086 2007 0.147722771 0.09981205 0.05687444 0.133455537 0.113293613

INTERPRETATION
ASIAN PAINT is higher ratio operating profit margin. In overall five companies Asian paint operating profit margin is high in comparision to kansai Nerolac, Berger paints, Shalimar paints & Akoznobel. In all 5 YEAR 2007 -11 Operating margin can be used to compare a company with its competitors and with its past performance. It is best to analyze the changes of operating margin over time and to compare company's figure to those of its competitors.

ASIAN PAINTS is high ratio is indicate the co. pricing strategy & operating efficiency .Asian paint profit in 2008 is increasing as compare to 2007and another year Asian paint profit in 2009 is less than as compare to 2008 and next year Asian paint profit in 2010 is more than 2009 and next year Asian paint profit in 2011 is less than 2010. A HIGH RATIO indicates that the company is earning more on rupees of Sale. This high profit also shows that sales are increasing faster than cost and the company is in a relatively liquid position.

CURRENT YEAR MARKET CAPITAL(RS .cr)

0% 8%

9% ASIAN PAINTS
12% KANSAI Nerolac BERGER PAINTS AKOZ NOBEL 71% SHALIMAR PAINTS

CURRENT YEAR SALE TURNOVER

1405.83

1096.82 ASIAN PAINTS 6322.24 2100.82 KANSAI Nerolac

BERGER PAINTS
AKOZ NOBEL SHALIMAR PAINTS

2139.88

Current year NET PROFIT S cr

SHALIMAR PAINTS 1%

AKOZ NOBEL 13%

BERGER PAINTS 11%

KANSAI Nerolac 16%

ASIAN PAINTS 59%

CURRENT MARKET SHARE OF COMPANIES

SHARE PRICE
3000

2500
2000 Axis Title

1500
1000 500 0 SHARE PRICE

ASIAN PAINTS 2917.75

KANSAI Nerolac 870

AKOZNOBEL 807

SHALIMAR PAINTS 438.4

BERGER PAINTS 95

CONCLUSION
WE have calculated the ratio of ASIAN PAINTA, BERGER PAINTS, SHALIMAR PAINTS KANSAI NEROLAC PAINTS and AKOZ NOBEL PAINTS from this we can understand the strength and weakness of companies.

The main purpose of this project is to know how to invest in a company. Which factors is important for investor while investing in any company.

A financial Ratio analysis also tells us that which company is better and profitable. We take the decision of investment on following ratios such as net profit, return on total assets, return on total equity and debt ratio, operation margin ratio ,total assest turn over and current market share The comparison of net profit of company shows that Berger has slightly greater profit but not as much as ASIAN PAINT.

Return on total asset is also better of ASIAN PASINT IS BETTER Return on total equity is also good of ASIAN PAINT .OPERATION MARGIN RATIO also tells its efficiency, pricing policies and strategy are very well and CURRENT MARKET SHARE is also very high of ASIAN PAINT it is good for trader. This current market share and ratio indicate ASIAN PAINT is day by day moving towards high growth and it is profitable company in future .

Cont.

ASIAN PAINTs current market share, Net profit , sale turn over & Market capital are also high in comparision to other companies . So by all these analysis we can say that day by day in ASIAN PAINTS growing . So we can say if a trader invest money in Asian paint .Its profitable for a trader.