Fixed Assets Turnover Ratio =

Net Sales

Fixed Assets The fixed asset turnover measures how effectively the firm uses its plant and eq uipment. Interpretation:Nerolac Paints 2010-11 Average Industry 7.791840888 6.157929481 8.521607

Shalimar Paints 2010-11 Average Industry 11.910151 11.81045925 8.521607 ANALYSIS: The higher the fixed asset turnover ratio the better it is. Nerolac paints ratio has improved, it means that they are using their assets pro ductively. However there is still scope for improvement as its ratio is lower th an industry average. Shalimar paints ratio has marginally improved compared to its average past perfo rmance. This means that they are improving the productive usage of their fixed a ssets. However, the value is higher than the industry average. Also, Shalimar pa ints is using their fixed assets much better than Nerolac paints.

Total Assets Turnover Ratio =

Net sales Total assets

This ratio measures the turnover of all the firm s assets. Interpretation:-

Nerolac Paints 2010-11 Average Industry 1.453630804 1.507314253 1.566000637 Shalimar Paints 2010-11 Average Industry 1.6071892 1.6939706 1.566000637

ANALYSIS: The total asset turnover indicates sales generated per rupee of asset employed i n the company. Nerolac paints ratio is worse than its average past performance and the industry average. This indicates better poor utilization of resources by the company when compared to its previous performance. Sahlimar paints ratio has worse ned as compared to the average past performance but is still above the industry average. Thus, Shalimar Pain s.is generating sufficient volume of business given its total assets investment.

Debt Ratio = Total Liabilities (Current Liabilities + Loan Funds) Total Assets This ratio shows the percentage of funds provided by creditors. Interpretation:Nerolac Paints 2010-11 Average Industry

0.056061902 0.109621874 0.433484669 Shalimar Paints 2010-11 Average Industry 0.78671 0.793283833 0.433484669

ANALYSIS: The debt ratio is significantly higher than the Industry average in Shalimar Pai nts but it is quite lower in the case of Nerolac paints.It is evident from previ ous year s average that Nerolac paints has decreased its debt ratio. Nerolac paints in particular has reduced debt ratio by 5.3 percentage points based on the perfo rmance of 2010-11. Shalimar Paints ratio is worst than industry average by a large distance, that m akes it highly leveraged or debt-ridden. However they have been able to improve it marginally to some extent as compared to the past. Nerolac paints debt ratio is better than Sahlimar paints by around 73 percentage points which makes it easy to raise more debt funds. Long term debt to Total Capitalization Ratio = term debt + shareholder s equity Long term debt Long This ratio measures the extent to which long term debt is used for financing Interpretation:Nerolac Paints 2010-11 Average Industry 0.075711 0.054347 0.063396485 Shalimar Paints

2010-11 Average Industry 0.0035066 0.001144545 0.063396485 ANALYSIS Nerolac Paints ratio is slightly more than the industry average and the current average is higher than the past performance that means the company is using long term debt as a major source of capital. Shalimar Paints on the other hand has a low ratio of 3.5 percent. They are lowly dependable on debt for permanent financing. This will increase credit worthines s of the company. However, their ratio has increased from the past average indic ating greater use of long term debts. Shalimar paints is more credit worthy th an Nerolac paints. Debt Equity Ratio = Total liabilities Shareholder

s equity

It measures debt relative to equity base in the capital structure. Interpretation: Nerolac Paints 2010-11 Average Industry 0.090031621 0.163991127 1.207744172

Shalimar paints 2010-11 Average Industry 3.6853991 3.8521002 1.207744172

ANALYSIS: Lower the ratio, the better it is for the creditors. Nerolac paints ratio is low er than the average past performance as well as industry average.This indicates that their creditors can have a higher amount of security and hence their risk i s lower. Thus the company can generate debt at a lower cost. Shalimar paints ratio is lower than the average past performance. Thus they have re duced their debts in the capital structure thereby enhancing their creditworthin ess.

Fixed Charge coverage = Operating profit + lease payments Interest Expense + lease payments It measures coverage capability more broadly than times interest earned by inclu ding lease payments as a fixed expense. Nerolac paints 2010-11 Average Industry 238.346250916 97.77 79.64653249

Shalimar paints 2010-11 Average Industry 1.3936257 3.06510477 79.64653249

ANALYSIS: Higher the ratio, better it is. Higher ratio means higher coverage for interest and lease payments. In this case, Nerolac paints ratio is extremely high as compared to its past per formance as well as to the industry average. This means the firm has covered its fixed costs very effectively. Shalimar paints ratio is very low. This shows the firms inability to cover its f ixed costs at a reasonable level. Their ratio has worsened over the past. This i ndicates some defect in the revenue generation model of the company, which has c aused tremendously low incomes.