Comparative Ratio Analysis of Three

Listed QSR Companies

(BY CSB INTERNS- ALISHA ANAND, ANKITA GUPTA,
HARSHITA KHADAYTE, KANIKA MANGAL, SHREYA
KUMARI)

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 DATE-04-07-2020

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 Table of Content

Tittle
Page No.
Introduction and Rationale of the study.....................................3
Objective of Study...........................................................................4
Sources of Data................................................................................4
Methodology....................................................................................5
Interpretation of Ratio Analysis....................................................6
1. Liquidity Ratios...........................................................................6
2. Solvency Ratios...........................................................................8
3. Profitability Ratios....................................................................10
4. Efficiency Ratios........................................................................13
5. Coverage ratios..........................................................................15
6. Market Prospect Ratios............................................................17
Conclusion.....................................................................................19

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Introduction and Rationale of the Study
Quick Service Restaurants (QSR) market in India is projected to grow at a CAGR of
over 18% during 2021 - 2025 due to increasing urbanization, rapid expansion in food
delivery services, expanding young & working population, growing number of
dual-income families and rising disposable income in the country.

QSR market is broadly categorized into Food & Beverages segments with Food
category holding the majority share in the market. Nevertheless, the Beverage
segment is expected to grow at a faster rate in the coming years on account of
innovative offerings being launched in this product category.

North India dominated the country's QSR market in 2019, and the region is expected
to maintain its dominance during the forecast period. Some of the major market
players operating in India QSR market include Jubilant FoodWorks Limited, Coffee
Day Global Limited, Hardcastle Restaurants Pvt. Ltd. (HRPL), Sapphire Foods India
Pvt Ltd, Devyani International Limited, Connaught Plaza Restaurants Limited,
Burger Kind India Pvt Ltd, Tata Starbucks Private Limited, Subway System India
Pvt Ltd, Burman Hospitality Private Limited, among others. Few of the other leading
players include Sierra Nevada Restaurants Private Limited, Jumboking Foods Pvt.
Ltd, Wow Momo Foods Private Limited, Barista Coffee Company Limited and
others.

Domino's Pizza, McDonald's, Cafe Coffee Day, KFC (Kentucky Fried Chicken), Pizza
Hut, Burger King, Starbucks, Dunkin' Donuts, Costa Coffee, Subway and Taco Bell
are few of the popular frontline QSR brand operating in the country. Some other
major brands include Wendy's, Jumbo King, Wow! Momo, Wat-a-burger, Nirula's,
Burgs, Smokin' Joe's, La Pinos and Carls Jr Burger.

Thus we can say that the QSR industry is one of the fastest-growing industries in the
world. The size of QSR industry is that much that a few of QSRs are listed with stock
exchange in India. Even they are the rising stars of people’s portfolio.to invest in
these listed QSR you have to analyse many aspects so that you can get to know
whether your investment is going in right direction or not.

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Objective of Study

We will conduct a comparative analysis of the balance sheet and the income

statement of Jubilant FoodWorks Limited, Westlife Development and TATA

Starbucks. During the analysis we will examine and analysis its financial prospects

in terms of liquidity, debt, company performance, efficiency and the market

performance of the market.

Sources of Data

The main data source ids the published annual reports of JUBILANT FOODWORKS

LIMITED, WESTLIFE DEVELOPMENT and TATA STARBUCKS for the year 2019-

2020. We have also took reference from MONEY CONTROL to cross check the data.

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Methodology

The Financial Ratios:

I. Liquidity Ratio
i) Current Ratio
ii) Cash Ratio
iii) Quick Ratio
II. Solvency Ratio
i) Debt-to-Equity
ii) Debt-to-Capital
iii) Proprietary Ratio
iv) Interest Coverage Ratio
III. Profitability/Performance
i) Gross Profit Margin
ii) Net Profit Margin
iii) Return on Asset (ROA)
iv) Return on Equity (ROE)
v) Return on Capital Employed
IV. Efficiency Ratio
i) Receivables Turnover Ratio
ii) Inventory Turnover
iii) Fixed Asset Turnover Ratio
iv) Total Asset Turnover Ratio
V. Coverage Ratio
i) Debt Service Coverage Ratio
ii) Interest Service Coverage Ratio
iii) Dividend Coverage Ratio

VI. Market Performance

i) EPS
ii) PE Ratio
iii) Price Book Ratio
iv) Dividend Yield Ratio

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Interpretation of Ratio Analysis
Ratio analysis is the analysis of financial statements of a business for the given
financial year. Data obtained from previous year and current year is used to get
information to assess the performance of an organization. At that point the
information is utilized to decide the pattern of the organization's financial wellbeing
and execution contrasted with competitors. There are numerous financial ratios that
are used for ratio analysis, and they are grouped such as liquidity, solvency,
profitability, efficiency, and coverage and market prospect.

1. Liquidity Ratios
Liquidity ratios measure a company’s ability to meet its debt obligations using
current assets. When an organization is encountering budgetary challenges and can't
pay its obligations, it can convert its assets into cash and utilize the cash to settle any
pending obligations without any difficulty. Some common liquidity ratios include
the quick ratio, the cash ratio, and the current ratio. Liquidity ratios are used by
banks, creditors, and suppliers to determine their ability to meet with their financial
obligations. A company should be able to translate its short-term assets into cash,
and this ability is measured using liquidity ratios. Analysis of liquidity ratios of
Jubilant FoodWorks, TATA Starbucks and Westlife Development are:

 Quick/ Acid Test Ratio- Quick ratio is also known as Acid test ratio, it is
a measure of a company's ability to meet its short-term obligations using the
assets that have high liquidity. It includes current assets that can be quickly
converted into cash, it shows a company’s short-term liquidity. A quick ratio
greater than 1 indicates that the company has enough quick assets to pay for
its current liabilities. Here Jubilant FoodWorks has the highest quick ratio
which shows they have highest liquidity compared to Westlife development
and TATA Starbucks. Westlife doesn’t have enough liquid assets that can be
quickly converted into cash, creditors may not trust the company with that
low quick ratio. TATA Starbucks although has enough liquidity and it would
be easy for them to obtain credit.

Jubilant Westlife TATA Starbucks

FoodWorks Development
Ratios 1.05 0.2 0.97

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  Cash Ratio- Cash ratio is a filtered form of quick ratio as it indicates the extent
to which liquid assets can be used to pay off current liabilities. Creditors use
this ratio to know about a company's liquidity and how easily it can service
debt and cover short-term liabilities. In the above example, the total cash &
cash equivalents and marketable securities of TATA Starbucks is not enough
to cover for all current liabilities. For every dollar of current liability, the
company only has $0.38 of cash and marketable securities to pay for it.
Westlife Development has zero cash ratio which indicates that the company is
not keeping enough cash to fund its operations. Jubilant FoodWorks also
doesn’t have enough cash to cover its liabilities but it has other liquid assets
that can be used for paying current liabilities.

Jubilant Westlife TATA Starbucks

FoodWorks Development
Ratios 0.42 0.003 0.38

 Current/ Working Capital Ratio- Current ratio measures a company's ability

to meet its short-term debt obligations. It tells us if a company has enough
resources to pay its debts over the next 12 months or not. Here Westlife
Development has a very low current ratio of 0.23 which shows that its ability
to meet its short-term obligations is not good enough even if we consider
quick ratio or cash ratio. The company is low on liquid assets and not in a
good position to acquire credit. Jubilant FoodWorks and TATA Starbucks has
enough liquid assets to meet its short-term debt obligations.

Jubilant Westlife TATA Starbucks

FoodWorks Development
Ratios 1.19 0.23 1.69
 

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2. Solvency Ratios
Solvency ratios is a company’s ability to meet long-term liabilities. These ratios
compare the liabilities of a company to its assets, net worth and profits. Important
solvency ratios include debt to equity ratio, debt to capital ratio, interest coverage
ratio, and proprietary ratio. These ratios are mainly used by governments, banks,
employees, and institutional investors. Analysis of solvency ratios of Jubilant
FoodWorks, TATA Starbucks and Westlife Development are:

 Debt to Equity Ratio- The debt to equity ratio analyses long-term debt of a

firm compared to its total equity. It measures a company’s leverage, a low
ratio means the firm is more financially secure, but it also means that the
equity is diluted. On contrary, a higher ratio means huge risk in business as
there are more creditors than investors. Whereas higher ratio may fend off
investors and creditors from lending money. Jubilant FoodWorks, Westlife
Development and TATA Starbucks, all the three companies have a higher
ratio which means their debt is more than equity. Although Jubilant
FoodWorks and TATA Starbucks have higher liquidity compared to Westlife
Development, we can say these companies can meet their debt obligations in
the long run.

Jubilant Westlife TATA Starbucks

FoodWorks Development
Ratios 2.16 2.06 2.11

 Debt to Capital Ratio- This ratio measures the long-term debt of a firm in
comparison to its total capital employed. This is one of the important solvency
ratios. It indicates the leverage used by the firm. A lower ratio sometimes
points to a more financially stable business, better for the creditors. Jubilant
FoodWorks and TATA Starbucks has neither low nor high ratios which
indicates their debts are manageable and not very risky for the creditors and
investors. Westlife Development has the highest debt to capital ratio as they
have more capital compare to assets or capital employed, this means they
have the ability to pay off their long-term debts.

Jubilant Westlife TATA Starbucks

FoodWorks Development
Ratios 0.65 0.67 0.53

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  Proprietary/ Equity Ratio – This ratio represents the relationship between the
proprietor’s funds and the capital employed. A high ratio is a good indication
of the financial health of the firm. It means that a larger portion of the total
capital comes from equity, also that a larger portion of net assets is financed
by equity rather than debt. But as we see in these 3 companies the equity ratio
is low as all of them a higher debt obligation. Their business involves risk but
at the same time they do have the ability to meet their long-term debt
obligations as mentioned while calculating debt to capital ratio.

Jubilant Westlife TATA Starbucks

FoodWorks Development
Ratios 0.35 0.32 0.47

 Interest Coverage Ratio- Debt comes with a cost, which is termed as interest
expense. This ratio measures a company’s ability to pay interest expense on
its debt in a timely manner. It calculates the affordability of interest paid on
the debt taken by the company. As we can see, Westlife Development has the
lowest ratio and this is due to lower profits. They have earned a considerably
lower profit and hence not capable of paying interest expense on their debt.
Jubilant FoodWorks is lower than TATA Starbucks and this could only
happen if their profits are high or their debt is lower which indicates low
interest expense. As mentioned in the debt equity ratio neither of the
companies has lower debt, so this means that TATA Starbucks has earned
more profits than Jubilant FoodWorks. TATA Starbucks has more than
enough to meet the interest coverage portion for its debt and Jubilant
FoodWorks also has the capacity to cover the interest expense but will be left
with lower retained earnings.

Jubilant Westlife TATA Starbucks

FoodWorks Development
Ratios 1.69 0.10 5.33

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3. Profitability Ratios
Profitability ratios measure an organisation’s ability to generate profits relative to its
revenue, operating costs, assets, and equity. Reporting a higher profitability ratio
than the previous year shows that financial growth in the business. We can also
compare to a similar firm’s ratio to determine how profitable the business is relative
to its competitors. Some of the important profitability ratios include the return on
equity ratio, return on assets, profit margin, gross margin, and return on capital
employed. These ratios show how efficiently companies use their existing assets to
generate profit for shareholders. Analysis of profitability ratios of Jubilant
FoodWorks, TATA Starbucks and Westlife Development are:

 Gross Profit Margin – Gross Profit Margin is a ratio which compares gross
profit earned to sales revenue generated at the end of the year. It reflects how
much a revenue a business earned, taking into account the costs incurred in
production activities. Jubilant FoodWorks has a high gross profit margin ratio
which means efficiency in core operations, indicating it can still cover
operating expenses, fixed costs, dividends, and depreciation, while also
generating good revenue for the business. On the other hand, Westlife
Development has a low profit margin indicating high cost of goods sold,
which can be due to decrease in sales, increased market competition, or
inefficient marketing. TATA Starbucks has a high ratio which means they also
have managed their cost efficiently and generated enough profits to sustain
growth.

Jubilant Westlife TATA Starbucks

FoodWorks Development
Ratios 22.57 0.51 13.29

 Net Profit Margin- It gives the final picture of how profitable a firm is after all
expenses incurred, including interest and tax. A reason this ratio is important
is it measures profitability taking all the income and expenses into account. A
disadvantage of using this ratio is that it also takes into account one-time
expenses and gains, which doesn’t give a clear picture while comparing a
firm’s performance with its competitors. Here Jubilant FoodWorks has the
highest ratio which tells that this company has earned highest profit
compared to the other companies, it also shows their efficiency in cutting cost
to increase their revenues. TATA Starbucks has also a good ratio which shows

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 they have generated profits and were able to retain most of the profit after
incurring all the interest and expenses. Whereas Westlife Development has
incurred loss and doesn’t show a good picture while managing costs,
although there could be other reasons such as decreased sales which led to
decline in revenue and failing to cut costs.

Jubilant Westlife TATA Starbucks

FoodWorks Development
Ratios 7.09 -0.48 4.13

 Return on Assets- The ROA ratio specifically tells how much profit after tax
was generated for every one rupee of asset it holds. This ratio is most useful
when we compare it to the industry average or historical performance of the
company. It also measures the asset requirement of a business. Highly asset-
intensive firm require more funds to purchase machinery and equipment for
it to earn revenues. Some of industries that are very asset-intensive are
telecommunications services, car manufacturers, and railroads. Although
there are also less asset-intensive companies such as advertising agencies and
software companies. Jubilant FoodWorks has a high ROA ratio which means
they are utilizing assets efficiently to generate high profits. TATA Starbucks
and Westlife Development also has low ROA ratio but both with different
reasons, Westlife Development has incurred loss and thus the ratio is very
low. Whereas Westlife has generated profits but their requirement for assets
may be less which is why their average total assets are also less, this makes
the overall ROA ratio low.

Jubilant Westlife TATA Starbucks

FoodWorks Development
Ratios 1.14 0.004 0.02

 Return on Equity– It expresses net income relative to its shareholders’ equity,

or the rate of return on investment made by equity shareholders. This ratio is
mainly used by stock analysts and investors to know the return they can get
on their investment. Jubilant FoodWorks has a high ROE ratio and they also
have debt in their company so a high ratio means they are utilizing their debt
efficiently to earn huge profits indicating a higher return to equity
shareholders. This Company with a high return on equity shows capability of

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 generating cash internally, and do not depend on debt financing. TATA
Starbucks also has a good ROE ratio indicating their capability to utilizing
profits earned to give good return to their equity shareholders. Westlife
Development has incurred loss and that is the reason their return on equity is
negative, there is no earnings left to provide for the equity shareholders.

Jubilant Westlife TATA Starbucks

FoodWorks Development
Ratios 23.29 -1.27 4.89

 Return on Capital Employed- This ratio measures the income generated from
total share capital including both bondholders and shareholders. It is similar
to the ROE ratio, but it also includes income earned from capital provided by
bondholders. EBIT is used while calculating this ratio because it considers
income generated before deduction of interest expenses, and shows earnings
available to all investors. It tells how much profit each rupee generates from
the employed capital. Jubilant FoodWorks has the highest ratio indicating the
company made Rs. 37.05 profit for every one rupee invested in the capital
employed. Although TATA Starbucks has also a higher ratio, it would be due
to higher profits generated than the capital employed. Since Westlife
Development incurred loss their ratio is lowest and gives poor return on
capital employed by the investors.

Jubilant Westlife TATA Starbucks

FoodWorks Development
Ratios 37.05 1.31 15.72
 

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4. Efficiency Ratios
Efficiency ratios shows the effectiveness of a firm in using its assets and liabilities to
earn revenue and generate profits. They evaluate the capability in managing
inventory, utilization of assets, use of debt financing as well as equity invested.
These ratios are important as an improvement in these ratios means business has the
ability to generate more revenues and earn profits. Some of the important efficiency
ratios are asset turnover ratio, inventory turnover, payables turnover, working
capital turnover, fixed asset turnover, and receivables turnover ratio. Analysis of
efficiency ratios of Jubilant FoodWorks, TATA Starbucks and Westlife Development
are:

 Debtor’s/ Receivable Turnover Ratio- This ratio measures how quickly a

company can get cash for their bills from its customers. It indicates how
efficient the company’s credit policies are and the requirement of investment
in receivables the company needs to maintain the sales level. If a company’s
accounts receivable turnover is very low, this means that they are facing
difficulty in collecting from its customers or it may mean that they are being
too generous with granting credit. Here all the three companies have a high
ratio which indicates that these companies have a lot of good quality debtors
who pays off the debt on time. This good for an organisation as they will have
more income for working capital requirements.

Jubilant Westlife TATA Starbucks

FoodWorks Development
Ratios 4.78 8.70 8.19

 Inventory Turnover Ratio- This ratio shows how effectively a company

manages their inventory, by comparing cost of goods sold with average
inventory. It measures how many times a company can sell its average
inventory amount during a specific period. This ratio keeps a check on the
inventory so that the company does not overspend by exceeding the required
quantity of the inventory and waste resources by keeping the inventory that
was not sold. This ratio also reflects how liquid a company’s inventory is, if
this inventory can’t be sold it will be worthless to the company. It shows how
easily a company can turn its inventory into cash. Jubilant FoodWorks has the
highest ratio and its clearly because their sales is high compared to average
inventory as we saw the profits earned by the company was also high.

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 Westlife Development has a high ratio as the amount of sales is much larger
than that of inventory, which indicates they are using the resources
effectively. In case of TATA Starbucks, the ratio is lowest as the company
have a huge inventory relative to sales. They are not managing their
inventory effectively and its increasing their costs.

Jubilant Westlife TATA Starbucks

FoodWorks Development
Ratios 42.15 37.47 2.86

 Fixed Assets Turnover- It measures the effectiveness of a company’s long-

term capital investments. It shows the sales generated by investments in
production capacity. This ratio is affected by many circumstances such as life
cycle of a company, life cycle of a product, initial plant capacity & relative
sales. TATA Starbucks has more fixed assets than sales which makes the ratio
less than 1, its clear that their sales are not sufficient. Westlife Development
and Jubilant FoodWorks has higher ratio as their sales is considerably larger
than their fixed assets, It indicates that these companies are utilising their
long-term capital investments effectively.

Jubilant Westlife TATA Starbucks

FoodWorks Development
Ratios 1.78 1.11 0.77

 Total Asset Turnover- This ratio measures overall investment efficiency by

taking into account both short-term and long-term assets. Like fixed asset
turnover ratio, total asset turnover ratio is also affected by similar factors. This
ratio tells how effectively the funds are being used by the company. The total
sale of the company Westlife Development is higher with a higher amount of
total assets which makes the ratio high too, this indicates there is scope of
growth in the company. Even TATA Starbucks has huge amount in total
assets compared to sales of the company, this indicates that the company is
not utilizing its resources efficiently to gain more profits. Jubilant FoodWorks
has the highest ratio as they generated more sales relative to total assets and
can be said that they have used their resources to the fullest.

Jubilant Westlife TATA Starbucks

FoodWorks Development

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 Ratios 1.14 0.87 0.56

5. Coverage Ratios
Coverage ratios measure a business’ ability to meet with its debt obligations.
Analysts use this ratio to draw a trend that predicts the company’s financial position
in the future by observing the past records. A higher ratio means that a company can
pay its debts and associated obligations with greater ease. Key coverage ratios
include the debt coverage ratio, interest coverage and dividend coverage. Analysis
of coverage ratios of Jubilant FoodWorks, TATA Starbucks and Westlife
Development are:

 Debt Service Coverage Ratio- This ratio is calculated in order to know the
cash profit available with the company to repay the debt including interest.
Essentially, it is evaluated when a company takes debt from bank / financial
institution / any other loan provider. It measures the capability of liquid profit
available in the company for the repayment of the debt. Westlife
Development has a negative ratio as they are suffering from loss and don’t
have sufficient revenue to pay for debt financing. Jubilant FoodWorks and
TATA Starbucks doesn’t have a higher ratio either, as they have more debt
compared to the profit earned. This indicates that these two companies can
repay their debt but it wont be very easy for them and might barely have any
profit left after the repayment.

Jubilant Westlife TATA Starbucks

FoodWorks Development
Ratios 0.29 -0.11 0.31

 Interest Service Coverage Ratio (ISCR)- It essentially measures the ability of

a borrower to repay the interest on borrowings. It is generally used by
financial institutions to gauge the capacity of a borrower to repay the interest
on the loan. Westlife Development has a ratio of less than 1, which indicates
the inability of firm to serve its interest on debts and repayment of debts.
TATA Starbucks have the highest ratio which is due to low interest expense
and good profits, it indicates they are in a better position to cover their
interest on the borrowings. Jubilant FoodWorks has neither low nor high ratio
and would be able to meet the obligations for the interest expenses but it
would be difficult for them. Their interest expenses are half as much as the

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 profits earned at the end of the year, which makes it difficult for them to pay
debt as well as interest expenses.

Jubilant Westlife TATA Starbucks

FoodWorks Development
Ratios 1.69 0.10 4.09

 Dividend Coverage Ratio – It measures the ability of a company to pay the

dividend. Generally, it is used by preference equity shareholders to know the
ability of the firm in dividend payment. Preference shareholders are the
priority for the company while paying dividends. The dividends may be
postponed but payment is compulsory and thus they are seen as a fixed
liability. Westlife Development has a zero in this ratio which means they
doesn’t have enough profits to pay dividend and we know from data that
they are in loss. Jubilant FoodWorks have the highest ratio which suggests the
company has a high proportion of income to its annual amount of dividend
payments. It indicates they have enough income left to pay dividends of the
same amount or even more to the shareholders. TATA Starbucks also have a
high ratio which means there is lower risk that the company will fail in
making dividend payments of the same amount.

Jubilant Westlife TATA Starbucks

FoodWorks Development
Ratios 3.48 0 2.94
 

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6. Market Prospect Ratios
Market prospect ratios help investors to know how much they can earn from a
specific investment. The earnings can be in the form of higher stock value or future
dividends. Investors use recent earnings and dividends to predict future stock price
and the dividends they can earn. Key market prospect ratios include dividend yield,
earnings per share, the price-to-earnings ratio, and the dividend payout ratio.
Analysis of Market Prospect ratios of Jubilant FoodWorks, TATA Starbucks and
Westlife Development are:

 Earnings per share ratio (EPS) - It is a market prospect ratio that evaluates
the amount of net income earned per share of stock outstanding in the
market. It indicates the amount of money each share of stock would bring in if
all the net income were distributed to the outstanding shareholders at the end
of the year. Westlife Development has not earned enough income since it is in
loss, the ratio here is negative. Jubilant FoodWorks has earned huge income
which is why the ratio is highest relative to other two companies. TATA
Starbucks also has good earnings and that is why their ratio is also high as
well. Since so many things can manipulate this ratio, investors do look at it
but don’t let it influence their decisions drastically.

Jubilant Westlife TATA Starbucks

FoodWorks Development
Ratios 20.87 -0.47 4.41

 Market-Book/ Price-Book Ratio- This ratio is a valuation metric used to

evaluate a company’s current market value relative to its book value. The
market value is the current stock price of all the outstanding shares. The book
value is the amount that would be left if the company liquidated all of its
assets and repaid all of its liabilities. This ratio is used to compare a
company’s net assets relative to the market value of its stock. It is used to
value insurance and financial companies, real estate companies, and
investment trusts. It does not work well for companies with mostly intangible
assets. It reflects the relationship between market perceived value of a
company’s equity and the fair book value of its equity. A high profit-to-book
ratio and a low ROE imply that a company is overvalued. Jubilant
FoodWorks has the highest P/B Ratio, also it has a high ROE ratio so the stock
is not overvalued but has a high market perceived value. But in case of

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 Westlife development, the stock is overvalued as it has a ROE in negative due
to losses. TATA Starbucks stock is undervalued as it has a higher ROE.

Jubilant Westlife TATA Starbucks

FoodWorks Development
Ratios 18.96 8.38 0.91

 Price-Earnings (P/E) Ratio- It is calculated by dividing the current price of the

stock by the earnings per share. Analysts also talk about a forward P/E ratio,
which is the estimated P/E ratio for the next financial year. Jubilant
FoodWorks has a higher ratio which means company expected to
grow revenues and earnings much more quickly, thus commanding a higher
price today for the higher future earnings. Whereas Westlife Development has
zero as its earnings are in negative. TATA Starbucks also has a higher ratio as
its earning for the year is enough to sustain the growth of the organisation.

Jubilant Westlife TATA Starbucks

FoodWorks Development
Ratios 67.12 0 18.70

 Dividend Yield Ratio- This ratio is calculated by dividing the total

dividend payments paid per year by the market price of the stock. Westlife
Development has zero in this ratio as the company didn’t paid any dividend
for the year due to loss. Jubilant FoodWorks has a low dividend yield ratio of
0.35 which means the investors are getting only 35% return on their
investment. TATA Starbucks has the highest ratio as they have earned huge
profits to give a hefty dividend, it also means that company is giving 177%
return on their investment which is a lot.

Jubilant Westlife TATA Starbucks

FoodWorks Development
Ratios 0.35 0 1.77

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Conclusion

After analysis of these companies we can see a true and clear picture of the financial
position of these companies, as an investor would see the whole picture before
deciding to invest. Westlife Development was in loss and after analysing the ratios
we can see that it was not due to declining sales or increased competition but due to
increasing expenses. They have debt and the interest expenses was beating them
down, also the other costs are also high. Their proportion of liquid assets is not any
better, the company has a lower percentage of liquidity. Although the long-term
debt obligations can be met as they have enough assets. Now we talk about TATA
Starbucks, they are generating profits and have enough liquidity to meet the debt
obligations but their sales are not enough as compared to the average inventory.
They are earning revenue but their costs and expenses are taking most part of the
profit. If the company is able to cut cost, they can retain large amount of profits.
Jubilant FoodWorks have a healthy capital structure and enough profit to pay
dividends to its shareholders. They are efficient in managing cost and expenses to
increase revenue, also they utilize their resources to the fullest and has no wastage
which can be seen through inventory turnover ratio. From an investor’s point of
view, the company poses good returns and higher dividends.

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