TOPIC: FINANCIAL ANALYSIS OF ALAN SCOTT INDUSTRIES LTD

PHARMA LTD

NAME : APOORVA PATTNAIK

ENROLLMENT NUMBER: 21BSPHH01C1725
SECTION : K
SEAT NO: 59

COMPANY1 COMPANY 2
NDUSTRIES LTD AND PARMAX

COMPANY 2
 Computation of Liquidity Ratios
Parmax Pharma limited Alan Scott Industries Ltd
Particulars
As on 31-03-2021 As on 31-03-2020 As on 31-03-2021 As on 31-03-2020

Current Ratio = Current Asset/Current Liabilities

Current Assets 2,818,873.70 3,315,042.54 2,818,873.70 3,315,042.54

Current Liabilities 100,474.75 40,834.68 100,474.75 40,834.68
Current Ratio 28.06 81.18 28.06 81.18

Quick Ratio or Acid Test Ratio = (Current Asset - Inventory)/Current Liabilities

Current Assets 2,818,873.70 3,315,042.54 2,818,873.70 3,315,042.54

Inventory 39,531,398.00 27,238,627.00 0.00 0.00
Current Liabilities 100,474.75 40,834.68 100,474.75 40,834.68
Quick Ratio -365.39 -585.86 28.06 81.18

Cash Ratio = (Cash and Cash Equivalents + Current Investment)/Current Liabilities

Cash and Cash Equivalents 25464478 17674876 52235.67 541654.67

Current Investment 0.00 0 0.00 0.00
Current Liabilities 100,474.75 40,834.68 100,474.75 40,834.68
Cash Ratio 253.44 432.84 0.52 13.26
The ideal current ratio is 2:1. When we compare both the companies, we can
interpret thatboth the companies aare equally doing good. A ratio under 1.00
indicates that the company’s debts due in a year or less are greater than its assets—
cash or other short-term assets expected to be converted to cash within a year or
less.

The Ideal quick ratio is 1:1. Quick ratio higher than 1 can instantly get rid of its
current liabilities. After comparing both the companies we can see that Alan Scott
has a better quick ratio than Parmax Pharma Ltd., helping to cover it's current
liabilities.

Prefered cash ratio is between 0.5 and 1.The cash ratio is most commonly used as a
measure of a company's liquidity. Both the companies cash ratio is less than 1, there
are more current liabilities than cash and cash equivalents. It means insufficient cash
on hand exists to pay off short-term debt.
 Computation of Capital Structure Ratios
Parmax Pharma limited Alan Scott Industries Ltd
Particulars
As on 31-03-2021 As on 31-03-2020 As on 31-03-2021 As on 31-03-2020

Debt to Asset Ratio = Total Debt/Total Assets

Total Debt 169,097,077.00 160,002,380.00 100,474.75 40,834.68

Total Asset 227,281,245.00 210642331 2,890,040.70 3,508,207.54
Debt to Asset Ratio 0.74 0.76 0.03 0.01

Debt to Capital Ratio = Total Debt/(Total Debt+Total Equity)

Total Debt 169,097,077.00 160,002,380.00 100,474.75 40,834.68

Total Equity 58,184,164.00 50,639,945.00 2,789,565.95 3,467,372.86
Debt to Capital Ratio 0.74 0.76 0.03 0.01

Debt to EBITDA Ratio = Total Debt/Earnings Before Interest Tax Depreciation and Amortisation

interest ₹ 3,436,720.00 ₹ 1,171,677.00 ₹ 11,543.00 ₹ 7,407.00

Depreciation ₹ 19,415,616.00 ₹ 10,071,526.00 0 3916
EBITDA ₹ 34,936,733.00 ₹ 18,549,570.00 ₹ -655,243.91 ₹ 79,727.86
Interest Coverage Ratio 10.17 15.83 -56.77 10.76

Debt-Service Coverage Ratio = EBITDA/Total Debt Service

Profit Before Tax 12,084,397.00 7,306,367.00 -666,786.91 64,268.86

Depreciation ₹ 19,415,616.00 ₹ 10,071,526.00 0 3916
Principal Debt #REF! #REF! #REF! #REF!
Interest Expense ₹ 3,436,720.00 ₹ 1,171,677.00 ₹ 11,543.00 ₹ 7,407.00
EBITDA ₹ 34,936,733.00 ₹ 18,549,570.00 ₹ -655,243.91 ₹ 79,727.86
Interest Coverage Ratio #REF! #REF! #REF! #REF!
Cash Coverage Ratio = Total Cash/Interest Expense
Total Cash & Cash Equivalents 25464478 17674876 52235.67 541654.67
Interest Expense ₹ 3,436,720.00 ₹ 1,171,677.00 ₹ 11,543.00 ₹ 7,407.00
Cash Coverage Ratio 7.41 15.09 4.53 73.13
As a general rule, most investors look for a debt ratio of 0.3 to 0.6.A ratio
below 0.5, indicates that a greater portion of a company's assets is
funded by equity.The total-debt-to-total-assets ratio shows the degree to
which a company has used debt to finance its assets

The optimal debt-to-equity ratio will tend to vary widely by industry, but
the general consensus is that it should not be above a level of 2.0. S
chand and co. having more debt to equity ratio indicating higher risk.
Both the companies have very low debt to equity ratio leading to more
risks

The interest coverage ratio is used to measure how well a firm can pay
the interest due on outstanding debt.When a company's interest
coverage ratio is only 1.5 or lower, its ability to meet interest expenses
may be questionable.A company’s ability to meet its interest obligations
is an aspect of its solvency and is thus an important factor in the return
for shareholders.

Debt-service coverage ratio (DSCR) is a measurement of a firm's

available cash flow to pay current debt obligations.A “good” DSCR
depends on the company’s industry, competitors, and stage of growth.As
a general rule, however, a DSCR above 1.25 is often considered “strong,”
whereas ratios below 1.00 could indicate that the company is facing
financial difficulties.
 Computation of Turnover Ratios
Parmax Pharma limited Alan Scott Industries Ltd
Particulars
As on 31-03-2021 As on 31-03-2020 As on 31-03-2021 As on 31-03-2020
Total Asset Turnover Ratio = Revenue from Operations/Total Assets
Revenue from Operations 262045442 209341081 ₹ 455,022.00 ₹ 1,151,560.00
Total Assets 227,281,245.00 210642331 2,890,040.70 3,508,207.54

Total Asset Turnover Ratio 1.15 0.99 0.16 0.33

Fixed Asset Turnover Ratio = Revenue from Operations/Fixed Assets

Revenue from Operations 262045442 209341081 ₹ 455,022.00 ₹ 1,151,560.00
Fixed Assets 108431440 96387453 19,786.00 19,786.00
Fixed Asset Turnover Ratio 2.41669244639747 2.17187065831068 22.9971697159608 58.20074800364
Capital Turnover Ratio = Revenue from Operations/Capital Employed
Revenue from Operations 262045442 209341081 ₹ 455,022.00 ₹ 1,151,560.00
Capital Employed 0 0 236.40 204.64
Capital Turnover Ratio NIL NIL 1924.80 5627.25
Working Capital Turnover Ratio = Revenue from Operation/Working Capital
Revenue from Operations 262045442 209341081 ₹ 455,022.00 ₹ 1,151,560.00
Current Asset 2,818,873.70 3,315,042.54 2,818,873.70 3,315,042.54
Current Liabilities 100,474.75 40,834.68 100,474.75 40,834.68
Working Capital ₹ 2,718,398.95 ₹ 3,274,207.86 ₹ 2,718,398.95 ₹ 3,274,207.86
Working Capital Turnover Ratio 96.40 63.94 0.17 0.35

Inventory Turnover Ratio = Revenue from Operation/Average Inventory

Revenue from Operations 262045442 209341081 ₹ 455,022.00 ₹ 1,151,560.00

Opening Inventory ₹ 231,000.00 ₹ 524,800.00 ₹ 522.69 ₹ 349.35
Closing Inventory ₹ 389,000.00 ₹ 620,000.00 ₹ 778.26 ₹ 522.69
Average Inventory ₹ 310,000.00 ₹ 572,400.00 ₹ 650.48 ₹ 436.02
Inventory Turnover Ratio 845.31 365.73 ₹ 699.52 ₹ 2,641.07

Receivables Turnover Ratio = Revenue from Sales/Accounts Receivables

Revenue from Operations 262045442 209341081 ₹ 455,022.00 ₹ 1,151,560.00

Accounts Reveivables ₹ 16,542,522.00 ₹ 33,046,251.00 2,274.68 1,511.91
Receivables Turnover Ratio 15.84 6.33 200.04 761.66
 Average Collection Period = 365 days/Receivables Turnover Ratio

Receivables Turnover Ratio 15.84 6.33 200.04 761.66

Average Collection Period 24 58 2 1
Payables Turnover Ratio = Purchases/Account Payables
Purchases NIL NIL 31.14 0.00
Accounts Payables ₹ 99,150,700.00 ₹ 96,242,617.00 ₹ 5,264.18 ₹ 3,127.62
Receivables Turnover Ratio NIL NIL 0.00591545121937 0.00
Average Payment Period = 365 days/Payables Turnover Ratio
Payables Turnover Ratio NIL NIL 0.01 0.00
Average Collection Period NIL NIL 61703 #DIV/0!
A higher ratio is favored because it implies that the company
is efficient in generating sales or revenues from its asset base.
A lower ratio indicates that a company is not using its assets
efficiently and may have internal problems. Both the
companies Total asset turnover ratio is very less indicating
both the companies less revenue to cover their assets.

A decreasing average inventory period typically means that

product is moving at a faster rate. it shows how long it takes a
company to sell its current inventory.

The receivables turnover ratio is an accounting measure used

to quantify a company's effectiveness in collecting its
accounts receivable, or the money owed by customers or
clients.A low receivables turnover ratio might be due to an
inadequate collection process, bad credit policies.Typically, a
low turnover ratio implies that the company should reassess
its credit policies to ensure the timely collection of its
receivables.
If a company requires invoices to be paid within 30 days, then
a lower average than 30 would mean that you collect
accounts efficiently. An average higher than 30 means that
companies are having trouble collecting accounts, and it
could also indicate trouble with cash flow.
 Computation of Profitability Ratios
Parmax Pharma limited Alan Scott Industries Ltd
Particulars
As on 31-03-2021 As on 31-03-2020 As on 31-03-2021
Gross Profit Ratio = Profit Before Tax/Sales * 100
Sales 262045442 209341081 ₹ 455,022.00
Purchases Stock-in-Trade 0.00 ₹ - 31.14
Changes in Inventory 231000.00 524800.00 0.00
Gross Profit ₹ 261,814,442.00 ₹ 208,816,281.00 ₹ 455,053.14

Gross Profit Ratio 99.91% 99.75% 100.01%

Net Profit Ratio = Profit After Tax/Sales * 100

Profit After Tax 7,544,218.00 4,286,790.00 -677,806.91
Sales 262045442 209341081 ₹ 455,022.00

Gross Profit Ratio 2.88% 2.05% -148.96%

Operating Profit Ratio = Earnings Before Interest and Tax/Sales * 100

Profit Before Tax 12,084,397.00 7,306,367.00 -666,786.91
Interest Expense ₹ 3,436,720.00 ₹ 1,171,677.00 ₹ 11,543.00
EBIT ₹ 15,521,117.00 ₹ 8,478,044.00 ₹ -655,243.91
Sales 262045442 209341081 ₹ 455,022.00
Operating Profit Ratio 5.92% 4.05% -144.00%
Cost of Goods Sold Ratio = Cost of Goods Sold/Sales * 100
Sales 262045442 209341081 ₹ 455,022.00
Purchases Stock-in-Trade 0.00 ₹ - 31.14
Changes in Inventory 231000.00 524800.00 0.00
Cost of Goods Sold ₹ 262,276,442.00 ₹ 209,865,881.00 ₹ 455,053.14
Cost of Goods Sold Ratio 100.09% 100.25% 100.01%
Operating Expense Ratio = Operating Expenses/Sales * 100
Sales 262045442 209341081 ₹ 455,022.00
Employee Benefit Expense 35,388,780.00 29,139,115.00 215,996.00
Depreciation & Amortisation 19415616.00 10071526.00 0.00
Other Expenses 58,153,846.00 49,868,688.00 867,340.39
Operating Expense Ratio 43.11% 42.55% 238.08%
Operating Ratio = Profit Before Tax/Sales * 100
Profit Before Tax 12,084,397.00 7,306,367.00 -666,786.91
Sales 262045442 209341081 ₹ 455,022.00
Operating Ratio 4.61% 3.49% -146.54%
Financial Expenses Ratio = Financial Expense/Sales * 100
 Financial Expense 3542515.00 1273691.00 47422.52
Sales 262045442 209341081 ₹ 455,022.00
Financial Expenses Ratio 1.35% 0.61% 10.42%

Return on Asset = Net Profit After Tax/Average Total Asset

Net Profit After Tax 7,544,218.00 4,286,790.00 -677,806.91

Total Fixed Assets 108431440 96387453 19,786.00
Return on Asset 6.96% 4.45% -3425.69%

Return on Capital Employed = EBIT * (1-Tax)/Average Total Capital Employed * 100

EBIT ₹ 15,521,117.00 ₹ 84,478,044.00 ₹ -655,243.91

Tax 4,403,972.00 3019577.00 11020
Tax % 28.37% 3.57% -0.016818164704499
Capital Employed 0 0 236.40
Return on Capital Employed NIL NIL -281837.53%

Return on Equity = Net Profit After Tax/Equity Shareholders Fund * 100

Net Profit After Tax 7,544,218.00 4,286,790.00 -677,806.91

Equity Shareholders Fund 44511500.00 44511500.00 685,053,770.00
Return on Equity 16.95% 9.63% -0.10%

Dividend Payout Ratio = Dividend Per Equity (DPS)/Earning Per Equity Share (EPS)

Dividend Per Share (DPS) ₹ - ₹ -

Equity Per Share (EPS) 2.02 1.15 -0.99
Dividend Payout Ratio 0.00 0.00 0.00
Dividend Yield = Dividend Per Share (DPS)/Market Price of Share (as on 31st March of Year) * 100
Dividend Per Share (DPS) ₹ - ₹ - ₹ -
Market Price Per Share (MPS) ₹ 57.00 ₹ 57.00 ₹ 228.00
Dividend Yield 0.00% 0.00% 0.00%
 Earnings Yield = Earnings Per Share (EPS)/Market Price of Share (as on 31st March of Year) * 100

Earnings Per Share (EPS) 2.02 1.15 -0.99

Market Price Per Share (MPS) ₹ 57.00 ₹ 57.00 ₹ 228.00
Earnings Yield 3.54% 2.02% -0.43%

P/E Ratio = Market Price Per Share (MPS)/Earnings Per Share (EPS)

Market Price Per Share (MPS) ₹ 57.00 ₹ 57.00 ₹ 228.00

Earnings Per Share (EPS) 2.02 1.15 -0.99
P/E Ratio 28.22 49.57 -230.30
lan Scott Industries Ltd
As on 31-03-2020

₹ 1,151,560.00
0.00
38300.00
₹ 1,113,260.00

96.67% The gross profit margin ratio analysis is an indicator of a

company's financial health. It tells investors how much gross
profit every dollar of revenue a company is earning.the higher
the gross profit margin the better. A high gross profit margin
means that the company did well in managing its cost of sales.

64,268.86
₹ 1,151,560.00

A high net profit margin indicates that a business is pricing its

5.58% products correctly and is exercising good cost control.Expressed
as a percentage, the net profit margin shows how much profit
is generated from every $1 in sales, after accounting for all
business expenses involved in earning those revenues.

64,268.86
₹ 7,407.00
₹ 71,675.86
₹ 1,151,560.00
6.22%

₹ 1,151,560.00
0.00
38300.00
₹ 1,189,860.00
103.33%

₹ 1,151,560.00
100,000.00
3916.00
908,421.65
87.91%

64,268.86
₹ 1,151,560.00
5.58%
 44317.00
₹ 1,151,560.00
3.85%

The term return on assets (ROA) refers to a financial ratio that

indicates how profitable a company is in relation to its total
assets. A higher ROA means a company is more efficient and
productive at managing its balance sheet to generate profits
while a lower ROA indicates there is room for improvement.
64,268.86
19,786.00
324.82%

Return on capital employed (ROCE) is a good baseline measure

00 of a company's performance. ROCE is a financial ratio that
shows if a company is doing a good job of generating profits
from its capital.A good rule of thumb is that a ROCE of 15% or
more is reflective of a decent quality business and this is almost
certain to mean it is generating a return well above its WACC
₹ 71,675.86
0.00
0.00%
204.64
35025.34%

Return on Equity (ROE) Ratio. The return on equity ratio or ROE

is a profitability ratio that measures the ability of a firm to
generate profits from its shareholders investments in the
company.A low ROE, indicates that a company may be
mismanaged and could be reinvesting earnings into
unproductive assets.
64,268.86
685,053,770.00
0.01%

This ratio shows the portion of profits the company decides to

keep to fund operations and the portion of profits that is given
S) to its shareholders. S chand and co. decided not to distribute
dividend for both the years.A range of 35% to 55% is
considered healthy and appropriate from a dividend investor's
point of view'
₹ -
0.09
0.00
ear) * 100
₹ -
₹ 228.00 (as per 20/1/22)
0.00%
 Earnings yield is one indication of value; a low ratio may
indicate an overvalued stock, or a high value may indicate an
ear) * 100 undervalued stock. Stocks with high growth potential are
typically valued higher and may have a low earnings yield even
as their stock price rises.An earnings yield of 7% or better is
considered to be a good ratio.
0.09
₹ 228.00
0.04%

The higher the P/E ratio, the more you are paying for each
dollar of earnings. The market average P/E ratio currently
ranges from 20-25, so a higher PE above that could be
considered bad, while a lower PE ratio could be considered
better.
₹ 228.00
0.09
2533.33