CCE – 2

Report Writing based on Ratio Analysis

OF
ASIAN PAINTS LTD.
FOR
FINANCIAL MANAGEMENT
Submitted to
Dr. D. Y. Patil Institute of Management and Research,
Pimpri, Pune – 411018

In the partial fulfillment of the requirement of degree of

Masters Of Business Administration (MBA).

Submitted By
Aditya Sanjay Murudkar
Roll No. MB-I-01
Div. (A)

Under The Guidance of

PROF. Shilpa Dubey Ma’am
2023 - 2025
 RATIO ANALYSIS OF ASIAN PAINTS

Name of the Company: Asian Paints Ltd

Brief Introduction Of The Company:

Origin: Founded in 1942, Asian Paints is an Indian multinational paint

company.expand_more

Headquarters: Mumbai, Maharashtra, India.expand_more

Market Presence: Asian Paints is the largest paint company in India and
among the top paint manufacturers globally.expand_more They have a
significant presence in Asia, the Middle East, the Caribbean, Africa, and
Oceania.

Products: Asian Paints offers a wide range of products, including:

o Interior and exterior wall paints (brands like Royale, Apcolite,
Tractor Emulsion)expand_more
o Decorative paints
o Wood finishesexpand_more
o Waterproofing solutionsexpand_more
o Adhesivesexpand_more
o Wallcoverings
o Bath fittings (under the Ess Ess brand)expand_more

Innovation: The company invests heavily in research and development,

driving innovation in paints and coatings.expand_more One of their
notable products is Royale Glitz, a luxury interior paint with a unique
Teflon surface protector.expand_more

Customer Focus: Asian Paints provides color consultation services and

visualization tools to help customers choose the perfect colors for their
space.
2. Ratios and their analysis of Last 5 Years from 2018-19 to 2022-23 :
Mar- Mar- Mar- Mar- Mar-
Name of the Ratio 23 22 21 20 19
Current Ratio 2.38 2.26 2.18 1.82 1.58
Inventory Turnover Ratio 2.79 3.29 2.86 6.08 6.34
Operating Ratio 15.66 13.37 18.3 16.22 15.79
Asset Turnover Ratio 1.42 1.34 1.19 126.54 119.79
Debtor’s Turnover Ratio 9.43 10.66 12.69 14.61 13.76
Return On Equity Ratio 26.3 23.48 25.24 28.07 24.11
Debt Equity Ratio 0.075 0.056 0.0415 0.0336 0.065
Price Earnings Ratio 64.48 97.5 77.53 59.1 66.4
Net Profit Ratio 13.63 12.44 16.48 15.43 13
Return On Investment Ratio 36.18 45.2 59.4 38.12 47.21

FY 2022-23
i) Current Ratio (2.38%) : The company had a healthy current ratio, indicating
it had more than enough current assets to cover its short-term liabilities. This
ensures the company's ability to meet its financial obligations without liquidity
issues.
ii) Stock Turnover Ratio (2.79%) : The stock turnover ratio reflects the
company's ability to manage its inventory efficiently. With a ratio of 2.79%, the
company was turning over its inventory effectively, which minimizes holding
costs and maximizes profitability.
iii) Operating Ratio (15.56%) : The operating ratio indicates the proportion of
revenue consumed by operating expenses. At 15.56%, the company was
effectively managing its operational costs, leaving more revenue available for
other expenses and profit generation.
iv) Total Assets Turnover Ratio (1.42%) : This ratio measures how efficiently
the company uses its assets to generate revenue. With a high ratio of 1.42%, the
company was effectively utilizing its assets to generate significant revenue,
reflecting operational efficiency.
v) Debtor’s Turnover Ratio (9.43%) : This ratio shows how efficiently the
company collects payments from its customers. A ratio of 9.43% suggests that
the company had a robust system in place for collecting receivables, ensuring
steady cash flow.
vi) Return on Equity Ratio (26.30%) : The return on equity ratio indicates
how effectively the company generates profits from shareholders' equity. With a
ratio of 26.30%, the company was generating decent returns for its shareholders,
reflecting effective use of equity capital.
vii) Debt Equity Ratio (0.075%) : This ratio indicates the proportion of debt
and equity used to finance the company's assets. A ratio of 0.075% suggests that
the company had no debt in its capital structure, indicating low financial risk.
viii) Price Earnings Ratio (64.48%) : The price-earnings ratio reflects the
market's valuation of the company's stock relative to its earnings per share. A
ratio of 64.48% suggests that investors were willing to pay a premium for the
company's earnings potential.
ix) Net Profit Ratio (13.63%) : The net profit ratio measures the company's
ability to generate profit relative to its revenue. With a ratio of 13.63%, the
company was generating a reasonable profit margin on its sales.
x) Return on Investments Ratio (36.18%) : This ratio indicates the company's
ability to generate returns on its investments in assets and projects. With a ratio
of 36.18%, the company was earning a healthy return on its investments,
reflecting sound investment decision.

FY 2021-22
i) Current Ratio (2.26%) : The company had a healthy current ratio, indicating
it had more than enough current assets to cover its short-term liabilities. This
ensures the company's ability to meet its financial obligations without liquidity
issues.
ii) Stock Turnover Ratio (3.29%) : The stock turnover ratio reflects the
company's ability to manage its inventory efficiently. With a ratio of 3.29%, the
company was turning over its inventory effectively, which minimizes holding
costs and maximizes profitability.
iii) Operating Ratio (13.37%) : The operating ratio indicates the proportion of
revenue consumed by operating expenses. At 13.37%, the company was
effectively managing its operational costs, leaving more revenue available for
other expenses and profit generation.
iv) Total Assets Turnover Ratio (1.34%) : This ratio measures how efficiently
the company uses its assets to generate revenue. With a high ratio of 1.34%, the
company was effectively utilizing its assets to generate significant revenue,
reflecting operational efficiency.
v) Debtor’s Turnover Ratio (10.66%) : This ratio shows how efficiently the
company collects payments from its customers. A ratio of 10.66% suggests that
the company had a robust system in place for collecting receivables, ensuring
steady cash flow.
vi) Return on Equity Ratio (23.48%) : The return on equity ratio indicates
how effectively the company generates profits from shareholders' equity. With a
ratio of 23.48%, the company was generating decent returns for its shareholders,
reflecting effective use of equity capital.
vii) Debt Equity Ratio (0.056%) : This ratio indicates the proportion of debt
and equity used to finance the company's assets. A ratio of 0.056% suggests that
the company had no debt in its capital structure, indicating low financial risk.
viii) Price Earnings Ratio (97.50%) : The price-earnings ratio reflects the
market's valuation of the company's stock relative to its earnings per share. A
ratio of 97.50% suggests that investors were willing to pay a premium for the
company's earnings potential.
ix) Net Profit Ratio (12.44%) : The net profit ratio measures the company's
ability to generate profit relative to its revenue. With a ratio of 12.44%, the
company was generating a reasonable profit margin on its sales.
x) Return on Investments Ratio (45.20%) : This ratio indicates the company's
ability to generate returns on its investments in assets and projects. With a ratio
of 45.20%, the company was earning a healthy return on its investments,
reflecting sound investment decision.

FY 2020-21
i) Current Ratio (2.18%) : The company had a healthy current ratio, indicating
it had more than enough current assets to cover its short-term liabilities. This
ensures the company's ability to meet its financial obligations without liquidity
issues.
ii) Stock Turnover Ratio (2.86%) : The stock turnover ratio reflects the
company's ability to manage its inventory efficiently. With a ratio of 2.86%, the
company was turning over its inventory effectively, which minimizes holding
costs and maximizes profitability.
iii) Operating Ratio (18.30%) : The operating ratio indicates the proportion of
revenue consumed by operating expenses. At 18.30%, the company was
effectively managing its operational costs, leaving more revenue available for
other expenses and profit generation.
iv) Total Assets Turnover Ratio (1.19%) : This ratio measures how efficiently
the company uses its assets to generate revenue. With a high ratio of 1.19%, the
company was effectively utilizing its assets to generate significant revenue,
reflecting operational efficiency.
v) Debtor’s Turnover Ratio (12.69%) : This ratio shows how efficiently the
company collects payments from its customers. A ratio of 12.69% suggests that
the company had a robust system in place for collecting receivables, ensuring
steady cash flow.
vi) Return on Equity Ratio (25.24%) : The return on equity ratio indicates
how effectively the company generates profits from shareholders' equity. With a
ratio of 25.24%, the company was generating decent returns for its shareholders,
reflecting effective use of equity capital.
vii) Debt Equity Ratio (0.0415%) : This ratio indicates the proportion of debt
and equity used to finance the company's assets. A ratio of 0.0415% suggests
that the company had no debt in its capital structure, indicating low financial
risk.
viii) Price Earnings Ratio (77.53%) : The price-earnings ratio reflects the
market's valuation of the company's stock relative to its earnings per share. A
ratio of 77.53% suggests that investors were willing to pay a premium for the
company's earnings potential.
ix) Net Profit Ratio (16.48%) : The net profit ratio measures the company's
ability to generate profit relative to its revenue. With a ratio of 16.48%, the
company was generating a reasonable profit margin on its sales.
x) Return on Investments Ratio (59.40%) : This ratio indicates the company's
ability to generate returns on its investments in assets and projects. With a ratio
of 59.40%, the company was earning a healthy return on its investments,
reflecting sound investment decision.

FY 2019-20
i) Current Ratio (1.82%) : The company had a healthy current ratio, indicating
it had more than enough current assets to cover its short-term liabilities. This
ensures the company's ability to meet its financial obligations without liquidity
issues.
ii) Stock Turnover Ratio (6.08%) : The stock turnover ratio reflects the
company's ability to manage its inventory efficiently. With a ratio of 6.08%, the
company was turning over its inventory effectively, which minimizes holding
costs and maximizes profitability.
iii) Operating Ratio (16.22%) : The operating ratio indicates the proportion of
revenue consumed by operating expenses. At 16.22%, the company was
effectively managing its operational costs, leaving more revenue available for
other expenses and profit generation.
iv) Total Assets Turnover Ratio (126.54%) : This ratio measures how
efficiently the company uses its assets to generate revenue. With a high ratio of
126.54%, the company was effectively utilizing its assets to generate significant
revenue, reflecting operational efficiency.
v) Debtor’s Turnover Ratio (14.61%) : This ratio shows how efficiently the
company collects payments from its customers. A ratio of 14.61% suggests that
the company had a robust system in place for collecting receivables, ensuring
steady cash flow.
vi) Return on Equity Ratio (28.07%) : The return on equity ratio indicates
how effectively the company generates profits from shareholders' equity. With a
ratio of 28.07%, the company was generating decent returns for its shareholders,
reflecting effective use of equity capital.
vii) Debt Equity Ratio (0.0336%) : This ratio indicates the proportion of debt
and equity used to finance the company's assets. A ratio of 0.0336% suggests
that the company had no debt in its capital structure, indicating low financial
risk.
viii) Price Earnings Ratio (59.10%) : The price-earnings ratio reflects the
market's valuation of the company's stock relative to its earnings per share. A
ratio of 59.10% suggests that investors were willing to pay a premium for the
company's earnings potential.
ix) Net Profit Ratio (15.43%) : The net profit ratio measures the company's
ability to generate profit relative to its revenue. With a ratio of 15.43%, the
company was generating a reasonable profit margin on its sales.
x) Return on Investments Ratio (38.12%) : This ratio indicates the company's
ability to generate returns on its investments in assets and projects. With a ratio
of 38.12%, the company was earning a healthy return on its investments,
reflecting sound investment decision.

FY 2018-19
i) Current Ratio (1.58%) : The company had a healthy current ratio, indicating
it had more than enough current assets to cover its short-term liabilities. This
ensures the company's ability to meet its financial obligations without liquidity
issues.
ii) Stock Turnover Ratio (6.34%) : The stock turnover ratio reflects the
company's ability to manage its inventory efficiently. With a ratio of 6.34%, the
company was turning over its inventory effectively, which minimizes holding
costs and maximizes profitability.
iii) Operating Ratio (15.79%) : The operating ratio indicates the proportion of
revenue consumed by operating expenses. At 15.79%, the company was
effectively managing its operational costs, leaving more revenue available for
other expenses and profit generation.
iv) Total Assets Turnover Ratio (119.79%) : This ratio measures how
efficiently the company uses its assets to generate revenue. With a high ratio of
119.79%, the company was effectively utilizing its assets to generate significant
revenue, reflecting operational efficiency.
v) Debtor’s Turnover Ratio (13.76%) : This ratio shows how efficiently the
company collects payments from its customers. A ratio of 13.76% suggests that
the company had a robust system in place for collecting receivables, ensuring
steady cash flow.
vi) Return on Equity Ratio (24.11%) : The return on equity ratio indicates
how effectively the company generates profits from shareholders' equity. With a
ratio of 24.11%, the company was generating decent returns for its shareholders,
reflecting effective use of equity capital.
vii) Debt Equity Ratio (0.065%) : This ratio indicates the proportion of debt
and equity used to finance the company's assets. A ratio of 0.065% suggests that
the company had no debt in its capital structure, indicating low financial risk.
viii) Price Earnings Ratio (66.40%) : The price-earnings ratio reflects the
market's valuation of the company's stock relative to its earnings per share. A
ratio of 66.40% suggests that investors were willing to pay a premium for the
company's earnings potential.
ix) Net Profit Ratio (13.00%) : The net profit ratio measures the company's
ability to generate profit relative to its revenue. With a ratio of 13.00%, the
company was generating a reasonable profit margin on its sales.
x) Return on Investments Ratio (47.21%) : This ratio indicates the company's
ability to generate returns on its investments in assets and projects. With a ratio
of 47.21%, the company was earning a healthy return on its investments,
reflecting sound investment decision.

7. Overall Conclusion :
Asian Paints Ltd. has maintained a strong financial position and operational
performance over the past five years, reflecting its strategic focus on product
innovation, brandbuilding, and operational excellence. The company's ability to
adapt to changing market dynamics and consumer preferences has positioned it
as a leader in the Indian paints industry.
With a robust balance sheet and efficient operational metrics, Asian Paints is
well positioned for sustained growth and value creation in the future.
This analysis provides valuable insights into Asian Paint’s financial health and
performance trends, highlighting its strengths and areas for further enhancement
in the dynamicand competitive Paints landscape.
In conclusion, the company demonstrates strengths in profitability and
operational efficiency, as indicated by the return on equity and operating ratios.
However, challenges such as declining liquidity, fluctuating asset turnover, and
increasing debt levels warrant attention. The company should focus on
improving liquidity, optimizing asset utilization, and managing debt levels to
ensure long-term financial health and sustainability.