Ratio Analysis

Presented by A-4
Sonia Hande Satish Padmashali Pushya Madhavan Kavita Mourya Chetan Kataria

Ratio Analysis
Its a tool which enables the banker or lender to arrive at the following factors : Liquidity position Profitability Solvency Financial Stability Quality of the Management Safety & Security of the loans & advances to be or already been provided

How a Ratio is expressed?

As Percentage - such as 25% or 50% . For
example if net profit is Rs.25,000/- and the sales is Rs.1,00,000/- then the net profit can be said to be 25% of the sales. As Proportion - The above figures may be expressed in terms of the relationship between net profit to sales as 1 : 4. As Pure Number /Times - The same can also be expressed in an alternatively way such as the sale is 4 times of the net profit or profit is 1/4th of the sales.

Cadbury India, a subsidiary of Cadbury is a Indian confectionery company, based in the Mumbai. Cadbury was incorporated in India on July 19, 1948. Currently, Cadbury India operates in four categories viz. Chocolate Confectionery, Milk Food Drinks, Candy and Gum category. It has five company owned manufacturing facilities at Thane, Induri (Pune) and Malanpur (Gwalior), Bangalore and Baddi (Himachal Pradesh) and 4 sales offices (New Delhi, Mumbai, Kolkata and Chennai). It products includes Cadbury Dairy Milk, 5-star, Perk, Gems, Eclairs, Bournvita Celebrations and Bilkul It is the market leader in Chocolate Confectionery business with a market share of over 70%. In India, Cadbury began its operations in 1948 by importing chocolates. In 1965, It started production of cocoa in India. More than two decades it has been working with the Kerala Agriculture University to undertake cocoa research and released clones, hybrids that improve the cocoa yield.

Balance Sheet

------------------- in Rs. Cr. -----------------Dec '05 Dec '06 Dec '07 Dec '08 Dec '09

12 mths 12 mths 12 mths 12 mths 12 mths Sources Of Funds

Total Share Capital

Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth

35.71
35.71 0 0 398.1 0 433.81

34.36
34.36 0 0 357.73 0 392.09

33.2
33.2 0 0 372.94 0 406.14

32.18
32.18 0 0 432.22 0 464.4

31.07
31.07 0 0 499.73 0 530.8

Secured Loans
Unsecured Loans Total Debt Total Liabilities

3.71
4.51 8.22 442.03

3.26
6.75 10.01 402.1

1.28
7.48 8.76 414.9

32.02
9.68 41.7 506.1

2.28
9.89 12.17 542.97

Dec '05
Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets 395.5 234.88 160.62 29.55 258.21 102.33 10.68 18.4 131.41 53.39 0 184.8 0 205.09 13.41 218.5 -33.7 27.35 442.03

Dec '06
430.21 265.13 165.08 82.18 253.42 122.08 11.37 11.2 144.65 44.27 0.62 189.54 0 275.84 25.96 301.8 -112.26 13.68 402.1

Dec '07
544.77 299.18 245.59 25.58 298.49 151.02 13.14 8.9 173.06 72.34 0.62 246.02 0 370.89 29.91 400.8 -154.78 0 414.88

Dec '08
586.94 335.55 251.39 123.86 2.92 222.81 19.67 269.59 512.07 69.82 0 581.89 0 433.56 20.4 453.96 127.93 0 506.1

Dec '09
724.75 372.09 352.66 152.53 18.01 199.82 31.09 271.5 502.41 74.2 0 576.61 0 534.02 22.83 556.85 19.76 0 542.96

Contingent Liabilities Book Value (Rs)

Source : Dion Global Solutions Limited

66.54 121.48

84.75 114.12

106.12 122.32

113.74 144.3

150.97 1,708.53

Current Ratio : It is the relationship between the current assets and current liabilities of a concern. Current Ratio = Current Assets/Current Liabilities

Current ratio 1.04 1.12 0.85 0.61 0.61 1.2 1 0.8 0.6 0.4 0.2 0 Dec '09 Dec '08 Dec '07 Dec '06 Dec '05

Dec '05

Dec '06 Dec '07 Dec '08 Dec '09 0.61 0.61 1.12 1.04

Current ratio

0.85

Net Working Capital : This is worked out as surplus of Long Term Sources over Long Tern Uses, alternatively it is the difference of Current Assets and Current Liabilities. NWC = Current Assets Current Liabilities

Net working capital

0 Dec '09 Dec '08 Dec '07 Dec '06 Dec '05 -100

-305.63 -388.1 -514.26 -525.67

-200 -238.79 -300

-400 -500 -600

Net working capital

Dec '05 -238.79

Dec '06 -388.1

Dec '07 -525.67

Dec '08 -305.63

Dec '09 -514.26

DEBT EQUITY RATIO : It is the relationship between borrowers fund (Debt) and Owners Capital (Equity). Long Term Outside Liabilities / Tangible Net Worth

0.09

0.1 0.08 0.06 0.02 0.03 0.02

0.02

0.04
0.02 0

Dec '09

Dec '08

Dec '07

Dec '06

Dec '05

Debt Equity Ratio

Dec '05 Dec '06 Dec '07 Dec '08 Dec '09 0.02 0.03 0.02 0.09 0.02

GROSS PROFIT RATIO : By comparing Gross Profit percentage to Net Sales we can
arrive at the Gross Profit Ratio which indicates the manufacturing efficiency as well as the pricing policy of the concern.

Gross Profit Ratio = (Gross Profit / Net Sales ) x 100

Gross Profit Margin(%)

11.54

11.45

14.11 10.62 12.83

15
10 5

Dec '09

Dec '08

0 Dec '07 Dec '06

Dec '07

Dec '05
Dec '08 Dec '09

Dec '05

Dec '06

Gross Profit Margin

12.83

14.11

10.62

11.45

11.54

OPERATING PROFIT RATIO : It is expressed as => (Operating Profit / Net Sales ) x 100 Higher the ratio indicates operational efficiencies

Operating Profit Margin(%)

13.81 13.75 15

13.27

13.16 11.25

10 5

Dec '09

Dec '08

0 Dec '07
Dec '06 Dec '05 Dec '08 13.75 Dec '09 13.81

Dec '05

Dec '06 13.16

Dec '07 13.27

Operating Profit Margin

11.25

8.

NET PROFIT RATIO : It is expressed as => ( Net Profit / Net Sales ) x 100

It measures overall profitability.

Net Profit Margin(%)

12
10 8 6 4 2 0

9.68

10.27

8.94

6.42

5.11

Dec '09 Dec '08 Dec '07 Dec '06 Dec '05

Net Profit Margin

Dec '05 Dec '06 Dec '07 Dec '08 Dec '09 5.11 6.42 8.94 10.27 9.68

INVENTORY TURNOVER RATIO Average Inventory or Stocks = (Opening Stock + Closing Stock)/2 . This ratio indicates the number of times the inventory is rotated during the relevant accounting period

10.23 7.86

11.04 8.78 8.77

12 10

8
6 4 2

Dec '09

Dec '08

0 Dec '07 Dec '06 Dec '05

Dec '05

Dec '06 8.78

Dec '07 11.04

Dec '08 7.86

Dec '09 10.23

Inventory TurnoverRatio

8.77

10. DEBTORS TURNOVER RATIO : This is also called Debtors Velocity or Average Collection Period or Period of Credit given . (Average Debtors/Sales ) x 365 for days (52 for weeks & 12 for months)

Debtors Turnover Ratio

96.83
76.2 105.54 95.97 120 100 80 49.89 60 40 20 Dec '09

Dec '08

0 Dec '07

Dec '06
Dec '07

Dec '05
Dec '08 96.83 Dec '09 76.2 105.54

Dec '05 Debtors Turnover Ratio 49.89

Dec '06 95.97

ASSET TURNOVER RATIO :

Net Sales/Tangible Assets

Assets Turnover Ratio

2.67 2.71 2.4 2.49 2.22 3 2.5 2 1.5 1 0.5 0

Dec '09

Dec '08

Dec '07

Dec '06

Dec '05

Dec '05 Dec '06 Dec '07 Dec '08 Dec '09 Assets Turnover Ratio 49.89 95.97 105.54 96.83 76.2

FIXED ASSET TURNOVER RATIO :

Net Sales /Fixed Assets

Fixed Assets Turnover Ratio

4.9 2.67 2.71 2.4

4.92

5 4 3 2 1

Dec '09

Dec '08

0 Dec '07 Dec '06

Dec '05
Dec '08 96.83 Dec '09 76.2

Dec '05

Dec '06 95.97

Dec '07 105.54

Fixed Asset Turnover Ratio

49.89

RETURN ON CAPITAL EMPLOYED : ( Net Profit before Interest & Tax / Average Capital Employed) x 100 Average Capital Employed is the average of the equity share capital and long term funds provided by the owners and the creditors of the firm at the beginning and end of the accounting period. Return On Capital Employed(%) 43.48

40.91

38.44 29.68 18.74

50
40 30 20 10 0

Dec '09

Dec '08

Dec '07

Dec '06

Dec '05
Dec '08 40.91 Dec '09 43.48

Dec '05 Fixed Asset Turnover Ratio 18.74

Dec '06 29.68

Dec '07 38.44

EARNING PER SHARE : EPS indicates the quantum of net profit of the year that would be ranking for dividend for each share of the company being held by the equity share holders. Net profit after Taxes and Preference Dividend/ No. of Equity Shares
607.15

700 600 500

400
300
51.51 35.43 Dec '09 Dec '08 20.03 12.87

200 100 0
Dec '07 Dec '06 Dec '05

Dec '05

Dec '06

Dec '07

Dec '08

Dec '09

Earning per share

12.87

20.03

35.43

51.51

607.15

ou

Thank You.