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» Financial Analysis Of Reliance Industries Ltd
Financial Analysis Of Reliance Industries Ltd
This is a research report on
Financial Analysis Of Reliance Industries Ltd
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Rajesh Sekar
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Financial Analysis
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1186 views, 0 comments, Last Update: Mar 1, 2013.
Analysis for Reliance Indu Limited
2003- 2009
Contents of the spreadsheet Balance Sheet Profit and loss account Yearly and trend analysis Ratio analysis Comments
ance Industries ted
Submitted to: Dr. Karamjeet Singh Submitted by: Name Rajat Singla Roll No. 21 Class MBA GEN -A IInd Semester Date of Submission: 08.03.2010
2009
Reliance Industries Limited
Balance Sheet
Year Ending Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities Year Ending 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 Contingent Liabilities Book Value (Rs) Mar '03 Mar '04 Mar '05 Mar '06 Mar '07 Mar '08
1,395.92 1,395.92 0 0 26,242.68 2,735.81 30,374.41 11,776.86 7,981.45 19,758.31 50,132.72 Mar '03
1,395.95 1,395.95 0 0 30,322.97 2,733.53 34,452.45 11,451.14 9,493.52 20,944.66 55,397.11 Mar '04
1,393.09 1,393.09 0 0 36,280.35 2,729.88 40,403.32 7,972.90 10,811.69 18,784.59 59,187.91 Mar '05
1,393.17 1,393.17 0 0 43,760.90 4,650.19 49,804.26 7,664.90 14,200.71 21,865.61 71,669.87 Mar '06
1,393.21 1,453.39 1,393.21 1,453.39 60.14 1,682.40 0 0 59,861.81 77,441.55 2,651.97 871.26 63,967.13 81,448.60 9,569.12 6,600.17 18,256.61 29,879.51 27,825.73 36,479.68 91,792.86 117,928.28 Mar '07 Mar '08
50,552.99 18,461.16 32,091.83 1,994.44 6,722.72 7,510.41 2,975.49 136.53 10,622.43 12,566.03 10.68 23,199.14 0 12,446.83 1,475.73 13,922.56 9,276.58 47.15 50,132.72 12,802.00 197.93
53,502.91 21,713.74 31,789.17 3,356.81 13,971.40 7,231.22 3,189.93 208.77 10,629.92 12,400.97 15.47 23,046.36 0 14,095.88 2,670.75 16,766.63 6,279.73 0 55,397.11 8,559.77 227.15
55,125.82 24,872.83 30,252.99 4,829.29 17,051.46 7,412.88 3,927.81 384.51 11,725.20 13,869.67 3,224.28 28,819.15 0 17,917.41 3,847.57 21,764.98 7,054.17 0 59,187.91
84,970.13 29,253.38 55,716.75 6,957.79 5,846.18 10,119.82 4,163.62 239.31 14,522.75 8,266.55 1,906.85 24,696.15 0 17,656.02 3,890.98 21,547.00 3,149.15 0 71,669.87
99,532.77 104,229.10 35,872.31 42,345.47 63,660.46 61,883.63 7,528.13 23,005.84 16,251.34 20,516.11 12,136.51 14,247.54 3,732.42 6,227.58 308.35 217.79 16,177.28 20,692.91 12,506.71 18,441.20 1,527.00 5,609.75 30,210.99 44,743.86 0 0 24,145.19 29,228.54 1,712.87 2,992.62 25,858.06 32,221.16 4,352.93 12,522.70 0 0 91,792.86 117,928.28 37,157.61 542.74
6,579.47 24,897.66 46,767.18 270.35 324.03 439.57
All in Rs. Cr. Mar '09
1,573.53 1,573.53 69.25 0 112,945.44 11,784.75 126,372.97 10,697.92 63,206.56 73,904.48 200,277.45 Mar '09
149,628.70 49,285.64 100,343.06 69,043.83 20,268.18 14,836.72 4,571.38 500.13 19,908.23 13,375.15 23,014.71 56,298.09 0 42,664.81 3,010.90 45,675.71 10,622.38 0 200,277.45 36,432.69 727.66
Reliance Industries Limited
Profit & Loss account
Year Ending Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses Year Ending Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs) Mar '03 Mar '04 Mar '05 Mar '06 Mar '07 Mar '08
50,095.81 56,247.03 73,164.10 89,124.46 118,353.71 139,269.46 4,391.62 4,397.40 7,245.27 8,246.67 6,654.68 5,463.68 45,704.19 51,849.63 65,918.83 80,877.79 111,699.03 133,805.78 1,135.76 1,384.61 1,573.70 546.96 236.89 6,595.66 2,435.49 -605.41 -524.35 2,131.19 654.6 -1,867.16 49,275.44 52,628.83 66,968.18 83,555.94 112,590.52 138,534.28 35,413.02 35,984.76 47,418.04 59,739.29 719.4 725.15 907.94 1,146.26 651.73 804.75 846.4 978.45 252.36 323.4 303.97 668.31 2,584.82 3,406.76 3,000.27 5,872.33 251.7 411.88 217.3 300.74 -4 -26.43 -9.6 -155.14 39,869.03 41,630.27 52,684.32 68,550.24 Mar '03 Mar '04 Mar '05 Mar '06 80,791.65 98,832.14 2,261.69 2,052.84 2,094.09 2,119.33 1,112.17 715.19 5,478.10 5,549.40 321.23 412.66 -111.21 -175.46 91,947.72 109,506.10 Mar '07 20,405.91 20,642.80 1,298.90 19,343.90 4,815.15 0 14,528.75 0.51 14,529.26 2,585.35 11,943.40 11,156.07 0 1,440.44 202.02 Mar '08 22,432.52 29,028.18 1,162.90 27,865.28 4,847.14 0 23,018.14 48.1 23,066.24 3,559.85 19,458.29 10,673.96 0 1,631.24 277.23
8,270.65 9,613.95 12,710.16 14,458.74 9,406.41 10,998.56 14,283.86 15,005.70 1,570.96 1,443.40 1,486.54 893.61 7,835.45 9,555.16 12,797.32 14,112.09 3,452.79 3,331.39 3,784.57 3,400.91 0 0 0 0 4,382.66 6,223.77 9,012.75 10,711.18 0 -13.03 -1.31 0.88 4,382.66 6,210.74 9,011.44 10,712.06 875.9 1,148.00 1,505.00 1,642.72 4,104.31 5,160.14 7,571.68 9,069.34 4,456.01 5,645.51 5,266.28 8,810.95 20.08 0 0 0 698.19 733.1 1,045.13 1,393.51 89.46 91.64 146.58 195.44
13,963.78 13,963.78 13,935.08 13,935.08 29.25 36.95 54.34 65.08 50 52.5 75 100 197.93 227.15 270.35 324.03
13,935.08 85.71 110 439.57
14,536.49 133.86 130 542.74
All in Rs. Cr. Mar '09
146,328.07 4,369.07 141,959.00 1,264.03 427.56 143,650.59 109,284.34 3,355.98 2,397.50 1,162.98 4,736.60 562.42 -3,265.65 118,234.17 Mar '09 24,152.39 25,416.42 1,774.47 23,641.95 5,195.29 0 18,446.66 0 18,446.66 3,137.34 15,309.32 8,949.83 0 1,897.05 322.4
15,737.98 97.28 130 727.66
Reliance Industries Limited
RATIOS ARE CALCULATED FOR 7 YEARS
Current Current Asset 22357.12 22040.05 28452.51 24574.45 29913.35 42885.84 54712.27 Ratio Current Liabilities 10395.72 12285.5 17131.52 16454.48 18578.4 24038.09 35701.9
YEAR 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Current Ratio 2.15 1.79 1.66 1.49 1.61 1.78 1.53
YEAR 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Quick Quick Asset 14846.71 14808.83 21039.63 14454.63 17776.84 28638.3 39875.55
Ratio Current Liabilities 10395.72 12285.5 17131.52 16454.48 18578.4 24038.09 35701.9
Quick Ratio 1.43 1.21 1.23 0.88 0.96 1.19 1.12
YEAR 2002-03
Absolute Cash
Ratio Marketable Securities Current Liabilities 147.21 536.19 10395.72
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
224.24 3608.79 2146.16 1835.35 4280.05 22176.53
536.11 3469.03 523.58 6813.14 9316.85 2678.84
12285.5 17131.52 16454.48 18578.4 24038.09 35701.9
YEAR 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Opening Debtors 2722.46 2998.11 3046.38 3927.81 4163.62 3732.42 6227.58
Debtors Turnover Ratio & Average Collection Period Closing Debtors Sales 2998.11 45,897.79 3046.38 51,801.53 3927.81 66,051.30 4163.62 81,211.33 111,692.72 3732.42 6227.58 133,443.00 4571.38 141,847.47
Creditors Turnover Ratio & Average Payment Period Year Opening Creditors Closing Creditors Purchases 2002-03 6,472.29 9,490.89 2003-04 9,490.89 11,312.32 2004-05 11,312.32 13,659.72 2005-06 13,659.72 12,563.50 2006-07 12,563.50 16,865.53 2007-08 16,865.53 21,045.47 2008-09 21,045.47 32,691.00
3420.75 2218.28 2356.55 2516.13 1821.28 6,007.71 2,205.27
Inventory Turnover Ratio & Inventory Period YEAR Opening Stock Closing Stock 2002-03 4974.07 2003-04 7501.41 2004-05 7231.22 2005-06 7412.88 2006-07 10119.82 2007-08 12136.51 2008-09 14247.54
Net Sales 7501.41 7231.22 7412.88 10119.82 12136.51 14247.54 14,836.72 45,897.79 51,801.53 66,051.30 81,211.33 111,692.72 133,443.00 141,847.47
ASSET TURNOVER RATIO YEAR Total Asset Sales 2002-03 63,166.11 2003-04 71,157.43 2004-05 80,586.25 2005-06 93,095.17 2006-07 117,353.28 2007-08 149,838.91 2008-09 245705.65
Asset Turnover Ratio 45,897.79 51,801.53 66,051.30 81,211.33 111,692.72 133,443.00 141,847.47 0.73 0.73 0.82 0.87 0.95 0.89 0.58
WORKING CAPITAL TURNOVER RATIO YEAR Net Working Capital Sales 2002-03 11961.4 2003-04 9754.55 2004-05 11320.99 2005-06 8119.97 2006-07 11334.95 2007-08 18847.75 2008-09 19010.37
Working Capital TR 45,897.79 51,801.53 66,051.30 81,211.33 111,692.72 133,443.00 141,847.47 3.84 5.31 5.83 10.00 9.85 7.08 7.46
LIQUIDITY RATIOS - CONSOLIDATED YEAR Current Ratio Quick Ratio 2002-03 2.15 2003-04 1.79 2004-05 1.66 2005-06 1.49 2006-07 1.61 2007-08 1.78 2008-09 1.53
Absolute Ratio 1.43 1.21 1.23 0.88 0.96 1.19 1.12 0.07 0.06 0.41 0.16 0.47 0.57 0.70
DEBT TO EQUITY RATIO YEAR Debt 2002-03 2003-04 2004-05 2005-06
Equity 19758.31 20944.66 18784.59 21865.61 30374.41 34452.45 40403.32 49804.26
DE Ratio 0.65 0.61 0.46 0.44
2006-07 2007-08 2008-09
27825.73 36,479.68 73,904.48
63967.13 81,448.60 126372.97
0.44 0.45 0.58
INTEREST COVERAGE RATIO YEAR Interest PBIT 2002-03 1555.16 2003-04 1434.72 2004-05 1468.66 2005-06 877.04 2006-07 1188.89 2007-08 1077.36 2008-09 1,745.23
IC Ratio 6529.37 7735.86 10537.34 11581.1 15709.36 24087.5 20178.46 4.20 5.39 7.17 13.20 13.21 22.36 11.56
CAPITAL STRUCTURE RATIOS - CONSOLIDATED Year Debt to Equity Ratio Interest Coverage Ratio 2002-03 0.65 4.20 2003-04 0.61 5.39 2004-05 0.46 7.17 2005-06 0.44 13.20 2006-07 0.44 13.21 2007-08 0.45 22.36 2008-09 0.58 11.56
GROSS PROFIT RATIO YEAR Gross Profit 2002-03
Sales 9366.46 45,897.79
GP Ratio 20.41
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
10982.88 14260.84 14982.01 20524.51 28935.87 25373.75
51,801.53 66,051.30 81,211.33 111,692.72 133,443.00 141,847.47
21.20 21.59 18.45 18.38 21.68 17.89
NET PROFIT RATIO YEAR Net Profit 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Sales 4974.21 6301.14 9068.68 10704.06 14520.47 23010.14 18,433.23 45,897.79 51,801.53 66,051.30 81,211.33 111,692.72 133,443.00 141,847.47
NP Ratio 10.84 12.16 13.73 13.18 13.00 17.24 13.00
PROFIT MARGIN YEAR PAT 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Sales 4104.31 5160.14 7571.68 9069.34 11943.4 19458.29 15,309.32 45,897.79 51,801.53 66,051.30 81,211.33 111,692.72 133,443.00 141,847.47
Profit Margin 8.94 9.96 11.46 11.17 10.69 14.58 10.79
RETURN ON EQUITY YEAR PAT 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Equity 4104.31 5160.14 7571.68 9069.34 11943.4 19458.29 15,309.32 30374.41 34452.45 40403.32 49804.26 63967.13 81448.6 126,372.97
ROE 13.51 14.98 18.74 18.21 18.67 23.89 12.11
RETURN ON CAPITAL EMPLOYED YEAR PBIT Capital Exp 2002-03 6529.37 2003-04 7735.86 2004-05 10537.34 2005-06 11581.1 2006-07 15709.36 2007-08 24087.5 2008-09 20178.46
ROCE 63737.01 71827.15 80586.25 93095.17 117353.28 149838.91 156638.65 10.24 10.77 13.08 12.44 13.39 16.08 12.88
PROFITABILITY RATIO - CONSOLIDATED YEAR GROSS PROFIT NET PROFIT
PROFIT MARGIN
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
20.41 21.20 21.59 18.45 18.38 21.68 17.89
10.84 12.16 13.73 13.18 13.00 17.24 13.00
8.94 9.96 11.46 11.17 10.69 14.58 10.79
Earning Per Share Year PAT 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
4104.31 5160.14 7571.68 9069.34 11943.4 19458.29 15,309.32
No. Of Shares EPS 1,396,377,536 1,396,377,536 1,393,508,041 1,393,508,041 1,393,508,041 1,453,648,601 1,573,798,233
29.39 36.95 54.34 65.08 85.71 133.86 97.28
Price Earning ratio Year Year end Avg Market Price EPS 2002-03 287.65 2003-04 552.63 2004-05 569.95 2005-06 755.05 2006-07 1316 2007-08 2274.2 2008-09 1349.35
P/E Ratio 29.39 36.95 54.34 65.08 85.71 133.86 97.28 9.79 14.96 10.49 11.60 15.35 16.99 13.87
Price to Book ratio Year Market Price Book Value 2002-03 287.65 2003-04 552.63 2004-05 569.95 2005-06 755.05 2006-07 1316 2007-08 2274.2 2008-09 1349.35
Price/Book Ratio 217.52 246.73 289.94 357.4 440 560.3 802.98 1.32 2.24 1.97 2.11 2.99 4.06 1.68
CAPITAL MARKET RATIOS – CONSOLIDATED YEAR EPS PE RATIO 2002-03 29.39 2003-04 36.95 2004-05 54.34 2005-06 65.08 2006-07 85.71 2007-08 133.86 2008-09 97.28
9.79 14.96 10.49 11.60 15.35 16.99 13.87
PRICE TO BOOK RATIO 1.32 2.24 1.97 2.11 2.99 4.06 1.68
e Industries Limited
RE CALCULATED FOR 7 YEARS
Current Ratio
2.50 2.00 1.50 1.00 0.50 0.00 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Quick Ratio
1.60 1.40 1.20 1.00 0.80 0.60 0.40 0.20 0.00 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
Absolute Ratio 0.07
0.80
Absolute Ratio
0.06 0.41 0.16 0.47 0.57 0.70
0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 0.00 2002-03 2003-04 2004-05 2005-06 2006-07
llection Period DTR 16.05 17.14 18.94 20.07 28.29 26.80 26.27
30.00
Collection Period 22.75 21.30 19.27 18.18 12.90 13.62 13.89
25.00 20.00 15.00 10.00 5.00 0.00 2002-03 2003-04 2004-05 2005-06 2006-07
CTR 0.43 0.21 0.19 0.19 0.12 0.32 0.08
Payment Period 851.65 1711.50 1933.93 1902.02 2948.91 1151.65 4447.03
0.50 0.45 0.40 0.35 0.30 0.25 0.20 0.15
CTR
0.20 0.15 0.10 0.05 0.00 2002-03 2003-04 2004-05 2005-06 2006-07
ITR 7.36 7.03 9.02 9.26 10.04 10.12 9.75
Inventory Period 49.61 51.90 40.46 39.40 36.37 36.08 37.42
12.00 10.00 8.00 6.00 4.00 2.00 0.00 2002-03 2003-04 2004-05
ITR
2005-06
2006-07
Asset Turnover Ratio
1.00 0.90 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 0.00 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Asset Turnover Ratio
0.00 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Working Capital TR
12.00 10.00 8.00 6.00 4.00 2.00 0.00 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Working Capital TR
DTR 16.05 17.14 18.94 20.07 28.29 26.80 26.27
Collection Period 22.75 21.30 19.27 18.18 12.90 13.62 13.89
CTR 0.43 0.21 0.19 0.19 0.12 0.32 0.08
Payment Period ITR Inventory Period 851.65 7.36 49.61 1711.50 7.03 51.90 1933.93 9.02 40.46 1902.02 9.26 39.40 2948.91 10.04 36.37 1151.65 10.12 36.08 4447.03 9.75 37.42
DE Ratio
0.70 0.60 0.50 0.40
0.50 0.40 0.30 0.20 0.10 0.00 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
IC Ratio
25.00 20.00 15.00 10.00 5.00 0.00 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
IC Ratio
GP Ratio
25.00
25.00 20.00 15.00 10.00 5.00 0.00 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
GP Ratio
NP Ratio
20.00 18.00 16.00 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
NP Ratio
Profit Margin
16.00 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00
Profit Margin
2.00 0.00 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
ROE
30.00 25.00 20.00 15.00 10.00 5.00 0.00 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
ROE
ROCE
18.00 16.00 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
ROCE
RETURN ON EQUITY
RETURN ON CAPITAL
13.51 14.98 18.74 18.21 18.67 23.89 12.11
10.24 10.77 13.08 12.44 13.39 16.08 12.88
EPS
160.00 140.00 120.00 100.00 80.00 60.00 40.00 20.00 0.00 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
P/E Ratio
18.00 16.00 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Price/Book Ratio
4.50 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Price/Book Ratio
Current Ratio
2008-09
Quick Ratio
2008-09
ute Ratio
Absolute Ratio
2006-07
2007-08
2008-09
DTR Collection Period
2006-07
2007-08
2008-09
CTR
5000.00 4500.00 4000.00 3500.00 3000.00
CTR
Payment Period
2500.00 2000.00
2500.00 2000.00 1500.00 1000.00 2006-07 2007-08 2008-09 500.00 0.00 2002-03 2003-04 2004-05 2005-06 2006-07
ITR
60.00 50.00 40.00
ITR
Inventory Period
30.00 20.00 10.00 0.00
2006-07
2007-08
2008-09
2002-03
2003-04
2004-05
2005-06
2006-07
Asset Turnover Ratio
orking Capital TR
Asset Turnover Ratio Working Capital TR. 0.73 3.84 0.73 5.31 0.82 5.83 0.87 10.00 0.95 9.85 0.89 7.08 0.58 7.46
DE Ratio
IC Ratio
GP Ratio
NP Ratio
Profit Margin
ROE
ROCE
EPS
P/E Ratio
Price/Book Ratio
ayment Period
Payment Period
Payment Period
2006-07 2007-08 2008-09
ventory Period
Inventory Period
2006-07
2007-08
2008-09
Reliance Industries Lim
INTERPRETA
1) Current Ratio:
Formula = Current Assets/Current Liabilities Current ratio in a business indicates that the availability of the current asset to meet it’s c here it can be seen that it has always been more than 1.5. Though it is below the general
2) Quick Ratio:
Formula = Quick Assets/Current Liabilities Quick ratio is a better form of the CURRENT RATIO which excludes from current assets th always been around 1. Thus, it is adequate and there is no need to panic.
3) Absolute Ratio:
Formula = Absolute Assets/Current Liabilities This ratio is the acid test ratio, which tells how much current liabilities are covered by the satisfactory.
4) Debtors Turnover Ratio:
Formula = Avg. Debtors/Sales Debtors turnover ratio represents the speed at which cash is realized from receivables. and now the company has increased this ratio to 26 which is excellent.
5) Collection Period:
Formula = 365/Debtor Turnover Ratio This ratio represents the number of days required to realize cash from receivables. It is a decreased it to 13 days which is excellent. It means company is realizing its debts earlier
6) Creditors Turnover Ratio:
6) Creditors Turnover Ratio:
Formula = Avg. Creditors/Sales Creditors turnover ratio represents the speed at which business pays cash to its creditors beginning and now the company has decreased this ratio to 0.08 which is excellent. This
7) Collection Period:
Formula = 365/Creditor Turnover Ratio This ratio represents the number of days in which company pays to its creditors. It is a be increased it to 4447 days which is excellent. It means company is paying its creditors late
8) Inventory Turnover:
Formula = Avg. Inventory/Net Sales This ratio indicates that how fast inventories is used or sold. A high ratio is good from the satisfactory.
9) Inventory period:
Formula = 365/Inventory Turnover Ratio It is a representation of the inventories turnover ratio in the number of days. Inventory tu 36 days with minimum in the year 2007-08 and highest of 52 days in the year 2003
10) Assets Turnover Ratio:
Formula = Net Sales/Assets Fixed assets turnover ratio establishes a relationship between net sales and assets. This r Objective and Significance: This ratio expresses the number to times the fixed assets are employed. A high ratio means a high rate of efficiency of utilisation of fixed asset and low
11) Working Capital Turnover Ratio:
Formula = Net Sales(COGS)/Net Working Capital Where Net Working Capital = Current Assets – Current Liabilities Working capital turnover ratio establishes a relationship between net sales and working c Objective and Significance: This ratio indicates the number of times the utilisation of wor working capital and the greater are the profits. However, a very high turnover indicates a
Objective and Significance: This ratio indicates the number of times the utilisation of wor working capital and the greater are the profits. However, a very high turnover indicates a indicates that the working capital has not been used efficiently. The ratio for Reliance has
12) DEBT EQUITY RATIO
Formula = Debt/Equity This ratio indicates proportion of owner’s fund to total fund’s investments in the busines utilization of the leverages is not done properly by the company. In case of Reliance, it’s d riskiness of the business in this years. But good returns has never made debt a worry for
13) Interest Coverage Ratio:
Formula = Net Profit before Interest and Tax/Interest on Long-term Loans Interest Coverage Ratio is a ratio between ‘net profit before interest and tax’ and ‘interes Objective and Significance: This ratio expresses the satisfaction to the lenders of the conc This ratio indicates that how many times the profit covers the interest. It measures the m periodical interest. Earlier, the ratio was very less for Reliance at 4 but now it has increas
14) GROSS PROFIT RATIO:
Formula = Gross Profit/Net Sales It indicates the firm’s capacity to face adverse economic conditions such as price compet company has no reason to worry.
15) NET PROFIT RATIO:
Formula = Net Profit/Net Sales It indicates the profitability over sales. In the earlier years , its value was years.
16) PROFIT MARGIN:
Formula = Profit After Tax(PAT)/Net Sales It indicates the profitability margin of the company in terms of sales. It is an good ratio w which was very less . Over the years , the company has increased this ratio to 14 which is down to 11.
which was very less . Over the years , the company has increased this ratio to 14 which is down to 11.
17) RETURN ON EQUITY:
Formula = Profit After Tax(PAT)/Equity This ratio is more meaningful to the equity shareholders who are interested to know pro better it is. The return on equity was 13 in the beginning which was very less but over the due to recession, this ratio has again fallen down to 12.
18) RETURN ON CAPITAL EMPLOYED:
Formula = Profit Before Interest & Tax/Capital Employed This ratio is the most important for measuring the overall efficiency of a firm. Higher the increased to 16 % in the later years and in the latest year, it is 13 %. This is very good for
19) Earnings Per Share – EPS:
Formula = Profit Available to Equity Shareholders/Number of Shares The portion of a company's profit allocated to each outstanding share of common stock. considered to be the single most important variable in determining a share's price. very good in creating wealth. The EPS was 29 in the beginning which was very less but ov due to recession, this has again fallen down to 97.
20) Price Earnings Ratio: Formula = Market price/EPS
This indicates the expectation of equity investors about the earnings of the firm. That is, company's current share price compared to its per-share earnings. It's usually in general or against the company's own historical P/E.The P/E Ratio was 10 in the beginn comfortable than the previous years. . But due to recession, this ratio has again fallen do
21) Price to Book Ratio:
Formula = Market Value/Book Value A ratio used to compare a stock's market value to its book value. It is calculated by dividin value represents higher expectation of the shareholders. A lower P/B ratio could mean th with the company. As with most ratios, be aware that this varies by industry. This ratio a bankrupt immediately. Price to Book ratio has been around 1.5 or 2 times, which shows a
Industries Limited INTERPRETATION OF RATIOS
current asset to meet it’s current liabilities. Higher the ratio, better the coverage. Generally 2:1 ratio is gene ugh it is below the generally accepted level, it is good enough to meet it’s liabilities. So, it is quite satisfactory
udes from current assets things that cannot be converted into cash in short period, like inventories. It’s value d to panic.
abilities are covered by the most liquid assets. Its value was very less in the earlier years but now its value is
ealized from receivables. It affects the liquidity position of the company. The value of this ratio was 16 times xcellent.
sh from receivables. It is a better representation of DTR. This value was 22 days in the beginning and now th s realizing its debts earlier than before now.
ss pays cash to its creditors. It affects the liquidity position of the company. The value of this ratio was 0.43 ti 08 which is excellent. This means company is paying very late to its creditors.
ys to its creditors. It is a better representation of CTR. This value was 851 days in the beginning and now the y is paying its creditors later than before now which is a good sign.
high ratio is good from the view point of liquidity and vice versa. Here, the value of this ratio has been aroun
umber of days. Inventory turnover ratio with debtors turnover represents the total accounting cycle. It has a days in the year 2003-04.
net sales and assets. This ratio indicates how well the assets are being utilised. times the fixed assets are being turned over in a stated period. It measures the efficiency with which fixed a ation of fixed asset and low ratio means improper use of the assets. This ratio has been between 0.7
een net sales and working capital. This ratio measures the efficiency of utilisation of working capital times the utilisation of working capital in the process of doing business. The higher is the ratio, the lower is th ry high turnover indicates a sign of over-trading and puts the firm in financial difficulties. A low working capit
times the utilisation of working capital in the process of doing business. The higher is the ratio, the lower is th ry high turnover indicates a sign of over-trading and puts the firm in financial difficulties. A low working capit The ratio for Reliance has been varying between 3 and 10 and it is currently 7.
nvestments in the business. Here the high ratio indicates that the business is risky. Whereas a low ratio indic ny. In case of Reliance, it’s debt-equity ratio is very high. Specially for the initial years, where it is more than 0 ver made debt a worry for Reliance.
term Loans terest and tax’ and ‘interest on long-term loans’. This ratio is also termed as ‘Debt Service Ratio’. n to the lenders of the concern whether the business will be able to earn sufficient profits to pay interest on interest. It measures the margin of safety for the lenders. The higher the number, more secure the lender is at 4 but now it has increased to 22 and at present this ratio is 11 which is quite comfortable.
tions such as price competition. The ratio is between 18-20 throughout the years. Thus , this ratio
value was 10 which was very less but now the company has increased this ratio to 13 which is comfortable
sales. It is an good ratio which tells how much profit the company is earning from its sales. In the earlier yea ed this ratio to 14 which is comfortable. But due to recession, this ratio has again fallen
ed this ratio to 14 which is comfortable. But due to recession, this ratio has again fallen
are interested to know profile earned by the company and the profiles that can be made available. The highe h was very less but over the years, company has increased this ratio to 24 which is comfortable than the prev
iency of a firm. Higher the ratio, the better it is for the company. It should be compared with those of the oth 13 %. This is very good for the firm like Reliance.
Shares ng share of common stock. Earnings per share serves as an indicator of a company's profitability. Earnings per ining a share's price. It is also a major component used to calculate the price-to-earnings valuation ratio. which was very less but over the years, company has increased this to 134 which is comfortabl
rnings of the firm. That is, how many times of the actual earnings are they ready to pay for the share. A valua ngs. It's usually more useful to compare the P/E ratios of one company to other companies in the same indu Ratio was 10 in the beginning which was very less but over the years, company has increased this ratio to 17 his ratio has again fallen down to 14.
ue. It is calculated by dividing the current closing price of the stock by the latest quarter's book value per shar P/B ratio could mean that the stock is undervalued. However, it could also mean that something is funda by industry. This ratio also gives some idea of whether you're paying too much for what would be left if th 5 or 2 times, which shows a reasonable amount of expectation by the shareholders.
Generally 2:1 ratio is generally accepted. But s. So, it is quite satisfactory.
, like inventories. It’s value for reliance has
years but now its value is 0.70 which is
e of this ratio was 16 times in the beginning
the beginning and now the company has
lue of this ratio was 0.43 times in the
he beginning and now the company has
of this ratio has been around 7-9. It is
l accounting cycle. It has always been above
ficiency with which fixed assets are been between 0.7-0.9 which is satisfactory.
of working capital r is the ratio, the lower is the investment in ulties. A low working capital turnover ratio
r is the ratio, the lower is the investment in ulties. A low working capital turnover ratio
. Whereas a low ratio indicates that the ars, where it is more than 0.6 , it shows the
Service Ratio’. t profits to pay interest on long-term loans. more secure the lender is in respect of mfortable.
Thus , this ratio is quite comfortable and the
which is comfortable than the previous
its sales. In the earlier years, its value was 9
made available. The higher the ratio, the comfortable than the previous years. . But
pared with those of the other firms. It
s profitability. Earnings per share is generally arnings valuation ratio. Reliance has been is comfortable than the previous years. . But
o pay for the share. A valuation ratio of a ompanies in the same industry, to the market as increased this ratio to 17 which is
arter's book value per share.. Higher of this an that something is fundamentally wrong for what would be left if the company went
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