Anda di halaman 1dari 33

NewGate India

Hyderbad, Andhra Pradesh- 500038

Website: www.newgate.in Email: contact@newgate.in Slideshare URL : http://www.slideshare.net/newgateindia

CIPLA LTD
Financial Statement & Ratio Analysis

Table of Contents

1. Introduction .3 2. Financial Statement..4 2.1 Balance Sheet overview 2007-2009.4 2.2 P&L Account overview 2007-2009......7 3. Financial Analysis.8 3.1 Horizontal Analysis...8 3.1.1 Analysis of Balance sheet8 3.1.2 Analysis of P&LD account.11 3.2 Ratio Analysis...13 3.2.1 Liquidity Ratio.....16 3.2.2 Solvency Ratio.17 3.2.3 Turnover Ratio.18 3.2.4 Profitability Ratio.....19 4. Conclusion22

Appendix 1.25 Appendix 2.26 Appendix 3.27 Appendix 4..28 Appendix 5..29

Accounting Glossary.31 Bibliography 33

1. INTRODUCTION

Cipla,

originally founded by Khwaja Abdul Hamied as The Chemical, Industrial &

Pharmaceutical Laboratories is a prominent Indian pharmaceutical company, best-known outside its home country for manufacturing low-cost anti-AIDS drugs for HIV-positive patients in developing countries. Cipla makes drugs to treat cardiovascular disease, arthritis, diabetes, weight control, depression and many other health conditions, and its products are distributed in more than 180 countries worldwide. Among the hundreds of generic medications it produces for international distribution are atorvastatin, amlodipine, fluoxetine, venlafaxine hydrochloride and metformin. Cipla offers services like consulting, commissioning, engineering, project appraisal, quality control, know-how transfer, support, and plant supply. Apart from its presence in the Indian market, Cipla also has an export market and regularly exports to more than 150 countries in regions such as North America, South American, Asia, Europe, Middle East, Australia, and Africa. For the year ended 31 March, 2007 Ciplas exports were worth approximately Rs. 17,500 million. Cipla is also considerably well-known for its technological innovation and processes for which the company received know-how loyalties to the tune of Rs. 750 million during 2006-07. Cipla has been approved by regulatory bodies such as:

World Health Organization Food and Drug Administration (FDA), USA Therapeutic Goods Administration (TGA), Australia Pharmaceutical Inspection Convention (PIC), Germany National Institute of Pharmacy (NIP), Hungary The Medicines and Healthcare products Regulatory Agency (MHRA) is the UK government agency

Cipla has recently launched I-Pill which is a single dose emergency contraceptive and has acquired a great deal of popularity in a short span of time. Other latest launches of Cipla include products such as Nova, Moxicip, Flomex, Fullform, Montair LC, and Imicrit.

Founded Headquarters Key people Industry Revenue Net income Employees over Website

: 1935 : : Mumbai, India Y. K. Hamied (CMD) Chairman

: Pharmaceuticals : : : Rs.37.6 billion (~939M USD) (2006) Rs. 9.1 billion (2006) 7,000

: www.cipla.com

2. FINANCIAL STATEMENT
To get a better idea about the current financial status of Cipla, we went through following financial statements BALANCE SHEET of 2007,2008,2009 PROFIT & LOSS Statements of 2007,2008,2009

2.1 BALANCHE SHEET OVERVIEW from 2007-2009


A standard company balance sheet has three parts Assets ( Fixed Assets, Current Assets,Investments,Profit & Loss) Liabilities ( Debts, provisions) Ownership equity (Share Capital,Reserves,Surplus)

The main categories of assets are usually listed first and typically in order of liquidity. Assets are followed by the liabilities. The difference between the assets and the liabilities is known as equity or the net assets or the net worth or capital of the company and according to the accounting equation net worth must equal assets minus liabilities.[

2.1.1 TOTAL ASSETS of CIPLA ( 2007,2008,2009)

Figure 2.1. Total Asset = Total Current Asset + Total Fixed Assets

The current assets as well as fixed assets & work in progress have tremendously increased over 3 years but the investments have decreased with an average rate of ( -16.86 %).

Figure 2.1.

2.1.2 DEBT & NET WORTH of CIPLA ( 2007,2008,2009)

Figure 2.3

The equity has increased showing a good hold on share holders. The Equity/net worth includes Capital shares, reserves & surplus which have increased significantly over years with an average rate of (+15.9 %) Total debts have increased over years. Debts are the loans payable to the creditors. This are basically of two types Secured loan Unsecured loan.

We know that more is the unsecured loan, more is the credit risk. From the below graphs (Figure 2.4) it is quite clear that the credit risk have increased significantly over past three years and the secured loan have become almost negligible at 2009.

The company is having more credit risk.

2007

2008 Figure 2.4

2009

2.1.3 TOTAL LIABILILTIES Total Liabilities includes share capital, reserves, surplus, equity share warrants, Shareholders fund, secured & unsecured loans. The liability has increased over 3 year but the distribution of each element per year for liabilities is shown below.

2009

2008

2007 6

2.2 PROFIT & LOSS ACCOUNT OVERVIEW from 2007-2009


Income statement, also referred as profit and loss statement (P&L), earnings statement, operating statement or statement of operations is a company's financial statement that indicates how the revenue (money received from the sale of products and services before expenses are taken out, also known as the "top line") is transformed into the net income (the result after all revenues and expenses have been accounted for, also known as the "bottom line"). It displays the revenues recognized for a specific period, and the cost and expenses charged against these revenues, including write-offs (e.g., depreciation and amortization of various assets) and taxes The purpose of the income statement is to show managers and investors whether the company made or lost money during the period being reported. Basically we will discuss upon Total Income Total Expenditure Profits o Operating Profit o Net Profit ( Profit after tax)

2.2.1 TOTAL INCOME

Figure 2.5

Total Income has increased at an average rate of (22.3 %) With time both income and expenditure have increased. Rise was also found in tax as well as depreciation charges and interest charged upon various items.

2.2.2 TOTAL EXPENDITURE

Figure 2.6

Total expenditure has increased at an average rate of ( 26.7 %)

2.2.3 OPERATING PROFIT

Figure 2.7

Total operating profit has increased at an average by ( 9.5 %) 2.2.4 PROFIT AFTER TAX

Figure 2.8

Total Income has increased at an average by ( 7.32 %)


8

3. FINANCIAL ANALYSIS
Financial analysis (also referred to as financial statement analysis or accounting analysis) refers to an assessment of the viability, stability and profitability of a business, sub-business or project. It is performed by professionals who prepare reports using ratios that make use of information taken from financial statements and other reports. These reports are usually presented to top management as one of their bases in making business decisions. Based on these reports, management may:

Continue or discontinue its main operation or part of its business; Make or purchase certain materials in the manufacture of its product; Acquire or rent/lease certain machineries and equipment in the production of its goods; Issue stocks or negotiate for a bank loan to increase its working capital; Make decisions regarding investing or lending capital; Other decisions that allow management to make an informed selection on various alternatives in the conduct of its business.

There are basically two type of financial Analysis Horizontal Analysis Ratio Analysis

3.1 HORIZONTAL ANALYSIS Financial analysts can also use percentage analysis which involves reducing a series of figures as a percentage of some base amount. When proportionate changes in the same figure over give time period expressed as a percentage is know as horizontal analysis[ It can be done on the basis of

Past Performance - Across historical time periods for the same firm (the last 3 years for example), Future Performance - Using historical figures and certain mathematical and statistical techniques, including present and future values, This extrapolation method is the main source of errors in financial analysis as past statistics can be poor predictors of future prospects. Comparative Performance - Comparison between similar firms.

We will undergo HORIZOMTAL ANALYSIS FOR BALANCE SHEET % ANALYSIS of % ANALYSIS of % ANALYSIS of % ANALYSIS of FIXED ASSETS CURRENT ASSETS TOTAL LIABILITY EQUITY

HORIZOMTAL ANALYSIS FOR P&L ACCOUNT % ANALYSIS of INCOME % ANALYSIS of EXPENDITURE % ANALYSIS of TAX,INTEREST,DEPRECIATION

HORIZONTAL ANALYSIS FOR BALANCE SHEET


3.1.1 HORIZONTAL ANALYSIS of FIXED ASSETS & INVESTMENT

From the graph it is clear that the Investments have decreased over 2007-2008 and 2008-2009 by an average rate of ( -16.8 %). However capital work in progress have given a major contribution to the assets with an average increase in 19 %

3.1.2 HORIZONTAL ANALYSIS of CURRENT ASSETS

10

From the graph its clear that the current assets have increased at an average rate of 24% Inventories have increased at an average rate of 17% Sundry Debtors have increased at an average rate of 34% Cash and bank balance have decreased at an average rate of 32% Loans & advances initially had increased significantly by 65 % and than went down by 1.6%

3.1.3 HORIZONTAL ANALYSIS of TOTAL LIABILITIES

Total Liabilities have increased at an average rate of 24.5% Secured loan first increased by 94% and than decreased -84 %by in next year Unsecured loan increased first year by 352% and 78% than by next year Total Debt increased first year by 337 % and than 73 %by next year

3.1.4 HORIZONTAL ANALYSIS of EQUITY

The Equity Share increased in 2008 by 16 %

11

HORIZONTAL ANALYSIS of P&L ACCOUNT


3.1.5 HORIZONTAL ANALYSIS of INCOME

Sales turnover have increased at an average rate 17% Excise duty have decreased at an average rate 18% Net sales have increased at an average rate 20% Other income increased at an average rate 27 % Stock Adjustment firstly decreased by -234 % and than increased by 174 % next year Total Income increased at an average rate 22%

3.1.6 HORIZONTAL ANALYSIS of EXPENDITURE

Raw Material Increased by 20% Power and fuel cost decreased by 13 % and than increased by 22 % Employee cost increased by 23 % Miscellaneous expense firstly decreased 30% by and than increased 542 %by
12

3.1.7 HORIZONTAL ANALYSIS of TAX,Depreciation,Interest

Deferred Tax increased by increased by 148% and than decreased by -58% Interest increased at an average rate of 127 % Operating profit increased at an average rate of 9 % Depreciation increased at an average rate of 21 % Tax first decreased by 22 % and than increased by 7%

3.2 RATIO ANALAYSIS


We will take following factors into considerations while doing financial analysis through ratio analysis LIQUIDITY SOLVENCY STABILITY PROFITIBILITY

3.2.1 LIQUIDITY RATIO ANALYSIS In business, economics or investment, market liquidity is an asset's ability to be sold without causing a significant movement in the price and with minimum loss of value. Money, or cash on hand, is the most liquid asset. An act of exchange of a less liquid asset with a more liquid asset is called liquidation. Liquidity also refers both to a business's ability to meet its payment obligations, in terms of possessing sufficient liquid assets, and to such assets themselves. Liquidity is measured using following ratios Current Ratio Quick Ratio Working Capital Cash Ratio Interval Measures

13

Current ratio = current Asset / Current Liability Liquidity (current ratio) had suddenly fallen down to 2.9 in 2008 compared to 3.01 of 2007. However current ratio increased significantly in 2009 to around 3.14 showing a good sign of liquidity and the ability to meet current obligations easily. Current ratio also satisfies the minimum required ratio that is 2:1 for better safety precautions. The current assets is almost 3 times over current liabilities which is sufficient to meet the current liabilities in case of any risk arises to repay the amount. Company is having good Liquidity compared to previous year.

Quick Ratio = [ Current Asset ( Inventory + pre loans or advances) ]/ Current Liability Absolute Liquidity (Quick ratio) have significantly increased in 2009.It is a good sign of liquidity and the ability to meet current obligations easily. Quick ratio also satisfies the minimum required ratio that is 1:1 for better safety precautions. It shows that company has sufficient amount of immediate funds to deal with its total liabilities in case of any emergency. Company is having good Liquidity compared to previous year.

14

Working Capital = Current Asset Current Liability Working capital has increased with time showing that company has more current assets (liquid) over current liability and the substantial amount have shown improvement with companys progress. Company is having good Liquidity compared to previous year.

Cash Ratio = Cash / Current liabilities The cash in the company has gone down indicating that company is not in the proper state to hold and make any hard core transactions immediately. More has to be done on credit basis. Company is not susceptible to any immediate hard core cash transactions.

15

Interval Measures = [ Current Asset ( Inventory + pre loans or advances) ]/ Average daily operating expenses Interval measures is the number of days the company can withstand without any profit on the basis of absolute liquid present in the company. Interval measures had suddenly increased significantly over years from 2007 to 2009. The ability to sustain in case a company receives no cash is only of maximum 5 days. Company is not susceptible to sustain for a long time in case company doesnt receives any cash for continuously 5 days.

3.2.2 SOLVENCY RATIO ANALYSIS In finance or business, solvency is the ability of an entity or individual to pay debts. Solvency can also be described as the ability of a corporation to meet its long-term fixed expenses and to accomplish long-term expansion and growth. The better a company's solvency, the better it is financially. When a company is insolvent, it means that it can no longer operate and is undergoing bankruptcy. Solvency is measured using following ratios Debt Equity Ratio Long Term Debt Equity Ratio Interest Coverage Ratio

16

Debt Equity Ratio = Debt/ Net Worth

Long Term Debt Equity Ratio = Long Term Debt/ Net Worth

The increase in debt Ratio shows that the amount invested by the creditors in the business is more than the owners. The company is more dependent on the creditors than its own net worth. Graph says clearly that where 96.2 % of business were financed by the owners in 2007,which reduced to 86% in 2008 and finally to 79% in 2009. Company is liable to pay more debts to creditors than before. Hence Companys solvency has decreased than previous years.

17

Interest Coverage = EBIDTA/ Interest The decrease in interest coverage ratio shows that the earning before tax, interest and depreciation is sufficient to what extent to meet the interest demand. Companys extent to pay interest over earnings have decreased with time. Hence Companys solvency has decreased than previous years..

3.2.3 TURN OVER RATIOS

Turnover is sometimes a synonym for revenue (or in certain contexts, sales), especially in European and South African usage. Services sold by a company during a particular period of time. Turnover is sometimes the name for a measure of how quickly inventory is sold. A high turnover means that goods are sold quickly, while a low turnover means that goods are sold more slowly.

Turnover is measured using following ratios Debtor Turnover Ratio Collective Ratio Stock Turnover Ratio Days of Inventory Holding

18

DEBT TURNOVER & COLLECTIVE DAYS

Debtors Turnover = Net Sales/ Average debtors


Higher the debtor turnover ratio means better is the management of credit.The graphs shows that management of credit has depraved indicating more credit risk.

Collective days = 365/ Debtors Turnover Ratio


However collective ratio shows the average number of days for which debtors remain outstanding .Lesser is the number of outstanding days more less is the credit risk. But graph shows that outstanding have increased , means more risk in credit management.

The company is having more credit risk and hence is less stable.

Stock Turnover Ratio & Days of Inventory Holding

19

Stock Turnover = Net Sales/ Average Inventory Average inventory = ( Opening Stock +Closing Stock) / Higher the Stock turnover ratio means better is the management sales and cost management. More is the ratio more is the efficiency in production and selling. The graphs shows that management of sales has fallen down in 2009 leading to less sales over the average inventory Days of Inventory Holding = 365/ Stock Turnover However Inventory Holding ratio shows the average number of days for which inventory remains outstanding in the company . More is the number of outstanding days more is the delay of conversion to liquid and more less is the efficiency. But inventory outstanding have increased in 2009 compared to 2008. The company is having less efficiency in productions and sales.

3.2.4 PROFITIBALITY RATIO Profit generally is the making of gain in business activity for the benefit of the owners of the business. The word comes from Latin meaning "to make progress", and is defined in two different ways, one for economics and one for accounting. Solvency is measured using following ratios Gross Profit Ratio Net Profit ratio Operating Profit ratio Return on Asset Return on Equity Earning Per Share

20

Operating Profit = ( Sales COGS Operating Expenses)/ sales Gross profit increases consistently from 2007 to 2009 showing that company is having more operating income over the same sales value.

Gross Profit = ( sales COGS )/ sales Gross profit increases consistently fro 2007 to 2009 showing that company is having more trading income over the same sales value.

21

Net Profit = Profit After Tax/Sales Net profit decreases consistently from 2007 to 2009 showing that company is having less income over the same sales value. Since the tax and differed tax have increased in 2009 leading to less net profit to previous year. Hence profitability of the company has degraded compared to previous year.

Return On Asset = Profit after Tax/ Total Asset Return on Asset has consistently degraded from 2007 to 2009 showing that company is having less income over the same sales value of assets. Hence profitability of the company has degraded compared to previous year.

22

Return On Equity = Profit after Tax/ Total Equity

Return on Equity has consistently degraded from 2007 to 2009 showing that company is having less income over the same value of equity.
Hence profitability of the company has degraded compared to previous year.

ERANING PER SHARE

EPS = Profit After Tax/Number of share Outstanding PER( Price Earning Ratio) = Market Value per share/ EPS EPS per share is more indicating that Price Earning ratio is reduced thus indicating decrease in the profitability of the company.

23

4. CONCLUSION Though overall liquidity condition of company have improved but solvency ratio has gone down in 2009.The credit risk has become a major issue. The companys efficiency upon sale and production have depraved and company seems to be less stable in replaying the debts and having more productivity over cost. The profitability of company has also degraded. So as a whole we come to the conclusion that companys financial status is not that good in 2009 as it was suppose to be in 2007.

24

APPENIDIX-1 CIPLA: BALANCE SHEET


Year (Rs in Crs) SOURCES OF FUNDS : Share Capital Reserves Total Equity Share Warrants Equity Application Money Total Shareholders Funds Secured Loans Unsecured Loans Total Debt Total Liabilities APPLICATION OF FUNDS : Gross Block Less : Accumulated Depreciation Less: Impairment of Assets Net Block Lease Adjustment Capital Work in Progress Investments Current Assets, Loans & Advances Inventories Sundry Debtors Cash and Bank Loans and Advances Total Current Assets Less : Current Liabilities and Provisions Current Liabilities Provisions Total Current Liabilities Net Current Assets Deferred Tax Assets Deferred Tax Liability Net Deferred Tax Total Assets
25

Mar 09(12)

Mar 08(12)

Mar 07(12)

155.46 4,195.29 0 0 4,350.75 2.79 937.45 940.24 5,290.99 2,693.29 700.8 0 1,992.49 0 366.32 81.32 1,398.32 1,837.15 53 1,131.10 4,419.57 1,012.85 391.71 1,404.56 3,015.01 0 164.15 -164.15 5,290.99

155.46 3,600.36 0 0 3,755.82 14.09 526.36 540.45 4,296.27 2,201.79 540.43 0 1,661.36 0 233.12 94.75 1,120.49 1,393.91 79.28 1,150.30 3,743.98 870.98 416.81 1,287.79 2,456.19 0 149.15 -149.15 4,296.27

155.46 3,080.81 0 0 3,236.27 7.25 116.31 123.56 3,359.83 1,799.71 411.64 0 1,388.07 0 73.19 117.8 978.6 1,028.78 131.49 695.81 2,834.68 528.13 413.13 941.26 1,893.42 0 112.65 -112.65 3,359.83

APPENDIX-2 CIPLA: P&L ACCOUNT


Year 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 Administration Expenses Miscellaneous Expenses Less: Pre-operative Expenses Capitalized Total Expenditure Operating Profit Interest Gross Profit Depreciation Profit Before Tax Tax Fringe Benefit tax Deferred Tax Reported Net Profit Extraordinary Items Adjusted Net Profit Adjst. below Net Profit P & L Balance brought forward Statutory Appropriations Appropriations P & L Balance carried down Dividend Preference Dividend Equity Dividend % Earnings Per Share-Unit Curr Earnings Per Share(Adj)-Unit Curr Book Value-Unit Curr
26

Mar 09(12) 5,021.64 61.04 4,960.60 366.17 113.55 5,440.32 2,460.95 91.71 242.86 364.34 856.45 318.68 0 4,334.99 1,105.33 52.23 1,053.10 151.79 901.31 101 8.5 15 776.81 -3.09 779.9 0 509.9 0 331.88 954.83 155.46 0 100 9.65 9.65 55.86

Mar 08(12) 4,088.56 90.66 3,997.90 340.31 41.37 4,379.58 2,084.08 74.69 186.47 304.85 707.78 49.58 0 3,407.45 972.13 17.51 954.62 116.26 838.36 94 6.43 36.5 701.43 0.94 700.49 0 390.35 0 581.88 509.9 155.46 0 100 8.68 8.68 48.2

Mar 07(12) 3,533.17 94.93 3,438.24 230.55 -30.73 3,638.06 1,694.85 86.71 162.05 299.87 401.08 70.99 0 2,715.55 922.51 11.16 911.35 103.37 807.98 121.75 3.5 14.7 668.03 0.66 667.37 0 304.2 0 581.88 390.35 155.46 0 100 8.25 8.25 41.52

APPENDIX 3 CIPLA: HORIZONTAL % ANALYSIS BALANCE SHEET

Year
(Rs in Crs) SOURCES OF FUNDS : Share Capital Reserves Total Equity Share Warrants Equity Application Money Total Shareholders Funds Secured Loans Unsecured Loans Total Debt Total Liabilities APPLICATION OF FUNDS : Gross Block Less : Accumulated Depreciation Less:Impairment of Assets Net Block Lease Adjustment Capital Work in Progress Investments Current Assets, Loans & Advances Inventories Sundry Debtors Cash and Bank Loans and Advances Total Current Assets Less : Current Liabilities and Provisions Current Liabilities Provisions Total Current Liabilities Net Current Assets Miscellaneous Expenses not written Deferred Tax Assets
27

% change in 2008-2009

% change in 2007-2008

0 16.52418092 0 0 15.84021598 -80.1987225 78.10053955 73.97354057 23.15310723 22.32274649 29.67451844 0 19.93126114 0 57.1379547 -14.17414248 24.79540201 31.7983227 -33.14833502 -1.669129792 18.04470109

0 16.86407146 0 0 16.05397572 94.34482759 352.5492219 337.3988346 27.87164827 22.34137722 31.28704693 19.68848833 0 218.5134581 -19.56706282 14.49928469 35.4915531 -39.70644155 65.31811845 32.07769484

16.28854853 -6.021928457 9.067472181 22.75149724 0 0

64.91772859 0.890760777 36.81554512 29.72240707 0 0

APPENDIX 4 CIPLA: HORIZONTAL % ANALYSIS of P&L ACCOUNT

Year
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 Administration Expenses Miscellaneous Expenses Less: Pre-operative Expenses Capitalised Total Expenditure Operating Profit Interest Gross Profit Depreciation Profit Before Tax Tax Fringe Benefit tax Deferred Tax Reported Net Profit Extraordinary Items Adjusted Net Profit P & L Balance brought forward Appropriations P & L Balance carried down Earnings Per Share-Unit Curr Earnings Per Share(Adj)-Unit Curr Book Value-Unit Curr
28

% change in 2008-2009
22.82172696 -32.67151996 24.08014207 7.598953895 174.4742567 24.2201307 18.08327895 22.78752176 30.2407894 19.51451534 21.00511458 542.7591771 0 27.22094235 13.70187115 198.2866933 10.31614674 30.56081197 7.508707477 7.446808511 32.19284603 -58.90410959 10.74661762 -428.7234043 11.33635027 30.62636096 -42.96418506 87.25828594 11.17511521 11.17511521 15.89211618

% change in 2007-2008
15.71931155 -4.498051196 16.27751408 47.60789417 -234.6241458 20.38229166 22.96545417 -13.86229962 15.06942302 1.660719645 76.46853496 -30.15917735 0 25.4791847 5.378803482 56.89964158 4.747901465 12.46976879 3.759994059 -22.7926078 83.71428571 148.2993197 4.999775459 42.42424242 4.962764284 28.32018409 0 30.62636096 5.212121212 5.212121212 16.08863198

APPENDIX -5 RATIO ANALYSIS

Mar 09(12)
Equity Paid Up Networth Capital Employed Gross Block Net Working Capital ( Incl. Def. Tax) Current Assets ( Incl. Def. Tax) Current Liabilities and Provisions ( Incl. Def. Tax) Total Assets/Liabilities (excl Reval & W.off) Gross Sales Net Sales Other Income Cost of Production PBIDT PBDT PBIT PBT PAT Book Value (Unit Curr) CEPS (annualised) (Unit Curr) EPS (annualised) (Unit Curr) Dividend (annualised%) Payout (%) 155.46 4341.78 5282.02 2684.32 2850.86 4419.57 1568.71 6850.73 5021.64 4960.6 366.17 3340.28 1105.33 1053.1 953.54 901.31 776.81 55.86 11.61 9.65 100 20.72

Mar 08(12)
155.46 3746.85 4287.3 2192.82 2307.04 3743.98 1436.94 5724.24 4088.56 3997.9 340.31 2792.33 972.13 954.62 855.87 838.36 701.43 48.2 10.18 8.68 100 23.03

Mar 07(12)
155.46 3227.3 3350.86 1790.74 1780.77 2834.68 1053.91 4404.77 3533.17 3438.24 230.55 2371.29 922.51 911.35 819.14 807.98 668.03 41.52 9.58 8.25 100 24.23

Appendix-5 Contd..

29

Key Ratios Liquidirty ratio Current Ratio Quick Ratio Cash Ratio Interval Measure Solvency Ratio Debt Equity Ratio Long term Debt Equity ratio Interest Coverage Turnover ratio Debt Turnover ratio Stock Turnover ratio Collective days ratio Profitability Ratio Gross Profit ratio Operation Profit ratio Net Profit ratio Return on Asset ratio Return on Equity ratio

3.14 1.34 0.037 5.17 0.216 0.215 21.25 5.27 3.54 69 4.71 4.48 0.156 0.146 0.178

2.9 1.14 0.61 4.49 0.143 0.14 57.17 7.4 3.56 49 4.18 4.11 0.175 0.163 0.186

3.01 1.23 0.139 3.17 0.038 0.035 83.8 27.9 3.51 13 3.77 3.72 0.194 0.198 0.206

30

Accounting Glossary
ACCOUNT - A fiscal and accounting entity with a self-balancing set of general ledger codes in which cash and other financial resources, together with all related liabilities and residual equities or balances, and changes therein, are recorded and segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations. For reporting purposes, the state identifies certain accounts as major funds, and administratively combines all remaining accounts into roll-up funds. Refer to MAJOR FUND, and ROLL-UP FUND. ACCOUNTS PAYABLE - Amounts owed to private persons or organizations for goods and/or services received by the state. Accounts Payable does not include amounts due to other agencies, funds, or other governments. Refer to DUE TO. ACCOUNTS RECEIVABLE - Amounts due from private persons or organizations for goods, and/or services furnished by the state. Accounts Receivable does not include amounts due from other agencies, funds, or other governments. Refer to DUE FROM. APPROPRIATION - A legislative authorization for an agency to make expenditures for specific purposes from designated resources available or estimated to be available during a specified time period. ASSETS - A probable future economic benefit obtained or controlled by a particular entity as a result of past transactions or events. These economic resources can be tangible or intangible. BALANCE SHEET - A financial statement that discloses the assets, liabilities, and equities of an entity at a specified date in conformity with generally accepted accounting principles (GAAP). CREDIT CARD - A card entitling the holder to buy services or goods on credit. CURRENT ASSETS - Resources that are available, or can readily be made available, to meet the cost of operations or to pay current liabilities. CURRENT LIABILITIES - Those obligations which are payable within one year from current assets or current resources. DEBIT CARD - A card that draws funds directly from a deposit account. DEBT - An obligation resulting from the borrowing of money or from the purchase of goods and services. Debts of the state include bonds, accounts payable, and other liabilities. Refer to BONDS PAYABLE, ACCOUNTS PAYABLE, LIABILITIES, LONGTERM OBLIGATIONS and GENERAL LONG-TERM OBLIGATIONS. DEFICIT - (1) The excess of the liabilities and reserves of a fund over its assets. (2) The excess of expenditures over revenues during an accounting period or, in the case of proprietary funds, the excess of expenses over revenues during an accounting period. DEPRECIATION - The portion of the cost of a capital asset representing the expiration in the useful life of the capital asset attributable to wear and tear, deterioration, action of the physical elements, inadequacy, and obsolescence which is charged off during a particular period. In accounting for depreciation, the cost of a capital asset, less any salvage value, is prorated over the estimated useful life of such an asset. Refer to COMPOSITE METHOD and STRAIGHT-LINE METHOD. DIRECT COSTS - Costs that include direct materials and labor. Refer to DIRECT EXPENSES. DIRECT EXPENSES - Expenses which are charged directly as a part of the cost of a product or service, or of a department or operating unit, as distinguished from overhead and other indirect costs which must be prorated among several products or services, departments, or operating units. FIXED ASSETS - Refer to CAPITAL ASSETS. FUND - For state purposes, a fund is referred to as an account. Refer to ACCOUNT.

31

FUND BALANCE - In governmental funds, this is the difference between fund assets and fund liabilities. Governmental fund balances should be segregated into reserved and unreserved amounts. Refer to RESERVED FUND BALANCE and UNRESERVED FUND BALANCE. FUND CAPITAL ASSET - Capital assets recorded in proprietary and trust funds and used in the production of the goods or services provided or sold. Depreciation on fund capital assets is charged as an expense of the fund. FUND EQUITY - The difference between a fund's assets and liabilities. In governmental funds, it is referred to as fund balance. In proprietary funds, it is referred to as net assets. Refer to FUND BALANCE and NET ASSETS. LIABILITIES Probable future sacrifices of economic benefits, arising from present obligations of a particular entity to transfer assets or provide services to other entities in the future as a result of past transactions or events. The term does not include encumbrances. LIQUIDATION - Payment of debt, cancellation of encumbrance, or conversion into cash. NET ASSETS - The difference between assets and liabilities. Refer to FUND EQUITY. NET BOOK VALUE - Refer to BOOK VALUE. NET INCOME - A term used in accounting for proprietary funds to designate the excess of total revenues and operating transfers in over total expenses and operating transfers out for an accounting period. RECEIVABLES - Amounts due from private persons, businesses, agencies, funds, or governmental units that are expected to be collected in the form of moneys, goods, and/or services. SHORT-TERM LIABILITIES - Short-term liabilities are legal obligations of the state that arise upon the receipt of goods or services. In governmental fund type accounts, they are payable from current financial resources. In proprietary fund type accounts, short-term liabilities are payable within one year. TAXES - Compulsory charges levied by a government for the purpose of financing services performed for the common benefit. TAXES RECEIVABLE - An asset account reflecting the uncollected portion of taxes that have been levied.

32

BIBLIOGRAPHY: Ratio Analysis PPT (by Prof Ruchi Mehrotra, Alliance Business School) Financial Accounting for Management ( N Ramachandran,Ram Kumar Kakani), 2nd Edition,McGraw Hill

Financial Management( I M PANDEY), 9th Edition,Vikas Publishing House PVT LTD

www.cipla.com www.wikipedia.org www.capitaline.com

33