Assignment Front Page

Name: Harshavardhan Mulay

Due Date: 19-07-2016
Division: A
Batch: 33
Roll No: 334312
Subject: AFM

Assignment No: 01
Topic: Ratio analysis

Assignment Number 1
Introduction:
In this assignment I have chosen 3 companies operating in sector
of steel.
Tata steel
Jindal steel and power
Steel authority of India
All the financial ratios along with other misc. ratios have been
calculated and analysis is made based on this data. Inter firm and
intra firm comparison is made on the basis of financial ratios
obtained.
Company wise financial ratios:
Tata steel
Ratios

March
15

March
14

March
13

March
12

March
11

Operating
profit
margin
GP margin
NP margin
Return on
capital
employed
Return on
long term
funds
Current
ratio
Quick ratio
Debt equity
ratio
Interest
coverage
ratio
Inventory
turnover
Debt
turnover

23.95

30.72

29.12

33.99

39.06

19.17
15.41
9.25

26.10
15.37
13.37

24.83
13.25
12.80

30.60
19.73
14.77

35.16
23.35
14.86

9.25

13.38

12.81

14.78

14.93

.62

.57

.86

.93

1.53

.27
.39

.32
.43

.61
.47

.69
.45

1.31
.56

4.35

6.41

5.53

5.85

6.26

5.79

7.71

8.05

7.62

8.07

66.21

53.21

44.91

51.10

68.46

Fixed
assets
turnover
Assets
turnover
Dividend
payout

1.07

1.01

1.48

1.32

.45

.48

.47

.45

.40

12.06

15.14

15.34

17.40

16.76

Jindal steel & power

Ratios

March
16

March
15

March
14

March
13

March
12

Operating
profit
margin
GP margin
NP margin
Return on
capital
employed
Return on
long term
funds
Current
ratio
Quick ratio
Debt equity
ratio
Interest
coverage
ratio
Inventory
turnover
Debt
turnover
Fixed
assets
turnover
Assets
turnover
Dividend
payout

17.35

27.67

25.84

26.33

30.46

5.45
-8.11
2.79

14.33
-2.32
5.73

17.44
-8.88
7.51

19.32
10.64
9.57

23.96
15.82
13.40

3.55

7.14

10.09

12.59

17.47

0.44

0.74

0.71

0.76

0.69

.86
2.09

1.22
2.09

1.05
1.74

1.16
1.58

.85
1.33

.37

1.08

2.48

3.72

6.30

5.73

3.94

4.15

4.69

4.37

11.66

9.63

10.08

12.83

16.24

.46

.39

.60

.80

.88

.36

.35

.41

.47

.53

10.62

9.39

7.08

Interpretation:

We can see that in the year 2014 the np margin ratio is negative
and continues to remain negative in 3 consecutive years. On the
other hand there is no dividend payout in year 2015 and 2016.
Also there is a substantial decrease in current ratio from year
2015 in 2016. Quick ratio is satisfactory as quick ratio of 1:1 is
considered to be satisfactory. Looking at the debt equity ratio, it
can be seen that lenders have contributed more towards capital
than owners. Interest coverage ratio can be seen decreasing over
the years. Higher the coverage ratio it is desirable, but too high
ratio also indicates that firm is conservative in using debts. Also
too low ratio indicates firms inability to use debts or inefficiency
in using debts. Inventory turnover ratio is marginally constant and
the total assets turnover ratio is also steady.
Steel authority of India
Ratios

March
15

March
14

March
13

March
12

March
11

Operating
profit
margin
GP margin
NP margin
Return on
capital
employed
Return on
long term
funds
Current
ratio
Quick ratio
Debt equity
ratio
Interest
coverage
ratio
Inventory
turnover
Debt
turnover
Fixed
assets

10.18

8.39

10.34

13.04

16.37

6.30
4.57
5.43

4.71
5.60
4.60

7.20
4.86
6.67

9.66
7.94
10.91

12.88
11.53
12.88

6.78

5.47

7.66

11.87

15.10

.68

.79

1.01

1.22

1.21

.55
.65

.62
.57

.68
.52

.82
.40

1.35
.54

2.68

3.19

5.59

15.86

2.88

3.45

2.79

3.37

5.13

10.54

9.45

9.71

10.39

11.11

.72

.89

1.09

1.16

1.16

turnover
Assets
turnover
Dividend
payout

.66

.72

.75

.82

.79

39.47

31.88

38.06

22.43

20.21

Interpretation:
The GP margin ratio indicates the firms efficiency in producing at
low cost. Here it can be seen that in comparison with year 2014
the GP margin has increased which shows production efficiency of
the firm. The NP ratio indicates firms ability to maintain a balance
between production cost and selling and administration expense.
Also the dividend payout ratio has increased over the years. The
inventory turnover ratio also states that company had good ratio
in the year 2014 whereas the ratio decreased in 2015. It can be
stated that the sales have taken a hit in year 2015. Operating
performance can be measured with help of assets turnover ratio.
It indicates the capability of firm to produce and sell at a given
level of assets.