ravi ratio.doc final001

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A Summer Training Project Report on

Ratio Analysis Made Simpler

In partial fulfillment for the award of the degree OfMasters of Business Administration of

IIMT College of ngineering! "reater #oida

Submitted To

UTTAR PRADESH TECHNICAL UNIVERSITY,LUCKNOW

Batch: 2013-2015

SUB!TT"# T$ SUB!TT"# B%R& R!S'! RA( RA)! *UAR

Ro++ ,o& 1321.0032


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AC$#O%&"M#T

I would like to express my special thanks of gratitude to my project guide prof. Ri/hi Raj

who gave me the golden opportunity to do this wonderful project on the topic RAT!$

A,A%S!S A#" S!P"R which also helped me in doing a lot of Research and i came

to know about so many new thingsI am really thankful to them.It was really worthwhile to receive help from r& Abhi/he #a/ Branch 'ead o4 Re+iance

Securitie/ imited who in person was always present to help us out anytime we felt his

need. Without his Constant support this project would not have been acknowledged as it is

now.

inally! i would also like to thank my parents and friends who helped me a lot in finishing this

project within the limited time.

I am making this project not only for marks but to also increase my knowledge.

"#$%&' $($I% ") $** W#) #+*,+- +.

Ravi &umar/$Ro++ ,o:- 1321.0032

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PR"A6"

'ummer training is an integral part of our academic curriculum. -uring the

training students gets an opportunity to understand the practical aspect of theory.

"raining makes the concept clear. "his report is the outcome of the summer

training that we have undergone at for the partial fulfillment of Re+iance

Securitie/ td&/$ course.

"he topic allotted to us by the company Ratio Ana+7/i/ ade Simp+er& "he

project is concerned with -emat account and y gold plan! there are the more

specific criticisms that it is over01uantitative and neglects the 1ualitative aspects

of contribution. "he issue has become not how many people should be

employed! but ensuring that all members of staff are making an effective

contribution. $nd for the future! the 1uestions are what are the skills that will be

re1uired! and how will they be ac1uired. ,reparation of project re1uires proper

guidance and direction.

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COMPANY PROFILE

Reliance Life Insurance

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Reliance Life Insurance Company Limited (RLIC) is amongst the leading privatesector life insurers with a private sector market share of 7% in terms of newbusiness premium RLIC has a strong distribution network of over !"" officesacross India

RLIC offers wide range of innovative life insurance products# targeted atindividuals and groups It offers need based products that caters to three distinctsegments namely protection# retirement and investment plans RLIC iscommitted to emerge as a leading Life Insurer with global scale and standards

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Reliance SecuritiesReliance $ecurities# the broking arm of Reliance Capital is the one of theIndias leading retail broking houses in India# providing customers withaccess to e&uities# e&uity options and commodities futures# wealthmanagement# wealth management services# mutual funds# I's andinvestment banking

Reliance $ecurities has over 7 lac retail broking accounts through its pan

India presence with over 7#""" outlets

Reliance Money

he third party distribution business of Reliance Capital# branded as*Reliance +oney is a comprehensive financial services and solutionsprovider# providing customers with access to life and general Insuranceproducts# money transfer# currency e,change and loans

o know more about Reliance $ecurities - Reliance +oney clickhere. http.//wwwreliancemoneycom

Reliance General Insurance

Reliance 0eneral Insurance (R0I) offers a range of products for the corporateand individual customers R0I currently offers insurance products including

1ealth# 1ome# +otor# ravel# 2ire# 3ngineering# +arine# Liability and 4viation

R0I is amongst the leading general insurance companies in India# with a privatesector market share of 75% R0I had a distribution network composed of 67branches and over 65#5"" intermediaries at the end of +arch "68

o know more about Reliance 0eneral Insurance click

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http://www.reliancemoney.com/http://www.reliancemoney.com/


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here. http.//wwwreliancegeneralcoin

Reliance General Insurance

Reliance 0eneral Insurance (R0I) offers a range of products for the corporateand individual customers R0I currently offers insurance products including1ealth# 1ome# +otor# ravel# 2ire# 3ngineering# +arine# Liability and

4viation

R0I is amongst the leading general insurance companies in India# with aprivate sector market share of 75% R0I had a distribution networkcomposed of 67 branches and over 65#5"" intermediaries at the end of+arch "68

o know more about Reliance 0eneral Insurance clickhere. http.//wwwreliancegeneralcoin

International BusinessesReliance Capital Limited intends to be a well9respected global player in theinternational financial services sector

$ingapore

Reliance 4sset +anagement ($ingapore) 'te Ltd (R4+$) is a private limitedcompany with limited liability and is regulated by the +onetary 4uthority of $ingapore(+4$) R4+$ holds a Capital +arkets $ervices (C+$) license issued by +4$# for

carrying out fund management activities under the $ecurities and 2utures 4ct ($24)It was set up as an offshore fund platform of Reliance Capital 4sset +anagementLimited in "": for managing/advising mandates from global institutional andaccredited investors he core activity of R4+$ is asset management focusing onIndia e&uities# alternative - fi,ed income instruments R4+$ has in9housecapabilities to structure and manage customi;ed mandates and new productofferings to meet specific client re&uirements R4+$ is also a registered 2oreign

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http://www.reliancegeneral.co.in/http://www.reliancegeneral.co.in/http://www.reliancegeneral.co.in/http://www.reliancegeneral.co.in/


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Institutional Investors (2II) with $ecurities - 3,change ebit +andate 2orm


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4bout Reliance Capital limited

R+*I$%C+ C$,I"$*

"ype ,ublic company

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http://en.wikipedia.org/wiki/Types_of_business_entityhttp://en.wikipedia.org/wiki/File:Reliance_Capital.svghttp://en.wikipedia.org/wiki/Types_of_business_entity


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'ubsidiaries Reliance *ife Insurance!Reliance (eneral Insurance!

Reliance Capital $sset anagement *imited! Reliance

oney and Reliance Consumer inance.

Website www.reliancecapital.co.in

Reliance Capital Limited(


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.istory o! Anil Am$aniAnil Am$ani

+r 4nil 4mbani during Reliance 0roup 40+ at +umbai# "6

Born 8 Aune 6!5! (age 55)

+umbai# +aharashtra# India

Residence +umbai# +aharashtra# India

Nationality Indian

Alma mater Bniversity of +umbai

?harton $chool of the Bniversity of 'ennsylvania

Occupation Chairman of4nil >hirubhai4mbani 0roup

Net %ort& 5 billion ("68)6J

Spouse/s0 ina 4mbani

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http://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Maharashtrahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/University_of_Mumbaihttp://en.wikipedia.org/wiki/Wharton_School_of_the_University_of_Pennsylvaniahttp://en.wikipedia.org/wiki/Anil_Dhirubhai_Ambani_Grouphttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/Anil_Ambani#cite_note-forbes.com-1http://en.wikipedia.org/wiki/Tina_Ambanihttp://en.wikipedia.org/wiki/File:Anil_Ambani_Reliance.jpghttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Maharashtrahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/University_of_Mumbaihttp://en.wikipedia.org/wiki/Wharton_School_of_the_University_of_Pennsylvaniahttp://en.wikipedia.org/wiki/Anil_Dhirubhai_Ambani_Grouphttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/Anil_Ambani#cite_note-forbes.com-1http://en.wikipedia.org/wiki/Tina_Ambani


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C&ildren Aai 4nmol4mbani

Aai 4nshul4mbani

Parents >hirubhai4mbani

Kokilaben4mbani

Relati'es +ukesh4mbani(4 0roup) which came into e,istence in Aune ""5 following a

demerger from Reliance Industries Limited 1e leads a large number of

listed corporations including Reliance Capital# Reliance Infra# Reliance

'ower and Reliance Communications4mbanisnetworth is 5! billion

according to the 2orbes billionaire list for "68

In India he is one of the largest producers of 1 business# 4nimation $tudios# and several multiple, cinemas

throughout India 1e is married to former


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Career

4nil 4mbani Doined Reliance Industries# the company founded by his father

>hirubhai4mbani# in 6!FE as Co9Chief 3,ecutive fficer and is credited withhaving pioneered many financial innovations in the Indian capital markets 1e led

Indias first foray into overseas capital markets with international public offerings of

global depository receipts# convertibles and bonds 1e directed Reliance in its

efforts to raise# since 6!!6# around B$ billion from overseas financial marketsG

with a 6""9year Mankee bondissue in Aanuary 6!!7 being the high point# after

which people regarded him as a financial wi;ard 1e along with his brother#

+ukesh4mbani# steeredReliance Industriesto its current status as Indias leading

te,tiles# petroleum and petrochemicals company

4fter the death of his father in ""5# 4nil 4mbani took over the reigns of Reliance

0roupwith interests in elecom# 3ntertainment# 2inancial $ervices# 'ower and

Infrastructure In ""F# 4mbani is also credited with Indias largest I' of

Reliance 'ower which was subscribed in less than :" second on offer# fastest in

the history of Indian capital markets till date

4mbani made his debut into the entertainment industry with the takeover

of4dlabs# the movie production9to9distribution9to9multiple, company that owns

Indias only domes theatre hereafter he e,panded his footprint in the industry to

now become the largest producer of


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4 Doint venture worth B$ F5 million with $teven $pielbergcatapulted 4mbanisentertainment business to global platform 4long with $teven $pielberg and $tacy

$neider he has produced a number of films including the scar winning Lincoln

Awards and recognition Conferred the


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Reliance Capital Limited

.istory o! Reliance capital limited2345

9 he Company was incorporated on 5th +arch# and obtained theCertificate for Commencement of irectors# theirfriends# etc 6F#""#""" shares were allotted to Reliance Industries Ltd

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6F#""#""" shares were allotted to investment companies in RIL 0rouphe remaining 658#""#""" shares were offered for public subscriptionduring 4pril 6!!"# of which 6"#""#""" shares were allotted on preferentialbasis to employees (including Indian working directors)/workers of theCompany 77#""#""" shares were allotted on preferential basis toshareholders of Reliance Industries# Ltd he balance :7#""#""" shareswere allotted to public

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9 6F#7"#""" =o of e&uity shares allotted to 4rsina hotels on itsamalgamation in Aanuary 6F#7"#""" Rights e&uity shares ('rop 6.6#'rem Rs E" per share) issued 4nother !:"" shares issued toemployees (only 75"" shares taken up)

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9 he Company issued 65#""#"""96% non9convertible unsecuredredeemable debentures of Rs 6"" each with one non9detachable warrantentitling the holder to apply for e&uity shares of Rs 6" each at apremium

ofRs 8" per shares 4ccordingly 5"#""#""" shares were allotted onconversion of warrants

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9 'ursuant to a resolution at the 3,tra rdinary 0eneral +eeting held at

6th 2ebruary# the Company issued 6E7#""#"""96% non9convertibleredeemable debentures of Rs 6"" each to promoters having one warrantentitling the holder to receive e&uity shares to Rs 6" each at a premiumof Rs 8" per share within 6 months from the date of allotment

4ccordingly 78#""#""" =o of e&uity shares were allotted

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233:

9 he Company issued 68#!#5"" Rights e&uity shares of Rs 6" each ata premium of Rs 8" per share in proportion 6.5 4nother 8!#57#""shares at a premium of Rs 6E" per share were issued through a'rospectus as follows. n firm allotment basis.(6) 6"7#68#E"" shares to promoters# directors# etc# (ii) 5#:#E8 sharesto Ind 2in 4ssociation (iii) 67#7"#""" shares to Indian +utual 2unds (iv)7F#:"" shares to =RIs

9 f the remaining# following were reserved for allotment on a preferentialbasis. (i) 6#"#65F shares to Ind 2in Institutes (ii) 8:#5F#5"" shares to+utual 2unds (iii) 7:#E5#:"" shares to =RIs on non9repatriation basis (iv)65#""" shares to employees

9 he Company plans to diversify its activities into money marketoperations# proDect finance advisory services# foreign e,change andevery sphere of financial services

9 :5#:!" shares allotted

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9 he company had been allotted a plot by the +umbai +etropolitanRegion >evelopment 4uthority (4) in the uring the year under review# the company sponsored the launch of the

two maiden schemes of the Reliance Capital +utual 2und

9 Reliance $hare - $tock


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9 he Companys 2i,ed >eposit programme was accorded C4R3 O444Oby Credit 4nalysis and Research Limited during the year

233;

9 Reliance Capital (RCL) has shelved its plans to enter into auto financebusiness because of a sluggish trend in the auto finance segment

9 he Company has received an 444 rating from Credit 4nalysis andResearch Ltd# for the proposed non9convertible debenture issue

incidentally# its fi,ed deposit programme was also rated 444

9 he company sought a fresh rating raising the amount of the proposed

issuer to Rs E"" crore

9 he Company has also become the first non9banking financial companyto receive approval to act as a depository participant

9 he company has been granted approval by the $ecurities and3,change


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aggregating Rs "F8 crores due for repayment but which remainedunclaimed on the due dates

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9 Reliance Capital (RCL) has decided to move away from the traditionalnon9banking finance company (=


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99Reliance Capital Limited ac&uires 66#8#"! shares representing 5E%of the total shareholding/voting rights of 4dlabs 2ilms Limited throughopen market9he 4c&uirer is making an pen ffer to the public shareholders ofReliance Capital Ltd (Oarget CompanyO) to ac&uire upto 5#68#:6#8! fullypaid up e&uity shares# representing "% of the fully e,panded votinge&uity capital of the arget Company (including the entire share allotmentas well as warrants) at a price of Rs E6 (Rupees wo hundred and thirty

one only) for each $hare of the arget Company (Offer priceO) to be paidin cash in accordance with the Regulations

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9Reliance Capital 2orays into Life Insurance

9Reliance Capital 9 4c&uisition of 4+' $anmar Life Insurance

9Reliance Cap to ac&uire 68!: per cent stake in $panco

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9Reliance Capital Doin hands with H 6F to fund Matra

9Reliance Capital Limited 9 4c&uisition of $hares by 444 3nterprises

9Reliance Capital to ac&uire 6""% of ravelmate $ervices

766;

9Reliance +oney Doins hand with H 6F unit

9Reliance Cap establishes subsidiary in $ingapore

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appointed as an Independent >irector on the L $hah =ational 4ward from ualityCouncil of India

9 In the backdrop of rising speculation that R


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Uses of Ratio AnalysisRatio analysis is a technique of analyzing the financial

statements by calculating ratios. Here is the list of uses

of ratio analysis

1. It is useful for inter firm comparison which implies

that company compares its performance with that of itsindustry peers.

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2. It is useful in intra firm comparison which meansthat company will compare the performance of various

departments of the company so as to udge the best

department within the company.

!. It is useful in simplifying the accounting figures to

ma"e them understandable to a layman# because it is

easier to understand ratios then plain figures.

$. It is also useful in forecasting and planning for the

future# also it helps in control by comparing the actual

performance with that of forecasted performance and

loo"ing for reason for it.

%. It is also used for analysis of financial statements by

various interested parties li"e ban"ers# creditors#

supplier etc&. for ta"ing future decision about the

company.

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A&,A#TA"S O+ RATIO A#A%*SIS

Ratio analysis is very useful tool of management accounting.

'ith this, we can analye business(s financial position. 'e also

check company(s short term and long term solvency with ratio

analysis. Following are the main advantages of ratio analysis.

-. )elpful in &e/ision Ma0ing

#ll our financial statements are made for providing information.

)ut this information is not helpful for decision making because

financial statements provide only raw information. 'hen we

calculate different ratios in ratio analysis, at that time, we get

useful information. I can e*plain it with simple e*ample.

+uppose, we calculate our interest coverage ratio which is

times but our competitor company(s interest coverage ratio is times. It means capacity of the profit of our competitor

company is more than us. )y seeing this, we can take decisions

for increasing our profitability.

1. )elpful in +inan/ial +ore/asting and 2lanning

%very year we calculate lots of accounting ratios. 'hen we

make trend of all these ratios, we can get useful information forour future forecasting and planning. For e*ample, we can tell

five year collection period with following way

/0 1 2 days

/3 1 0 days

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/2 1 4 days/ 1 days

/ 1 5 days

From this trend, we know that we are decreasing the days for

collection money from our debtors. 'ith this information, we

can make two plans. 6ne is effective use of money which we

are getting from our debtors more fastly and second we can

also check the behavior of our debtors by comparing this withsales trend. !ike this, there are lots of ratios which are also

useful for better planning.

3. )elpful in Communi/ation

Ratio analysis are more important from communication point of

view. +uppose, we have to appoint new sales agents for our

company. #t that time, we can communicate them by using ourcompany(s sales and profit related ratios. There is no need of

hi-tech for understanding the meaning of any specific ratio. For

e*ample, our gross profit in / is /4.47 and in /, it is

/3.7. )y 8ust telling this ratio, we can understand whether

our company is growing or falling.

4. )elpful in Co5ordination

9o company has all the strength points. $ompany(s financial

results shows some strength points and some weak points.

Ratio analysis can create co-ordination between strength points

and weak points.

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take decisions.

:. )elpful for employees8 de/isions

%very employee wants to increase his salary.


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%IMITATIO#S O+ +I#A#CIA% A#A%*SIS

Ratio analysis is used by almost all the accounts managers

for strategic planning and decision making. It also very helpfultool to know the effect of each item of financial statements bycreating relationship with other items. There is big list ofbenefits of ratio analysisbut it has also some limitations. +o,account managers and other parties who use ratio and itsanalysis should remember these limitations when they take anydecision.

+ollowing are main draw=a/0s or limitations of ratio

analysis>

-. %imited 'se of Single Ratio

+ometime, we can not compare our ratios with others. Fore*ample, we have started new business and our financialresults are not still normal. #t that time, our profitability ratiowill have limited use because there is not any past data ofprofitability ratios.

1. %a/0 of Ade?uate Standards

'e could not make standards of all ratios. For e*ample, we can

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http://www.svtuition.org/2011/12/advantages-of-ratio-analysis.htmlhttp://www.svtuition.org/2011/12/advantages-of-ratio-analysis.htmlhttp://www.svtuition.org/2011/12/advantages-of-ratio-analysis.htmlhttp://www.svtuition.org/2011/12/advantages-of-ratio-analysis.html


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not tell what is rule of them of our net profit ratio because thereare lots of factors affect it. In the lack of adequate standards ofratios, we can not give e*act comment on the basis of ratioanalysis.

3.Inherent %imitation of +inan/ial A//ounting

Ratio analysis is 8ust like simplification of financial accountingdata. )ut there are lots of limitations of financial accounting

which you can read athere. #ll these limitation will be absorbedby ratios. This is the one of the important limitation of ratio. Ican say if base is not good, everything will be wrong. If there issmall portion of poison in milk, its effect will be in everythingwhat you will make.

4. Changes of A//ounting 2ro/edures

If accounting procedures will change, our accounting ratio will

be changed. #t that time, we can not compare our current yearratios with our past year ratios. For e*ample, in past year, wehad used!IF6but current year, we are using FIF6for inventoryvaluation. ;ue to this, figures of closing stock will be different.6n this basis, if we have calculated current ratio, it will not becomparable with past current ratio.

6. (indow &ressing

)ecause we have shown our financial data through windowdressing. 6ur ratios will also be affected from it.

7. 2ersonal Bias

This is reality, I saw many $#s who waste their time to optimiedifferent ratios by changing the pro8ect financial statements

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http://www.svtuition.org/2009/10/limitations-of-financial-accounting.htmlhttp://www.svtuition.org/2010/08/what-is-lifo.htmlhttp://www.blogger.com/http://www.svtuition.org/2011/10/window-dressing-accounting.htmlhttp://www.svtuition.org/2011/10/window-dressing-accounting.htmlhttp://www.svtuition.org/2009/10/limitations-of-financial-accounting.htmlhttp://www.svtuition.org/2010/08/what-is-lifo.htmlhttp://www.blogger.com/http://www.svtuition.org/2011/10/window-dressing-accounting.htmlhttp://www.svtuition.org/2011/10/window-dressing-accounting.html


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figures for making attractive pro8ects. #ll these activities aredone for getting loan. +o, this will make the drawback of ratioanalysis.

9. Mat/hless

;ifferent companies uses different accounting policies, so, wecan not compare their ratios.

:. 2ri/e %e


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Con/epts

+hort-term +olvency Ratios

;ebt &anagement Ratios

#sset &anagement Ratios

:rofitability Ratios

&arket >alue Ratios

%quations

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http://www.zenwealth.com/businessfinanceonline/RA/LiquidityRatios.htmlhttp://www.zenwealth.com/businessfinanceonline/RA/DebtManagementRatios.htmlhttp://www.zenwealth.com/businessfinanceonline/RA/AssetManagementRatios.htmlhttp://www.zenwealth.com/businessfinanceonline/RA/ProfitabilityRatios.htmlhttp://www.zenwealth.com/businessfinanceonline/RA/MarketValueRatios.htmlhttp://www.zenwealth.com/businessfinanceonline/RA/RatioEquations.htmlhttp://www.zenwealth.com/businessfinanceonline/RA/LiquidityRatios.htmlhttp://www.zenwealth.com/businessfinanceonline/RA/DebtManagementRatios.htmlhttp://www.zenwealth.com/businessfinanceonline/RA/AssetManagementRatios.htmlhttp://www.zenwealth.com/businessfinanceonline/RA/ProfitabilityRatios.htmlhttp://www.zenwealth.com/businessfinanceonline/RA/MarketValueRatios.htmlhttp://www.zenwealth.com/businessfinanceonline/RA/RatioEquations.html


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Short5term Sol


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?uick Ratio

"he Buick Ratio recognies that! for many firms! Inventories can be rather illi1uid.If these Inventories had to be sold off in a hurry to meet an obligation the firmmight have difficulty in finding a buyer and the inventory items would likely haveto be sold at a substantial discount from their fair market value.

"his ratio attempts to measure the ability of the firm to meet its obligations relyingsolely on its more li1uid Current $sset accounts such as Cash and $ccountsReceivable. "his ratio is calculated by dividing Current $ssets less Inventories by

Current *iabilities.

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&e=t Management Ratios

-ebt anagement Ratios attempt to measure the firmAs use of inancial*everage and ability to avoid financial distress in the long run. "hese ratios arealso known as *ong0"erm 'olvency Ratios.

-ebt is called inancial *everage because the use of debt can improve returns tostockholders in good years and increase their losses in bad years. -ebt generallyrepresents a fixed cost of financing to a firm. "hus! if the firm can earn more onassets which are financed with debt than the cost of servicing the debt then theseadditional earnings will flow through to the stockholders. oreover! our tax lawfavors debt as a source of financing since interest expense is tax deductible.

With the use of debt also comes the possibility of financial distress andbankruptcy."he amount of debt that a firm can utilie is dictated to a great extentby the characteristics of the firmAs industry. irms which are in industries with

volatile sales and cash flows cannot utilie debt to the same extent as firms inindustries with stable sales and cash flows. "hus! the optimal mix of debt for afirm involves a tradeoff between the benefits of leverage and possibility offinancial distress.

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&e=t Ratio! &e=t5?uity Ratio! and

?uity Multiplier

"he -ebt Ratio! -ebt0+1uity Ratio! and +1uity ultiplier are essentially threeways of looking at the same thing2 the firmAs use of debt to finance its assets. "he-ebt Ratio is calculated by dividing "otal -ebt by "otal $ssets. "he -ebt0+1uity

Ratio is calculated by dividing "otal -ebt by "otal )wnersA +1uity. "he +1uityultiplier is calculated by dividing "otal $ssets by "otal )wnersA +1uity.

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Asset Management Ratios

$sset anagement Ratios attempt to measure the firmAs success in managing itsassets to generate sales. or example! these ratios can provide insight into thesuccess of the firmAs credit policy and inventory management. "hese ratios arealso known as $ctivity or "urnover Ratios.

Re/ei


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"he -aysA Receivables Ratio is calculated by dividing the number of days in ayear! ?83! by the Receivables "urnover Ratio. "herefore! the -aysA Receivablesindicates how long! on average! it takes for the firm to collect on its sales tocustomers on credit. "his ratio is also known as the -aysA 'ales )utstanding9-'): or $verage Collection ,eriod 9$C,:.

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+ied Assets Turno


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Total Assets Turno


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2rofita=ility Ratios

,rofitability Ratios attempt to measure the firmAs success in generating income."hese ratios reflect the combined effects of the firmAs asset and debtmanagement.

2rofit Margin

"he ,rofit argin indicates the dollars in income that the firm earns on eachdollar of sales. "his ratio is calculated by dividing %et Income by 'ales.

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Return on Assets ROA and Return

on ?uity RO

"he Return on $ssets Ratio indicates the dollars in income earned by the firm onits assets and the Return on +1uity Ratio indicates the dollars of income earned

by the firm on its shareholdersA e1uity. It is important to remember that these

ratios are based on $ccounting book values and not on market values. "hus! it isnot appropriate to compare these ratios with market rates of return such as theinterest rate on "reasury bonds or the return earned on an investment in a stock.

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)ow a Ratio is epressedE

#s :ercentage - such as /7 or 7 . For

e*ample if net profit is Rs./,@- and the sales is

Rs.,,@- then the net profit can be said to be

/7 of the sales.

#s :roportion -The above figures may be

e*pressed in terms of the relationship between net

profit to sales as A B.

#s :ure 9umber @Times -The same can also bee*pressed in an alternatively way such as the sale

is B times of the net profit or profit is @B thof the

sales.

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CurrentRatioQuickAsset RatioProprietaryRatio

DebtEquityRatio

Gross ProftRatioOperating RatioExpense Ratioet proft Ratio!tock "urno#er

Ratio

Fixe$ Asset"urno#er Ratio%Return on "otalResourcesRatio%Return on O&n

Fun$s Ratio%Earning per!'are Ratio%Debtors(

"urno#er Ratio%

+ormat of =alan/e sheet forratio analysis

LIABILITIES ASSETS

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NETWORTH"E(UITY"OWNED

)UNDS

!'are Capital)Partner(sCapital)Pai$ up Capital)O&ners Fun$sReser#es * General% Capital%Re#aluation + Ot'er Reser#es,

Cre$it -alance in P+. A)c

)I*ED ASSETS + .AD +-/0.D0G% P.A" +1AC20ER0E!Original 3alue .ess Depreciationet 3alue or -ook 3alue or4ritten $o&n #alue

LON TER-

LIABILITIES"BORROWED

)UNDS 5 "erm .oans *-anks+ 0nstitutions,Debentures)-on$s% /nsecure$.oans% Fixe$ Deposits% Ot'er.ong "erm .iabilities

NON CURRENT ASSETS

0n#estments in quote$ s'ares +securitiesOl$ stocks or ol$)$ispute$ book$ebts.ong "erm !ecurity DepositsOt'er 1isc6 assets &'ic' are not

current or fxe$ in nature

CURRENT LIABILTIES

-ank 4orking Capital .imitssuc' as CC)OD)-ills)ExportCre$it!un$ry )"ra$eCre$itors)Cre$itors)-illsPayable% !'ort $uration loansor $epositsExpenses payable +pro#isions against #ariousitems

CURRENT ASSETS5 Cas' +-ank -alance%1arketable)quote$ Go#t6 orot'er securities% -ookDebts)!un$ry Debtors% -illsRecei#ables% !tocks + in#entory*R1%!0P%FG, !tores + !pares%A$#ance Payment o7 "axes%Prepai$ expenses% .oans an$A$#ances reco#erable &it'in 89mont's

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INTANIBLE ASSETSPatent% Goo$&ill% Debitbalance in P+. A)c%Preliminary or Preoperati#eexpenses

Some important notes

!iabilities have $redit balance and #ssets have ;ebit

balance

$urrent !iabilities are those which have either become due

for payment or shall fall due for payment within / monthsfrom the date of )alance +heet

$urrent #ssets are those which undergo change in their

shape@form within / months. These are also called

'orking $apital or =ross 'orking $apital

9et 'orth C !ong Term !iabilities are also called Long

Term Sources of Funds

$urrent !iabilities are known as Short Term Sources of

Funds

!ong Term !iabilities C +hort Term !iabilities are also

called Outside Liabilities

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$urrent #ssets are Short Term Use of Funds

#ssets other than $urrent #ssets are Long Term Use of

Funds

Installments of Term !oan :ayable in / months are to be

taken as $urrent !iability only for $alculation of $urrent

Ratio C ?uick Ratio.

If there is profit it shall become part of 9et 'orth underthe head Reserves and if there is loss it will become part of

Intangible #ssets

Investments in =ovt. +ecurities to be treated current only

if these are marketable and due. Investments in other

securities are to be treated $urrent if they are quoted.

Investments in allied@associate@sister units or firms to be

treated as 9on-current. )onus +hares as issued by capitaliation of =eneral

reserves and as such do not affect the 9et 'orth. 'ith

Rights Issue, change takes place in 9et 'orth and $urrent

Ratio.

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Relian/e /apital limited2rofit F %oss AGC

Standalone

Standalone Pro!it 28 Mar >27 Mar >22 Mar >26 Mar >63

6 mths 6 mths 6 mths 6 mths 6 mths

Income

$ales urnover E#FF"" E#:F"" 6#F8"E! #E::: #!E!FF

3,cise >uty """ """ """ """ """

=et $ales E#FF"" E#:F"" 6#F8"E! #E::: #!E!FF

ther Income 8""" 8!"" 8:E: E7F 9!E!

$tock 4dDustments """ """ """ """ """

?otal Income 8)454-66 8)82;-66 2)445-;: 7)8;6-96 7)386-93

E,penditure

Raw +aterials """ """ """ """ """

'ower - 2uel Cost """ """ """ """ """

3mployee Cost 6:5"" 686"" 6"!87 66:8 68!"F

ther +anufacturing3,penses

""" """ """ """ """

$elling and 4dmin3,penses

""" """ !6E 87"EE E5:8!

+iscellaneous3,penses

7!6"" 8:8"" E7 5::" F!77

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Mar >28

Mar >27 Mar >22 Mar >26 M

6 mths 6 mths 6 mths 6 mths 6

Sources O! Fundsotal $hare Capital 8:"" 8:"" 8:6: 8:6:

3&uity $hare Capital 8:"" 8:"" 8:6: 8:6:

$hare 4pplication +oney """ """ """ """

'reference $hare Capital """ """ """ """

Reserves66#::"

"6"#7!F"" :#7F65E :#76!" :#

Revaluation Reserves """ """ """ """

Net%ort& 22):27-66

22)699-66 ;)67;-53 5)3:3-65 5)

$ecured Loans66#EF5"

"!#75"" 6E#:8:66 :#5" 8#

Bnsecured Loans5#"7"

"8#5!E"" 8#FE:!6 5#8E:6E F#

?otal 1e$t25):37-

6629)824-66 24)948-67 22)3:4-2: 28

?otal Lia$ilities74)269-

667:)857-66 7:):26-;2 24)32;-72 76

Mar >28 Mar >27 Mar >22 Mar >26 M


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Application O! Funds

0ross ebtors """ 6!E"" 6::! 66E F

Cash and


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Manaement E!!iciency RatiosInventory urnover

Ratio99 99 99 99 99

>ebtors urnover Ratio E!:7 E667 ::! EE5 "5

Investments urnoverRatio

99 99 99 99 99

2i,ed 4ssets urnoverRatio

99 99 99 99 99

otal 4ssets urnoverRatio 99 99 99 99 99

4sset urnover Ratio "68 "6E ""F "6 "6:

4verage Raw +aterial1olding

99 99 99 99 99

4verage 2inished0oods 1eld

99 99 99 99 99

=umber of >ays In

?orking Capital6#6!E!5 6#6"F"7 #755! 6#6:!E 6#86F8

Pro!it < Loss Account Ratios

+aterial CostComposition

99 99 99 99 99

Imported Compositionof Raw +aterials

Consumed99 99 99 99 99

$elling >istributionCost Composition

99 99 E8: 5": 68

3,penses asComposition of otal

$ales99 99 99 99 99

Cas& Flo% Indicator Ratios

>ividend 'ayout Ratio=et 'rofit

8F6F E585 7"E 55"E 6!!

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>ividend 'ayout RatioCash 'rofit 8:6: EE7: ::6F 58 6FFF

3arning RetentionRatio

56F :855 E7 8F" F6:E

Cash 3arningRetention Ratio

5EF8 ::8 F5: 85F6 F"6

4dDustedCash 2lowimes

8"6 :7 F6!" E8:! 6E7

Mar >28 Mar >27 Mar >22 Mar >26 Mar >63

3arnings 'er $hare :!5 66E !EE 6EF E!86


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Relian/e /apital limited2rofit F %oss AGC

ConsolidatedRe+iance 6apita+ Pre'ious Years @

Consolidated Pro!it 28 Mar >27 Mar >22 Mar >26 Mar >63


Income

$ales urnover 7#87""" :#577"" 5#EF:F :#6"7F7 5#!E!:

3,cise >uty """ """ """ """ """

=et $ales 7#87""" :#577"" 5#EF:F :#6"7F7 5#!E!:

ther Income F!"" 8!"" 666:5 98! 986!E

$tock 4dDustments """ """ """ """ """

?otal Income ;)::3-66 5)575-66 :)934-9; 5)26:-84 :)432-68

E,penditure

Raw +aterials """ """ """ """ """

'ower - 2uel Cost """ """ """ """ """

3mployee Cost :"7"" 58F"" 8!:F 5E5E5 558"7ther +anufacturing3,penses

""" """ """ """ """

$elling and 4dmin3,penses

""" """ """ F:!:! 7!:"

+iscellaneous3,penses

E#:FE"" E#5:"" E#6!F88 #:65E6 #"5FE6

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'reoperative3,pCapitalised """ """ """ """ """

otal 3,penses 8#!""" E#F"8"" E#:!5: 8#""E5 E#E86!F

Mar >28 Mar >27 Mar >22 Mar >26 Mar >63


Operatin Pro!it 8)246-66 7);;8-66 2)532-:5 7)64;-:7 7):36-34

'I E#:!"" #F"" 6#F"E6 #"F5"E #58!"5Interest #E8E"" #5""" 6#8:"8 6#E8"5F 6#:F6E

' !:"" 57"" E8667 78885 6#F"!

>epreciation 5:"" 58"" 8!!: :7:E 5:76

ther ?ritten ff """ """ """ 6"8:7 56!"

'rofit


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$hares in issue (lakhs) #85:EE #85:EE #85:EE #85:EE #85:EEEarnin Per S&are

/Rs086-7: 28-8: 3-9; 2;-39 92-5:

3&uity >ividend (%) """ """ """ """ """

28 Mar >27 Mar >22 Mar >26 M


Sources O! Funds

otal $hare Capital 8:"" 8:"" 8:6: 8:6:

3&uity $hare Capital 8:"" 8:"" 8:6: 8:6:

$hare 4pplication +oney """ """ """ """

'reference $hare Capital """ """ """ """

Init Contribution $ettler """ """ """ """

'reference $hare 4pplication+oney

""" """ """ """

3mployee $tock piton """ """ """ """

Reserves 66#75"" 66#5"" 7#58E7! 7#857F 7#

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Revaluation Reserves """ """ """ """Net%ort& 22)3;2-66 22);54-66 ;);43-3: ;);68-34 ;)

$ecured Loans 68#EFF"" 66#:!F"" 65#EEFF F#78786 8#

Bnsecured Loans E#:F8"" E#F!5"" 8#F65E8 5#!EF! !#

?otal 1e$t 24)6;7-66 2:):38-66 76)2:8-57 29)545-88 29

+inority Interest 56:"" 6E6"" 6:F" !E75 F

'olicy 1olders 2unds """ """ """ """

0roup $hare in Aoint Henture """ """ """ """

?otal Lia$ilities 86)::3-66 7;)937-66 74)265-8; 77)949-65 72Mar >28 Mar >27 Mar >22 Mar >26 M


Application O! Funds

0ross epreciation """ 6FF"" 876 855 E

Net Bloc# 989-66 746-66 729-65 253-55 7Capital ?ork in 'rogress 5"" 6"" 666E6 FFF: !

In'estments 2:)64;-66 29);:3-66 27)862-8; 22)896-:3 3)

Inventories 688"" 67"" 6F5E! EFF" E

$undry >ebtors FE!"" 8"5"" 6"E85 6!"F7

Cash and


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otal CL - 'rovisions 6"#"!"" 7#F56"" E#!8!7E E#:768 #Net Current Assets 2:)688-66 27)9:7-66 2:)843-62 26);33-69 22

+inority Interest """ """ """ """

0roup $hare in Aoint Henture """ """ """ """

+iscellaneous 3,penses """ """ !": F5!6 6

?otal Assets 86)::3-66 7;)937-66 74)265-8; 77)949-65 72

Contingent Liabilities #776"" #E6:"" 6#56666 EE":: F


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+inan/ial Ratio of Relian/e/apital limited

ConsolidatedRe+iance 6apita+ Pre'ious Years @

------------------- in R/& 6r& -------------------

ar A5? ar A5@ ar A55 ar A54 ar A46

Investment Daluation Ratiosace Dalue 54.44 54.44 54.44 54.44 54.44

-ividend ,er 'hare 00 00 00 00 00)perating ,rofit ,er 'hare 9Rs: 5@6.


73/82

$djusted Return on %etWorth9G: 3.73 @.74 4.34 3.;8 5


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Composition+xpenses as Composition of"otal 'ales

00 00 00 00 00

Cash low Indicator Ratios-ividend ,ayout Ratio %et

,[email protected] 34.44 87.@7


75/82

Balance S&eet =================== in Rs- Cr- ===================

RelianceCapital

Ba+a+.oldins

Ba+a+Finser'

L


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?otal Lia$ilities 74)269-66 :)245-;: 7)96;-:2 :)67:-25 24

RelianceCapital

Ba+a+.oldins

Ba+a+Finser'

L


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Net Current Assets 29)7;:-66 773-89 =73-22 293-2: 24+iscellaneous 3,penses """ """ """ """

?otal Assets 74)269-66 :)245-;: 7)96;-:2 :)67:-2: 24

Contingent Liabilities 6#F!"" F!58 FFE """


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Competition

Name Last Price Mar#et Cap-/Rs- cr-0

Sales?urno'er

Net Pro!it ?otal


80/82

$ummit $ec 5:"" 7!"! :6F 5""Hisagar'olyte, 6E5"" :: :7: "!8

nelife Capital 6:6"" 656" 99 99

4,is 0old 32 #:8!"" "E" 9 9

$4 6"" E!"" 66"65 9 9

Inventure 0row 6"F" !"7 6:! 9"EE

I>


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ravi ratio.doc final001

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