You are on page 1of 20

FinShiksha

Question Number
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Total

Marks
1
1
1
1
3
3
1
2
3
1
1
1
1
1
1
1
1
1
25

FinShiksha
3
4
5
6

Real Estate
Maruti
Cement
Real Estate

Dr. Reddy's acquired a German company Betapharma at a significant premium to


purchase, the German Government made it mandatory for all pharma drugs to be
names. So for example, a company who sells an antibiotic drug under a brand na
just like the others. The market turned from what was 'branded generics' to 'gen
huge overpayment was for those brands of BEtapharma, which now by regulation
regulatory risk

ignificant premium to the market value. However, a year into the


all pharma drugs to be sold under generic names, and not brand
drug under a brand name will now have to sell it as an antibiotic,
nded generics' to 'generics' This resulted in huge loses, since the
hich now by regulation it could not sell. This was an example of

FinShiksha
Year
Effective Capacity
Production
Utilization
Operating Margin

mt
mt
%

2010
27.4
21.1
77.0%

2011
29.0
23.5
81.0%

2012
30.0
24.2
80.7%

21.2%

18.8%

19.0%

Why do you think ACC is not using their capacity completely even though their margins seem fine and

ACC is one of the largest Cement firms in India. In spite of stable margins, ACC has not bee
exists in India, and there are indications of cartelization. The companies have already bee
all companies produce less to keep prices in check. Also - cement cannot be stored for too

margins seem fine and stable

ins, ACC has not been utilizing their capacity completely, since demand supply mismatch in cement
es have already been penalized for this as well. Thus rather than producing more and taking a hit o
ot be stored for too long, so any surplus is unwanted.

supply mismatch in cement sector


ing more and taking a hit on margins,

FinShiksha
Profit & Loss Excerpts
Sales
Operating Profit
EBIT
Interest
Net profit

Mar-08
27,012
11,381
8,173
396
6,395

Mar-09
37,352
15,440
11,048
631
7,859

Mar-10
41,829
16,997
11,032
770
9,163

Balance Sheet excerpts


Equity Share Capital
Reserves
Secured Loans
Unsecured Loans
Total Liabilities

Mar-08
1,898
19,767
58
9,543
32,338

Mar-09
1,898
27,087
1,429
12,088
43,873

Mar-10
1,899
37,716
4,958
5,330
53,020

ROE

29.52%

27.11%

23.13%

NPM
ATR
A/E

23.68%
0.84
1.49
29.52%

21.04%
0.85
1.51
27.11%

21.91%
0.79
1.34
23.13%

Falling ROE due to Largely Net Margin Impacts. Also, Asset Turnover has reduced, which sh

Mar-11
59,467
19,971
11,762
2,535
7,167

Mar-12
71,506
23,705
10,601
4,083
2,217

Mar-11
1,899
46,868
7,671
48,980
108,273

Mar-12
1,899
48,713
12,089
56,934
122,404

14.70%

4.38%

12.05%
0.55
2.22
14.70%

3.10%
0.58
2.42
4.38%

nover has reduced, which shows lesser utilization of resources. This infact when leverage has incre

when leverage has increased.

FinShiksha
Cash Flow
Cash from Operating Activity
Cash from Investing Activity
Cash from Financing Activity
Net Cash Flow

Mar-03
199
-1274
1025
-49

Mar-04
1056
-320
-771
-35

Mar-05
1355
-1780
915
490

Comment on this series of Cash Flows for Jet Airways

Jet seems to have turned around a bit in the last few years, in terms of CFO becoming pos
probably the huge debt is due to that. 2009 was when recession arrived, and the company
consistently reducing debt, unlike their peer Kingfisher, and probably this is one reason w
foreign player.

Mar-06
607
-2472
1588
-276

Mar-07
687
-786
732
634

Mar-08
863
-6177
5123
-191

Mar-09
-376
-1154
1242
-288

Mar-10
1651
160
-2084
-272

Mar-11
1227
14
-1206
35

Mar-12
2241
293
-2610
-76

of CFO becoming positive and higher. 2008 was the year they got Sahara, and
ved, and the company suffered due to that. However, since then they have been
y this is one reason why they were the first candidate to get acquired by a

FinShiksha
Exercise Objective

Kindly create the Cash Flow Statement using the Indirect method, and

Income Statement
Y1
5000

Y2
6000

Cost of Goods Sold

2600

3120

Gross Profit

2400

2880

Operating Expense
Depreciation & Amortization
Operating Profit

1200
1200
1200

1440
1600
1440

Finance Cost

400

500

EBT

800

940

Tax

240

282

Net Profit

560

658

Dividends

80

25

Revenue

CFO Year 1
Cash Balance Year 2
Total Assets Year 2

1660
3113
17113

low Statement using the Indirect method, and fill in the grey cells, in order to Balance the Balance Sheet for
Balance Sheet
Yo
9000
0
4000
2000

Y1
9000
480
4000
1800

Total Liabilities

15000

15280

17113

Cash Flow from Operation

Gross Block
Accumulated Dep & Amor
Net Block

12000
2000
10000

12000
3200
8800

16000
4800
11200

Gross Capex
Investments

1000
2000
2000

900
3680
1900

1000
3113
1800

15000

15280

17113

Equity (FV 10)


Reserves and Surplus
Long term Loans
Current Liabilities

Cash Flo
Y2
9000
1113
5000
2000

Net Profit
Add Depreciation
Less Change in Current Asse
Add Change in Current Liabil

Cash Flow from Investing


Investments
Cash
Current Assets

Total Assets
Check

Equity
Debt
Less Dividend

Cash Flow from Financing


Net Cash Flow
Beginning Cash
Ending Cash

e the Balance Sheet for years Y1 and Y2


Cash Flow Statement
Y1

Y2

dd Depreciation
ss Change in Current Assets
dd Change in Current Liabilities

560
1200
-100
-200

658
1600
-100
200

ash Flow from Operations

1660

2558

0
100

-4000
-100

100

-4100

0
0
80

0
1000
25

-80

975

1680
2000
3680

-567
3680
3113

oss Capex

ash Flow from Investing

ss Dividend

ash Flow from Financing

et Cash Flow
eginning Cash
nding Cash

FinShiksha
Consolidated Balance Sheet

Sources Of Funds
Total Share Capital
Equity Share Capital
Reserves
Networth
Secured Loans
Unsecured Loans
Total Debt
Group Share in Joint Venture
Total Liabilities
Application Of Funds
Gross Block
Less: Accum. Depreciation
Net Block
Capital Work in Progress
Investments
Inventories
Receivables
Cash and Bank Balance
Loans and Advances
Total CA, Loans & Advances
Payables
Provisions
Total CL & Provisions
Net Current Assets
Group Share in Joint Venture
Total Assets
Consolidated Profit & Loss account
Income
Sales Turnover
Excise Duty
Net Sales
Other Income
Stock Adjustments
Total Income
Expenditure
Raw Materials

Rs Crore
Mar '12
Mar '11

145
145
15,530
15,675
1,262
1,262
16,937

145
145
14,164
14,309
31
278
309
232
14,850

15,056
7,310
7,746
612
6,545
1,838
1,007
2,463
2,889
8,197
5,470
692.90
6,162.60
2,034
16,937

11,953
6,281
5,672
1,499
5,439
1,414
895
2,511
1,630
6,450
3,820
517.40
4,337.20
2,113
127
14,850

Rs Crore
Mar '12
Mar '11
40,050
3,989
36,061
844
162
37,068

40,895
4,351
36,544
1,349
73
37,966

28,736

29,294

Power & Fuel Cost


Employee Cost
Other Manufacturing Expenses
Selling and Admin Expenses
Miscellaneous Expenses
Preoperative Exp Capitalised
Total Expenses
Operating Profit
PBDIT
Depreciation
PBIT
Interest
Profit Before Tax
Extra-ordinary items
PBT (Post Extra-ord Items)
Tax
Reported Net Profit

230
878
53
3,844
-43
33,698

210
704
1,949
1,057
451
33,664

2525.1
3369.4
1,163
2206.7
62
2,145
2,145
512
1,634

2952.9
4302.0
1,031
3270.7
24
3,246
19
3,265
828
2,307

7.00%
4.5%

8.08%
6.3%

10.4%
0.08
35.8
19.6
35.8
6.6

16.1%
0.02
134.0
25.8
40.8
9.6

Ratios
OPM
NPM
ROE
Debt Equity
Interest Coverage
Inventory Turnover Ratio
Receivables Turnover Ratio
Payables Turnover Ratio

Costs as % of sales
Raw Material Cost
Power & Fuel
Employee Cost
Working Capital (Current Assets - Current Liabilities)
Non Cash CA - CL
In terms of days
Inventory
Receivables
Payables
Cash Conversion Cycle
Cash Collected

79.7%
0.6%
2.4%

80.2%
0.6%
1.9%

2,034
-429.4

2,113
-398.0

18.6
10.2
55.4
-26.6
35,949

14.1
8.9
38.2
-15.1

Cash Collected / Sales


Net Sales
Change in Receivables

99.69%
36,061
112

Steps to Solve this


Find receivables for year 2012
Then, with the ratio of Cash Collected by Sales, find change in receivables over the last ye
With this, find receivables for last year, and Receivables Turnover Ratio
Calculate other elements of Current Assets and Current Liabilities
Calculate Provision using the differential of total assets and total liabilities
Rest of the calculations follow simple formulae

23,099
6,163

19,187
4,337

vables over the last year