FA Report

A STUDY ON COMPARISON OF
PROFITABILITY, LIQUIDITY AND

SOLVENCY OF COMPANIES
In partial fulfilment of covering the course of Financial
Accounting
Submitted To:
Dr. Vandana Gupta

Faculty, FA
FORE School of Management
Submitted By:
Aanchal Malik
Danish Sharma
Hina Gupta
Parth Dhingra
Samik Mahotra
1
ACKNOWLEDGEMENT
The report has been done as an end term project for the course titled Comparison of
Solvency, Liquidity and Profitability of Companies. I am thankful to our course instructor
Dr. Vandana Gupta, Professor, FORE School of Management, New Delhi for her
invaluable guidance and assistance. I also wish to thank her for providing us with this
opportunity to learn more about the solvency, liquidity and profitability of the corporate
sector.
Aanchal Malik
Danish Sharma
Hina Gupta
Parth Dhingra
Samik Mahotra
2
LETTER OF TRANSMITTAL
September 13, 2016
TO: Dr. Vandana Gupta

FROM: Aanchal Malik, Danish Sharma, Hina Gupta, Parth Dhingra, Samik Mahotra
Student, Fore School of Management
SUBJECT: Comparison of Solvency, Liquidity and Profitability of Companies
As per the course of Financial Accounting, I am submitting the attached report

entitled Comparison of Solvency, Liquidity and Profitability of Companies.
This report examines the various ratios of profitability, liquidity and solvency of companies
of the corporate sector. For this purpose, one company from each sector i.e. FMCG, Cement,
Automobile, Steel and IT has been taken into consideration. The calculations for all the ratios
has been attached for your reference in the appendix. Profitability, liquidity and solvency
ratios and their analysis are covered in this report. Also, comparison of the ratios with their
respective industry average has also been accounted in the report.
I hope you find this report satisfactory.
Aanchal Malik
Danish Sharma
Hina Gupta
3
Parth Dhingra
Samik Mahotra
Table of Contents
ACKNOWLEDGEMENT.......................................................................................................ii
LETTER OF TRANSMITTAL.............................................................................................iii
Executive Summary................................................................................................................vi
Chapter 1...................................................................................................................................1
Introduction..............................................................................................................................1
Significance of the Study.................................................................................................................1
Purpose of the Study.......................................................................................................................1
Objective of the Study.....................................................................................................................2
Brief Outline of the Chapters.........................................................................................................2
Chapter 2...................................................................................................................................3
Methodology.............................................................................................................................3
Universe of the Study......................................................................................................................3
Locale of the Study..........................................................................................................................3
Sample Size of the Study.................................................................................................................3
Data Collection of the Study...........................................................................................................3
Data Analysis...................................................................................................................................3
Field Research Experience.............................................................................................................4
Chapter 3...................................................................................................................................5
Brief Profile of the Companies................................................................................................5
1. Brief Profile of Nestle.............................................................................................................5
2. Brief Profile of Maruti Suzuki...............................................................................................5
3. Brief Profile of ACC...............................................................................................................6
4. Brief Profile of JSW Steel.......................................................................................................6
5. Brief Profile of Infosys Limited.............................................................................................6
Chapter 4...................................................................................................................................7
Analysis.....................................................................................................................................7
Analysis for Nestle...........................................................................................................................7
1. Profitability Ratios...............................................................................................................7
Analysis of Profitability Ratios.....................................................................................................8
4
2. Liquidity Ratios..................................................................................................................10
Analysis of Liquidity Ratios.......................................................................................................12
3. Solvency Ratios..................................................................................................................13
Analysis of Solvency Ratios.......................................................................................................14
Analysis of Nestls Ratios with The Food Processing Industry Average...................................15
Analysis for Maruti Suzuki...........................................................................................................15
1. Profitability Ratios.............................................................................................................15
Analysis of Profitability Ratios...................................................................................................17
3. Solvency Ratios..................................................................................................................21
Analysis of Marutis Ratios with The Automobile Industry Average..........................................22
Analysis for ACC...........................................................................................................................23
3. Solvency Ratios..................................................................................................................28
Analysis of ACC Ratios with the Cement Industry Average.......................................................30
Analysis for JSW - Steel................................................................................................................31
3. Solvency Ratios..................................................................................................................36
Analysis of JSW - Steels Ratios with the Industry Average.......................................................38
Analysis for Infosys.......................................................................................................................39
3. Solvency Ratios..................................................................................................................45
Analysis of Infosys Ratios with the IT Industry Average............................................................46
APPENDIX......................................................................................................................................I
Calculations for Nestle....................................................................................................................I
Calculations for Maruti Suzuki...................................................................................................IV
Calculations for ACC..................................................................................................................VII
Calculations for JSW Steel.........................................................................................................X
Calculations for Infosys Limited...............................................................................................XIII
REFERENCES..........................................................................................................................XVI
5
Executive Summary
Ratio analysis is a important tool for analyzing the companys financial performance.
Different users such as bankers, investors, creditors, financial institutions use this tool to
analyze the financial situation of the company. They judge to help how well company is
utilizing their assets and earn profits. Also management can pay attention to the weakness and
take remedial measures to overcome them.
The main objective of the study is to calculate the liquidity, solvency and profitability ratios
of the five companies of 5 different industries each. The analysis of these ratios to be done as
compared from previous year to this year. Also to see how company is performing in the
industry as compared to the Industry standard ratios. The five Industry are FMCG, Steel,
Cement, Automobile and IT.
The data is taken from the annual report of the five companies of 2015. The ratios are found
out using standard formulas and analysis is done as per students understanding.
There are many major findings which are discussed in the upcoming chapters and some
analysis with their respective industries has also been done as per student understanding.
6
Chapter 1
Introduction
Profitability ratios are a class of financial metrics that are used to assess a business's ability to
generate earnings compared to its expenses and other relevant costs incurred during a specific
period of time. For most of these ratios, having a higher value relative to a competitor's ratio
or relative to the same ratio from a previous period indicates that the company is doing well.
Liquidity ratios measure a company's ability to pay debt obligations and its margin of
safety through the calculation of metrics including the current ratio, quick ratio and operating
cash flow ratio. Current liabilities are analyzed in relation to liquid assets to evaluate the
coverage of short-term debts in an emergency.
A key metric used to measure an enterprises ability to meet its debt and other obligations.
The solvency ratio indicates whether a companys cash flow is sufficient to meet its short-
term and long-term liabilities.
Significance of the Study
1. ROI Ratios are used to analyze the overall profitability of a company in relation to its
shareholders funds. It is important to analyze the profitability of a company at various
steps or intermediate levels.
2. Liquidity ratios help to determine the capacity of a company to discharge its suppliers
and service providers and meet its day to day expenses its liquidity and ensures smooth
continuity of operations, which in turn have a strong bearing on the long term survival of
the company.
3. Solvency ratios help to determine the capacity of a company to discharge its obligations
towards long term lenders which indicates its financial strength and ensures long term
survival. It deals with the leveraging capacity of a company.
Purpose of the Study
The purpose of the study is to study the profitability, liquidity and solvency ratios of the
corporate sector. A detailed analysis of the financial ratios has to be done for one company of
each of the following sectors FMCG, Cement, Automobile, Steel and IT. A comparison
needs to be made for the financial ratios with vis a vis industry average financial raios to
understand the performance of each of the chosen companies.
Objective of the Study
1. Compare the profitability, liquidity and solvency of one company of the following
corporate sectors FMCG, Cement, Automobile, Steel and IT.
2. Analyze the financial ratios with respect to previous year.
3. Compare and analyze the financial ratios with the respective industry average financial
ratios.
Brief Outline of the Chapters
The report has been divided into 4 chapters
The first chapter consists of the introduction to the research study that has taken place. The
relevance, purpose and the objectives of the study undertaken have been clearly defined in
the subsequent part.
Chapter 2 involves the methodology which has been used to perform the research study. It
explains the sample space and size that has been taken up for the study. Description of the
data analysis techniques used and the whole research experience is also provided.
A brief profile of the chosen companies from each sector that has been used in the execution
of the study has been explained in the third chapter.
Chapter 4 includes the analysis of the financial ratios and calculations acquired by the
primary source and the secondary source as defined by the objectives.
Chapter 2
Methodology
Universe of the Study
The universe of the study is the analysis of financial ratios of all companies that are listed in
the BSE and NSE and then consequently analyze the performance of each and every
company in terms of its profitability, solvency and liquidity.
Locale of the Study
The locale of the study is choosing one company from each of the following corporate sectors
FMCG, Cement, Automobile, Steel and IT. One of the big and listed companies has been
accounted as the locale of the study.
Sample Size of the Study
The sampling method used for the aforementioned study is convenient sampling. One of the
big and listed companies has been accounted as the locale of the study. The companies that
are taken into consideration are as follows:
FMCG Nestle
Cement ACC
Automobile Maruti Suzuki
Steel JSW Steel
IT Infosys Limited
Data Collection of the Study
Information has been collected from internet, journals, companys website and other already
done research on profitability, liquidity and solvency ratios. The companys annual report for
the year has been taken as a reference and data from financial websites has been also been
taken into account for calculating the financial ratios.
Data Analysis
Data from the above mentioned sources was collected and a detailed calculation of the
financial ratios was done. Consequently, a comprehensive analysis of all the three ratios
profitability, liquidity and solvency ratios was done. A deep analysis of the reasons of
increase or decrease of the financial ratios has been covered under the scope of the project.
The analysis of the calculated ratios with respect to their industry average has also been
covered in the project.
Field Research Experience
The field experience was enriching in terms of knowledge and exposure to the corporate
environment. Besides the analysis of the financial ratios over the previous year, we also
analyzed the ratios with respect to the industry average. Comparison of the companies
specific to the topic of the study and analyzing the data accordingly developed our cognitive
skills. The whole procedure enlightened us with the various aspects to be considered for
calculating and analyzing the profitability, liquidity and solvency ratios and consequently
judge the performance of a company.
Chapter 3
Brief Profile of the Companies
1. Brief Profile of Nestle
2. Brief Profile of Maruti Suzuki

3. Brief Profile of ACC
4. Brief Profile of JSW Steel
5. Brief Profile of Infosys Limited

Chapter 4
Analysis
Analysis for Nestle
1. Profitability Ratios
(a) Gross Profit Margin
Gross Profit Margin has been computed by:
Net Revenue
Gross Profit
Operations 100

2015 2014 Increase / Decrease

Gross Profit (Rs. in million) 43052.8 47360.5 (8.7%)
Gross Profit Margin (%) 52.66 48.06 4.6
(b) Net Profit Ratio
Net Profit Ratio has been computed by:
Net Revenue
Profit After Tax
Operations 100

Profit After Tax (Rs. in million) 5632.7 11846.9 (52.4%)

Net Profit Ratio (%) 6.89 12.02 (5.13)
(c) Operating Profit Ratio
Operating Profit Ratio has been computed by:
Net Revenue
Operating Profit
Operations 100


Operating Profit (Rs. in million) 13,337.50 17,925.50 (25.6%)
Operating Profit Ratio (%) 16.31 18.19 (1.88)
(d) Return on Net Worth / Equity (ROE)
Return on Net Worth / Equity (ROE) has been computed by:
Profit After Tax

100
Net WorthEquity Shareholde r ' s Funds

Net Worth (Rs. in million) 28,178.40 28,372.10 (0.68%)
Return on Net Worth / Equity (ROE) (%) 19.99 41.76 (21.77)
(e) Return on Total Assets
Return on Total assets has been computed by:

Profit After Tax (Rs. in million) 5632.7 11846.9 ( 52.4%)
Total Assets (Rs. in million) 60,804.60 58,195.00 4.2%
Return on Total Assets (%) 9.26 20.36 (11.1)
Profit After Tax
100
Total Assets
Analysis of Profitability Ratios
There is a decrease of 17% from previous year in the net revenue from operations. This is due
to the Maggi controversy which is the main reason of this downfall. Despite a decrease in
sales, Nestle has managed to increase the gross profit margin marginally by 9% from
previous year by lowering its manufacturing expenses. Though, Nestle has tried to lower its
expenses from previous year, the operating profit has decreased by 25.6% from previous year.
This is because the net revenue from operations is higher for previous year and the expenses
being higher than this year but the net result for gross profit figure is higher for the previous
year. Consequently, we can conclude that the profit after tax has decreased by 52.4%. The net
worth of the company has reduced very marginally but due to considerable decrease in the net
profit, the return on equity is very low compared to previous year. The slight increase of total
assets can be attributed to the investments Nestle has made using the previous years profit.
Therefore, return on total assets is on a decline as compared to previous year.
The above information has been depicted through graphs.

All the calculations have been done in excel and the excel sheets have attached in the
appendix.
Graph 1 - Operating Profit

Graph 2 - EBDITA, PBT and PAT
Graph 3 - Net Sales

Finally, if we analyze Nestle from the profitability perspective, we can infer that the company
is in a profitable position. And, with the clearance of Nestle from the Maggi controversy, the
sales are expected to increase and the company is expected to make huge profits.
2. Liquidity Ratios
(a) Current Ratio
Current Ratio has been computed by:
Current Assets
Current Liabilities

Current Assets (Rs. in million) 24796.1 19636.7 20.8%
Current Liabilities (Rs. in million) 14757.3 13554.5 8.1%
Current Ratio 1.68 1.45 13.7%
(b) Quick Ratio
Quick Ratio has been computed by:
Current AssetsInventory
Current Liabilities

Current Assets (Rs. in million) 24796.1 19636.7 20.8%
Current Liabilities (Rs. in million) 14757.3 13554.5 8.1%
Inventory (Rs. in million) 8208.1 8441 (2.7%)
Quick Ratio 1.12 0.83 25.8%
(c) Inventory Holding Period (Days)
Inventory Holding Period has been computed by:
Inventory
365
COGS

COGS (Rs. in million) 38700.3 51187.9 (24.4%)
Inventory Holding Period (Days) 77.41 60.19 22.2%
(d) Debtor Days
Debtor Days has been computed by:
Trade Receivables
365
Credit Sales

Trade Receivables (Rs. in million) 784.2 991 (20.8%)
Credit Sales (Rs. in million) 84304.4 101295 (16.7%)
Debtor Days 3.40 3.57 (4.7%(
(e) Creditor Days
Creditor Days has been computed by:
Trade Payables
365
Credit Purchases

Trade Payables 7435.4 7287.1 2%
Credit Purchases 33355.8 45907.1 (27.3%)
Creditor Days 81.36 57.94 28.8%
(f) Inventory Turnover Ratio
Inventory Turnover Ratio has been computed by:
Net Sales
Inventory

Net Sales (Rs. in million) 81753.1 98548.4 (17%)
Inventory Turnover Ratio 9.96 11.67 (14.6%)
Analysis of Liquidity Ratios
The current ratio has increased by 13.7% over the previous year which is attributed to the
increase in current assets and current liabilities. High value of current ratio means that Nestle
has the capacity to meet its day to day obligations. The current assets increment is due to the
investments which Nestle has made so that the short term funds are not kept idle. There is a
very slight increase in the current liabilities. The ideal current ratio is 2:1. But ideally,
institutions look for a current ratio of 1.33:1 while financing projects. This high value of
current ratio means that Nestle possesses adequate level of current assets to pay off their
current liabilities. This higher value is likely to attract cheaper credit and suppliers and
institutions feel that there is a less risk associated with the company.
The quick ratio has increased by 25.8%. It is completely in line with the current ratio. The
ideal quick ratio is 1:1 and institutions look for this ratio while financing projects. The high
quick ratio means that the company can convert its current assets into cash more swiftly.
The inventory holding period has increased by 22.2% over the previous year. This is due to
the Maggi controversy. But, Nestle has been able to lay off its inventories at a good pace.
The debtor days have reduced very marginally by 4.7% over the previous year. It is good for
the company as the debtors have paid the payments to the company.
The creditor days have increased by 28.8% over the previous year. The company may have
renegotiated with its suppliers for a higher credit period on account of low off take due to
Maggi controversy. This is an indication that the suppliers have confidence in the company
that they will pay off their debts. This also shows that the creditors believe that Nestle would
be able to clear off their debts in the future.
The inventory turnover ratio has reduced by 14.6% over the previous year. This is also
because of the Maggi controversy. This ratio determines the quickness of an organization to
convert its inventory into cash. Due to decline in sales, and not much decrease in inventory, a
lower figure of inventory turnover figure was recorded.
Overall, a very high liquidity has been observed. Nestle is using the working capital very
efficiently. However, inventory levels need to be brought down for further gains.
appendix.
3. Solvency Ratios
(a) NAV
NAV has been computed by:
Networth
No . of Equity Shares O/ S

Net Worth (Rs. in million) 28178.4 28372.1 (0.68%)
No. of Equity Shares O/S (Rs. in million) 96.42 96.42 0%
NAV 292.25 294.26 (0.68%)
(b) Debt Equity Ratio
Debt Equity Ratio has been computed by:
Long Term Borrowings

Networth

Long Term Borrowings (Rs. in million) 167.9 154.6 7.9%
Debt Equity Ratio 0.005958 0.005449 8.5%
(c) Interest Cover Ratio
Interest Cover Ratio has been computed by:
Profit After Tax+ Interest on Long Term Debt + NonCash Charges

Interest on LongTerm Debt
Interest on Long Term Debt (Rs. in million) 0 0 0%
Non-Cash Charges (Rs. in million) 4389.4 4070.3 7.2%
Interest Coverage Ratio - - -
(d) Debt Service Coverage Ratio (DSCR)
Debt Service Coverage Ratio has been computed by:

Interest on Long Term Debt + Instalment on Principal Due

Non-Cash Charges (Rs. in million) 4389.4 4070.3 7.2%
Interest on Principal Due 0 0 -
DSCR - - -
Analysis of Solvency Ratios
The company has an extremely high value of NAV i.e. 292.25 against a face value of Rs. 10
per share. It is marginally 0.6% down over previous year. This high value indicates that
Nestle is performing very efficiently and it has a backup of reserves and surplus after paying
the dividends on equity. It has a high capacity to raise further capital borrowed as well as
equity.
The debt equity ratio is almost the same over the 2 years. Nestle is practically a debt free
organization. Based on standard debt equity ratio of 1.5:1 followed by lending organizations,
Nestle has the capacity to raise additional long term borrowings with the existing resources of
its own. It has a high leverage capacity available for further growth.
Nestle has an extremely high Interest Coverage Ratio against a standard value of 2:1. This is
because the the long term borrowings are interest free. Nestle has long term borrowings from
the State of Karnataka and the State of Himachal Pradesh. State of Karnataka has provided an
interest free loan, repayable after 10 years of disbursement in 10 equal installments
commencing from 2024. State of Himachal Pradesh has provided an interest free loan,
repayable after 10 years of deferment commencing from 2021.
Nestle has a very high Debt Service Coverage Ratio. As explained above, Nestle has secured
interest free loans, it has no interest on long term debt as well as no instalments of principal
due as of now.
Overall, Nestle is very strongly solvent. Institutions and banks will be willing to lend to the
company on its slightly indication to borrow. The banks will make beeline for the same.
appendix.
Analysis of Nestls Ratios with The Food Processing Industry Average
2015 2016
Nestle Industry Nestle Industry
A. Profitability
1. Gross Profit Margin 52.66 20.81 48.06 21.34
2. Operating Profit Margin 16.31 8.13 18.19 9.01
3. Net Profit Margin 6.89 5.31 12.02 6.56
4. ROE 19.99 21.02 41.76 23.18
B. Liquidity
1. Current Ratio 1.68 1.40 1.45 1.43
2. Quick Ratio 1.12 0.28 0.83 0.32
3. Inventory Turnover Ratio 9.96 1.17 11.67 1.30
4. Debtor Days 3.40 23.32 3.57 22.23
C. Solvency
1. Debt Equity Ratio 0.005958 0.38 0.005449 0.29
2. Interest Cover Ratio - 8.57 - 7.54
3. DSCR - 1.49 - 1.23
Note: Debtor Turnover Ratio was given for the industry which has been converted into
Debtor Days
There is a downfall in ROE in 2015 which is due to the Maggi controversy. Nestle has a high
inventory holding period which is a concern for Nestle. On other parameters, Nestle is way
ahead of the industry average and outperforms the industry hands down. Overall, Nestle is a
highly profitable, liquid and solvent organization.
Analysis for Maruti Suzuki
Net Revenue
Gross Profit
Operations 100


Gross Profit (Rs. in crores) 6,000.13 4,126.60 45.40%
Net Revenue
Profit After Tax
Operations 100


(c)
Profit After Tax (Rs. in crores) 4,571.40 3,711.20 23.17% (c)
(c)
Net Profit Ratio (%) 8.11 7.64 0.47 (c)
(c)
Operating Profit Ratio
Net Revenue
Operating Profit
Operations 100

Operating Profit (Rs. in crores) 8,978.50 6,712.90 33.74%
Operating Profit Ratio (%) 15.93 13.81 2.12
Profit After Tax

'
100
Net WorthEquity Shareholde r s Funds

Profit After Tax (Rs. in crores) 4,571.40 3,711.20 23.17%
Net Worth (Rs. in crores) 27,007.10 23,704.20 13.93%
Return on Net Worth / Equity (ROE) (%) 16.93 15.66 1.27
Profit After Tax

100
Total Assets
Profit After Tax (Rs. in crores) 4,571.40 3,711.20 23.17%
Total Assets (Rs. in crores) 39,195.60 33,551.00 16.82%
Return on Total Assets (%) 11.66 11.06 0.60
There is an increase of 33.74% from previous year in the net revenue from operations. This is
due to the upward demand in automobile sector. Maruti has also managed to increase the
gross profit margin marginally by 2.6% from previous year by lowering its manufacturing
expenses. Marutis operating profit has increased by 33.74% from previous year. This is a
healthy sign for any organization. Consequently, we can conclude that the profit after tax has
increased by 23.17%. The net worth of the company has also increased by almost 14%. The
increase of total assets can be attributed to the investments Maruti has made using the
previous years profit.

appendix.

EBITDA is an acronym for Earnings Before Interest, Taxes, Depreciation, and Amortization.
PBT stands for Profit Before Tax, and PAT stands for Profit After Tax.
The graph visually shows how the net profit of the company stand reduced due to the impact
of Interest, Depreciation, and Tax.
Graph 6 - Net Sales
Finally, if we analyze Maruti from the profitability perspective, we can infer that the
company is in a profitable position. And, with the loyalty Maruti earn from its customers the
sales are expected to increase and the company is expected to make huge profits.
2. Liquidity Ratios
(a) Current Ratio
Current Assets
Current Liabilities

Current Assets (Rs. in crores) 7149.5 8197.9 -12.78%
Current Liabilities (Rs. in crores) 11290 8823 27.96%
Current Ratio 0.63 0.93 -32.25%
(b) Quick Ratio
Current Liabilities

Inventory (Rs. in crores) 3132.1 2615 19.77%
Quick Ratio 0.36 0.63 57.14%
Inventory
365
COGS

COGS (Rs. in crores) 50350.27 44478.9 13.20%
Inventory Holding Period (Days) 22.71 21.46 5.82%
(d) Debtor Days
Trade Receivables
365
Credit Sales

Trade Receivables (Rs. in crores) 1298.6 1069.8 21.38%
Credit Sales (Rs. in crores) 66226.4 56052.3 18.15%
Debtor Days 7.16 6.97 2.72%
(e) Creditor Days
Trade Payables
365
Credit Purchases
Trade Payables 7013.3 5561.4 26.10%
Credit Purchases 40797.4 37878.5 7.70%
Creditor Days 62.75 53.59 17.10%
Net Sales
Inventory

Net Sales (Rs. in crores) 57746.3 49970.6 15.56%
Inventory Turnover Ratio 18.44 19.11 -3.50%
The liquid ratio is not so good in the year 2015(0.36) which is less than 1 and shows that they
will not be able to pay their short term debts easily. The liquid ratio is not so good in the year
2008. but it becomes more than 1 in the year 2015 which shows that they will pay their short
term debts easily. This implies that bank is acquiring more assets which make it solvent for a
particular year. Since the ratio has fallen in 2015 from 2014 it shows there has been excessive
use of debt.
The debtor days have increased very marginally by 2.72% over the previous year. It is not
good for the company as the debtors have not paid the payments to the company.
The creditor days have increased by 17.10% over the previous year. This is an indication that
the suppliers have confidence in the company that they will pay off their debts. This also
shows that the creditors believe that Maruti would be able to clear off their debts in the future
.
appendix.
3. Solvency Ratios
(a) NAV

Networth
Net Worth (Rs. in crores) 27007.1 23704.2 13.93%
No. of Equity Shares O/S (Rs. in crores) 30.2 30.2 0%
NAV 894.27 784.91 13.93%

Networth

Long Term Borrowings (Rs. in crores) 0 144.8 -
Debt Equity Ratio 0.000000 0.006109 -


Profit After Tax (Rs. in crores) 4630.9 3790.6 22.16%
Interest on Long Term Debt (Rs. in crores) 104.41 294.36 -64.50%
Non-Cash Charges (Rs. in crores) 3740.7 3165.2 18.18%
Interest Coverage Ratio 81.18 24.63 229.59%
The company has an extremely high value of NAV i.e. 894.27. It is 13.93% up over previous
year. This high value indicates that Maruti is performing very efficiently and it has a backup
of reserves and surplus after paying the dividends on equity. It has a high capacity to raise
further capital borrowed as well as equity.
The debt equity ratio is almost the same over the 2 years. Maruti is practically a debt free
organization. Based on standard debt equity ratio of 1.5:1 followed by lending organizations,
Maruti has the capacity to raise additional long term borrowings with the existing resources
of its own. It has a high leverage capacity available for further growth.
Maruti has an extremely high Interest Coverage Ratio against a standard value of 2:1.
Overall, Maruti is very strongly solvent. Institutions and banks will be willing to lend to the
appendix.
Analysis of Marutis Ratios with The Automobile Industry Average
2015 2014
Maruti Industry Maruti Industry
A. Profitability
4. ROE 16.93 12.42 15.66 12.82
B. Liquidity
1. Current Ratio 0.63 1.31 0.93 1.39
2. Quick Ratio 0.36 0.38 0.63 0.48
4. Debtor Days 7.16 12.52 6.97 12.77
C. Solvency
2. Interest Cover Ratio 81.18 29.77 24.63 29.55
3. DSCR - 1.79 - 1.72
There is an increase in ROE in 2015 which is a healthy sign. On other parameters, Maruti is
way ahead of the industry average and outperforms the industry hands down. Overall, Maruti
is a highly profitable, liquid and solvent organization.
Analysis for ACC

Net Revenue
Gross Profit
Operations 100


Gross Profit (Rs. in crores) 884.76 949.6 -6.83 %
Gross Profit Margin (%) 7.50 8.09 -7.29%
Net Revenue
Profit After Tax
Operations 100

Profit After Tax (Rs. in crores) 591.57 1168.29 -49.3% (c)

(c)
Net Profit Ratio 5.01 9.95 -49.62% (c)
(c)
Net Revenue
Operating Profit
Operations 100


Operating Profit (Rs. in crores) 1537.13 1507.19 2%
Operating Profit Ratio (%) 13.03 12.84 1.5%
Profit After Tax

100
Profit After Tax (Rs. in crores) 591.57 1168.29 -49.3%
Return on Net Worth / Equity (ROE) (%) 7.01 14.19 -50.61%

Total Assets (Rs. in crores) 12840.82 12671.33 1.3%
Return on Total Assets (%) 4.66 9.22 -50.03%
Profit After Tax
100
Total Assets
There is a increase of 0.5% from previous year in the net revenue from operations which is
marginal. There is a significant decrease of 7% in the gross profit margin of ACC limited due
to slow down of Cement industry as demand has decreased. ACC has tried to lower its
expenses from previous year, the operating profit has increased by 2% from previous year.
This is because the profit before taxes has reduced from previous year to this year. Although
finance cost as well as other income reduced due to lower cash and cash equivalent on
account of utilization of funds. Though net revenue from operations has increased marginally
but net profit ratio has decreased significantly due to very high decrease in profit after tax of
49% because of the revised estimate of useful life of fixed assets. The net worth of the
company has increased by 2%. Also due to considerable decrease in the net profit, the return
on equity is very low compared to previous year. The slight increase of total assets can be
attributed to the long term loans and advances paid by ACC as well as increase in other non-
current assets. Therefore, return on total assets is on a decline as compared to previous year.
appendix.
Graph 8 - PBT and PAT

Graph 9 - Net worth and RONW
Finally, if we analyze ACC limited from the profitability perspective, we can infer that the
company is making profit from its core operations but ROE has decreased significantly which
could make investors doubtful about the companys future.
2. Liquidity Ratios
(a) Current Ratio
Current Assets
Current Liabilities

Current Liabilities (Rs. in crores) 3808.76 3784.21 0.64%
Current Ratio 0.88 0.96 8.28%
(b) Quick Ratio
Current Liabilities
Current Liabilities (Rs. in crores) 3808.76 3784.21 0.6%
Inventory (Rs. in crores) 1188.6 1255.59 -5.33%
Quick Ratio 0.57 0.63 -9.5%
Inventory
365
COGS

COGS (Rs. in crores) 10912.07 10788.59 1.2%
Inventory Holding Period (Days) 40.0 43.0 Down
(d) Debtor Days
Trade Receivables
365
Credit Sales

Trade Receivables (Rs. in crores) 484.35 410.71 17.9%
Credit Sales (Rs. in crores) 13240.71 13108.18 1.01%
Debtor Days 13.35 11.44 UP
(e) Creditor Days
Trade Payables
365
Credit Purchases

Trade Payables( in Rs. Crores) 874.11 750.23 16.5%
Credit Purchases( in Rs. Crores) 1739.78 1788.31 -2.7%
Creditor Days 183.39 153.12 UP
Net Sales
Inventory

Net Sales (Rs. in crores) 11796.83 11738.21 0.5%
Inventory Turnover Ratio 9.92 9.35 UP
The current ratio has decreased by 8.28% over the previous year which is attributed to the
decrease in current assets and increase in current liabilities. The company has taken 35 crore
loan and trade payable has increased. Also cash and cash equivalent has dropped significantly
this year. The company need to be very cautious to meet its day to day obligations. The ideal
current ratio is 2:1. But ideally, institutions look for a current ratio of 1.33:1 while financing
projects. In comparison to that the current ratio of this company is very low.
The quick ratio has also decreased by 9.5%. It is completely in line with the current ratio. The
ideal quick ratio is 1:1 and institutions look for this ratio while financing projects. The reason
for this being low is same as that of current ratio.
The inventory holding period has been decreased from 43 days to 40 days which is good sign
means the company is able to convert its inventory into cash at faster rate over the previous
year.
The debtor days has also increased from 11 days to 13 days but is still less than that of
creditors day of 183 days means company extending shorter and enjoying a longer credit
period.
This is an indication that the suppliers still has confidence in the company that they will pay
off their debts. This also shows that the creditors believe that ACC would be able to clear off
their debts in the future.
Overall, liquidity of the company is not good. ACC may need to improve its current ratio and
quick ratio to meet daily operational expenses.
appendix.
3. Solvency Ratios
(a) NAV

Networth
No. of Equity Shares O/S (Rs. in crores) 187.95 187.95 0%
NAV 449.82 438.76 2.5%

Networth

Long Term Borrowings (Rs. in crores) 0 0 0%
Debt Equity Ratio 0.00 0.00 0%


Interest on Long Term Debt (Rs. in crores) 0 0 0%

DSCR - -
The company has an extremely high value of NAV i.e. 450 against a face value of Rs. 10 per
share. It is increased by 2% from last year. This high value indicates that company is
efficiently building up a back-up of reserve and surplus to fall back upon. It has a high
capacity to raise further capital borrowed as well as equity.
The debt equity ratio is NIL of the company as it has not taken any long term loan this year as
well as last year. The company is using its own raised money for financing its assets. The
institutional norm suggests a debt equity ratio to be 1.5:1. Relying heavily on its own capital
is also not suggested.
Consequently, the interest coverage ratio as well as DSCR is also NIL.
Overall, ACC is very strongly solvent. Institutions and banks will be willing to lend to the
appendix.
Analysis of ACC Ratios with the Cement Industry Average
2015
ACC Industry
A. Profitability
1. Operating Profit Margin 13.03 14.7
2. Net Profit Margin 5.05 4.7
3. ROE 7.01 5.5
B. Liquidity
1. Current Ratio 0.88 1.5
2. Inventory Holding days 40 46
3. Debtor Days 13 17
C. Solvency
1. Debt Equity Ratio 0.0 0.375
2. Interest Cover Ratio - 4.5
As compared to Industry standards the ROE of ACC is still better. The ROE of cement
industry is decreasing due to less demand which is because of slowdown of construction
industry. Although the current ratio of company is very less because of decrease in current
assets and increase in current liabilities. The company is doing well in terms of the debtors
day and inventory holding days. The low debt equity ratio is concerned for ACC. The
company is relying too much on its own capital for financing its assets.
Analysis for JSW - Steel
Net Revenue
Gross Profit
Operations 100

2016 2015 Increase /

(Decrease)
Gross Profit (Rs. In crore) 4,934.94 6,846.42 (27.91%)
Gross Profit Margin (%) 39.33 51.13 (30)
Net Revenue
Profit After Tax
Operations 100

Loss After Tax (Rs. In crore) (1,018.88) (310.68) (c)

(c)
Net Profit Ratio (%) -8.12 -2.32 (c)
(c)
(c)
Net Revenue
Operating Profit
Operations 100

Operating Profit (Rs. in million)
2,481.31 4,018.63 (38.25%)
Operating Profit Ratio (%) 19.77 30.01 (34.12)
Profit After Tax

100

Loss After Tax (Rs. in crore) (1,018.88) (310.68) 228%
Net Worth (Rs. in crore)

11,441.47 12,511.21 (8.5%)
Return on Net Worth / Equity (ROE) (%) -8.91 -2.48
2016 2015 Increase / (Decrease)

Loss After Tax (Rs. in crore) (1,018.88) (310.68) 228%
Total Assets (Rs. in crore)

45,539.41 46,170.23 (1.3%)
Return on Total Assets (%) -2.24 -0.67
Profit After Tax

100
Total Assets
There is a decrease of 6.28% from previous year in the net revenue from operations. During
FY 2015-16, JSW - Steel, like other Indias steel manufacturers, continued to face margin
pressure due to imports from China, South Korea and other countries. Dumping of steel by
these countries has resulted in a decline in Net Sales Realizations (NSRs) for steel
manufacturers. Due to this factor, gross profit margin decreased by approximately 30% from
previous year. The operating profit dipped owing to decline in Net Sales Realization (NSR)
which continued to be under pressure due to unabated import of steel from China, Korea and
other countries for most part of the fiscal. Consequently, even the loss after tax has increased
by a huge 228%. Net profit was impacted on account of the additional coal levy of over 3,300
crore owing to the cancellation of coal blocks by the Supreme Court and enhanced finance
cost due to borrowing. The net worth of the company has reduced very marginally but due to
considerable decrease in the net profit, the return on equity is very low compared to previous
year. The slight decrease of total assets can be attributed to the lack of current investments as
well as the decrease in inventories. But still, due to the high loss after tax, return on total
assets is on a decline as compared to previous year.
Finally, if we analyze JSW - Steel from the profitability perspective, we can infer that the
company is not in a profitable position. However, the Minimum Import Price (MIP)
introduced by the Government of India (GOI) is seen to be a step in the right direction to
protect domestic steel manufacturers like JSW - Steel from the onslaught of unrelenting
imports from China and other low-cost producing countries.
appendix.
2. Liquidity Ratios
(a) Current Ratio
Current Assets
Current Liabilities

(Decrease)
Current Assets (Rs. in crore) 9354.6 11588.08 (19.27%)
Current Liabilities (Rs. in crore) 16322.18 13216.6 23.49%
Current Ratio 0.57 0.88 (35.22%)
(b) Quick Ratio
Current Liabilities
Current Assets (Rs. in crore) 9354.6 11588.08 (19.27%)
Current Liabilities (Rs. in crore) 16322.18 13216.6 23.49%
Inventory (Rs. In crore) 2420.93 3720.03 (34.92%)
Quick Ratio 0.42 0.60 (30%)
Inventory
365
COGS

Inventory (Rs. in crore) 2420.93 3720.03 (34.92%)
COGS (Rs. in crore) 10001.78 8,514.33 17.46%
Inventory Holding Period (Days) 88.35 159.47 (44.59%)
(d) Debtor Days
Trade Receivables
365
Credit Sales

Trade Receivables (Rs. in crore) 830.86 1321.27 (37.11%)
Credit Sales (Rs. in crore) 14936.72 15360.75 (2.76%)
Debtor Days 20.30 31.40 (35.35%)
(e) Creditor Days
Trade Payables
365
Credit Purchases
Trade Payables 1947.35 1433.02 35.89%
Credit Purchases 4688.06 4553.19 2.96%
Creditor Days 151.62 114.88 31.98%
Net Sales
Inventory

(Decrease)
Net Sales (Rs. in crore) 12548.39 13,390.35 (6.28%)
Inventory (Rs. in crore) 2420.93 3720.03 (34.92%)
Inventory Turnover Ratio 5.18 3.60 43.88%
The current ratio is decreased by 35.22% over the previous year which is attributed to the
decrease in current assets and increase in current liabilities. The current ratio is mainly used
to give an idea of the company's ability to pay back its liabilities (debt and accounts payable)
with its assets. The ideal current ratio is 2:1. But ideally, institutions look for a current ratio of
1.33:1 while financing projects. Low value of current ratio indicates JSW - Steels financial
health is not so good. The current assets have decreased due to the lack of current investments
by JSW - Steel as well as the decrease in inventories. There is an increase in the current
liabilities. This lower value is likely to project an image to the suppliers and institutions that
there is a risk associated with the company.
The quick ratio has also decreased by 30%. It is completely in line with the current ratio. The
ideal quick ratio is 1:1 and institutions look for this ratio while financing projects. Low quick
ratio indicates the companys inability to convert its current assets into cash swiftly.
The inventory holding period has decreased by 44.59% over the previous year due to an
increase in COGS, particularly due to an increase in changes in inventories of finished goods,
work-in-process and scrap.
The debtor days have reduced very by 35.35% over the previous year. It is good for the
company as the debtors have paid the payments to the company.
The creditor days have increased by 31.98% over the previous year. The company may have
negotiated with its suppliers for a higher credit period. This is an indication that the suppliers
have confidence in the company that they will pay off their debts. This also shows that the
creditors believe that JSW - Steel would be able to clear off their debts in the future.
The inventory turnover ratio has increased by 43.88% over the previous year showing the
quickness of JSW - Steel to convert its inventory into cash.
Overall, even though the debtor days have reduced and inventory turnover ratio has
increased, the low quick ratio and the current ratio signifies that currently JSW - Steel is short
on cash-in-hand, liquidity of JSW - Steel is not so good.
appendix.
3. Solvency Ratios
(a) NAV
Networth
(Decrease)
Net Worth (Rs. in crore) 11441.47 12511.21 (8.55%)
No. of Equity Shares O/S (Rs. in crore) 91.49 91.49 0%
NAV 125.06 136.75 (8.54%)

Networth

Long Term Borrowings (Rs. in million) 16411.56 18507.42 (11.32%)
Debt Equity Ratio 1.434393 1.479267 (3%)



Profit After Tax (Rs. in million) (1,018.88) (310.68)

Non-Cash Charges (Rs. in million) 1534.27 1838.17 (16.53%)

Profit After Tax (Rs. in crore) (1,018.88) (310.68)
Interest on Long Term Debt (Rs. in crore) 0 0 0%

Non-Cash Charges (Rs. in crore) 1534.27 1838.17 (16.53%)

DSCR - - -
The company has a value of NAV at 125.06 against a face value of Rs. 1 per share. It has
decreased by 8.54% over previous year. This is due to the fact that generals and reserves of
the company has dipped a little from the previous years, thereby affecting the net worth of the
company.
The debt equity ratio has marginally reduced by 3%. Based on standard debt equity ratio of
1.5:1 followed by lending organizations, JSW - Steel has the capacity to raise additional long
term borrowings with the existing resources of its own. It has a high leverage capacity
available for further growth.
Overall, JSW - Steel is solvent. Institutions and banks will be willing to lend to the company
on its slightly indication to borrow. The banks will make beeline for the same.
appendix.
Analysis of JSW - Steels Ratios with the Industry Average
2015 2016
JSW - Industry JSW - Steel Industry
Steel
A. Profitability
1. Net Profit Margin -2.32 -4.49 -8.12 -7.35
2. ROE -2.48 2.31 -8.91 3.61
B. Liquidity
1. Current Ratio 0.88 0.67 0.57 0.68
2. Quick Ratio 0.60 0.25 0.42 0.25
C. Solvency
There is a huge downfall in ROE as compared with the industry. Net profit margin has been
low for the industry as well due the challenges face by the steel industry as a whole.
Inventory turnover ratio for the company is higher than compared with the industry. For the
remaining factors as well, it has fared better than the industry.
CONCLUSION
FY 2015-16 saw significant headwinds for global businesses with low economic activity,
financial turbulence and uneven global growth. The steel sector globally faced its own share
of challenges, and JSW - Steel was no exception. JSW - Steels business landscape changed
dramatically,
as it did for their national and international peers.
But, with the introduction of Minimum Import Price (MIP) by the Government of India
(GOI), which aims to protect domestic steel manufacturers like JSW - Steel from the
onslaught of unrelenting imports from China and other low-cost producing countries, steel
sector might see a better growth.
Analysis for Infosys
Net Revenue
Gross Profit
Operations 100


Gross Profit (Rs. in crores) 51,119 43,821 16.65%
Net Revenue
Profit After Tax
Operations 100

Profit After Tax (Rs. in crores) 15786 12164 29.77% (c)

(c)
Net Profit Ratio (%) 0.29 0.26 11.53 (c)
(c)
Net Revenue
Operating Profit
Operations 100


Operating Profit (Rs. in crores) 17,657 16,386 7.75%
Operating Profit Ratio (%) 32.71 34.64 -5.57%
Profit After Tax

100

Profit After Tax (Rs. in crores) 15,786 12,164 29.77%
Net Worth (Rs. in crores) 57,157 48,068 18.09%
Return on Net Worth / Equity (ROE) (%) 27.62 25.31 9.12

Profit After Tax (Rs. in crores) 15,786 12,164 29.77%
Total Assets (Rs. in crores) 72,767 61,813 17.72%
Return on Total Assets (%) 21.69 19.68 10.21%
Profit After Tax
100
Total Assets
There is an increase of 14.12% from previous year in the net revenue from operations.
Infosys has managed to increase the gross profit margin marginally by 16.65% from previous
year. operating profit has increased by 7.75% from previous year. This is because the net
revenue from operations is higher for previous year and the expenses being higher than this
year but the net result for gross profit figure is higher for the previous year. Consequently, we
can conclude that the profit after tax has increased by 29.77%.
appendix.

Graph 12 - Net Sales
Finally, if we analyze Infosys from the profitability perspective, we can infer that the
company is in a profitable position. And the sales are expected to increase and make huge
profits.
2. Liquidity Ratios
(a) Current Ratio
Current Assets
Current Liabilities

Current Assets (Rs. in crores) 46097 42752 7.82%
Current Ratio 3.41 3.70 -7.83%
(b) Quick Ratio

Current Liabilities

Current Assets (Rs. in crores) 46097 42752 7.82%
Inventory (Rs. in crores) 0 0 0
Quick Ratio 3.38 3.65 -7.39%
Inventory
365
COGS

COGS (Rs. in crores) 6038 4247 42.17%
Inventory Holding Period (Days) 0 0 0
(d) Debtor Days
Trade Receivables
365
Credit Sales

Trade Receivables (Rs. in crores) 9798 8627 12.41%
Credit Sales (Rs. in crores) 53983 47300 14.12%
Debtor Days 66.25 66.57 -0.48%
(e) Creditor Days
Trade Payables
365
Credit Purchases
Trade Payables 0 0 0
Credit Purchases 6038 4247 42.17%
Creditor Days 0 0 0
Net Sales
Inventory

Net Sales (Rs. in crores) 58983 47300 24.69%
Inventory Turnover Ratio - - -
The current ratio has decreased 7.83% over the previous year which is attributed to the
increase in current assets and current liabilities. High value of current ratio means that
Infosys has the capacity to meet its day to day obligations. The current assets increment is
due to the investments which Infosys has made so that the short term funds are not kept idle.
There is a very slight increase in the current liabilities. The ideal current ratio is 2:1. But
ideally, institutions look for a current ratio of 1.33:1 while financing projects. This high value
of current ratio means that Infosys possesses adequate level of current assets to pay off their
current liabilities. This higher value is likely to attract cheaper credit and suppliers and
institutions feel that there is a less risk associated with the company.
Liquidity enables Infosys to make a rapid shift in direction, if there is a market demand.
During fiscal 2015 internal cash flows have more than adequately covered working capital
requirements, capital expenditure, investment in subsidiaries and dividend payments. As on
March 31, 2015, on a standalone basis, they had liquid assets of ` 29,705 crore, as against
28,149 crore at the previous year end. On a consolidated basis, they had liquid assets of
32,543 crore at the current year-end, as against 30,277 crore at the previous year end. These
funds comprise deposits with banks and highly rated financial institutions, liquid mutual
funds, fixed maturity plans, certificates of deposit, tax-free bonds and government bonds.
3. Solvency Ratios
(a) NAV
Networth
Net Worth (Rs. in crores) 57157 48068 18.90%
No. of Equity Shares O/S (Rs. in crores) 229 229 0%
NAV 249.59 209.90 18.90

Networth

Long Term Borrowings (Rs. in crores) 0 0 0
Net Worth (Rs. in crores) 57157 48068 18.90%
Debt Equity Ratio 0 0 0


Profit After Tax (Rs. in crores) 15786 12164 29.77
Non-Cash Charges (Rs. in crores) 1115 913 22.12%



Profit After Tax (Rs. in crores) 15786 12164 29.77%
Non-Cash Charges (Rs. in crores) 1115 913 22.12%
DSCR - - -
The company has an extremely high value of NAV i.e. 249.59 against a face value of Rs. 5
per share. It is marginally 18.90% up from previous year. This high value indicates that
Infosys is performing very efficiently and it has a backup of reserves and surplus after paying
the dividends on equity. It has a high capacity to raise further capital borrowed as well as
equity.
The debt equity ratio is 0 for both the years as Infosys does not have any long term
borrowings. Infosys is practically a debt free organization.
Infosys has zero net coverage Ratio. This is because the the long term borrowings are interest
free.
Infosys has zero Debt Service Coverage Ratio. As explained above, Infosys has not loans, it
has no interest on long term debt as well as no instalments of principal due as of now.
Overall, Infosys is very strongly solvent. Institutions and banks will be willing to lend to the
appendix.
Analysis of Infosys Ratios with the IT Industry Average
2016 2015
Infosys Industry Infosys Industry
A. Profitability
4. ROE 27.62 21.02 25.31 19.97
B. Liquidity
1. Current Ratio 3.41 1.29 3.70 1.37
2. Quick Ratio 3.38 1.09 3.65 0.51
3. Inventory Turnover Ratio - - - -
4. Debtor Days 66.25 23.32 66.57 22.23
C. Solvency
2. Interest Cover Ratio - 8.57 - 7.54
3. DSCR 15.16 1.49 14.32 1.23
Note: Debtor Turnover Ratio was given for the industry which has been converted into
Debtor Days
There is an increase in ROE in 2016 due to weaker rupee. On other parameters, Infosys is
way ahead of the industry average and outperforms the industry hands down. Overall, Infosys
is a highly profitable, liquid and solvent organization
APPENDIX
Calculations for Nestle
Profitability Ratios
(Rs. in million)
S.No. 2015 2014
1 Equity 964.20 964.20
2 COGS (Note 1 & 2) 38,700.30 51,187.90
3 Net Revenue from Operations 81,753.10 98,548.40
4 Reserves and Surplus 27,214.20 27,407.90
5 Net worth 28,178.40 28,372.10
6 Total Assets 60,804.60 58,195.00
7 Profit After Tax 5,632.70 11,846.90
8 Operating Profit 13,337.50 17,925.50
9 Gross Profit 43,052.80 47,360.50
Ratios 2015 2014

a Gross Profit Margin (9/3)% 52.66 48.06
b Net Profit Ratio (7/3)% 6.89 12.02
c Operating Profit Ratio (8/3) % 16.31 18.19
d Return on Net Worth / Equity (ROE) (7/5)% 19.99 41.76
e Return on Total Assets (7/6) % 9.26 20.36
Note 1: COGS includes cost of materials consumed, purchase of stock in trade,

change in inventories of finished goods, work in progress and stock in trade,
power and fuel, maintenance and repairs of plant and machinery, contract
manufacturing charges, consumption of stores and spare parts, laboratory, milk
collection and district development
Note 2: Finished goods, transport and handling has been considered as freight
outwards and hence not included in COGS
Liquidity Ratios
(Rs. in million)
S.No. 2015 2014
1 Current Assets 24796.1 19636.7
2 Current Liabilities 14757.3 13554.5
3 Inventory 8208.1 8441
4 Net Sales 81753.1 98548.4
5 COGS (Note 1 & 2) 38700.3 51187.9
6 Trade Receivables 784.2 991
7 Credit Sales (Note 3) 84304.4 101295
8 Trade Payables 7435.4 7287.1
9 Credit Purchases (Note 4,5,6) 33355.8 45907.1
Ratios 2015 2014

a Current Ratio (1/2) 1.68 1.45
b Quick Ratio ((1-3)/2 ) 1.12 0.83
c Inventory Holding Period (Days) (3/5 * 365) 77.41 60.19
d Debtor Days (6/7 * 365) 3.40 3.57
e Creditor Days (8/9 * 365) 81.36 57.94
f Inventory Turnover Ratio (4/3) 9.96 11.67

manufacturing charges, consumption of stores and spare parts, laboratory, milk
collection and district development
Note 3: Gross Sales has been considered as Credit Sales as credit sales figure is
not available in corporate annual reports
Note 4: Total purchases has been considered as Credit Purchases as credit
purchase figure is not available in corporate annual reports
Note 5: Credit Purchases has been calculated by Cost of material consumed +
Closing Stock - Opening Stock
Note 6: Opening Stock for the year 2014 is 7359.3 from Nestle Annual Report
2014
Solvency Ratios
(Rs. in million)
S.No
2015 2014
.
1 Equity 964.2 964.2
2 Reserves and Surplus 27214.2 27407.9
3 Net Worth 28178.4 28372.1
4 No. of Equity Shares O/S 96.42 96.42
5 Long Term Borrowings 167.9 154.6
6 Profit After Tax 5632.7 11846.9
7 Interest on Long Term Debt (Note 1) 0 0
8 Non-Cash Charges (Note 2) 4389.4 4070.3
9 Instalments of Principle Due (Note 3) 0 0
Ratios 2015 2014

a NAV (3/4) 292.25 294.26
b Debt Equity Ratio (5/3) 0.005958 0.005449
c Interest Cover Ratio ((6+7+8)/7) - -
d DSCR ((6+7+8)/(7+9)) - -
Note 1: Long Term Debt is interest free and is repayable in equal

instalments starting from 2021 and 2024
Note 2: Non-Cash Charges include Depreciation, impairment loss on
fixed assets, Net provision for contingencies (operations) and Net
provision for contingencies (others)
Note 3: Long Term Debt is interest free and is repayable in equal
instalments starting from 2021 and 2024. Therefore, no installments
are due
Calculations for Maruti Suzuki
(Rs. in crores)
S.No
2015 2014
.
1 Equity 151.00 151.00
2 COGS (Note 1 & 2) 50,350.27 44,478.90
5 Net Worth 27,007.10 23,704.20
6 Total Assets 39,195.60 33,551.00
7 Profit After Tax 4,571.40 3,711.20
9 Gross Profit 6,000.13 4,126.60
Ratios 2015 2014


manufacturing charges, consumption of stores and spare parts
Liquidity Ratios
(Rs. in crores)
S.No. 2015 2014
2 Current Liabilities 11290 8823
3 Inventory 3132.1 2615
4 Net Sales 57746.3 49970.6
5 COGS (Note 1 & 2) 50350.27 44478.9
6 Trade Receivables 1298.6 1069.8
7 Credit Sales (Note 3) 66226.4 56052.3
9 Credit Purchases (Note 4,5,6) 40797.4 37878.5
Ratios 2015 2014

b Quick Ratio ((1-3)/2 ) 0.36 0.63
d Debtor Days (6/7 * 365) 7.16 6.97
e Creditor Days (8/9 * 365) 62.75 53.59

manufacturing charges, consumption of stores and spare parts
Note 5: Credit Purchases has been calculated by Cost of material consumed +
Closing Stock - Opening Stock
Note 6: Opening Stock for the year 2014 is 1705.90 from Maruti Suzuki Annual
Report 2014
Solvency Ratios
(Rs. in crores)
S.No. 2015 2014
1 Equity 151 151
3 Net Worth 27007.1 23704.2
5 Long Term Borrowings 0 144.8
7 Interest on Long Term Debt 104.41 294.36
8 Non Cash Charges (Note 1) 3740.7 3165.2
Ratios 2015 2014

a NAV (3/4) 894.27 784.91
c Interest Cover Ratio ((6+7+8)/7) 81.18 24.63
Note 1: Non-Cash Charges include

Depreciation, impairment loss on fixed
assets, Net provision for contingencies
(operations) and Net provision for
contingencies (others)
Calculations for ACC
(Rs. in crore)
S.No. 2015 2014
1 Equity 187.95 187.95
2 COGS (Note 1) 10912.07 10788.59
5 Net Worth 8,443.04 8,235.61
6 Total Assets 12,840.82 12,671.33
8 Operating Profit( Note 2) 1,537.13 1,507.19
9 Gross Profit 884.76 949.62
Comparison
Ratios 2015 2014
2015/2014
a Gross Profit Margin (9/3)% 7.50 8.09 -7.29
b Net Profit Ratio (7/3)% 5.01 9.95 -49.62
c Operating Profit Ratio (8/3) % 13.03 12.84 1.48
d Return on Net Worth / Equity (ROE) (7/5)% 7.01 14.19 -50.61
e Return on Total Assets (7/6) % 4.61 9.22 -50.03
Note 1: COGS includes cost of materials consumed, purchase of stock in

trade, change in inventories of finished goods, work in progress and stock
in trade, power and fuel, freight and handling expenses, consumption of
stores and spare parts, consumption of packing materials, rent, repairs to
building, machinery, other items, discount on sales.
Note 2: Operating Income = Profit before taxes and exceptional items-

Finance cost-other income.
Liquidity Ratios
(Rs. in crores)
S.No. 2015 2014
3 Inventory 1188.6 1255.59
4 Net Sales 11796.83 11738.21
5 COGS (Note 1) 10912.07 10788.59
9 Credit Purchases (Note 3 & 4) 1739.78 1788.31
Comparison
Ratios 2015 2014
2015/2014
a Current Ratio (1/2) 0.88 0.96 -8.28
b Quick Ratio ((1-3)/2 ) 0.57 0.63 -9.50
Inventory Holding Period (Days) (3/5 *
c 39.76 42.48 Down
365)
d Debtor Days (6/7 * 365) 13.35 11.44 UP
e Creditor Days (8/9 * 365) 183.39 153.12 UP
f Inventory Turnover Ratio (4/3) 9.92 9.35 UP
Note 1: COGS includes cost of materials consumed, purchase of

stock in trade, change in inventories of finished goods, work in
progress and stock in trade, power and fuel, freight and handling
expenses, consumption of stores and spare parts, consumption of
packing materials, rent, repairs to building, machinery, other items,
discount on sales.
Note 2: Gross Sales has been considered as Credit Sales as credit
sales figure is not available in corporate annual reports
Note 3: Total purchases has been considered as Credit Purchases as
credit purchase figure is not available in corporate annual reports
Note 4: Credit Purchases has been calculated by Cost of material
consumed + Closing Stock - Opening Stock
Solvency Ratios
(Rs. in crores
S.No
2015 2014
.
1 Equity 187.95 187.95
3 Net Worth 8443.04 8235.61
5 Long Term Borrowings (Note 1) 0 0
7 Interest on Long Term Debt (Note 1) 0 0
9 Instalments of Principle Due 0 0
Comparison
Ratios 2015 2014
2015/2014
a NAV (3/4) 449.82 438.76 2.52
d DSCR ((6+7+8)/(7+9)) - -
Note 1: As per the annual report of ACC, company has no long term
borrowings in the year of 2014 and 2015
Note 2: Non-Cash Charges include Depreciation and amortization

Calculations for JSW Steel
(Rs. in crore)
S.No Year ended Year ended

. 31st March, 31st March,
2016 2015
1 Equity 91.49 91.49
2 COGS (Note 1 & 2) 10,001.78 8,514.33
5 Net Worth 11,441.47 12,511.21
6 Total Assets 45,539.41 46,170.23
7 Profit After Tax (1,018.88) (310.68)
9 Gross Profit 4,934.94 6,846.42
Year ended Year ended

Ratios 31st March, 31st March,
2016 2015
a Gross Profit Margin (%) 39.33 51.13
b Net Profit Ratio (%) -8.12 -2.32
c Operating Profit Ratio (%) 19.77 30.01
d Return on Net Worth / Equity (ROE) (%) -8.91 -2.48
e Return on Total Assets (7/6) % -2.24 -0.67

change in inventories of finished goods, work in progress and scrap,
consumption of power and fuel, maintenance and repairs of plant and machinery,
buildings and others, consumption of stores and spares.
Liquidity Ratios
(Rs. in crore)
S.No. 31st March, 31st March,
2016 2015
3 Inventory 2420.93 3720.03
4 Net Sales 12548.39 13,390.35
5 COGS (Note 1 & 2) 10001.78 8,514.33
9 Credit Purchases (Note 4,5) 4688.06 4553.19

Ratios 31st March, 31st March,
2016 2015
b Quick Ratio ((1-3)/2 ) 0.42 0.60
d Debtor Days (6/7 * 365) 20.30 31.40
e Creditor Days (8/9 * 365) 151.62 114.88
Note 1: COGS includes cost of materials consumed, purchase of stock in trade, change
in inventories of finished goods, work in progress and scrap, consumption of power and
fuel, maintenance and repairs of plant and machinery, buildings and others, consumption
of stores and spares.
Note 2: Finished goods, transport and handling has been considered as freight outwards
and hence not included in COGS
Note 3: Gross Sales has been considered as Credit Sales as credit sales figure is not
available in corporate annual reports
Note 4: Total purchases has been considered as Credit Purchases as credit purchase
figure is not available in corporate annual reports
Note 5: Credit Purchases has been calculated by Cost of material consumed + Closing
Stock - Opening Stock
Solvency Ratios
(Rs. in crore)
Year
Year ended ended
S.No
31st 31st
.
March, March,
2016 2015
1 Equity 91.49 91.49
3 Net Worth 11441.47 12511.21
5 Long Term Borrowings 16411.56 18507.42
6 Profit After Tax (1,018.88) (310.68)
7 Interest on Long Term Debt 0 0
Year
Year ended ended
Ratios 31st 31st
March, March,
2016 2015
a NAV (3/4) 125.06 136.75
d DSCR ((6+7+8)/(7+9)) - -
Note 1: Non-Cash Charges include Depreciation and amortization

expense, Bad debts/provision for doubtful debts and advances
Calculations for Infosys Limited
(Rs. in crores)
S.No
2016 2015
.
1 Equity 1,148.00 574.00
2 COGS (Note 1 & 2) 6,038.00 4,247.00
5 Net Worth 57,157.00 48,068.00
6 Total Assets 72,767.00 61,813.00
7 Profit After Tax 15,786.00 12,164.00
9 Gross Profit 51,119.00 43,821.00
Ratios 2016 2015

Note 1: COGS includes cost of technical sub-contractors, cost of software

packages and others, power and fuel, cost of repair to plant and machinery,
computer maintenance
Liquidity Ratios
(Rs. in crores)
S.No. 2016 2015
1 Current Assets 46097 42752
2 Current Liabilities 15537 13715
3 Inventory 0 0
4 Net Sales 58983 47300
5 COGS (Note 1 ) 6038 4247
6 Trade Receivables 9798 8627
7 Credit Sales (Note 2)* 53983 47300
8 Trade Payables 0 0
9 Credit Purchases (Note 3) 6038 4247
Ratios 2016 2015

b Quick Ratio ((1-3)/2 ) 3.38 3.65
d Debtor Days (6/7 * 365) 66.25 66.57
e Creditor Days (8/9 * 365) 0.00 0.00
f Inventory Turnover Ratio (4/3) - -
Note 1: COGS includes cost of technical sub-contractors, cost of software

packages and others, power and fuel, cost of repair to plant and machinery,
computer maintenance

Solvency Ratios
(Rs. in crores)
S.No. 2016 2015
1 Equity 1148 574
2 Reserves and Surplus 56009 47494
3 Net Worth 57157 48068
4 No. of Equity Shares O/S 229 229
5 Long Term Borrowings 0 0
6 Profit After Tax 15786 12164
7 Interest on Long Term Debt 0 0
8 Non-Cash Charges (Note 1) 1115 913
Ratios 2016 2015

a NAV (3/4) 249.59 209.90
d DSCR ((6+7+8)/(7+9)) - -
Note 1: Non-Cash Charges include Depreciation, amortization

REFERENCES
http://www.moneycontrol.com/india/stockpricequote/food-processing/nestleindia/NI
http://www.moneycontrol.com/india/stockpricequote/cement-major/acc/ACC06
http://www.moneycontrol.com/india/stockpricequote/auto-cars-
jeeps/marutisuzukiindia/MS24
http://www.moneycontrol.com/india/stockpricequote/computerssoftware/infosys/IT
http://www.moneycontrol.com/india/stockpricequote/steel-large/jswsteel/JSW01
Nestle India Annual Report 2015
Nestle India Annual Report 2014
ACC Annual Report 2015
ACC Annual Report 2014
Maruti Suzuki Annual Report 2015
Maruti Suzuki Annual Report 2014
JSW Steel Annual Report 2015
JSW Steel Annual Report 2014
Infosys Limited Annual Report 2015
Infosys Limited Annual Report 2014
http://csimarket.com/Industry/industry_Profitability_Ratios.php?ind=505
http://www.jsw.in/investors/investor-relations-steel
Ambrish Gupta, 5th Edition, Financial Accounting for Management

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A STUDY ON COMPARISON OF

PROFITABILITY, LIQUIDITY AND

Dr. Vandana Gupta

September 13, 2016

TO: Dr. Vandana Gupta

SUBJECT: Comparison of Solvency, Liquidity and Profitability of Companies

As per the course of Financial Accounting, I am submitting the attached report

I hope you find this report satisfactory.

Significance of the Study

Purpose of the Study

Brief Outline of the Chapters

The report has been divided into 4 chapters

Locale of the Study

Sample Size of the Study

Data Collection of the Study

2. Brief Profile of Maruti Suzuki

4. Brief Profile of JSW Steel

5. Brief Profile of Infosys Limited

(a) Gross Profit Margin

Gross Profit Margin has been computed by:

2015 2014 Increase / Decrease

(b) Net Profit Ratio

Net Profit Ratio has been computed by:

2015 2014 Increase / Decrease

Profit After Tax (Rs. in million) 5632.7 11846.9 (52.4%)

Operating Profit Ratio has been computed by:

2015 2014 Increase / Decrease

(d) Return on Net Worth / Equity (ROE)

Return on Net Worth / Equity (ROE) has been computed by:

Profit After Tax

2015 2014 Increase / Decrease

(e) Return on Total Assets

Return on Total assets has been computed by:

2015 2014 Increase / Decrease

Analysis of Profitability Ratios

The above information has been depicted through graphs.

Graph 1 - Operating Profit

Graph 3 - Net Sales

(a) Current Ratio

Current Ratio has been computed by:

2015 2014 Increase / Decrease

(b) Quick Ratio

Quick Ratio has been computed by:

2015 2014 Increase / Decrease

(c) Inventory Holding Period (Days)

Inventory Holding Period has been computed by:

2015 2014 Increase / Decrease

(d) Debtor Days

Debtor Days has been computed by:

2015 2014 Increase / Decrease

(e) Creditor Days

Creditor Days has been computed by:

2015 2014 Increase / Decrease

(f) Inventory Turnover Ratio

Inventory Turnover Ratio has been computed by:

2015 2014 Increase / Decrease

NAV has been computed by:

2015 2014 Increase / Decrease

(b) Debt Equity Ratio

Debt Equity Ratio has been computed by:

Long Term Borrowings

2015 2014 Increase / Decrease

(c) Interest Cover Ratio

Interest Cover Ratio has been computed by: