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Profit margin
This ratio also known as return on sales (ROS),measures the amount of net profit
earned by each rupee of revenue .The profit margin also gives us a indication of
the cushion available to the company in the event of the increase in costs or drop
in sales prices
for 2008
This is the firm's efficiency in utilising its assets.It indicates how many times the
Assets were turn over in a period and and thereby generated sales .If assets
turnover is high then the company is managing its assets efficiently.
Here the assets turnover ratio is high so it indicates that the company is
managing its assets efficiently
Return on Assets
=212.20%
Earnings per share
EPS is an important measure of profitability .EPS is a useful in comparing
performance over time
Liquidity ratios
Current Ratio:-
Current Ratio of company=Current Assets/Current Liabilities
=775.54/468.97
=1.65
Quick Ratio:-
Quick Ratio=Quick Assets/Current Liabilities
=508.24/468.97
=1.08
=2531.71/310.29
=8.159
=1317.40/492.28
=2.67
=134.83 days
Operating Cycle:-
Operating Cycle=44.12+134.83
=178.95 days
SOLVENCY RATIOS
DEBT-TO-EQUITY RATIO
This ratio indicates the extent of use of financial leverage. A high debt-to-equity
ratio indicates aggressive use of leverage, and a highly leveraged company is
more risky for creditors.
shareholder's equity
2008
2007
= 2.79
2.79
123.64+351.93
123.64+306.54
= 0.0058
0.00648
COMMENT: Thus, we can see that that castrol has a low debt-equity ratio which
means that it is not risky for creditors.
LIABILITIES-TO-EQUITY RATIO
It is a variant of debt-to-equity ratio current provisions and liabilities in the
numerator to get the firm's total liabilities.
2008
2007
= 2.79+468.97
= 2.79+511.61
475.57
432.18
= 0.991
= 1.19
COMMENT: It shows that the liabilities to equity ratio is decreasing over the year.
INTEREST EXPENSE
2008
2007
= 412.20+3.65
=339.84+3.79
3.65
3.79
= 113.93
= 90.66
COMMENT: It shows that company has ample amount of interest coverage in
both the years.
• In the begining our company have the cash=317.9 crores. And at the ending time castrol india
have the cash 255.63 crores
• paid to sundry creditors =35.31 crores & sundry debtors didn't pay= 15.98crors (bal.)
Comment:-
The operating profit before working capital changes is more then last year (439.39
against 351.44) but net cash flow from operating activities has gone down by almost half
compared to last year. This is because company had paid more income tax in the current
year 2008 and its creditors has gone down by more than half.
• And sale of fixed assets is so less which is.14 crore. In the previous year it was 3.75 crores
• sales of investment was 20.06 crores and interest receved was 21.04 crores . Which is
increasing the cash of companies
comment:-
The net cash flow from investing activities shows positive balance but has gone down by
four times in comparision to last year because of above mentioned facts
• The total cash flow from the financing activities was (227.94crores) it shows company paid the
cash
• In the begining our company have the cash=317.9 crores. And at the ending time castrol india
have the cash 255.63 crores
• At the end of the year due to all of the (Oprating ,investing & financing) activities company
have the cash 255.63 crore which is less then the year 2007. In 2007 it was 317.91 it's main
reasion was company paid the cash to all of it's debtors and it paid 191.64 crores divedend But
it's debtors didn't paid the cash in 2008. and recession was the another reasion But the company
have a good position at the end of year 2008.
Comment:-
The cash flow from financing activities shows a deficit balance here.
This is because castrol India has not issued any shares and just have made payments .It
could have been positive if it
had issued shares