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FINANCIAL RATIOS ANALYSIS

OF ONGC ( 2005-09)
SUBMITTED TO:-

MRS.SMITA SAHOO
RATIO ANALYSIS
It’s a tool which enables the banker or lender
to arrive at the following factors :
• Liquidity position
• Profitability
• Solvency
• Financial Stability
• Quality of the Management
• Safety & Security of the loans & advances
to be or already been provided
Liquidity And Solvency
Ratio:-
04-05 05-06 06-07 07-08 08-09

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Turnover Ratios:-
04-05 05-06 06-07 07-08 08-09

Debtors Turnover Ratio 15.27 12.91 17.61 16.87 15.16

Inventory Turnover Ratio 248.6 121.06 150.64 122.77 111.98

Fixed Assets Turnover Ratio 1.41 1.27 1.31 1.05 1.05

Total Assets Turnover Ratio 0.82 0.72 0.74 0.73 0.68

Profitability Ratios :-
04-05 05-06 06-07 07-08 08-09

Operating Profit Ratio 50.96 56.15 49.47 49.51 50.39

Gross Profit Ratio 52.38 57.71 52.54 42.99 43.58

Net Profit Ratio 27.26 28.93 25.79 25.93 23.5

Return On Capital Employed(%) 40.8 37.46 37.12 36.3 34.29

Return on Long Term Funds(%) 42.04 37.46 37.26 36.3 34.29

 Valuation Ratios:-

04-05 05-06 06-07 07-08 08-09

Earning
Earning per
per Share
Share 91.05
91.05 101.2
101.2 73.14
73.14 78.09
78.09 75.4
75.4

Price-Earning
Price-Earning Ratio
Ratio 3.61
3.61 3.74
3.74 3.96
3.96 4.23
4.23 4.88
4.88
 INTERPRETATION
CURRENT RATIO:-Current ratio is stable for years 05-07 and in year08 it increases suddenly which is
better. Again it falls slightly in next year current ratio is good for the company.

QUICK RATIO:-This is stable for past 5 years minor fluctuation in 08-08 but ratio is approximately
around 1.3 and ideal quick ratio is 1 so the company is performing good but very quick ratio shows a
lack of management practice.

INVERTORY TURNOVER RATIO:-This ratio is stable for first 3 years but in 08 it suddenly
increases which shows that inventory increases manifolds . In next year it falls a little which is not in a
favour of the company .This implies that there is decrease in stock

DEBTOR TURNOVER RATIO:-This is almost stable from 05-09.

DEBT EQUITY RATIO:-This is increased in year 06 then stable for next year and then suddenly falls
by high percentage which shows decrease in debt. Then it again increases in 09.Ideal value for debt
equity ratio ratio is 2. Data is showing 0.24 approx value which is very below from the ideal value.So,
the company needs to think about it.

FIXED ASSET TURNOVER RATIO:- This is slight fluctuation from 05 to 09 continously which is
not good for the company. Higher fixed asset turnover ratio better is for the company.

INTEREST COVERAGE RATIO:- It increases a lot in 07 than suddenly decreases in 08 and again
decreases in 09. Company state of repaying the debt is higher in 07 then falls in 08 and again falls in 09
which is not good for company. So management needs to think for the company.

GROSS PROFIT RATIO:- It shows the adequacy of selling price and the efficiency of production.
And company data shows that it increase in 06 then it falls in next 3 years. And in year 09 it slightly
increases so gross profit ratio should be higher for company and the data shows decreament which is not
good for the company. There is problem in profitability of the company.

NET PROFIT RATIO:-It increases in 2006 and then folloes continuosly which is also not good for the
company.

OPERATING PROFIT RATIO:-This ratio increases in 2006, then falls in 2007, then slightly
increases in next 2 years. This data shows that operating profit and operating leverage increases.There
are more earnings from operations.net sales increases and this is a good time for investment.

RETURN ON CAPITAL EMPLOYED(ROCE):-This continuously falls from 2005 to 2009.since

EPS:-This increases in 2006 then decreases in 2007 and remains almost stable for next 3 years.
COMPARISON WITH PEER COMPANY
ONGC GAIL
A. Liquidity Ratio

Current ratio 1.45 1.29

Quick ratio 1.02 1.21

B. Turnove r Ratios

Fixed Assets
Turnover Ratio 1.05 1.36
Stock or Invento ry
Turnover Ratio 111.98 101.36
Debtors Turnover
Ratio 15.16 18.46
Average Collection
Period 24.07 203.09
Creditors Turnover
Ratio 3.45 3.18
Average Payme nt
Period 105.79 114.77

C. Leverage Ratio

Debt-Equity Ratio 0.21 1.21

Inte rest Coverage
Ratio 273.32 50.15
Total Debt to
Owners Fu nd Ratio 0.20 0.08

D. Profitability ratios

Operating Ratio 50.39 17.33

Gross Profit Ratio 43.58 14.97
Net Profit Ratio 23.50 11.4

Return on Capital
Employed 34.29 27.29

E. Valuation Ratio

Earning Per Shar e 75.4 22.1

Price Earning Ratio 4.88 5.27
QUESTION
AND
ANSWERS
THANK YOU