Feroz Digaria Piyush Gadiya Krish Desai Abhishek Dedhia Ronak Dalal

Financial Ratio Analysis

Financial analysis: Applying analytical techniques to financial statements and other relevant data to produce information useful for decision making. Focus

Three Issues :

Profitability, Liquidity, Safety (Solvency or Risk)

In general, each financial ratio is closely related to one of the three fundamental issues.

Income Statement for the year ending 31st Mar 2011 Particulars amount in crs. 686.15 0 686.15 79.05 34.71 799.91 373.14 23.88 55.49 4.79 Particulars amount in crs. 73.95 13.63 0 60.32 -0.08 60.24 17.23 43.04 340.5 0.01 15.06

Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses

PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition PreferenceDividend EquityDividend

Particulars Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities

in Rs. Cr. 35.96 20.06 0 15.9 1,045.99 0 1,081.95 100 175 275 1,356.9 5

Particulars Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances

in Rs. Cr. 330.19 66.27 263.92 27.83 424.97 130.57 6.66 13.41 150.64 495.14 286.94 932.72

Income Statement for the year ending 31st Mar 2011 Particulars amount Particulars in crs. SalesTurnover 1,929.0 PBDT 0 Excise Duty 0 Depreciation Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses 1,929.0 0 9.13 1.24 1,939.3 7 1,096.9 2 0 98.98 135.92 183.87 112.03 Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition PreferenceDividend EquityDividend CorporateDividendTax Per share data

amount in crs. 144.82 31 0 113.82 0 113.82 38.65 75.18 530.81 0 6.16 0.8

Balance sheet as on 31st march 2011 Particulars amount in crs. Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Sources Of Funds 41.08 41.08 0 0 557.02 0 598.1 128.72 20 148.72 746.82

Particulars Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit

amount in crs. 505.64 193.5 312.14 44.65 237.19 151.14 16.01 2.36 169.51 284.32 0.25 454.08 0

1.

SHOPPERS STOP
CURRENT RATIO 1.51

Trent
3.19

Current assets, Loans and Advances Current Provisions liabilities and

454.08

932.72

301.24

292.48

The current ratio of Trent is more compared to S.S, this shows that Trent has good financial health as compared to S.S and less risk of paying the liabilities.

ASSET MANAGEMENT RATIO:

1) Inventory Turnover Ratio: This shows how many times a company's inventory is sold and replaced over a period of time. Generally calculated as: Sales Inventory. However, it may also be calculated as : Cost of Goods sold Average Inventory.

Inventory turnover ratio

SHOPPERS STOP 12.76 1929.00 151.14

Trent 5.26 686.15 130.57

SALES INVENTORY

Since inventory turnover ratio of S.S. is high, ratio implies either strong sales or ineffective buying but a low turnover implies poor sales and, therefore, excess inventory. Trent's have to improve there sales since risk of dead stock is more

2) Debtors Turnover Ratio:

Net Credit Sales Average Trade Debtors Trent 103.03 686.15 6.66

SHOPPERS STOP
Debtors turnover ratio

120.49 1929.00 16.01

SALES Debtors

The ratio indicates the efficiency of the concern to collect the amount due from the debtors. Since S.S is having a high, it proves that it collects its debt quicker than Trent. S.S manages its trade debtors more efficiently than Trent.

3) DSO = Accounts Receivables Average Sales per Day

SHOPPERS STOP Trent

Days sales outstanding

3.03 days

3.54 days

RECEIVABLES AVG SALES PER DAY

16.01 5.28

6.66 1.88

A low DSO number means that it takes a company fewer days to collect its accounts receivable both company's have the chance to put the cash to use again due to good ratio - ideally, to reinvest and make more sales.

4)Fixed Assets Turnover = Sales / Fixed Assets

SHOPPERS STOP Fixed Asset turnover 5.40 Trent 2.60

SALES TOTAL FIXED ASSETS

1929.00 356.79

686.15 291.75

S.S uses its fixed assets very intensively as compared to Trent for generating sale

5) Total Assets Turnover Ratio = Sales / Total Assets

SHOPPERS STOP Trent

Total asset turnover

2.58

0.51

SALES

1929.00

686.15

TOTAL ASSETS

746.82

1396.96

S.S ratio is good as compared to Trent.Trent is not generating a sufficient volume of business given its total assets investments.

Debt management ratio

1) Debt to equity Ratio = Total debt / Total Share Holders Equity
SHOPPERS STOP Trent

Debt Equity

0.25

0.25

TOTAL DEBT

148.72

275

TOTAL EQUITY

598.10

1081.95

Here we see that Shoppers Stop and Trent have same ratio of 0.25 which shows that Shoppers Stop and Trent are the companies that are the good performers in the industry.

2) Interest Coverage Ratio = EBIT / interest expense

Column1
Interest Coverage Ratio (TIE)

SHOPPERS STOP 20.80

Trent 7.01

EBIT Interest Expense

280.65 13.49

86.25 12.3

A ratio used to determine how easily a company can pay interest on outstanding debt. An interest coverage ratio is more than sufficient for both, here it indicates S.S is generating sufficient revenues to satisfy interest expenses as compared to Trent.

PROFITABILITY RATIOS
1) Profit margin on sales = NPAT / Sales*100

Profit Margin

SHOPPERS STOP 3.90 75.18 1929.00

Trent 6.27 43.04 686.15

Net Income Sales

A higher profit margin indicates a more profitable company that has better control over its costs compared to its competitors. Profit margin is displayed as a percentage, Trent has a higher profit margin than S.S.

2) Return on Total Assets

Return on Total Assets

SHOPPERS STOP(%) 10.67 75.18 746.82

Trent (%) 3.17 43.04 1356.96

NET Income Total assets

The greater a company's earnings in proportion to its assets, the more effectively that company is said to be using its assets.

Thank you