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A nalyzing F inancial P erformance Atlas Battery Pvt Limited

Presented by Khuram Shahzad Sajid Siddique Naveed Hassan Salman Rasheed Faran Majeed Umar Javed081158

fsafsa A nalyzing F inancial P erformance Financial ratios du pont analysis s tandardized financial s tatements Applications of financial analysis Problems in using FSA SUMMARY

fsafsa A nalyzing F inancial P erformance Financial ratios Ratio is an arithmetic relationship between two figures FRA is a study of ratios between various items in fin statements

fsafsa Is drawing conclusions to serve as basis for decisions and actions Interpretation

fsafsa A nalyzing F inancial P erformance Financial Ratios- Classification Liquidity Leverage Turnover Profitability Valuation

fsafsa Atlas Battery: P/L Account for the year ending 31 st March, 20x9 20x920x8 (Rs in Mil) Net Sales COGS Stocks wages & salaries other Mfg Exp Gross Profit Operating Expenses Distributin Gn Adm Op Expenses Other Op Income Operating Profit Non Operating surplus/deficit Interest Profit before tax Tax Profit after tax Per Share Data (Rs) EPS Mkt Price Per Share Book Value per share

fsafsa Atlas Battery: Balance Sheet as on 31 st March,20x9 (Rs in Mill) 20x920x8  Current Liabilities  Provisions  Current Assets  Loans & Advances I Equity and Liabilities 1 Share Capital & Reserve a) Share Capital7070 b) Reserves & Surplus Surples on Revaluation Liabilities a) Non Current8662 Deffered Liabilities8662 b) Current Trade & Other Payables Short Term Borrowings Provision For Taxation

fsafsa Atlas Battery: Balance Sheet as on 31 st March,20x9 (Rs in Mill) 20x920x8  Current Liabilities  Provisions  Current Assets  Loans & Advances I Assets 1 Fixed Assets Long term Deposits Current Assets Inventories debtors Cash & Bank Balance Loans & Advances 2 1 Othe Receivables

fsafsa Liquidity Ratios

fsafsa Current Ratio = Current Assets Current Liabilities Acid Test Ratio = Current Assets-inventory Current Liabilities Working Capital = Current Assets – Current Liabilities 662/509 =1.31 ( )/509 = =153.22

fsafsa Leverage Ratios (Refers to use of debt finance)

fsafsa Leverage Ratios Debt Equity Ratio = Debt Equity Debt Asset Ratio = Debt Assets Interest Coverage Ratio = Profit before Int and Taxes Interest 316/43.5 = Financial Leverage Refers to Use of Debt Finance 435 / 532 =0.817 =81.77% 435 /1300 = = 33.43%

fsafsa Turnover Ratios (Measure how efficiently assets are employed)

fsafsa Turnover Ratios activity Ratios how assets are employed Inventory Turnover Cost of Goods Sold Average Inventory Debtors’ Turnover Net Credit Sales Average Sundry Debtors Average Collection Period Average Sundry Debtors Av. Daily Credit Sales 2627/423 = /80.74 = (3157/365) =9.34 days 365 Debtors’ Turnover =9.34 days

fsafsa Turnover Ratios Activity Ratios How Assets Are Employed Fixed Assets Turnover Total Assets Turnover Net Sales Average Total Assets 3157/ = / =2.428 Net Sales Av. Net fixed assets

fsafsa Profitability Ratios Profit Margin Ratios Rate of Return Ratios

fsafsa  Gross Profit Margin Ratio  Net Profit Margin Ratio  Return on Assets  Earning Power  ROCE  Return on Equity

fsafsa Profitability Margin Ratios GP Margin Ratio Gross Profit Net Sales NP Margin Ratio Net Profit Net Sales 530/3157 =16.79% 178/3157 =5.63%

fsafsa Profitability Return Ratios Equity Earnings Av. Equity Return on Equity 178/ =33.4% ROCE PBIT(1-Tax Rate) Av.total Assets 316(1-0.5)/ =12.15% Earning Power EBIT Av. total Assets 316/ =24.34% Profit after Tax Av. Total Assets Return on Assets 178/ =13.7%

fsafsa Valuation Ratios (How Equity Stock is assessed in Capital Market)

fsafsa Valuation Ratios Market Price Per Share Earning per Share Price Earning Ratio /25.41 =6.76 Market Price Per Share Book Value per Share Market Value to Book Value Ratio /76.02 =2.26 Common Stock Equity Outstanding Shares Book Value Per Share 532/ =76.016

fsafsa Comparison with Industry Time Series of Financial Ratios

fsafsa Comparison Comparison of Ratios of Atlas Battery with Industry Average Ratio Atlas Ltd Industry Av. Liquidity Current Ratio Acid Test Ratio Leverage Debt Equity ratio Debt Ratio Interest Coverage Ratio Turnover Inventory turnover Acct Receivable TO FA Turnover Total Assets Turnover Profitability GP Margin Ratio16.8%18.0% NP Margin Ratio13.7%11.0% Return on Assets7.7%6.9% Earning power20.0%17.7% ROCE40%31.96% Return on Equity33.4%22.03%

fsafsa Time Series Times Series of Certain Ratios Debt-Equity ratio Total Assets turnover Net P margin(%) Return on Equity(%) Earning Power

fsafsa du pont analysis

fsafsa Profile of Profitability of a Firm (DU PONT ANALYSIS) Overall Profitability depends upon 2 elements Profit Margin On Sales Selling Price Cost and Expenses Turnover of Firm Total Assets Sales Du pont added another Dimension to it

fsafsa A nalyzing F inancial P erformance du pont analysis Du Pont Company pioneered this system of FA Analyze Return on Assets With the help of Net Profit Margin (NPM) & Total Assets Turnover Ratio (TATR) Extended to get Return on Equity (ROE)

fsafsa A nalyzing F inancial P erformance du pont analysis ROA Net Profit Net Sales Av.Total Assets x ROE Net Profit Net Sales Av.Total Assets x Av Equity x NPMTATR NPMTATREFR

fsafsa A nalyzing F inancial P erformance du pont analysis ROA Net Profit Net Sales Av.Total Assets x ROE Net Profit Net Sales Av.Total Assets x Av Equity x NPMTATR x =13.69% x 2.44 = %

fsafsa A nalyzing F inancial P erformance du pont analysis x X 5.6 X2.42 X 2.44 = How these results can be improved?

fsafsa Common-Size Statements standardized financial statements

fsafsa Common-Size Statements Net sales Net sales is usually the base and is expressed as 100%.

fsafsa Common-Size Statements 2008 Cost ÷ 2008 Sales × 100% ( Rs2,241,937 ÷ Rs2,628,820 ) × 100% = 85.3% 2009 Cost ÷ 2009 Sales × 100% ( Rs 2,626,740 ÷ Rs3,156,807 ) × 100% = 83.2%

fsafsa Common-Size Statements

fsafsa A nalyzing F inancial P erformance Applications of financial analysis Assessing Corporate Excellence Judging Creditworthiness 4c’s-character,capital,capacity,collatral Forecasting Bankruptcy Valuing Equity Shares Estimating Market Risk Indicators of Corporate Excellence (IDBI) Growth rate of Sales Growth rate of Assets PBT to C Employed WC to Gross Sales Debt Equity Ratio

fsafsa A nalyzing F inancial P erformance Using financial statement analysis Problems Price Level Changes Variations in Accounting Policies Window Dressing Interpretation of Results Correlation among Results

fsafsa A nalyzing F inancial P erformance SUMMARY Compara tive Analysis

fsafsa A nalyzing F inancial P erformance SUMMARY (Cont’d) Sales increasd from mil to mil. Net income raised from mil to mil. Cash and Cash equilents have decrased down to mil. Basic earning per share increased from Rs to Rs per share Overall Performance has been better as Compared to Previous Year Compara tive Analysis