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AMITY UNIVERSITY, UTTAR PRADESH

AMITY BUSINESS SCHOOL

ACCOUNTING & FINANCIAL MANAGEMENT-I


In partial fulfillment of Masters of Business Administration (2013-2015)

Submitted ByAkansha Nagpal (A-24) Akanksha Tyagi (A-03) Diksha Singhal (A-67) Ananya Dubey (A-66)

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ACKNOWLEDGEMENT

The satisfaction and euphoria that accompany the successful completion of any task that would be incomplete without mentioning the name of the people whose constant guidance and encouragement has crowned all our efforts and success.

Firstly, we would like to thank Ms. Lakhwinder Kaur Dhillon (Professor, ABS) who has through her vast experience and knowledge has been able to guide us, both ably and successfully towards the completion of the Economics for Managers project.

We wish to express our gratitude to all the group members for stretching out their helping hands. We were able to complete this project with their support and hard work. So, thank you!

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CONTENTS
S No. Topics 1 2 3 4 5 7 Page No.

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BHARTI AIRTEL
BALANCE SHEET OF BHARTI AIRTEL For the year ended 2013 (in crores) LIABILITIES EQUITY SHARE CAPITAL RESERVES
2012 2013 ASSETS 2012 2013

1898.80 1898.80 GROSS BLOCK 47528.70 52247.40 LESS:DEPRICIATION

2.10 0.00 REVALUATION RESERVE CAPITAL WORK-IN-PROGRESS TOTAL DEBT: 2.90 2.00 INVESTMENTS SECURED LOAN UNSECURED LOAN 14126.50 12977.80 INVENTORIES 17145.20 20061.70 SUNDRY DEBTORS CURRENT LIABILITIES 697.50 695.50 CASH AND BANK BALANCE PROVISIONS FIXED DEPOSITS LOANS & ADVANCES MISCELLANOUS EXPENSES TOTAL 81401.70 87883.20 TOTAL

70450.30 76206.10 26466.00 33023.50 43984.30 43182.60 1072.50 1030.80 12337.80 28199.10 32.10 2.10 2134.50 2246.80 159.20 362.70 322.60 0.00 21309.50 12859.10 49.20 N/A 81401.70 87883.20

PROFIT AND LOSS ACCOUNT OF BHARTI MITTAL AS ON 31st MARCH 2013 (in crores) PATICULARS AMOUNT (IN RS.) PARTICULARS AMOUNT (IN RS.)

OPENING STOCK PURCHASES POWER AND FUEL COST GROSS PROFIT c/d TOTAL EMPLOYEE COST OTHER MANUFACTURING EXPENSES

32.10 SALES 11.20 CLOSING STOCK 3569.90 41739.80 45353.00 TOTAL

45350.90 2.10

45353.00 41739.80 1463.00

1511.30 GROSS PROFIT b/f 14325.30 OTHER INCOME

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SELLING & ADMINISTRATION EXPENSES MISCELLANEOUS EXPENSES INTEREST DEPRICIATION TAX NET PROFIT c/d TOTAL

5252.00 7191.70 1652.30 6826.70 1358.50 5085.00 43202.80 TOTAL 43202.80

Other Informationa) b) c) d) No. of equity shares o/s = 37975.30 Total no. of equity shares issued = 3997400102 Face value Market value of shares =

CALCULATION OF RATIOSA) LIQUIDITY RATIOSA.1) Current Ratio = Total current assets/ Total current liabilities Total C.A. = Short-term Investments + Inventories + Debtors + Cash & Bank Balances + Loans & Advances = 28199.10 + 2.10 + 2246.80 +362.70 +12859.10 = 43669.80 Rs. (in crores) Total C.L. = 20061.70 Rs. (in crores) Therefore, CA/CL = 43669.80/20061.70 = 2.176 ~ 2.18 A.2) Quick Ratio = (Total C.A- Total Inventory- Prepaid expenses) Total Current Liability = (43669.80 2.10 0) 20061.70 = 43667.70 20061.70 = 2.1766 ~ 2.18 ~5~

A.3) Absolute Liquid ratios = Absolute Liquid assets/ C. L. = Cash + Bank + short term securities/ C.L = 362.70 + 1030.80 + 28199.10 + 2.10 + 2246.80 20061.70 = 1.587 Working notes: Investments are assumed to be short-term investment. B) EFFICIENCY/ACTIVITY RATIOSB.1) Inventory Turnover Ratio = COGS/ Average Inventory Now, COGS = Opening stock + Purchases Closing stock = 32.10 + 11.20 2.10 = 41.20 Rs. (in crores) Now, Average Inventory = Opening stock + Closing stock / 2 = 32.10 + 2.10 / 2 = 17.10 Rs. (in crores) Therefore, ITR = 41.20 / 17.10 = 2.467 ~ 2.47 times

B.2) Debtor Turnover Ratio = Net credit sales/ Average Debtors = 25350.90/2246.80 = 11.283 ~ 11.28 times (a) In months = 12/11.28 = 1.06 months (b) In days = 365/11.28 = 32.358 days ~6~

B.3) Creditor Turnover Ratio = Net Purchases/ Average Creditors = 11.20 / = times (a) In months = 12/ (b) In days = 365/ B.4) Working Capital Turnover Ratio = COGS/ Net working capital = 41.20/ 23608.1 = 0.0017 B.5) Total Asset Turnover Ratio = Net Sales/ Total Assets = 45350.9 / 87883.2 = 0.516 B.6) Fixed Asset Turnover Ratio = Net Sales/ Fixed Assets = 45350.9 / 43182.60 = 1.05 C) SOLVENCY RATIOSC.1) Debt Equity ratio = Outsiders fund Shareholders fund = 12979.2/ 1898.80 + 52247.40 = 12979.2/ 54146.2 = 0.239 ~ 0.24 C.2) Proprietary Ratio = Shareholders fund Total Assets = 1898.80 + 52247.40/ 87883.20 = 0.616 ~ 0.62 C.3) Capital Gearing Ratio = Equity share capital + R&S Pref. share capital + Long-term debt

= 1898.80 + 52247.40 = 54146.2 = 4.171 ~ 4.17 0 + 12979.80 12979.80

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C.4) Interest Coverage Ratio = Net profit (before interest, dep. and tax) Interest = 14922.1 / 1652.30 = 9.03 C.5) Debt service coverage ratio = PAT + Depreciation + Interest on loan Interest on loan + Loan re-payment in a year = 5085 + 6826.7 + 1652.3 = 13564 / 1653.2 1652.3 + 0.9 = 8.20 D) PROFITABILITY RATIOSD.1) Gross Profit Ratio = Gross Profit x 100 Net Sales = 41739.80 x 100 = 92.037 45350.90 D.2) Net Profit Ratio = Net Profit x 100 = 5085.00 x 100 = 11.212 ~ 11.21 Net Sales 45350.90 D.3) Operating Profit Ratio = Operating Profit x 100 = 36487.80 x 100 Net Sales 45350.90 = 80.456 ~ 80.46 Since, Operating Profit = Gross Profit Administrative Expenses Selling Expenses = 41739.80 5252.00 = 36487.80 D.4) Return on investment = Net profit before interest, tax and dividend x 100 Capital employed = Working Note: Capital employed = equity share capital + preference shares capital + reserves and surplus + long term loans +debentures fictitious assets ~8~ 5085/54148.2 = 9.3%

= 1898.80 + 52247.40 + 2 = 54148.2 D.6) Return on Equity = ROE Where, ROE = Net profit after tax interest and dividend Equity share capital = 5085/18980.8 = 26.7 % D.7) Return on Capital Employed = Net profit before tax and interest and dividend Capital employed = 6454.80/54148.2 = 11.9% E) VALUATION RATIOSE.1) Earnings per share [EPS] = Net profit after tax and preference dividend Number of equity shareholders = 5085/ 37975.30 = 13.3% E.2) Price-Earnings Ratio [PER] = Market Price per share of common stock Earnings per share of common stock = 325.30/13.3= 24.45% ~ 24.5% E.3) Dividend-Yield Ratio = Current dividend per share divided Market price of the stock = 1/325.30 = .307% ~ .31%

Working Notes: Current dividend per share given is 20% of the market price amounting to Rs 1 per share E.4) Dividend Payout Ratio = Common dividend per share Earnings per share = 1/13.3= .075% ~ .08% ~9~

E.5) Market Value to Book value Ratio = MV per share/ BV per share =

FINANCIAL RATIO ANALYSIS 1.

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