Britannia New 2

8/8/2019 Britannia New 2

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BRITANNIA INDUSTRIES

-Akshay Dixit, 12

-Ankit Bahl, 23

-Asav Solanki, 35

-Dinesh Kumar, 55


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LIQUIDITY RATIOS

March06 March07 March08 March09 March10

Currentratio

0.95 1.22 1.45 1.18 0.94

Current ratio = current assets/ current liabilities

The current ratio is an indication of a firm's market liquidity and ability to meet

creditor's demands.

The current ratio is a financial ratio that measures whether or not a firm has enough

resources to pay its debts over the next 12 months. It compares a firm's current assetsto its current liabilities.

If current liabilities exceed current assets (the current ratio is below 1), then the

company may have problems meeting its short-term obligations.

If the current ratio is too high, then the company may not be efficiently using its

current assets or its short-term financing facilities.


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LIQUIDITY RATIO CURRENT RATIO

0

0.5

1

1.5

2

2.5

3

March '06 March '07 March '08 March '09 march '10

Britannia

GSK Con


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LIQUIDITY RATIOS

Acid-test ratio = Quick assets/ current liabilities


Current

ratio

0.17 0.32 0.33 0.31 0.16

Acid Test ratio measures the ability of a company to use its near cash or quick

assets to immediately extinguish or retire its current liabilities. Quick assets include

those current assets that presumably can be quickly converted to cash at close to

their book values. A company with a Quick Ratio of less than 1, can not currentlypay back their current liabilities.

Generally, the acid test ratio should be 1:1 or better, however this varies widely

by industry. In general, the higher the ratio, the greater the company's liquidity

(i.e., the better able to meet current obligations using liquid assets).


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LIQUIDITY RATIO ACID TEST

0

0.0.4

0.6

0.8

1

1.

1.4

1.6

1.8

March '06 March '07 March '08 March '09 March '10

Britannia

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LEVERAGE

Debt equity ratio =debt/equity


Debt asset

ratio 0.39 0.20 4.4 1.05 17.98

Debt Ratio is a financial ratio that indicates the percentage of a company's assets

that are provided via debt.

It is the ratio of total debt (the sum of current liabilities and long-term liabilities)

and total assets (the sum of current assets, fixed assets, and other assets such as'goodwill').

If the ratio is less than 0.5, most of the company's assets are financed through

equity. If the ratio is greater than 0.5, most of the company's assets are financed

through debt.

Companies with high debt/asset ratios are said to be "highly leveraged"


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LEVERAGE RATIO DEBT EQUITY

0

4

6

8

10

1

14

16

18

0


Britannia

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Interest coverage ratio =

Profit before interest

and taxes

Interest


Interest

coverage ratio

39.59 14.04 22.95 13.87 17.9

A Interest coverage ratio is used to determine how easily a company can payinterest on outstanding debt

The lower the ratio, the more the company is burdened by debt expense. When a

company's interest coverage ratio is 1.5 or lower, its ability to meet interest expenses

may be questionable. An interest coverage ratio below 1 indicates the company is not

generating sufficient revenues to satisfy interest expenses.

LEVERAGE RATIO


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LEVERAGE RATIO INTEREST

COVERAGE

0

10

20

30

40

50

60

0

80

90


Britannia

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LEVERAGE RATIO

Fixed charges

coverage ratio

=

Profit before interest

and taxes+ depreciation

Interest+ Repayment of loans

1- Tax rate


Fixed charges

coverage ratio

42.14 16.22 26.34 15.52 29.41


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LEVERAGE RATIO FCCR

0

10

20

30

40

50

60

70


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Average collection

period=

Average sundry debtors

Average daily credit sales


Average

collection

period

4.44 4.75 6.53 5.81 4.23

The approximate amount of time that it takes for a business to receive paymentsowed, in terms of receivables, from its customers and clients.

Most businesses allow customers to purchase goods or services via credit, but one of

the problems with extending credit is not knowing when the customer will make cash

payments. Therefore, possessing a lower average collection period is seen as optimal,

because this means that it does not take a company very long to turn its receivables into

cash. Ultimately, every business needs cash to pay off its own expenses.

LEVERAGE RATIO


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0

1

2

3

4

5

6

7


Average Collection Period

Average Collection Period

LEVERAGE RATIO


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Fixed asset

turnover

Net sales

Net average fixed

assets


Fixed asset

turnover3.24 3.92

3.95 4.24 4.29

Asset turnover is a financial ratio that measures the efficiency of a company's use ofits assets in generating sales revenue or sales income to the company.

The fixed-asset turnover ratio measures a company's ability to generate net sales

from fixed-asset investments - specifically property, plant and equipment (PP&E) - net of

depreciation. A higher fixed-asset turnover ratio shows that the company has been

more effective in using the investment in fixed assets to generate revenues.

LEVERAGE RATIO


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0

0.1

1.

2

2.

3

3.

4

4.


Britannia

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LEVERAGE RATIO


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Total assets

turnover

= et sales

Average total assets


Total assets

turnover3.06 3.54 3.01 3.66 4.11

Asset turnover is a financial ratio that measures the efficiency of a company's use ofits assets in generating sales revenue or sales income to the company.

Average Total Assets is the value of "Total assets" from the company's balance sheet

in the beginning and the end of the fiscal period divided by 2

LEVERAGE RATIO


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0

0.5

1

1.5

2

2.5

3

3.5

4

4.5


Britannia

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LEVERAGE RATIO


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ROFITABILITY RATIOS

Gross ProfitMargin = Gross profit/ et Sales

year March06 March07 March08 March09 March10

Gross Profit

Margin 11.72 5.85 8.97 7.20 5.99

The gross profit margin ratio (orgross margin ratio) provides clues to the

company's pricing, cost structure and production efficiency.

A decreasinggross profit margin ratio (orgross margin ratio) indicates that low

amount of earnings, required to pay fixed costs and profits, are being generated

from revenues. Also, the business is unable to control its production costs.


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ROFITABILITY RATIOS

0

5

10

15

20

25

30

2006 2007 2008 2009 2010

GSK Con

Britannia


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ROFITABILITY RATIOS

EBITDA Margin =


EBITDA

Margin 13.02 6.83 9.75 8.21 4.70

(Earnings before interest, taxes,depreciation and amortization)

et Sales

All interest, tax, depreciation and amortization entries in the income statement are

reversed out from the bottom-line net income. EBITDA differs from the operating cash flow in a cash flow statement primarily by

excluding payments for taxes or interest as well as changes in working capital. EBITDA

also differs from free cash flow because it excludes cash requirements for replacing

capital assets

EBITDA margin measures the extent to which cash operating expenses use up

revenue


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0

2

4

6

8

10

12

14


EBITDA Margin

EBITDA Margin


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ROFITABILITY RATIOS

Net ProfitMargin =


Net Profit

Margin 8.54 4.89 7.38 5.79 3.42

Net Profit

Net Sales

Profit margin is an indicator of a company's pricing policies and its ability to

control costs. Differences in competitive strategy and product mix cause the profit

margin to vary among different companies

A low profit margin indicates a low margin of safety: higher risk that a decline in

sales will erase profits and result in a net loss.


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0

2

4

6

8

10

12

14


Britannia

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ROFITABILITY RATIOS

Return on assets =

Year March06 March07 March08 March09 March10

Return on

assets0.262 0.182 0.257 0.211 0.139

Net ProfitAverage total assets

Return on assets gives an indication of the capital intensity of the company,

which will depend on the industry; companies that require large initial investments

will generally have lower return on assets.

Return on assets is an indicator of how profitable a company is before leverage,

and is compared with companies in the same industry. Since the figure for total

assets of the company depends on the carrying value of the assets, some caution

is required for companies whose carrying value may not correspond to the actual

market value.


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0

0.05

0.1

0.15

0.2

0.25

0.3


Britannia

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VALUATION

Market Value to BookValue Ratio


Market

Value to

Book Value

Ratio 7.59 4.72 4.15 4.05 9.69

Market Value per share

Book value per share=

A higher P/B ratio implies that investors expect management to create more

value from a given set of assets, all else equal (and/or that the market value of the

firm's assets is significantly higher than their accounting value).

This ratio also gives some idea of whether an investor is paying too much for what

would be left if the company went bankrupt immediately.

P/B ratios do not, however, directly provide any information on the ability of the

firm to generate profits or cash for shareholders.


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0

2

4

6

8

10

12

March '06March '07March '08March '09March '10

Market Value to Book Value Ratio

Market Value to Book

Value Ratio


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DU POINT ANALYSIS

Average Total Assets

Return on Assets

(ROA)

Net Profit=


ROA

26 17 22 21.5 14

Du point breaks the ROA into two different

parts, NPM and TATR. The NPM ratio gives the

operating efficiency and the TATR ratio gives the

asset use efficiency


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0

5

10

15

20

25

30

March

'06

March

'07

March

'08

March

'09

March

'10

Return on Assets

Return on Assets


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FOR YEAR 2010

Return on = 14 %

total Assets

Net Profit = 116.51

TATR = 4.15

Net sales = 3401

Net sales = 3401

Average total Assets =825

NPM= 3.38%

Net sales = 3401

Total cost = 3284.49


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THANK YOU!!!

Documents

Britannia New 2