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INDIAN OIL CORPORATION
LIMITED
•IndianOil is also the highest ranked Indian company in the prestigious Fortune 'Global 500' listing, having moved up 19 places to the 116th position in 2008. It is also the 18th largest petroleum company in the world.
FINANCIAL STATEMENT
ANALYSIS
OF
COMPANY
RATIOANALYSIS
Liquidity
Ratios
Coverage
RatiosTurnover Ratios
Leverage
Ratios
Profitability
Ratios
LIQUIDITYRATIO
CURRENTRATIO
QUICKRATIO
CASH RATIO
CURRENT RATIOYEAR C.R
2005 1.2921
2006 1.4053
2007 1.3996
2008 1.3302
2009 1.5181
2010 1.25380
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
YEAR 2004 2005 2006 2007 2008 2009
QUICK RATIO
YEAR Q.R
2005 0.643985
2006 0.629437
2007 0.547197
2008 0.540943
2009 0.679925
2010 0.6160930
0.1
0.2
0.3
0.4
0.5
0.6
0.7
04 05 06 07 08 09
QR
QR
CASH RATIOYEAR C.R
2005 0.0553
2006 0.0458
2007 0.0313
2008 0.0293
2009 0.0238
2010 0.0224 0
0.01
0.02
0.03
0.04
0.05
0.06
04 05 06 07 08 09
C.R
C.R
ANALYSIS• The current ratio for the last 6 years is appox.
1.3:1 which is quite unsatisfactory according to the standard norms, but in this industry sector it is fair enough.
• The quick ratio is 0.6:1 which is again unsatisfactory. It implies that the company may find it difficult to pay its current liabilities.
• The cash ratio is also not adequate in meeting the short-term obligations of the firm.
LEVERAGERATIOS
Debt
Equity Ratio
Equity
Asset Ratio
Interest
Coverage Ratio
Debt
Asset RatioPreference Dividend
Coverage Ratio
DEBT EQUITY RATIO
YEAR D/E
2005 0.64845
2006 0.78237
2007 1.02594
2008 0.84554
2009 0.94480
2010 1.07531 0
0.2
0.4
0.6
0.8
1
1.2
04 05 06 07 08 09
D/E
D/E
DEBT ASSET RATIO
YEAR D/A
2004 0.209052
2005 0.240617
2006 0.296022
2007 0.266715
2008 0.287211
2009 0.324213 0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
04 05 06 07 08 09
D/A
D/A
ANALYSIS
• From the debt-equity, debt-asset and equity-asset ratios, we interpret that most of the money involved is of owner’s and it is safe for creditors to invest money in this company.
• Thus we can say that company can perform satisfactorily in long term.
TURNOVERRATIO
INVENTORYTURNOVER
RATIO
DEBTORSTURNOVER
RATIO
AVERAGECOLLECTION
PERIOD
TOTALASSET
TURNOVERRATIO
INVENTORY TURNOVER RATIO
YEAR
ITR(times)
2004 6.699831
2005 5.836031
2006 6.686472
2007 6.915437
2008 7.885222
2009 11.084820
2
4
6
8
10
12
04 05 06 07 08 09
ITR
ITR
DEBTORS TURNOVER RATIO
YEAR DTR(times)
2004 14.48785
2005 13.65056
2006 18.74085
2007 17.55006
2008 13.02869
2009 17.187330
24
68
1012
1416
1820
04 05 06 07 08 09
DTR
DTR
TOTAL ASSET TURNOVER RATIO
YEAR TATR(times)
2004 1.89321
2005 1.79170
2006 1.89715
2007 2.07175
2008 1.91765
2009 2.166250
0.5
1
1.5
2
2.5
04 05 06 07 08 09
TATR
TATR
ANALYSIS• The avg. Inventory turnover ratio for the last 6
yrs is approx 6 times per year,which is satisfactory. It implies that the inventories have been sold fast.
• The avg. Debtors turnover ratio is 15 times per year (industrial avg. is 7) which is quite high and indicates that there is a short time-lag between sales and cash collection
• The TATR is around 1.8 (avg. of 6 yrs)• From the above turnover ratios we can conclude
that the company’s trade credit management is satisfactory.
PROFITABILITYRATIOS
Gross Profit Margin
Ratio
Net Profit Ratio
Operating
Profit RatioEarning Power Ratio
Return
on Total
Assets
NET PROFIT RATIO
YEAR NPR(%)
2004 5.79
2005 3.897
2006 2.654
2007 3.572
2008 3.298
2009 0.7570
0.01
0.02
0.03
0.04
0.05
0.06
04 05 06 07 08 09
NPR
NPR
RETURN ON TOTAL ASSET
YEAR ROTA(%)
2004 10.9617
2005 6.9833
2006 5.0367
2007 7.401
2008 6.3257
2009 1.64110
0.02
0.04
0.06
0.08
0.1
0.12
04 05 06 07 08 09
ROTA
ROTA
EARNING PER RATIO
YEAR EPR(%)
2004 16.0656
2005 9.8272
2006 8.4142
2007 12.0844
2008 10.5712
2009 5.38330
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16
0.18
04 05 06 07 08 09
EPR
EPR
ANALYSIS•The Net Profit Margin (avg. of 6
yrs) is 3.25% which is a little low. But since the inventory turnover ratio is high it can earn a high rate of return on investments.
•There is a huge drop in ROTA from 2004 to 2009. In 2004 the analysis shows that the firm did utilize it’s assets efficiently.
DU PONTANALYSIS
Pioneered by Du Pont Company of USA. It analyses important inter-relationships based
on information found in financial statements. It is defined as- Net Profit = Net Profit × Net
Sales Total assets Net sales Total
assets ROTA NPM TATR Such a decomposition helps in understanding
how the return on total assets is influenced by the net profit margin and the total asset turnover ratio.
YEAR 2005 2006 2007 2008 2009 2010
NPM 0.0579 0.03897 0.02654 0.03572 0.03298 0.00757
TATR 1.8932 1.79170 1.89715 2.07175 1.91765 2.16625
NPM X
TATR
0.1096 0.06983 0.05036 0.07401 0.06325 0.01641
= = = = = = =
ROTA 0.1096 0.06983 0.05036 0.07401 0.06325 0.01641
OVERALL ANALYSIS
Thus, we see that the short-term financial state of the company is slightly weak but it is satisfactory in the long-term. The assets are employed efficiently by the firm. The use of capital employed is also done efficiently.
But there is a huge drop in ROTA, in the year 2010. In fact the net profit has also dropped a great extent in this year. One of the major reasons for this drop is the fluctuations in the international crude oil price.
Otherwise, the company has been performing well over the period from ’05 to ’09.