Documente Academic
Documente Profesional
Documente Cultură
Purpose of FSA
Evaluate Financial Performance
I Income Statement
Evaluate Efficiency
I Linking Income Statement and Balance sheet
Indigo
Drreddys
Infosys
TCS
Reliance
D-Mart
Reliance-Retail
Ujjivan - MF/Bank
Purpose of FSA
Evaluate Financial Performance
I Income Statement
Evaluate Efficiency
I Linking Income Statement and Balance sheet
Benchmarking
Trend Analysis
Company X Company X Company X
Year(t) Year (t-1) Year (t-2)
Cross Sectional
Company X Company Y Company Z
Year(t) Year (t) Year (t)
Combination of both
Company X Company Y Company Z
Y(t) Y(t-1) Y(t-2) Y(t) Y(t-1) Y(t-2) Y(t) Y(t-1) Y(t-2)
Income Statement
Trend in sales: Increasing/ Decreasing/ Stagnant
Reasons:
I Volume Effect
Market Size
Mix
I Price Effect
Capacity
I Utilization (Yield)
Profitability Ratios
Profit Margins: Sales Vs. Profit
I Gross Margin = Gross Profit
Sales
I EBITDA
Cash Operating (EBITDA) Margin = Sales
I Net Profit
Net Profit Margin = Sales
I Administration Cost
Administration expense ratio = Sales
I Selling Cost
Selling expense ratio = Sales
Example
DOL= Contribution/PBIT 2
DFL= PBIT/PBT 1.5
†
Tax rate = Effective Tax Rate and not Corporate Tax Rate
Sales
Current Assets Turnover = Average Current Assets
I COGS
Inventory Turnover: Average Inventory
I Sales
Debtors Turnover: Average debtors
I Purchases
Creditors Turnover: Average Creditors
†
Should I consider A/R or inventory more than x months old? Some banks don’t.
Are you repaying the interest/ instalments from profits or new loans?
Their interest is also affected by the share of capital contributed by them vs. equity
holders (Riskiness)
I Debt
Debt Ratio or Debt Capitalization = Debt + Equity
I Debt
Debt-Equity Ratio = Equity
Asset Utilization:
Total assets turnover=Sales/avg(FA+WC)
Days’ inventory=365/(COGS/Avg(inv))
Days’ receivable= 365/(Sales/Avg(Receivable))
Day’s payable = 365/(Purchases/Avg(Payable))
Leverage:
Debt-equity
Debt Ratio
Interest coverage (1) =(EBIT+Depn)/Interest
Interest coverage (2)=EBIT/Interest
Profitability/Margins:
Gross profit margin = GP/Sales
Net profit margin = PAT/Sales
ROE=PAT/Avg.(Equity)
ROA=(PAT+Int.)/Avg.(Equity + Debt)
Others:
Sales growth
Industry Specific
PAT
ROE = Equity
PAT Sales
= Sales
× Equity
1 Assets
× P&M Building Inventory (Efficiency ratios) × Equity (Leverage)
Sales
+ Sales + Sales + Debtors
Sales
− Creditors
Sales
Bird’s-eye view:
CFO vs. NI
Financing Pattern:
I Equity or Debt
I Public Offers