Britannia New 2
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Transcript of Britannia New 2
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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
March06 March07 March08 March09 March10
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
March06 March07 March08 March09 March10
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
March '06 March '07 March '08 March '09 March '10
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Interest coverage ratio =
Profit before interest
and taxes
Interest
March06 March07 March08 March09 March10
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
March '06 March '0 March '08 March '09 March '10
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LEVERAGE RATIO
Fixed charges
coverage ratio
=
Profit before interest
and taxes+ depreciation
Interest+ Repayment of loans
1- Tax rate
March06 March07 March08 March09 March10
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
March '06 March '07 March '08 March '09 March '10
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Average collection
period=
Average sundry debtors
Average daily credit sales
March06 March07 March08 March09 March10
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
March '06 March '07 March '08 March '09 March '10
Average Collection Period
Average Collection Period
LEVERAGE RATIO
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Fixed asset
turnover
Net sales
Net average fixed
assets
March06 March07 March08 March09 March10
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.
March '06 March '07 March '08 March '09 March '10
Britannia
GSK Con
LEVERAGE RATIO
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Total assets
turnover
= et sales
Average total assets
March06 March07 March08 March09 March10
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
March '06 March '07 March '08 March '09 March '10
Britannia
GSK Con
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 =
year March06 March07 March08 March09 March10
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
March '06 March '07 March '08 March '09 March '10
EBITDA Margin
EBITDA Margin
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ROFITABILITY RATIOS
Net ProfitMargin =
year March06 March07 March08 March09 March10
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
March '06 March '07 March '08 March '09 March '10
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
March '06 March '07 March '08 March '09 March '10
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VALUATION
Market Value to BookValue Ratio
year March06 March07 March08 March09 March10
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=
year March06 March07 March08 March09 March10
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!!!