Era Business School, Dwarka, New Delhi..... assignment submitted by a group of students of PGDM 2012-14

1. Name of the Ratio
1. Liquidity Ratios
Current Ratio
= CA/CL
Calculations
2010-11
Calculations
2011-12
Analysis
739.21/661.15
=1.11:1
758.68/694.21
=1.09:1
Quick Ratio
=(CAInventories)/CL
Cash Ratio
=(Cash+Marketable
Securities)/CL
739.21- 153.70/
661.15=0.88:1
758.68- 217.68/
694.21=0.77:1
395.61+ 0/
661.15= 0.59
= 59% approx
309.81+0/
694.21=0.44
=44% approx
Networking Capital
Ratio = NWC/NA
78.06/384.10
=0.20
64.47/435.39
= 0.14
Deteriorated since 2011.
871,96.58/
(162,29.76+
77,73.62)/2=7.2
times
2,381.51/42.96
=55.43 times
1,050,22.17/
(199,69.59+
103,49.57 )/2
=6.9 times
2,805.54/87.27
= 32.14 times
The company had been holding an inventory
of 365/7.2= 51 days (approx) during 2010-11
but the holding has risen to approx 53 days.
2. Turnover Ratio
Inventory Turnover
Ratio = CoGS/ Avg
Inventory
Debtors Turnover
Ratio = Total Sales/
Drs
When seen in isolation, while the liquidity has
reduced from 2011 to 2012, the overall
liquidity of both the years appears to be
unsatisfactory since there is a very low margin
of safety in both the years.
In a case wherein inventories do not sell, the
company has pretty low Quick Ratios; overall
unsatisfactory for both the years.
Even though overall Cash Ratio has declined
from 2011 to 2012, considering bank credit
available and standing/credibility of the
company concerned, it does not look
worrisome.
Misc
Even though the overall figures have declined,
the company still maintains a healthy ratio
since even with reduced ratio in 2011-12, the
average collection period(ACP) is as low as
365/32.14 = 11 days (approx) and Drs are just
about 3% approx. of total sales, the stats look
healthy and assuring.
For these calculations, loans
and advances (146.93 and
143.92) have not been counted
in since same do not fall under
the category og marketable
securities.
1. Details of Credit Sales and
Average Drs not known.
2. Since the goods are not
seasonal, the formula being
used is logical.
3. Cr policy of the company is
not known.

2. Creditors Turnover
Ratio
750,35.73 /
491.84= 152.5
Asset Turnover
Ratio
Net Assets
Turnover Ratio
= Sales/NA
2,381.51/
384.10 = 6.2
times
Total Assets
Turnover Ratio
=Sales/Total Assets
Fixed Asset
Turnover Ratio
=Sales/NFA
Current Asset
Turnover Asset
=Sales/CA
89527.09/
586.96=152.5
There has been no change in the figures. It
translates into an APP (average Payment
Period) of less than three days!
For every ₹of capital employed, company has
been producing ₹ (approx) of sales
6
consistently over past two years. It means that
the company is not under-utilising its assets.
2,381.51/
2,805.54/(758.68 For every ₹of investment (NFA+CA)
(739.21 +
+254.42 )= 2.7
employed, company has been producing ₹
2.5
255.04)=2.4
times
(approx) of sales consistently over past two
times
years. This is significantly lower than Net Asset
Turn Over Ratio figures.
2,381.51/255.04 2,805.54/254.42 FA are being turned over faster than CA. In
=9.33 times
=11.02 times
other words, to generate a sale of ₹1,
company needs to invest ₹0.9 in FA and ₹
2,381.51/739.21 2,805.54/758.68 0.28 (approx). However, both these ratios are
on an increase between two financial periods.
=3.22 times
=3.6 times
1. Details of Credit purchases
and Average Drs not known.
2. Separate details of credit
purchases are not available;
being assumed from the figures
given in the balance sheet.
2,805.54/ 435.39
= 6.4 times
3. Leverage Ratios
Debt Ratio = TD/
(TD+NA)
0.05/.05+384.05 0.00/435.39 =0
=0.0001
Debt Equity Ratio
= TD/NW
0.05/384.05
=0.0001
0
These ratios indicate that the company has
been financed by the owners all by
themselves since there are hardly any
borrowings from lenders.
--do----
1.Total Assets= Net Fixed
Assets+ Current Assets.
2. Figures of Net Block being
taken as NFA here.

3. Capital Employed
to Net Worth Ratio
= CE or NA/NW
Coverage Ratios
Interest Coverage
Ratio=EBIT/Interest
4. Profitability
Ratios
Gross Profit Margin
=GP (or SalesCoGS)/Sales
Net Profit Margin
=PAT/Sales
Return on Equity
=PAT/NW (Equity)
Return on Capital
Employed= ROI
=EBIT(1-Tax)/NA
5. Investment
Ratios
Dividend Per Share
=Dividend/No of
shares
Earnings Per Share
=PAT/No of shares
Dividend Pay Out
Ratio = DPS/EPS
384.10/384.05=
1.0001
435.39/435.39
=1
Follows the same trend as two other leverage
ratios as also the thumb rule of 1+Debt-Equity
ratio.
522.13/ 8.61
=60.64:1
588.97/1.51
=390.04:1
Very high ratios here indicate an ultraconservative approach towards usage of debt.
However, since there is hardly any debt on the
company, these figures look justified.
520.19/2,284.47 578.55/2,688.01
=0.22 = 22%
=0.21 =21%
402.58/2,284.47
=0.17 = 17%
402.58/384.05
=1.04= 104%
522.13(1-0.24)/
384.10= 1.03
= 103%
446.47/2,688.01
=0.16 = 16%
446.47/435.39
=1.02 or 102%
588.97(1-0.22)/
435.39= 1.05
= 105%
299.18Crore/
1359.93 lac
=₹
21.99
402.58 Crore/
1359.93 lac
=₹
29.60
21.99/29.60
=74%
339.98Crore/
1359.93 lac
=₹
24.99
446.47 Crore/
1359.93 lac
=₹
32.83
24.99/32.83
=76%
A bit of decline (1%) between the accounting
periods indicates declining margins.
--- do--------do----; however, returns look good when
compared to market trends in general.
With a uniform figure of 135%*, the company
is doing well.
An increase of approx. 14% (year on year)
augurs well for the stock holders.
An increase of approx. 10% is in line with
industry averages.
Translates into a situation wherein growth in
equity is 26% approximately. This is in line
*If tax component is ignored
because same is not uniform,
the ROCE will be 135% in both
the years.

4. Dividend Yield
Ratio = DPS/ Mkt
value per share
Price Earnings
Ratio =Mkt value
per share/EPS
21.99/1563
= 1.4%
24.99/1563
=1.5%
1563/29.60
=52.80 times
1563/32.83
=47.60 times
with industry average and it has seen an
increase of 2% between two accounting
periods.
These ratios are perfectly in sync with industry Mkt Value of one share worth
averages (competitors like Godrej, P&G, Dabur FV of ₹ = ₹1563 as on 01 Jan
1
and so on). As a company, it is earning well for 2013
its investors while staying in meaningful
competition in the market.

5. Appendix giving out details of the inputs used in the assignment
Balance sheet - Colgate-Palmolive (India) Ltd.
Particulars
Mar'12
Mar'11
Liabilities 12 Months 12 Months
Share Capital
13.60
13.60
Reserves & Surplus
421.79
370.45
Net Worth
435.39
384.05
Secured Loans
0.00
0.00
Unsecured Loans
0.00
0.05
TOTAL LIABILITIES
435.39
384.10
Gross Block
522.50
579.83
(-) Acc. Depreciation
268.08
324.79
Net Block
254.42
255.04
Capital Work in Progress.
69.38
12.26
Investments.
47.12
38.74
Inventories
217.68
153.70
Sundry Debtors
87.27
42.96
Cash And Bank
309.81
395.61
Loans And Advances
143.92
146.93
Total Current Assets
758.68
739.21
Current Liabilities
586.96
491.84
Provisions
107.25
169.31
Total Current Liabilities
694.21
661.15
NET CURRENT ASSETS
64.47
78.06
Misc. Expenses
0.00
0.00
TOTAL ASSETS (A+B+C+D+E)
435.39
384.10

6. Profit & Loss - Colgate-Palmolive (India) Ltd.
Mar'12
Mar'11
12 Months
12 Months
INCOME:
Sales Turnover
2,805.54
2,381.51
Excise Duty
117.54
97.05
NET SALES
2,688.01
2,284.47
Other Income
0.00
0.00
TOTAL INCOME
2,737.74
2,320.66
EXPENDITURE:
Manufacturing Expenses
172.09
139.33
Material Consumed
1,055.58
881.18
Personal Expenses
215.61
193.22
Selling Expenses
0.00
422.35
Administrative Expenses
666.18
128.21
Expenses Capitalised
0.00
0.00
Provisions Made
0.00
0.00
TOTAL EXPENDITURE
2,109.46
1,764.28
Operating Profit
578.55
520.19
EBITDA
628.28
556.38
Depreciation
39.31
34.25
Other Write-offs
0.00
0.00
EBIT
588.97
522.13
Interest
1.51
8.61
EBT
587.46
513.52
Taxes
141.92
117.37
Profit and Loss for the Year
445.54
396.15
Non Recurring Items
0.29
0.29
Other Non Cash Adjustments
0.64
6.14

7. Other Adjustments
0.00
0.00
REPORTED PAT
446.47
402.58
KEY ITEMS
Preference Dividend
0.00
0.00
Equity Dividend
339.98
299.18
Equity Dividend (%)
2,499.99
2,199.99
Shares in Issue (Lakhs)
1,359.93
1,359.93
EPS - Annualised (Rs)
32.83
29.60
Capital Structure - Colgate-Palmolive (India) Ltd.
Authorized
Capital
Issued
Capital
(Rs. cr)
Period Instrument
(Rs. cr)
Shares
(nos)
Face
Value
Capital
(Rs.
Cr)
-PAIDUP-
From
To
2011
2012
Equity Share
137.0
13.6
135992817
1.0
13.6
2010
2011
Equity Share
137.0
13.6
135992817
1.0
13.6
2009
2010
Equity Share
137.0
13.6
135992817
1.0
13.6
Statements of Cost of Goods Sold
2011(₹ in Lacs)
2012 (₹ in Lacs)
Work-in-Process
6,08.33
10,36.30
Finished Goods
60,27.50
77,73.62
Add : Stock taken over on Amalgamation
of a Subsidiary
14,55.51
23,05.20
particular
Opening Stock
81,09.41
111,15.12
Raw and Packing Materials Consumed
Opening Stock
23,89.52
47,87.99
Add : Stock taken over on Amalgamation
of a Subsidiary
74.34
------
Add : Purchases
750,35.73
89527.09
774,99.59
943,15.08
35,47.71
49,28.10
739,51.88
893,86.98
Less : Closing Stock
820,61.29
Purchased Finished Goods
100,502.10
162,29.76
199,69.59
Less : Closing Stock
Work-in-Process
10,36.30
8,33.73
Finished Goods
77,73.62
103,49.57
Stock-in-trade
23,05.20
47,87.99
(-) 111,15.12
Excise Duty on Finished Goods
Cost of goods sold
20.65
871,96.58
(-) 159,71.29
5,21.77
1,050,22.17

8. Era Business School, Dwarka
ASSIGNMENT: CF
Group Members
NavdeepDahiya
-
0121pg005
Manoj Kajla
-
0121pg036
Col AK Raina, SM
-
0121pg014

9. (P.S.: Ratios have been worked out based on the data that has been placed as appendix after the ratios)