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Gross Profit Margin:

A financial metric used to assess a firm's financial


health by revealing the proportion of money left over
from revenues after accounting for the cost of goods sold.
Gross profit margin serves as the source for paying
additional expenses and future savings. It is calculated by
dividing gross profit on sales.
Without an adequate gross margin, a company
will be unable to pay its operating and other expenses and
build for the future. The gross profit margin shows a
reducing trend until 2012 and a slight increase this year
(2013). The current year values, when compared to the
values of FY2010, shows a 52.1% drop in gross profit margin signifying higher costs being
incurred.
Operating Profit Margin:


The operating profit margin lets us analyse
the firm's profitability, particularly with regard to
cost control. It shows how much cash is spent after
most of the expenses are met. Operating Profit
Margin is calculated as Operating Income divided
by the Sales Revenue.
At HGS, although revenues have been
increasing, the margin has been falling, which
signifies that higher costs are being incurred.
Mar 2013 Mar 2012 Mar 2011 Mar 2010
Gross Profit Margin (%) 11.74 10.94 15.78 22.53
Mar 2013 Mar 2012 Mar 2011 Mar 2010
Operating Profit Margin (%) 17.23 16.66 22.77 29.44
0
5
10
15
20
25
30
Operating Profit Margin
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0
5
10
15
20
25
Gross Profit Margin
Mar-10 Mar-11 Mar-12 Mar-13
The BPO industry is one which involves a lot of evolving technologies and hence
investments, training & development costs, etc. Increased attrition rates have also been
recorded and therefore results in higher cost to the company.

Net Profit Margin:


Net profit margin is a key financial indicator used
to assess the profitability of a company. Net profit
margin is calculated as net profit after taxes by net sales.

Net profit margin measures how much of each
rupee earned by the company is translated into profits. A
low profit margin indicates a low margin of safety: higher
risk that a decline in sales will erode profits and result in
a net loss.

The profitability of the organization is not satisfactory and the net profit margin has
been showing a decreasing trend year after year because of factors like high costs being
incurred, increasing attrition, new technologies and investments.







Mar 2013 Mar 2012 Mar 2011 Mar 2010
Net Profit Margin (%) 7.49 9.85 13.78 19.48
0
5
10
15
20
Net Profit Margin
Mar-10 Mar-11 Mar-12 Mar-13
Return on Capital Employed:


Return on capital employed is a measure for
comparing the operating efficiency of the firm. Higher
the output better is the efficiency and lower the output
lower the operating efficiency. This ratio is calculated
by taking EBIT by the capital employed.
The data indicates that the return on capital
employed in FY2013 has increased by 3.24% when
compared the previous year but when compared to
FY2010, has come down by 4.16%.

Return on Net Worth:


Return on net worth describes the portion of net
income that is eventually returned as a percentage of the
equity held by shareholders in a company.
It is calculated by dividing the net income by equity. The
chart shows a decreasing trend as a result of reducing
profit margins.




Mar 2013 Mar 2012 Mar 2011 Mar 2010
Return On Capital Employed (%) 12.57 9.33 12.34 16.73
Mar 2013 Mar 2012 Mar 2011 Mar 2010
Return On Net Worth (%) 8.12 9.58 11.72 15.50
0
5
10
15
20
Return on Capital
Employed
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0
5
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15
20
Return On Net Worth
Mar-10 Mar-11 Mar-12 Mar-13
Current Ratio:

The ratio is mainly used to give an idea of the
company's ability to pay back its short-term liabilities
(debt and payables) with its short-term assets (cash,
inventory, receivables). The higher the current ratio, the
more capable the company is of paying its obligations.
This ratio can be calculated by dividing current assets on
current liabilities.
The chart shows that the current ratio had dropped
in FY2012 as a result of increased liabilities and re-
stabilized in FY 2013 maintaining an average current ratio
of approximately 1.2.

Quick Ratio:


The quick ratio is very useful in measuring the
liquidity position of a firm. It measures the firm's
capacity to pay off current obligations immediately.
Quick ratio is more rigorous test of liquidity than the
current ratio because it eliminates inventories and
prepaid expenses as a part of current assets.
The chart indicates an increasing trend in the
quick ratio, except for a slight decrease in FY2013,
maintaining an average of 1.8.

Mar 2013 Mar 2012 Mar 2011 Mar 2010
Current Ratio 1.26 0.79 1.34 1.31
Mar 2013 Mar 2012 Mar 2011 Mar 2010
Quick Ratio 1.89 1.93 1.82 1.56
0
0.5
1
1.5
Current Ratio
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0
0.5
1
1.5
2
Quick Ratio
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Debt-Equity Ratio:


Debt equity ratio is used to measure a companys
financial leverage. It is calculated by dividing total
liabilities by stockholders equity. It indicates what
proportion of equity and debt the company is using to
finance its assets. A high debt/equity ratio generally
means that a company has been aggressive in financing
its growth with debt.
The chart indicates that the company has employed
higher debt capital in view of a more aggressive growth
strategy.

Debt-Turnover Ratio:

Debtors turnover ratio indicates the
velocity of debt collection of a firm. In simple words
it indicates the number of times average debtors
(receivable) are turned over during a year. It is
calculated as net credit sales by average debtors.
The chart indicates an increasing trend in the
ratio which is good, signifying efficient management
of debtors.

Mar 2013 Mar 2012 Mar 2011 Mar 2010
Debt Equity Ratio 0.20 0.20 0.10 0.08
Mar 2013 Mar 2012 Mar 2011 Mar 2010
Debtors Turnover Ratio 6.30 5.59 4.67 5.35
0
0.05
0.1
0.15
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Debt-Equity Ratio
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Debtors Turnover
Ratio
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Asset-Turnover Ratio:

The fixed-asset turnover ratio measures a
company's ability to generate net sales from fixed-asset
investments - specifically property, plant and equipment.
A higher fixed-asset turnover ratio shows that the
company has been more effective in using the investment
in fixed assets to generate revenues.
This ratio is calculated by dividing net sales to
fixed assets. The chart shows that the asset turnover ratio
has been increasing signifying efficient investments in
fixed assets.













Mar 2013 Mar 2012 Mar 2011 Mar 2010
Asset Turnover Ratio 0.89 0.85 0.80 0.74
0
0.2
0.4
0.6
0.8
1
Asset Turnover Ratio
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