Return on investment

This ratio return on investment (ROI) return on capital employed it

measure the sufficiency or otherwise of profit in relation to capital employed.

Operating Profit

Return on investment = -------------------------------- x 100

Capital Employed

Operation Capital
Year Profit Employed Ratio
(₹ in millions) (₹ in millions)

2010-2011 343163.17 839939.83 40.85%

2011-2012 366425.67 1717276.05 21.33%

2012-2013 367421.65 1781266.67 20.62%

2013-2014 324319.32 1992884.29 16.27%

2014-2015 265552.35 2080798.81 12.76%

SOURCE: Annual report of Oil And Natural Gas Corporation Limited

INTERPRETATION:

In the year 2010-2011, the ratio was 40.85% which was the highest in
upcoming years. Then in the year 2011-2012 it was reduced to 21.33%. It kept
on decreasing from 20.62%, 16.27% and 12.76% in 2012-13, 2013-2014, and
2014-2015 respectively.

20
 Return on investment
45.00%

40.85%
40.00%

35.00%

30.00%

25.00%

21.33%
20.62% Ratio
20.00%

16.27%

15.00%
12.76%

10.00%

5.00%

0.00%
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

21
 Return on shareholders’ funds

This ratio determines the profitability from the shareholders point of

view. The net profit here is income after payment of interest and tax. The term
shareholders funds include equity share capital, preference share capital, and all
reserves and profits belonging to shareholders.

Net profit after interest and tax

Return on shareholders’ funds = --------------------------------------- x 100

Shareholders’ funds

Net profit after Shareholders’

Year interest and tax funds Ratio
(₹ in millions) (₹ in millions)

2010-2011 228249.73 975044.31 23.40%

2011-2012 251229.22 1129564.31 22.24%

2012-2013 239902.63 1244532.24 19.27%

2013-2014 220948.07 136250.05 16.16%

2014-2015 177329.54 1446009.75 12.26%

SOURCE: Annual report of Oil And Natural Gas Corporation Limited

INTERPRETATION:

In the year 2010-2011, the ratio was 23.40% was the highest in the next 5
years. It the year 2011-2012, the ratio was 22.24%and it kept going down from
19.27%, 16.16% and 12.26% from 2012-2013, 2013-2014, 2014 and 2015
respectively.

22
 Return on shareholders’ funds
25.00%
23.40%
22.24%

20.00% 19.27%

16.16%

15.00%

12.26%
Ratio

10.00%

5.00%

0.00%
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

23
 Return on equity shareholders funds

Return on equity also known as ROE is the amount of net

income returned as a percentage of shareholders equity. Return
on equity measures a corporation's profitability by revealing how much profit a
company generates with the money shareholders have invested.

Net profit after interest and tax

Return on equity shareholders funds = ----------------------------------- x 100

Equity shareholders funds

Equity
Net profit after
Shareholders
Year interest and tax Ratio
(₹ in millions)
funds
(₹ in millions)

2010-2011 228249.73 975044.31 23.40%

2011-2012 251229.22 1129564.31 22.24%

2012-2013 239902.63 1244532.24 19.27%

2013-2014 220948.07 136250.05 16.16%

2014-2015 177329.54 1446009.75 12.26%

SOURCE: Annual report of Oil And Natural Gas Corporation Limited

INTERPRETATION:

In the year 2010-2011, the ratio was 23.40% was the highest in the next 5
years. It the year 2011-2012, the ratio was 22.24%and it kept going down from
19.27%, 16.16% and 12.26% from 2012-2013, 2013-2014, 2014 and 2015
respectively.

24
 Return on equity shareholders funds
25.00%
23.40%
22.24%

20.00% 19.27%

16.16%

15.00%

12.26%
Ratio

10.00%

5.00%

0.00%
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

25
 Gross Profit Ratio

This ratio is also known as gross margin or trading margin ratio. Gross
profit ratio indicates the difference between sales and direct cost. Gross profit
ratio explains the relationship between gross profit and sales.

Gross profit

Gross profit ratio = ----------------------------------- x 100

Net sales

Gross profit Net sales

Year (₹ in millions) (₹ in millions) Ratio

2010-2011 1222400.40 1227685.75 99.56%

2011-2012 760884.65 768870.59 98.96%
2012-2013 1631335.28 1658488.43 98.36%
2013-2014 836958.85 842027.80 99.39%
2014-2015 825986.78 830934.67 99.40%
SOURCE: Annual report of Oil And Natural Gas Corporation Limited

INTERPRETATION:

The gross profit was 99.56% in the year 2012-2011. Then it decreased to
98.96% in the year 2011-2012. It kept decreasing to 98.36% in 2012-2013.
Then the profit increased to 99.39% in the year2013-2014. And it again
increased to 99.40% in2014-2015.

26
 Gross profit ratio
99.80%

99.60% 99.56%

99.39% 99.40%
99.40%

99.20%

99.00% 98.96%

98.80%

Ratio
98.60%

98.40% 98.36%

98.20%

98.00%

97.80%

97.60%
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

27
 Operating Profit Ratio

It is the ratio of profit made from operating source to sales usually shown
as a percentage. It shows the operational efficiency of the firm and is a measure
of the management efficiency in running routine.

Operating profit

Operating profit ratio = ----------------------------------- x 100

Net sales

Operating profit Net sales

Year (₹ in millions) (₹ in millions) Ratio

2010-2011 343163.17 1227685.75 21.95%

2011-2012 366425.67 768870.59 47.65%

2012-2013 367424.65 1658488.43 22.15%

2013-2014 324319.32 842027.80 38.51%

2014-2015 265552.35 8309334.67 31.95%

SOURCE: Annual report of Oil And Natural Gas Corporation Limited

INTERPRETATION:

In the year 2010-2011 the operating profit ratio was 21.95%. It hiked up
to 47.65% in the year 2011-2012. Then it reduced t 22.15% in the year 2012-
2013. It again increased 38.51% in the year2013-2014. Then again it reduced in
the year 2014-2015 by 31.95%.

28
 Operating profit ratio
60.00%

50.00%
47.65%

40.00% 38.51%

31.95%

30.00%
Ratio

21.95% 22.15%

20.00%

10.00%

0.00%
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

29
 Net Profit Ratio

This ratio is called net profit ratio to sales ratio. It is a measure of

management efficiency in carrying in operating the business successfully from
the owner’s point of view.

Net profit

Net profit ratio = ----------------------------------- x 100

Net sales

Net profit Net sales

Year (₹ in millions) (₹ in millions) Ratio

2010-2011 228249.73 1227685.75 18.59%

2011-2012 251229.22 768870.59 32.67%

2012-2013 239902.63 1658488.43 14.40%

2013-2014 220948.07 842027.80 26.23%

2014-2015 228249.73 830934.67 18.59%

SOURCE: Annual report of Oil And Natural Gas Corporation Limited

INTERPRETATION:

The net profit ratio was 18.59% in the year 2010-2011. The net profit
ratio hiked up to 32.67% in 2011-2012 which was highest in 5 years. Then it
decreased to 14.40% in 2012-2013. In the year 2013-2014, the net profit ratio
went up by 26.23%. It kept on fluctuating all these years and by 2014-2015 it
went down and was 18.59%.

30
 Net profit ratio
35.00%
32.67%

30.00%

26.23%

25.00%

20.00%
18.59% 18.59%

Ratio

15.00% 14.40%

10.00%

5.00%

0.00%
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

31
 Operating Ratio

Total operating expense here include cost of goods sold administrative

expense and selling distribution expense generally finance expense like interest
are not included under operating expense.

Cost of goods sold + operating expenses

Operating ratio = --------------------------------------------------- x 100

Net sales

Operating
expense + Cost of Net sales
Year goods sold (₹ in millions) Ratio
(₹ in millions)

2010-2011 211548.73 1227685.75 17.23%

2011-2012 873553.15 768870.59 10.78%
2012-2013 148095.47 1658488.43 08.92%
2013-2014 114326.90 842027.80 13.57%
2014-2015 119531.01 830934.67 14.38%
SOURCE: Annual report of Oil And Natural Gas Corporation Limited

INTRPRETATION:

Operating ratio in the year 2010-2011 was 17.23%. It decreased to

10.78% in the year 2011-2012. It kept on reducing to 08.92% in 2012-2013.
Then in the year 2013-2014 the operating ratio starts increasing to 13.57% and
14.38% in years 2012-2014 and 2014-2015 respectively.

32
 Operating ratio
20.00%

18.00% 17.23%

16.00%

14.38%
14.00% 13.57%

12.00%
10.78%

10.00%
8.92% Ratio

8.00%

6.00%

4.00%

2.00%

0.00%
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

33
 Debtors Turnover Ratio

The method for calculating receivables turnover ratio can be represented

with the following formula:

Net credit sales

Debtors turnover ratio = -------------------------------

Average Receivables

Average
Net Credit Sales
Year (₹ in millions)
Receivables Ratio
(₹ in millions)

2010-2011 1227685.75 34522.67 35.56

2011-2012 768870.59 50947.47 15.44

2012-2013 1658488.43 28129.26 58.95

2013-2014 842027.80 75146.95 11.20

2014-2015 830934.67 67794.72 12.25

SOURCE: Annual report of Oil And Natural Gas Corporation Limited

INTERPRETATION:

Debtor’s turnover ratio keeps on fluctuating as the years go. In 2010-

2011, it was 35.56, and then it reduces to 15.44 in the year 2011-2012. In the
year 2012-2013 the ratio went drastically up to 58.95. Then the next year 2013-
2014 it came down to 11.20. It still increased to 12.25 in 2014-2015.

34
 Debtors turnover ratio
70.00%

60.00% 58.95%

50.00%

40.00%
35.56%
Ratio

30.00%

20.00%
15.44%
12.25%
11.20%
10.00%

0.00%
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

35
 Return on Total Assets

This ratio is calculated to measure the total productivity of total assets.

Net Profit after tax + interest

Return on Total Assets = ------------------------------------------ x 100

Total assets – fictitious Assets

Net Profit After Total assets –

Year tax + Interest Fictitious assets Ratio
(₹ in millions) (₹ in millions)

2010-2011 183,240.02 1,250,190.81 15.13%

2011-2012 251,229.22 1,502,721.18 16.71%

2012-2013 239,902.63 1,508,027.87 15.90%

2013-2014 220,948.07 1,601,093.01 13.79%

2014-2015 177,329.54 2,080,798.81 10.03%

SOURCE: Annual report of Oil And Natural Gas Corporation Limited

INTERPRETATION:

The company witnessed highest productivity in the year 2011-2012

where the ratio was 16.71%, It then decreases to 15.90%, 13.79% and 10.03%
in the year ending 2012, 2013, 2014, 2015 respectively.

36
 Return on Total Assets
18.00%
16.71%
15.90%
16.00%
15.13%

13.79%
14.00%

12.00%

10.03%
10.00%

8.00%

6.00%

4.00%

2.00%

0.00%
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

Ratio

37
 Working Capital Turnover Ratio

The working capital turnover ratio is also referred to as net sales to

working capital. It indicates a company's effectiveness in using its working
capital.

Cost of sales

Working capital turnover ratio = -----------------------------------

Net working capital

Net working
Cost of sales
Year (₹ in millions)
capital Ratio
(₹ in millions)

2010-2011 5285.35 348962.34 0.015

2011-2012 7985.94 105864.94 0.075

2012-2013 27153.15 131274.40 0.200

2013-2014 5068.95 107635.15 0.040

2014-2015 4947.89 109897.66 0.046

SOURCE: Annual report of Oil And Natural Gas Corporation Limited

INTERPRETATION:

In this ratio, in the year 2010-2011, the ratio was 0.015times. The ratio
increases to 0.075 n the year 2011-2012. Then the ratio starts fluctuating from
0.200times, 0.040times and 0.046times in the years 2012-2013, 2013-2014 and
2014-2015 respectively.

38
 Working capital turnover ratio
0.25

0.2
0.2

0.15

Ratio

0.1

0.075

0.05 0.046
0.04

0.015

0
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

39
 Capital Turnover Ratio

Managerial efficiency is also calculated by establishing the

relationship between cost of sales or sales with the amount of capital
invested in the business.

Cost of sales

Capital turnover ratio = -----------------------------------

Capital Employed

Capital
Cost of sales
Year (₹ in millions)
employed Ratio
(₹ in millions)

2010-2011 5285.35 839939.83 6.290

2011-2012 7985.94 1717276.05 4.650

2012-2013 27153.15 17812660.67 0.020

2013-2014 5068.95 1992884.29 0.016

2014-2015 4947.89 2080798.81 2.380

SOURCE: Annual report of Oil And Natural Gas Corporation Limited

INTERPRETATION:

The ratio keeps on fluctuating throughout 5 years of course. In 2010-2011

the ratio was 6.290times. It reduced to 4.650times in 2011-2012. It still reduced
to 0.020times in 2012-2013. It kept on going down to 0.016times and in the
next year 2014-2015 it has come up to 2.380times.

40
 Capital turnover ratio
7

6.29

5
4.65

Ratio

2.38

0.02 0.016
0
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

41
 Owned capital Turnover Ratio

This is the relationship between the sales and shareholders’ funds.

By the application if the sales we come to know how much amount
invested in sales shareholders funds, this is represented by the formula:

Cost of sales

Owned capital turnover ratio = ---------------------------------

Shareholders’ funds

Shareholders’
Cost of sales
Year (₹ in millions)
funds Ratio
(₹ in millions)

2010-2011 5285.35 975044.31 5.42

2011-2012 7985.94 1129564.31 7.06

2012-2013 27153.15 1244532.24 0.02

2013-2014 5068.95 1367250.05 3.70

2014-2015 4947.89 1446009.75 3.42

SOURCE: Annual report of Oil And Natural Gas Corporation Limited

INTERPRETATION:

In owned capital turnover ratio there was no much of fluctuation. In the

year 2010-2011, it was 5.42times. The next year 2011-2012 it was the highest
by 7.06times. Then it went down to 0.02times in the year 2012-2013. It took a
pick in the year 2013-2014 by 3.70times and by the next year that is 2014-2015
it wasn’t much of a drop but was 3.42times.

42
 Owned capital turnover ratio
8

7.06
7

6
5.42

4
3.7 Ratio
3.42

0.02
0
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

43
 Fixed assets Turnover Ratio

This is the relationship between the sales and shareholders’ funds.

By the application if the sales we come to know how much amount
invested in sales shareholders funds, this is represented by the formula:

Cost of goods sold

Fixed assets turnover ratio = -----------------------------------

Net Fixed assets

Cost of sales Fixed assets

Year (₹ in millions) (₹ in millions) Ratio

2010-2011 5285.35 839939.83 6.29

2011-2012 7985.94 949362.61 8.41

2012-2013 27153.15 1048154.30 0.02
2013-2014 5068.95 1306203.07 3.89

2014-2015 4947.89 1267809.44 3.90

SOURCE: Annual report of Oil And Natural Gas Corporation Limited

INTERPRETATION:

In this ratio that is fixed assets turnover ratio, the ratio was 6.29times in
the year 2010-2011. In the next year that is 2011-2012 the ratio hiked up to
8.41and drastically decreased to 0.02 in the next year that is 2012-2013. It took
a pick by the next year that is 2013-2014 by 3.89times and by 2014-2015 it was
stable by 3.90time.

44
 Fixed assets turnover ratio
9
8.41

6.29

Ratio
4 3.89 3.9

0.025
0
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

45
 Current Ratio

The ratio of current assets to current liability is called current ratio. In

order to measure the short term liquidity or solvency of a concern comparison
of current assets and current liability.

Current assets

Current ratio = -----------------------------------

Current liabilities

Current
Current assets
Year (₹ in millions)
liabilities Ratio
(₹ in millions)

2010-2011 586436.06 237473.72 2.46

2011-2012 365844.13 259979.13 1.40

2012-2013 248968.98 174738.52 1.42

2013-2014 2984333.0 190797.85 1.56

2014-2015 301632.54 191734.88 1.50

SOURCE: Annual report of Oil And Natural Gas Corporation Limited

INTERPRETATION:

There were very minor fluctuations in current ratio in these 5 years. In

2010-2011 the ratio was 2.46times which was the highest compared to other 4
years. In 2011-2012 it went down to 1.40times. The ratio changed again by
increasing to 1.42times in 2012-2013. In 2013-2014’s period it again increased
to 1.56times and the next year that is 2014-2015 the ratio decreased to
1.50times.

46
 Current ratio
3

2.5 2.46

1.56
1.5
1.5 1.4 1.42 Ratio

0.5

0
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

47
 Liquid Ratio

It refers to assets which are quickly convertible into cash. Current assets
other than stock and prepaid expenses are considered as quick assets.

Liquid assets

Liquid ratio = -----------------------------------

Current liabilities

Current
Liquid assets
Year (₹ in millions)
liabilities Ratio
(₹ in millions)

2010-2011 545246.22 237473.72 2.29

2011-2012 314189.78 259979.13 1.20

2012-2013 248968.98 174738.52 1.42

2013-2014 239607.59 190797.85 1.25

2014-2015 241997.27 191734.88 1.27

SOURCE: Annual report of Oil And Natural Gas Corporation Limited

INTERPRETATION:

In liquid ratio there were minor fluctuations in each of years. Starting

from 2010-2011 it was the highest by 2.29times. In 2011-2012 the ratio came
down to 1.20times and again increased to 1.42 in 2012-2013. In 2013-2014 it
was 1.25times and in 2014-2015 it came up to 1.27times.

48
 Liquid ratio
2.5

2.29

1.5 1.42

1.25 1.27
1.2
Ratio

0.5

0
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

49