Balance sheet of Tata Steel and calculation of financial ratios

(in Rs. Crore)

Profit and Loss statement of Tata Steel

Ratio Analysis for 2019

s. ratios Particulars (Rs in value remarks

no crores)

1 Net working capital = Current assets = -14339.63 Liquidity available is

current assets – current 21,073.33 less.
 liabilities Current
liabilities =
35,412.96

2. 𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑟𝑎𝑡𝑖𝑜 As for 1 0.595 Not safe

𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠
=
𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

3. Quick ratio = Quick assets = 0.38 Not safe

quick assets 13336.49
𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

4 𝑑𝑒𝑏𝑡 − 𝑡𝑜 − 𝑒𝑞𝑢𝑖𝑡𝑦 Total debt = 0.41 Not good

𝑙𝑜𝑛𝑔 𝑡𝑒𝑟𝑚 𝑑𝑒𝑏𝑡 28934.28
=
𝑠ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟𝑠 ′ 𝑒𝑞𝑢𝑖𝑡𝑦
Shareholders’
equity =
70454.71

5 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑐𝑜𝑣𝑒𝑟𝑎𝑔𝑒 Operating profit 7.28 Not safe

𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑝𝑟𝑜𝑓𝑖𝑡 = 20562.94
=
𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡
Interest =
2823.58

6 𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑝𝑟𝑜𝑓𝑖𝑡 𝑚𝑎𝑟𝑔𝑖𝑛 Sales = 29.12% It is good.

𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑝𝑟𝑜𝑓𝑖𝑡 ∗ 100 70610.71
=
𝑠𝑎𝑙𝑒𝑠

7 𝑔𝑟𝑜𝑠𝑠 𝑝𝑟𝑜𝑓𝑖𝑡 𝑚𝑎𝑟𝑔𝑖𝑛 Gross profit = 25.12% It is average.

𝑔𝑟𝑜𝑠𝑠 𝑝𝑟𝑜𝑓𝑖𝑡 ∗ 100 17739.36
=
𝑠𝑎𝑙𝑒𝑠

8 𝑛𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡 𝑚𝑎𝑟𝑔𝑖𝑛 Net profit = 14.92% Not good

𝑛𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡 ∗ 100 10533.19
=
𝑠𝑎𝑙𝑒𝑠
9 𝑟𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝑎𝑠𝑠𝑒𝑡𝑠 Operating profit 21.83% Not good
𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑝𝑟𝑜𝑓𝑖𝑡 ∗ 100 = 20562.94
=
𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑎𝑠𝑠𝑒𝑡𝑠
Average assets =
94208.83

10 𝑟𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 Profit before tax 23.04% Not satisfactory

𝑝𝑟𝑜𝑓𝑖𝑡 𝑏𝑒𝑓𝑜𝑟𝑒 𝑡𝑎𝑥 ∗ 100 = 16231.13
=
𝑛𝑒𝑡 𝑤𝑜𝑟𝑡ℎ
Net worth =
70454.71

11 𝑟𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝑛𝑒𝑡 𝑤𝑜𝑟𝑡ℎ Net profit = 15.96% Not good

𝑛𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡 ∗ 100 10533.19
=
𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑛𝑒𝑡 𝑤𝑜𝑟𝑡ℎ
Average net
worth =
65984.78

12 Return on capital employed Operating profit 34.38% satisfactory

(ROCE) = 20562.94
𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑝𝑟𝑜𝑓𝑖𝑡 ∗ 100
= Average capital
𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑐𝑎𝑝𝑖𝑡𝑎𝑙
𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑑 employed =
59807.76

13 Cost of goods sold ratio = Cost of goods 0.36 Not satisfactory

Cost of Goods sold sold = 25688.42
Sales
Sales =
70610.71

14 Operating ratio = Other expenses 0.72 Not good

Cost of Goods sold+other = 24913.68
expenses
Sales

15 Fixed assets turnover = Sales = 0.82 good

 sales 70610.71
fixed assets
Fixed assets =
86110.62