Professional Documents
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Asian paints
As at As at As at As at As at
PARTICULARS 31/03/2015 31/03/2016 31/3/2017 31/3/2018 31/3/2019
1. EQUITY AND
LIABILITIES
(1
) Shareholders’ Funds
Total Shareholders’ Fund 4,230.26 4,963.16 7,09475 7,798.16 8,887.56
58.16 59.33 99.54 67.29 67.57
(2
) Non-Current liabilities
Total Non-Current 285.12 335.15 387.35 390.81 548.62
Liabilities
3.92 4.00 0.05 3.37 4.17
(3
) Current Liabilities
Total Current Liabilities 2,757.82 3,065.84 2,875.93 3,398.96 3,176.19
37.91 36.65 0.40 29.33 28.25
II ASSETS
(1
) Non-Current Assets
Total Non-Current 3,103.93 3,866.59 4,927.83 6,086.84 7,099.02
Assets
42.67 46.22 0.69 52.52 53.97
(2 Current Assets
)
Total Current Assets 4,169.27 4,497.56 5,430.20 5,500.17 6,053.35
57.32 53.77 0.76 47.46 46.02
From the above table we can see that shareholder’s Funds is increases by 58.16, 59.33, 99.54, in the year
2015,2016 and in 2017 but it starts decreases in 4 year in 2018 ratio was 67.29 and again it increases in last
year in 2019 ratio was 67.57. Total Non-Current Liabilities is increases by 3.92, 4.00 in the year 2015,2016
and in 2017 the ratio was 0.05 it decreases and again it increases in last 2 years in 2017, 2018 ratio was 3.37,
4.17. Total Current Liabilities is decreases in 1st 2 years in 2015, 2016 ratio was 37.91, 36.65 and in 3 rd year
it decreases by 0.40 in 2017 and again it increases in the 2018 by 29.33 and in last year it decreases by
28.25. Total Non-Current Assets it increases in 1 st 2 years in 2015, 2016 ratio was 42.67, 46.22 and it
decreases in 3rd year 2017 ratio was 0.69 and again it increases in last 2 years 2018, 2019 ratio was 52.52,
53.97. Total Current Assets it decreases in 1st 3 years 2015, 2016,2017 ratios were 57.32, 53.77, 0.76 and it
increases 4-year 2018 ratio was 47.46 and again it decreases in last year 2019 ratio was 46.02.
Asian Paints
Trend Analysis of BALANCE SHEETS
2000
1500
1000
500
0
2014-15 2015-16 2016-17 2017-18 2018-19
From the above table we can see Total Current Assets, Total Non-current Assets, Reserves & Surplus, Total
Current Liabilities of all this is increase year by year it knows that Asian paints is performance well.
Quick Ratio -
Quick ratio or liquid ratio gives a more in-depth view of the liquidity position of a company. Quick ratio
does not consider inventories and prepaid expenses as part of current assets. This is a logical exclusion as the
company may not be able to convert inventory into cash easily. Inventories need to be sold first for
converting into cash. Selling inventory is a time-consuming process. When and how the inventories will be
sold is dependent on many factors such as economic conditions, consumer preferences, and so on. These
factors are often not controllable by the company. Therefore, inventories are not really that current in real
sense. Prepaid expenses are also excluded because they cannot be converted into cash. Thus, it is a more
conservative measure of liquidity. The basic purpose of computing liquidity ratios is to assess the capability
of repaying the current liabilities on demand.
Year
2014-15 2015-2016 2016-2017 2017-2018 2018-2019
Current assets
4,169.27 4,497.56 5,429.88 5,501.09 6,053.35
Inventories
1,802.18 1,610.12 2,194.09 2,178.43 2,585.10
Current liabilities
2,757.82 3,065.84 2,875.73 3,398.96 3,716.19
Quick Ratio
0.8
0.6
0.4
0.2
0
2014-15 2015-16 2016-17 2017-18 2018-19
ASIAN PAINTS
During the study period of this industry the highest ratio was 2.40, in the year 2007- 2008 and the lowest
ratio was 0.61, in the years 2011-2012. To get quick liquid assets, debtors also are deducted. It is possible
that collection may not be made immediately as and when required.
In the year 2007-2008 the ratio was increased it was 2.40, and after than the normally decreased in the year
2008-2009, the ratio was 1.42, and after again decreased ratio in the year 2009-2010, the ratio was 0.99, and
again increased ratios in the year 2010- 2011, the ratio was 1.52 and again decreased ratio in the year 2011-
2012 the ratio was 0.61.
A good condition of this industry for quick ratio compare with ideal ratio 1:1. But good condition of this
industry compared with other industries.
It should be below 1:1. Sometime 1:1 is also considered to be an ideal ratio. If liquid (Quick) assets are 2/3
of the liquid liabilities, it is satisfactory.
Year
2014-15 2015-2016 2016-2017 2017-2018 2018-2019
Current assets
1,433.03 1,569.79 1,840.96 2,099.21 2,281.08
Inventories
646.50 688.22 884.17 939.36 1,149.13
Current liabilities
969.50 948.78 1,063.72 1,294.31 1,386.49
Ratio
0
2014-15 2015-16 2016-15 2017-18 2018-19
Interpretation
BERGER PAINTS
During the study period of this industry the highest ratio was 2.40, in the year 2007- 2008 and the lowest
ratio was 0.61, in the years 2011-2012. To get quick liquid assets, debtors also are deducted. It is possible
that collection may not be made immediately as and when required.
In the year 2007-2008 the ratio was increased it was 2.40, and after than the normally decreased in the year
2008-2009, the ratio was 1.42, and after again decreased ratio in the year 2009-2010, the ratio was 0.99, and
again increased ratios in the year 2010- 2011, the ratio was 1.52 and again decreased ratio in the year 2011-
2012 the ratio was 0.61.
A good condition of this industry for quick ratio compare with ideal ratio 1:1. But good condition of this
industry compared with other industries.
It should be below 1:1. Sometime 1:1 is also considered to be an ideal ratio. If liquid (Quick) assets are 2/3
of the liquid liabilities, it is satisfactory.
Working Capital Ratio -
The working capital ratio, also called the current ratio, is a liquidity ratio that measures a firm’s ability to
pay off its current liabilities with current assets. The working capital ratio is important to creditors because it
shows the liquidity of the company. Current liabilities are best paid with current assets like cash, cash
equivalents, and marketable securities because these assets can be converted into cash much quicker than
fixed assets. The faster the assets can be converted into cash, the more likely the company will have the cash
in time to pay its debts. The reason this ratio is called the working capital ratio comes from the working
capital calculation. When current assets exceed current liabilities, the firm has enough capital to run its day-
to-day operations. In other words, it has enough capital to work. The working capital ratio transforms the
working capital calculation into a comparison between current assets and current liabilities. In the form of a
formula, this ratio may be express as follows:
Average – 1.1616 S.D -0.653 C.V -0.523 Min -1.46 Max -1.88
WORKING CAPITAL RATIO OF ASIAN PAINTS
2
1.8
1.6
1.4
1.2
0.8
0.6
0.4
0.2
0
2014-15 2015-16 2016-17 2017-18 2018-19
INTERPRETATION
During the study period of this industry the highest ratio was 1.88, in the year 2016- 2017 and the lowest
ratio was 1.46, in the year 2015-2016. It is so believed that liquidity of company is higher if the ratio is
higher. The ideal ratio is 2:1 it means that if the current assets are twice the current liabilities, the liquid
position of a company is said to be satisfactory.
In the year 2014-2015 the ratio was increased it was 1.51, and after than the decreased in the year 2015-
2016, the ratio was 1.47, and after than again increased in the year 2016-2017 the ratio was ,and decrease in
2017-2018 the ratios was 1.61, and again normally increased ratio in the year 2018-2019 the ratios was 1.61.
A normally good condition of this industry for current ratio compare with ideal ratio 2:1. But good
condition of this industry compared with other industries.
This ratio is measure working capital position and useful to creditors and short-term money-lenders. With
the help of this ratio, one can judge whether or not the company is able to pay back the debt within a short
period.
1.75
1.7
1.65
1.6
1.55
1.5
1.45
1.4
1.35
1.3
2014-15 2015-16 2016-17 2017-18 2018-19
INTERPRETATION
During the study period of this industry the highest ratio was 1.73, in the year 2016- 2017 and the lowest
ratio was 1.47, in the year 2014-2015. It is so believed that liquidity of company is higher if the ratio is
higher. The ideal ratio is 2:1 it means that if the current assets are twice the current liabilities, the liquid
position of a company is said to be satisfactory.
In the year 2014-2015 the ratio was increased it was 1.47, and after than the increased in the year 2015-
2016, the ratio was 1.65, and after than again increased in the year 2016-2017 the ratio was1.73 ,and
decrease in 2017-2018 the ratios was 1.62, and again normally increased ratio in the year 2018-2019 the
ratios was 1.64.
A normally good condition of this industry for current ratio compare with ideal ratio 2:1. But good
condition of this industry compared with other industries.
This ratio is measure working capital position and useful to creditors and short-term money-lenders. With
the help of this ratio, one can judge whether or not the company is able to pay back the debt within a short
period.
RETURN ON EQUITY –
(ROE) is a ratio that provides investors with insight into how efficiently a company (or more specifically, its
management team) is handling the money that shareholders have contributed to it. In other words, it
measures the profitability of a corporation in relation to stockholders’ equity. The higher the ROE, the more
efficient a company's management is at generating income and growth from its equity financing. ROE is
often used to compare a company to its competitors and the overall market. The formula is especially
beneficial when comparing firms of the same industry since it tends to give accurate indications of which
companies are operating with greater financial efficiency and for the evaluation of nearly any company with
primarily tangible rather than intangible assets. This is the basic formula for calculating ROE is:
4.5
3.5
2.5
1.5
0.5
0
Category 1 Category 2 Category 3 Category 4
INTERPRETATION
4.5
3.5
2.5
1.5
0.5
0
Category 4
INTERPRETATION
Inventory turnover ratio -
Inventory turnover is the number of times a company sells and replaces its stock of goods during a period.
Inventory turnover provides insight as to how the company manages costs and how effective their sales
efforts have been. The higher the inventory turnover, the better since a high inventory turnover typically
means a company is selling goods very quickly and that demand for their product exists. Low inventory
turnover, on the other hand, would likely indicate weaker sales and declining demand for a company’s
products. Inventory turnover provides insight as to whether a company is managing its stock properly. The
company may have overestimated demand for their products and purchased too many goods as shown by
low turnover. Conversely, if inventory turnover is very high, they might not be buying enough inventory and
may be missing out on sales opportunities. Inventory turnover also shows whether a company’s sales and
purchasing departments are in sync. Ideally, inventory should match sales. It can be quite costly for
companies to hold onto inventory that isn’t selling, which is why inventory turnover can be an important
indicator of sales effectiveness but also for managing operating costs. Alternatively, for a given amount of
sales, using less inventory to do so will improve inventory turnover. The inventory turnover ratio is defined
as follows:
30
25
20
15
10
0
2014-15 2015-16 2016-17 2017-18 2018-19
INTERPRETATION
Here from the above-mentioned table, Asian paints turned their inventory 17.13 times in 2014-15 and the
turnover rate started to rise in 2015-16 ratio was 29.20 time and 2016-17 it declines ratio was 11.57 time.
and in 4 year it increases again ratio was 12.18 time and again it declines in last year ratio was 11.99 time.
This happened because they had more inventories piled up than the sales proceeds which indicate the
company over spent by buying too much inventory. Over the last five years the inventory turnover
ratios were fluctuating from the standard ratio.
18
16
14
12
10
0
2014-15 2015-16 2016-17 2017-18 2018-19
INTERPRETATION
Here from the above-mentioned table, Berger paints turned their inventory 12.34 times in 2014-15and the
turnover rate started to rise in 2015-16, 2016-17 which were respectively 14.85 and 17.09 times.
Furthermore, the turnover ratio declines to 15.38 time in 2017-18 and 18.6 times in 2018-19 it rises due to
effective sales of the inventory they bought. Over the last five years the inventory turnover
ratios were fluctuating from the standard ratio.
CASH RATIO –
The cash ratio or cash coverage ratio is a liquidity ratio that measures a firm’s ability to pay off its current
liabilities with only cash and cash equivalents. The cash ratio is much more restrictive than the current ratio
or quick ratio because no other current assets can be used to pay off current debt–only cash. This is why
many creditors look at the cash ratio. They want to see if a company maintains adequate cash balances to
pay off all of their current debts as they come due. Creditors also like the fact that inventory and accounts
receivable are left out of the equation because both of these accounts are not guaranteed to be available for
debt servicing. Inventory could take months or years to sell and receivables could take weeks to collect.
Cash is guaranteed to be available for creditors. Cash ratio can be calculated as follows:
0.05
0.04
0.03
0.02
0.01
0
2014-15 2015-16 2016-17 2017-18 2018-19
INTERPRETATION
During the study period of this industry the highest ratio was 0.05, in the 2015-16and the lowest ratio was
0.2, in the year 2014-2015, 2016-17, 2018-19.
In the year 2014-2015 the ratio was increased by 0.02, and after than the its start increased in the year 2015-
2016, the ratio was 0.05 and again it decreased in 3rd year’s ratio was 0.02 and again its increased in the
4nd years in 2017-18 the ratio was 0.03, and again it decreased in last year’s ratio was 0.02
0.45
0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
2014-15 2015-16 2016-17 2017-18 2018-19
INTERPRETATION
During the study period of this industry the highest ratio was 0.44, in the 2014-15and the lowest ratio was
0.01, in the year 2018-2019.
In the year 2014-2015 the ratio was increased by 0.44, and after than the its start decreased in the year 2015-
2016, 2016-17,the ratio was 0.06, 0.02 and again its increased in the 4nd years in 2017-18 the ratio was 0.04,
and again it decreased in last year’s ratio was 0.01.
where,
Average accounts receivable
= (Opening accounts receivable + Closing accounts receivable)/2
ACCOUNTS RECEIVABLE TURNOVER RATIO OF ASIAN PAINTS
20
18
16
14
12
10
0
2014-15 2015-16 2016-17 2017-18 2018-19
INTERPRETATION
During the study period of this industry the highest ratio was 18.55, in the 2018-19and the lowest ratio was
11.48, in the year 2014-2015.
In the year 2014-2015 the ratio was increased by 11.48, and after than the its start increased in the year
2015-2016, 2016-17, the ratio was 13.56, 15.36 and again its decreased in the 4nd years in 2017-18 the ratio
was 14.56, and again it increased in last year’s ratio was 18.55.
0
2014-15 2015-16 2016-17 2017-18 2018-19
INTERPRETATION
During the study period of this industry the highest ratio was 6.19, in the 2016-17and the lowest ratio was
3.53, in the year 2018-2019.
In the year 2014-2015 the ratio was increased by 6.08, and after than the its start decreased in the year 2015-
2016, the ratio was 4.91 and again it increased in 3rd year’s ratio was 6.19 and again its start decreased in the
last 2nd years in 2017-18,2018-19 the ratio was 5.68, 3.53.
FIXED ASSET TURNOVER RATIO OF BERGER PAINTS
0
2014-15 2015-16 2016-17 2017-18 2018-19
INTERPRETATION
During the study period of this industry the highest ratio was 5.99, in the 2014-15and the lowest ratio was
5.18, in the year 2017-2018.
In the year 2014-2015 the ratio was increased by 5.99, and after than the its start decreased in the year 2015-
2016, 2016-17, 2017-18 the ratio was 5.95, 4.63, 5.18 and again it increased in last year’s ratio was 5.53.
1.6
1.4
1.2
0.8
0.6
0.4
0.2
0
2014-15 2015-16 2016-17 2017-18 2018-19
INTERPRETATION
During the study period of this industry the highest ratio was 1.57, in the 2014-15and the lowest ratio was
1.20, in the year 2017-2018.
In the year 2014-2015 the ratio was increased by 1.57, and after than the its start decreased in the year 2015-
2016, 2016-17, 2017-18 the ratio was 1.48, 1.30, 1.20 and again it increased in last year’s ratio was 1.23.
1.6
1.4
1.2
0.8
0.6
0.4
0.2
0
2014-15 2015-16 2016-17 2017-18 2018-19
INTERPRETATION
During the study period of this industry the highest ratio was 1.64, in the 2015-16 and the lowest ratio was
2.45, in the year 2017-2018.
In the year 2014-2015 the ratio was increased by 1.33, and after than the again increased in the year 2015-
2016, the ratio was 1.64, and after than again decreased in the last 2 nd years ratio was 1.38 for 2016-17 and in
2017-18 ratio was 1.34 and again it increased in last year’s ratio was 1.43.
2.7
2.6
2.5
2.4
2.3
2.2
2014-15 2015-16 2016-17 2017-18 2018-19
INTERPRETATION
During the study period of this industry the highest ratio was 2.77, in the 2015-16 and the lowest ratio was
2.45, in the year 2016-2017.
In the year 2014-2015 the ratio was increased by 2.75, and after than the again increased in the year 2015-
2016, the ratio was 2.77, and after than again decreased in the last 2 nd years ratio was 2.45 for 2016-17 and in
2017-18 ratio was 2.53 and again it increased in last years ratio was 2.67.
2.6
2.5
2.4
2.3
2.2
2.1
2
2014-15 2015-16 2016-17 2017-18 2018-19
INTERPRETATION
During the study period of this industry the highest ratio was 2.65, in the 2014-15 and the lowest ratio was
2.25, in the year 2017-2018.
In the year 2014-2015 the ratio was increased by 2.65, and after than the it decreased in the year 2015-2016,
2016-17 and 2017-18 the ratio was 2.63, 2.29, 2.25 and again it increased in last year’s ratio was 2.41.
The profit margin ratio, also called the return on sales ratio or gross profit ratio, is a profitability ratio that
measures the amount of net income earned with each dollar of sales generated by comparing the net income
and net sales of a company. In other words, the profit margin ratio shows what percentage of sales are left
over after all expenses are paid by the business. Creditors and investors use this ratio to measure how
effectively a company can convert sales into net income. Investors want to make sure profits are high
enough to distribute dividends while creditors want to make sure the company has enough profits to pay
back its loans. In other words, outside users want to know that the company is running efficiently. An
extremely low profit margin formula would indicate the expenses are too high and the management needs to
budget and cut expenses.
Net Income
1,327.40 1,597.43 1,803.10 1,894.80 2,134.76
Sales 11,485.67 12,458.65 13,332.18 13,923.33 16,209.44
0.13
0.13
0.12
0.12
0.11
0.11
0.1
2014-15 2015-16 2016-17 2017-18 2018-19
INTERPRETATION
During the study period of this industry the highest ratio was 0.13, in the last 3 rd years and the lowest ratio
was 0.11, in the year 2014-2015.
In the year 2014-2015 the ratio was increased it was 0.11, and after than the increased in the year 2015-
2016, the ratio was 0.12, and after than again increased in the last 3rd years ratio was 0.13.
Net Income
266.03 354.87 446.45 431.84 439.03
Sales 3,806.51 4,132.62 4,225.32 4,723.79 5,515.55
Ratio 0.06 0.08 0.10 0.09 0.07
0.1
0.08
0.06
0.04
0.02
0
2014-15 2015-16 2016-17 2017-18 2018-19
INTERPRETATION
During the study period of this industry the highest ratio was 0.10, in the year 2016- 2017 and the lowest
ratio was 0.06, in the year 2014-2015.
In the year 2014-2015 the ratio was increased it was 0.06, and after than the increased in the year 2015-
2016, the ratio was 0.08, and after than again increased in the year 2016-2017 the ratio was 0.10 ,and
decrease in 2017-2018 the ratios was 0.09, and again normally decreased ratio in the year 2018-2019 the
ratios was 0.07.
Chapter five
Financial Statements Analysis is an important tool in assessing company’s performance. It reveals the
strengths and weaknesses of a firm. It helps the clients to decide in which firm the risk is less or in which
one they should invest so that maximum benefit can be earned. It is known that investing in any company
involves a lot of risk. Based on the data available the trend of the company can be predicted in near future.
On studying the Financial Statements Analysis of Asian Paints for a period of five years from 2014 to 2019,
the study reveals that the financial performance is better. Asian Paints has been avail to maintain
profitability.
It is found that there is an increase of sales, gross profit, and net profit. Total assets also increase during the
term. It is also found that Current ratios are satisfactory and Acid test ratios are perfect. Overall Asian Paints
is in a good position.
Further the company performance and efficiency can be improved by above mentioned recommendation.