op stock 100 sales

purchased 200 cls

Profit 350
650

COGS 250 Gross profit

Figures in crores
Particulars Year 1 Year 2 Remarks Amount
Op stock 100 100 100
Purchases 200 200
Total purchase 300 300 0
Cls stock 50 70 50
COGS 250 230 Notes 1 50
200
Cost as %age of sales 42% 38% 250
Gross profit 58% 62%
Total Sales 100% 100%

Notes 1

How closing value of inventory is important

in lacs"
Closing stock in units Closing value per unit Total value
7 10 70 0.4

Closing stock in units Closing value per unit Total value

7 7.14 50

a) If we value closing stock high - my consumed value will come down and will increase profitability

Year 1 op 100 sales

pur 200 cls

Profit 350
650

COGS 250
Direct cost 42%
Gross profit 58.3% -1% -6
Change in cls stock
Year 1 op 100 sales
pur 200 cls

Profit 350
650

COGS 230
Direct cost 38%
Gross profit 61.7% 3.3% increased

in crores in crores
Asian Paints 2020-21 2020-21
Sales 22,015 22,015

Material consumed 10,317 10317

Purchases 1,872 1872
Change in inventory -92 -92.45
COGS 12,097 12,097 a
Gross profit amount 9,918
Gross profit 45.1%
Gross Cost 55%

Employees expense 1540 b

Other expenses 3219 c
Total expense before interest / dep /tax/ amortization 16,856 (a+b+c) = d
 EBITDA 5,159.45 sales - d
EBITDA margin 23.4%

Finance Cost
Depreciation
Total exp +FC + Dep
Profit before Tax

PBT + Finance cost

Is Operating profit
Operating profit margin

Operating profit margin including interest

Operating expenses
They include a number of costs, like rent, marketing, salaries, insurance, as well as funds. These can also be
categorized as fixed expenses, which are inconsistent with the amount of level of production within the company.  

What are Interest Expenses?

Long-term financing is highly common across almost all businesses in the modern-day and age. The greatest
advantage of companies taking on long-term loans is the fact that they are able to generate funds and finance witho
having to worry much regarding ownership dilution.

Questions you should ask ?

1 Is EBIT - opertaing profit ?

2 Why to remove interest form opertaing profit ?
3 Formula and Calculation of Operating Profit
4 Operating profit serves as a highly accurate indicator of a business’s health because it removes all extraneous facto
All expenses that are necessary to keep the business running are included, which is why operating profit takes into
5 Operating profit is also referred to as operating income as well as earnings before interest and tax (EBIT)—although
which is not a part of operating profit.
6 If a firm does not have any non-operating income, its operating profit will equal EBIT.

Answer
1 EBIT is not operating profit, as it may include other non operating income, if non operating income is not there EBIT
Notes :

2 a) Interest can also be seen as a fixed cost irrespective of business runs or not
b) Money borrowed could have been used for non- operating work like investments in subsidiary or other investme
Notes :

3 Operating Profit = Operating Revenue - Cost of Goods Sold (COGS) - Operating Expenses - Depreciation - Amortizati
Notes :
Asian Paints
Consolidated Figures in Rs. Crores / View Standalone
Mar-11 Mar-12 Mar-13 Mar-14
Sales + 6,434 7,403 9,231 10,504
Expenses - 5,270 6,072 7,720 8,767
Material Cost % 48.59% 50.72% 53.56% 52.23%
Manufacturing Cost % 12.39% 12.46% 11.63% 11.63%
Employee Cost % 6.81% 6.16% 5.74% 5.97%
Other Cost % 14.12% 12.68% 12.70% 13.62%
Operating Profit 1,164 1,331 1,511 1,737
OPM % 18% 18% 16% 17%

Berger Paints
Consolidated Figures in Rs. Crores / View Standalone
Mar-11 Mar-12 Mar-13 Mar-14
Sales + 1,829 2,263 2,846 3,227
Expenses - 1,630 2,013 2,543 2,856
Material Cost % 56.67% 55.92% 58.10% 56.64%
Manufacturing Cost % 16.68% 17.36% 15.96% 15.49%
Employee Cost % 6.85% 6.34% 5.77% 5.84%
Other Cost % 8.92% 9.32% 9.50% 10.53%
Operating Profit 199 250 303 371
OPM % 11% 11% 11% 12%

Kansai Nerolac
Consolidated Figures in Rs. Crores / View Standalone
Sales +
Expenses -
Material Cost %
Manufacturing Cost %
Employee Cost %
Other Cost %
 Manufacturing element
in crores
600 op 100 op 100
50 closing 20 Purchased 30
Consumed 80 closing 20

650 Consumed 110

350 58%

Particulars2 Remarks2
Op stock Suppose no purchases

No purchases
Op stock
Consumed Opening Less (-) Closing is consumed
Add purchases
COGS Notes 2

l increase profitability

Year 2
600 op 50 sales 600
50 pur 200 cls 50

Profit 400
650 650 650

COGS 200
Direct cost 33%
Gross profi 66.7%
 Year 2
op 70 sales 600
600 pur 200 cls 50
70
Profit 380
650 650
670
COGS 220
Direct cost 37%
Gross profi 63.3% -3.3% next year decreased
20

in crores Remarks
2020-21
22,015

10317 46.86%
1872 8.50%
-92.45 -0.42%
12,097

All these
1540 7.00% calculations
will help you
3219 14.62% to validate
16,856 d 76.56% screener you
are using to
check ratios
calculated are
correct
 All these
calculations
will help you
to validate
screener you
5,159.45 sales -d 23.44% are using to
check ratios
calculated are
correct

91.63 e 0.42%
791.27 f 3.59% dep cost as a % of sales
17,738 80.57%
4,277 PBT 19.43%

91.63 Finance cost 0.42%

4,368.2 19.84% 19.43%
20%

19%

well as funds. These can also be

vel of production within the company.  

modern-day and age. The greatest

able to generate funds and finance without

because it removes all extraneous factors from the calculation.

which is why operating profit takes into account asset-related  depreciation and amortization
before interest and tax (EBIT)—although wrongfully, as the latter includes non-operating income,

f non operating income is not there EBIT is operating profit

estments in subsidiary or other investments

ting Expenses - Depreciation - Amortization

Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21
12,220 13,615 14,271 15,062 16,825 19,240 20,211
10,217 11,372 11,546 12,068 13,621 15,475 16,054
51.14% 58.55% 56.40% 45.97% 49.16% 50.32% 48.21%
11.67% 2.87% 2.59% 11.74% 10.71% 10.30% 10.11% 58.32%
6.25% 6.88% 6.97% 6.90% 6.67% 6.46% 6.78%
14.55% 15.23% 14.94% 15.51% 14.42% 13.35% 14.33%
2,004 2,243 2,725 2,994 3,204 3,765 4,157
16% 16% 19% 20% 19% 20% 21%

Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21

3,732 4,170 4,223 4,552 5,166 6,062 6,366
3,300 3,659 3,578 3,833 4,359 5,127 5,313
55.82% 60.70% 58.49% 49.04% 50.93% 53.65% 51.65%
15.55% 8.63% 9.02% 17.07% 15.73% 15.77% 16.38% 68.03%
6.08% 6.08% 6.49% 6.75% 6.91% 6.75% 7.12%
10.99% 12.34% 10.73% 11.34% 10.81% 8.42% 8.32%
431 511 645 719 807 935 1,053
12% 12% 15% 16% 16% 15% 17%

Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21

3,120 3,505 3,767 4,053 4,658 5,424 5,280
2,753 3,054 3,182 3,315 3,864 4,672 4,476
62% 61% 63% 52% 61% 57% 55%
10% 10% 3% 9% 2% 10% 9%
4% 4% 5% 5% 5% 5% 6%
12% 12% 14% 16% 15% 15% 15%
-3.44%
-6.27%
-0.34%
6.01%