Course Code: ACC 306 Course Title: Financial statement analysis

Course Instructor: Preeti Kumari

Academic Task No.: CA-2 Academic Task Title:

Date of Allotment: 23-03-2021 Date of submission: 31-03-2021

Student’s Roll no: RQ4E61A01 Student’s Reg. no: 12001099

Evaluation Parameters:

Learning Outcomes: (Student to write briefly about learnings obtained from the academic tasks)

Declaration:
I declare that this Assignment is my individual work. I have not copied it from any other student’s
work or from any other source except where due acknowledgement is made explicitly in the text, nor
has any part been written for me by any other person.

Student’s Signature: Aditya Bhardwaj

Evaluator’s comments (For Instructor’s use only)

General Suggestions for Best part of
Observations Improvement assignment

Evaluator’s Signature and Date:

Marks Obtained: _______________ Max. Marks: ______________

 LEVERAGE ANAYLIS
OF VALIANT ORGANICS

DEBT – EQUITY RATIO

DEBT – EQUITY - LONG – TERM DEBT

SHAREHOLDERS FUND

76,600

91,314

YEARS
RATIO
2021 2020
DEBT - EQUITY 0.95 0.79

ANALYSIS
DEBT – EQUITY RATIO IS A RATIO THAT MEASURES THE CONTRIBUTION OF
THE CREDITORS TO THE SHAREHOLDER OR OWNERS OF THE COMPANY.
THE IDEAL RATIO IS 3:2. HENCE FROM ABOVE WE CAN SAY THAT THE
RATIO IS NOT IDEAL AND THAT THE EQUITY IS MORE THAN THE DEBT
WHICH MEANS THAT THE OWNERSHIP RIGHTS HAVE BEEN DILUTED AND
THERE IS STILL SCOPE TO RAISE MORE DEBT .
PROPRIETARY RATIO

SHAREHOLDERS FUND × 100

TOTAL ASSET

91,614 × 100

1,79,800

YEARS
RATIO
2021 2020
PROPRIETARY 49.56 50.26

ANALYSIS
THE PROPRIETARY RATIO IS ALSO KNOWN AS EQUITY RATIO AND IT
TELLS ABOUT THE PROPORTION OF ASSETS TAKEN UP BY THE CAPITAL.
THE GREATER RATIO INDICATES A STRONGER FINANCIAL POSITION OF
THE COMPANY WHEREAS LOWER RATIO INDICATES THAT THE COMPANY IS
ALREADY HEAVILY DEPENDING ON DEBTS FOR ITS OPERATION. FROM
ABOVE WE CAN SAY THAT THE COMPANY IS EQUALLY DEPENDENT ON
DEBT AND EQUITY.

DEBT RATIO

DEBT - TOTAL DEBT

TOTAL ASSET

82,700

1,79,800
 YEARS
RATIO
2021 2020
DEBT 0.50 0.45

ANALYSIS
DEBT RATIO TELLS ABOUT THE PORTION OF ASSETS COVERED BY DEBTS
OF THE COMPANY . THE IDEAL DEBT RATION SHOULD BE BETWEEN 0.3 AND
0.6 HENCE WE CAN SAY THAT THE COMPANY IS IN A FAVOURABLE
POSITION.

RECEIVABLE/PAYAMENT MANAGEMENT

DEBTORS TURNOVER RATIO

DEBTORS TURNOVER RATIO - NET CREDIT SALES

AVERAGE ACCOUNT RECEIVABLE

30,300

20,075
YEARS
RATIO
2021 2020
DEBTORS 0.52 TIMES 1.47 TIMES
TURNOVER
ANALYSIS
DEBTOR TURNOVER RATIO TELLS ABOUT THE EFFICIENCY OF THE
COMPANY IN EXTENDING CREDIT AND COLLECTING DEBTS. THE HIGHER IT
IS THE BETTER THE POSITION OF THE COMPANY. FROM ABOVE WE CAN
SAY THAT THE DEBTOR TURNOVER RATIO IS QUITE LOW HENCE THIS CAN
MEAN THAT THE POLICIES ARE LIBERAL AND THE CUSTOMERS ARE NOT
LOYAL .

COLLECTION PERIOD
COLLECTION PERIOD - 365 DAYS/52 WEEKS/12 MONTHS

DEBTORS TURNOVER RATIO

365

1.77

YE ARS
RATIO
2021 2020
COLLECTION 702 DAYS 248 DAYS
PERIOD

ANALYSIS
THE DEBT COLLECTION PERIOD TELLS ABOUT THE TIME PERIOD IT TAKES
TO CONVERT THE DEBTORS INTO CASH . FROM ABOVE WE CAN SAY THAT
THE COLLECTION PERIOD HAS BEEN INCREASING AND IS NOT IN A
FAVOURABLE POSITION AS THE COMPANY IS TAKING MORE THAN A YEAR
TO COLLECT THE TAXES FROM THE DEBTORS.
CREDITORS TURNOVER RATIO
CREDITORS TURNOVER RATIO - NET CREDIT PURCHASES

AVERAGE ACCOUNT PAYABLES

890

726
YEARS
RATIO
2021 2020
CREDITORS 0.45 TIMES 1.22 TIMES
TURNOVER

ANALYSIS
THE CREDITOR TURNOVER RATIO TELLS ABOUT THE AVERAGE NUMBER OF
TIMES THE COMPANY PAYS DURING THE PERIOD. THE LOWER THE RATIO
THE BETTER IT IS. FROM ABOVE WE CAN SAY THAT THE COMPANY PAID
AT LEAST ONCE A YEAR IN 2020 BUT THAT ALSO BECAME ONCE IN 2
YEARS.

PAYMENT PERIOD
PAYMENT PERIOD - 365 DAYS/52 WEEKS/12 MONTHS

CREDITOR TURNOVER RATIO

365

1.77
 YEARS
RATIO
2021 2020
PAYMENT 811 DAYS 296 DAYS
PERIOD

ANALYSIS
THE PAYMENT PERIOD IS THE DURATION IN WHICH COMPANY PAYS ITS
DEBT . THE HIGHER IT IS THE BETTER IT IS FOR THE COMPANY AND IT
TELLS THAT THE CREDITORS HAVE PROVIDED A GREATER DURATION TO
PAY OFF THE DEBT .

REFERENCES
 HTTPS://WWW.MONEYCONTROL .COM /FINANCIALS/
VALIANTORGANICS /RATIOSVI/VO03#VO03
 HTTPS://WWW.MONEYCONTROL .COM /INDIA /STOCKPRICEQUOTE /
CHEMICALS /VALIANTORGANICS /VO03
 https://www.moneycontrol.com/financials/valiantorganics/balance-
sheetVI/VO03#VO03
THANKS