Ratio Analysis

Debt Paying Capacity

Debt to Equity Ratio

a leverage ratio that determines how much total debt and financial liability against the total
amount of shareholders' equity. The debt-to-assets ratio utilises total assets as its denominator,
whereas the debt-to-equity ratio uses total equity. This ratio illustrates the tilt of a company's
capital structure towards debt or equity financing.

Debt to Equity Ratio = Total Debt / Shareholders’ Equity

Interest Coverage Ratio

A company's capacity to pay the interest on its outstanding loans is assessed using a financial
ratio is the Interest Coverage Ratio (ICR)

Venders, creditors, and investors frequently use the interest coverage ratio to assess how risky
it is to lend money to a business. The ratio known as the "times interest earned" is another
name for the interest coverage ratio.

Interest Coverage Ratio = EBIT / Interest Expense

EBIT to sales ratio

EBIT margin is a profitability metric that quantifies the amount of earnings a business
generates as a percentage of revenue before interest, taxes, depreciation, and amortisation.

Sales revenue plus operating costs, such as cost of goods sold, selling, general, and
administration costs, but not depreciation and amortisation, are used to determine earnings.

The effect of the capital structure of the business, non-cash expenses, and income taxes are
not factored into the margin. This ratio can be used to assess a corporation along with other
leverage and profitability factors.

EBIT= EBITDA / Revenue

 Profitability Ratios

Net profit to sales ratios

The net profit ratio, also known as the net profit margin ratio, is a profitability ratios that
assesses how much money is brought into the company relative to its earnings.

Since it is a profitability ratio, it is expressed as a percentage. The net profit ratio is regarded
as a reliable indicator of a company's overall success and is most useful when combined with
an analysis of the company's working capital.

It aids in assessing the general effectiveness of the company, but the net profit ratio is not
regarded as a trustworthy predictor of cash flows because it includes numerous costs such
non-cash expenses, accumulated costs, depreciation, and amortisation.

Net Profit Ratio = Net Profit/ Net Sales × 100

Earnings Per Share

EPS is a financial ratio that divides the net earnings available to common shareholders by the
average number of shares outstanding during a specific time period. Indicated by the EPS
formula is a company's capacity to generate net profits for common shareholders.

EPS = Net Income – Preferred Dividend/ Outstanding Shares

 Asian Paints Ratio Analysis

 Debt Paying Capacity

  2018-19 2019-20 2020-21

Debt Paying Capacity      
Debt to Equity Ratio 0.002 0.003 0.002
Intrest Coverage Ratio 107 45 58.1
EBIT to Sales 23.37% 20.50% 22.72%

Debt to Equity Ratio = Total Debt / Shareholders’ Equity

Interest Coverage Ratio = EBIT / Interest Expense
EBIT to sales = EBITDA / Revenue

 Profitability Ratios

  2018-19 2019-20 2020-21

Profitability Ratios  
Net Profit Ratio 8.00%   11.31%
Earning Per Share 4.49 7.2 7.01

Net Profit Ratio = Net Profit/ Net Sales × 100

EPS = Net Income – Preferred Dividend/ Outstanding Shares
 Berger Paint Ratio Analysis

 Debt Paying Capacity

  2018-19 2019-20 2020-21

Debt Paying Capacity      
Debt to Equity Ratio 0.09 0.08 0.12
Intrest Coverage Ratio 36 28.71 27.1
EBIT to Sales 16.61% 19.48% 19.14%

Debt to Equity Ratio = Total Debt / Shareholders’ Equity

Interest Coverage Ratio = EBIT / Interest Expense
EBIT to sales = EBITDA / Revenue

 Profitability Ratios

  2018-19 2019-20 2020-21

Profitability Ratios  
Net Profit Ratio 8.00% 12.28% 11.31%
Earnings Per Share 4.49 7.2 7.01

Net Profit Ratio = Net Profit/ Net Sales × 100

EPS = Net Income – Preferred Dividend/ Outstanding Shares