Zomato Intro-
INTRODUCTION
Zomato is an Indian multinational restaurant aggregator and
food delivery company founded by Pankaj Chaddah and
Deepinder Goyal in 2008. Zomato provides information, menus
and user-reviews of restaurants as well as food delivery options
from partner restaurants in select cities.
Zomato - Startup Launch
When the founders launched this website, it wasn’t called
Zomato back then, it was called Foodiebay. And it initially
started out in Delhi, then the services were extended to cities
like Mumbai and Kolkata. With the tremendous user base and
growth rates that Foodiebay brought in to the founders, they
decided to modify it and take it international. And that’s when
this venture started being called Zomato, as we know of it
today. It was in 2010 when Foodiebay was officially rechristened
as Zomato.
The story behind the name Zomato
One of the reasons why they decided to change the name in
late 2010 from Foodiebay to Zomato was that they wanted a
powerful brand name. After endless debate over several cups of
coffee, they came up with the name Zomato. Decided to keep
the idea of food at the center and choose a name that is short,
easy to remember and makes people think of food. Zomato’s
got a zing to it and is originally a play on the word ‘tomato’.
They also wanted to avoid any confusion with “ebay”, they
wanted to be sure that they weren’t taking any chances when
creating a brand they’d want to take international. Focusing on
brand recall and communicating what they stood for is of
primary importance to any consumer internet company and to
think they have got most of it right.
Zomato - Name, Tagline, and Logo
The founders changed Foodiebay to 'Zomato' to make it more
prominent, simple to memorize and primarily to eliminate the
confusion with the website eBay. Zomato's tagline is "Never
have a bad meal"
ZOMATO - BUSINESS MODEL & REVENUE MODEL
The main source of revenue for Zomato now is the
advertisements channel that the portal offers to display. This
accounts for most of its revenue followed by the commissions
that it charges to the restaurants. It works on a commission
business model.
Directors of Zomato-
What is Ratio Analysis?
Ratio analysis is referred to as the study or analysis of the line
items present in the financial statements of the company. It can
be used to check various factors of a business such as
profitability, liquidity, solvency and efficiency of the company or
the business.
Categories of Ratio Analysis
1. Liquidity Ratios: Liquidity ratios are helpful in
determining the ability of the company to meet its debt
obligations by using the current assets. At times of
financial crisis, the company can utilise the assets and sell
them for obtaining cash, which can be used for paying off
the debts.
Some of the most commonly used liquidity ratios are quick
ratio, current ratio, cash ratio, etc. The liquidity ratios are
used mostly by creditors, suppliers and any kind of
financial institutions such as banks, money lending firms,
etc for determining the capacity of the company to pay off
its obligations as and when they become due in the
current accounting period.
2. Solvency Ratios- From tb
3. Activity Ratios or Turnover Ratios- Activity ratios are used
to measure the efficiency of the business activities. It
determines how the business is using its available
resources to generate maximum possible revenue.
These ratios are also known as efficiency ratios. These
ratios hold special significance for business in a way that
whenever there is an improvement in these ratios, the
company is able to generate revenue and profits much
efficiently.
4. Profitability ratios: The purpose of profitability ratios is
to determine the ability of a company to earn profits when
compared to their expenses. A better profitability ratio
shown by a business as compared to its previous
accounting period shows that business is performing well.
The profitability ratio can also be used to compare the
financial performance of a similar firm, i.e it can be used
for analysing competitor performance.
Some of the most used profitability ratios are return on
capital employed, gross profit ratio, net profit ratio, etc.
Some of the examples of activity or efficiency ratios are
asset turnover ratio, inventory turnover ratio, etc.
Advantages of Ratio Analysis
Despite its limitations, the strengths of ratio analysis are
significant in financial evaluation and planning.
1. Enhanced Comparability
One of the key strengths of ratio analysis is its ability to
level the playing field when comparing companies of
varying sizes within the same industry. It’s akin to using a
standard measure to weigh athletes of different disciplines
against each other’s performance. Ratios standardise
financial results, allowing for direct comparison even if one
company’s revenues are vastly larger than another’s.
2. Performance Trends
Ratios are instrumental in identifying trends within a
company’s financial performance over time. By examining
ratios across multiple periods, you can pinpoint patterns of
growth, stability, or decline in various areas of the
company’s finances. This trend analysis can inform future
forecasts and strategic planning. For example, a
consistent increase in profitability ratios year over year
could indicate effective management strategies and
operational improvements.
3. Red Flags
Ratio analysis can also act as an early warning system,
unveiling issues that may not be immediately evident. A
sudden shift in a company’s debt-to-equity ratio, for
example, might signal an increase in borrowing that could
jeopardise the company’s solvency if not managed
properly. This kind of insight is crucial for swift decision-
making and risk management.
4. Benchmarking
Finally, ratio analysis is a valuable benchmarking tool. It
provides a basis for comparing a company’s financial
metrics against industry standards or competitors. By
doing so, a company can see where it stands in its market
and identify areas for improvement. If the industry
average for the return on assets is higher than a
company’s ratio, it may indicate that the company is not
utilising its assets as effectively as its peers.
