FACTORS Share Value Competitive edge Earnings Capital structure Management Operating efficiency Financial Performance Historic Value of Stock P/E ratio Economic Condition Stock Market condition Future Price Present Price .

Factors for company analysis COMPETITIVE EDGE OF THE COMPANY     MARKET SHARE GROWTH OF SALES STABILITY OF THE SALES SALES FORECAST EARNINGS OF THE COMPANY CAPITAL STRUCTURE .

MANAGEMENT OPERATING EFFICIENCY FINANCIAL PERFORMANCE .

Ratio Analysis Liquidity ratios Efficiency ratios Leverage Ratios Profitability ratios .

loss of creditors confidence etc. Very High – idle assets earn nothing. . Quick measure of liquidity Lack of sufficient liquidity – poor credit worthiness.Liquidity Ratios Measure of ability of the firm to meet its current obligations.

Liquidity ratios Current ratio: current assets / current liabilities Quick ratio: (current assets-inventories)/current liabilities .

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. Ratios indicate mix of funds provided by owners and lenders. There should be an appropriate mix of debt and owners equity in financing the firm’s assets.Leverage Ratios T o judge the long term position of the firm. Computed from Balance Sheet and P/L account. To calculate the financial risk and firm’s ability of using debt to shareholders’ advantage.

LEVERAGE RATIOS Debt equity ratios: Total debt/shareholder’s equity Interest Coverage Ratio: EBIT/Interest charged Debt Service Coverage Ratio: EBIT/Total Debt Service .

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Indicate the speed with which assets are being converted or turned over into sales. Involves the relationship between sales and assets.ACTIVITY/EFFICIENCY RATIOS Better management of assets. Activity ratios are employed to evaluate the efficiency with which the firm manages and utilizes its assets. . the larger the amount of sales.

EFFICIENCY RATIOS Inventory turnover ratio: Net sales/turnover Debtors turnover ratio: Net credit sales/ average debtors Asset turnover ratio: Net Sales/Total assets .

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as well as how that profit relates to other important information about the company.Profitability Ratios It is used to give us an idea of how likely it is that a company will turn a profit. This gives the formation to different types of profitability ratios. Profitability Ratios can be found to have relation with several important factors of conducting a business. .

PROFITABILITY RATIOS IN AIRTEL  Return on Capital Employed: EBIT/ (Capital + Reserve + Long Term Liability)  Gross profit margin: (Revenue-Cost of Goods Sold)/Revenue  Net profit margin: Net profit/ Sales  Operating profit margin: EBIT/ Sales .

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DU PONT ANALYSIS .

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