y A Project of Managerial Accounting  Under the guidance of Dr.

Sandeep Goel

By :--Jasmeet Bhatia Geeta Chopra Vivek Balokhra Varun Kukreja Deepika Pundir Samdarsh Nayyar Mohit Goel

Profitability Ratios TATA POWER NTPC .

Profitability Ratios TATA POWER NTPC .

TATA POWER NTPC . and then open the file again. or the image may have been corrupted. Restart your computer. If the red x still appears. you may have to delete the image and then insert it again.Profitability Ratios The image cannot be displayed. Your computer may not have enough memory to open the image.

Overall Profitability Ratios TATA POWER .

932 4.696 90.128 0.105 8.140 0.248 0.26.Capital Structure Ratios (or) Long Term Solvency Ratios a.965 1.331 7.983 0.156 0.191 0.411 0. hence both the firms enjoy low debt and higher equity. .73.39 5.126 9.451 2.97 5.310 0.139 0.354 5.327 68.518 3. larger the loan component.24. A debt equity ratio of 2:1 is considered ideal. Debt and Equity Ratio = Long-term Liabilities / Shareholder s Funds TATA 05-06 06-07 07-08 08-09 09-10 Long term liabilities Shareholder s funds Debt & Equity Ratio NTPC 05-06 06-07 07-08 08-09 09-10 57. It can be seen that both TATA & NTPC have D/E less than 1.484 0.799 4.229 73.58 4.147 89. A firm with a debt equity ratio of 2 or less exposes its creditors to relatively lesser risks.145 Higher the ratio.49. A firm with a high debt equity ratio exposes its creditors to greater risk.70 6.85.38 946 4.

The company has been getting loans quite easily also because of the TATA brand.82 5.2 to 6.Capital Structure Ratios (or) Long Term Solvency Ratios b. as it indicates a greater margin of safety to the lenders of long-term debt.46 182. And also being a PSU.45 586.853.035 3.01 936.54 141. the better it is.36 8. ¡ 148. TATA has Interest Coverage Ratio ranging from 3.603 3.86 . Interest Coverage Ratio = PBIT / Fixed Interest Charges TATA 05-06 06-07 07-08 08-09 09-10 PBIT Fixe Interest C arges Interest Coverage Ratio NTPC 05-06 06-07 07-08 08-09 09-10 60224 89074 102549 93595 108855 4473 9520 11976 15442 13852 747.210 6.6.06 7.76 781.56 6.06 to 13. The higher the ratio is.929 13. it can easily raise loans.64 1.9 3.140.481 4.2   A debt service ratio of around 6 is normally considered as ideal.86 327. NTPC on the other hand has excellent Interest Coverage Ratio ranging from 6.46.46 9.

827 2.01 A current Ratio of 2:1 is usually considered as ideal. the Current Ratio exceeds 3 and hence there are idle funds which needs to be properly invested by both TATA & NTPC.466 1.876 4.419 1.16 4.091 3.55.954 1.60 4.298 4.488 3. Current Ratio = Current Assets / Current Liabilities TATA 05-06 06-07 07-08 08-09 09-10 Current Assets Current Liabilities Current Ratio NTPC 05-06 06-07 07-08 08-09 09-10 2.973 732 4.157 49.590 3. a high current ratio of more than 3 indicates that the firm is having idle funds and has not invested them properly.126 3.062 3.063 3.221 55.08.2452.253 3.391 76.254 4.681 5.21.042 1.57.09 4. If this ratio is less than 2 it indicates that the business does not enjoy adequate liquidity.20 4.876 1.Liqui ity Ratios (or) S ort Term Solvency Ratios a. In both cases.09. However.102 54. .483 74.

238 2.391 76.681 5.458 3.42 473.26 396.042 3.466 133840 196725 228731 276819 274680 49.126 3.954 442.102 54.483 74. Note: Quick Assets = Current Assets -(Inventory + Prepaid Expenses) Quick Liabilities = Current Liabilities Bank Overdraft .876 3.531 732 3.713 2.14 589.402 1. A quick ratio of less than 1 is indicative of inadequate liquidity of the business.63 4.876 4.973 4.72 3.Liqui ity Ratios (or) S ort Term Solvency Ratios b.844 3.365 1.419 1.221 55.254 4.037 5.61 644. Quick Ratio = Quick Assets / Quick Liabilities TATA 05-06 06-07 07-08 08-09 09-10 Current Assets Liabilities Quick Assets Quick Liabilities Quick Ratio NTPC 05-06 06-07 07-08 08-09 09-10 2. quick ratio exceeds 1 and hence both TATA & NTPC are liquid.12 3.660 2.57 A quick ratio of 1 is usually considered as ideal. In both cases.73 3.36 2.645 1.

885 13.039 442 396 474 644 589 10. .139 12.94 11. A High stock turnover ratio indicates that the stocks are fast moving and get converted into sales quickly.17 11. Both companies TATA & NTPC enjoy the ratio over 8.405 25.17.78 12.434 33.808 12.870.193.22 7.668.477 4532.5 5. Inventory Turnover Ratio = COGS / Average Inventory TATA 05-06 06-07 07-08 08-09 09-10 Sales Closing Inventory Inventory Turnover Ratio NTPC 05-06 06-07 07-08 08-09 09-10 260701 325344 369462 417913 461687 23.961 13. An Inventory Turnover Ratio of 8 is considered ideal.Efficiency in Assets Utilization a.757 32.39 11.102 26.2 4.24 11.791 An Inventory Turnover ratio represents the number of times inventories are turned over to generate sales.

A high debtors turnover ratio is always better.870.039 1.73 9.69 17. TATA on the other hand has lower Debtors Turnover Ratio and hence poor fund collection ie their funds remain invested for a longer time.834 51.193.4 5.668. Debtors Turnover Ratio TATA 05-06 06-07 07-08 08-09 09-10 Net Cre it Sales Average Tra e Debtors Debtors Turnover Ratio NTPC 05-06 06-07 07-08 08-09 09-10 260701 325344 369462 417913 461687 8.02 . NTPC enjoys a very high Debtors Turnover Ratio and hence there is good collection of funds.175 32.45 12.600 21.2 7.178 4532.797 It represents the number of times average dues from customers are realised.22 2.60 30. 7.406 1.Efficiency in Assets Utilization b.678 10. ¢ ¢ 3.2 4.04 30.

Efficiency in Assets Utilization c.152 60.030 641 835 776 7. TATA has a very large Turnover Ratio whereas NTPC has very less so TATA has less funds available for investment compared to NTPC.15 2.70 1. Cre itors Turnover Ratio TATA 05-06 06-07 07-08 08-09 09-10 Purc ases Cre itors Cre itors Turnover Ratio NTPC 05-06 06-07 07-08 08-09 09-10 112915 103101 86207 100087 245301 51.155 87.39 1. ¤ ¤ £ 4114 103101 86207 100087 245301 549 1.51 .58 119. A very less turn over ratio is always better.21 1.579 It represents number of times average dues to suppliers are settled.191 97.82 316.11 134.50 100.789 62.1 2.

847 1. Both TATA & NTPC have ensured progressive reduction in Working Capital Turnover Ratio.039 1652.609.785 2.779 1.04 2. It is always better to operate with minimum net working capital requirement.22 7.4 5.870.8 3.74 2.76 1. Working Capital Turnover Ratio = COGS / Working Capital TATA 05-06 06-07 07-08 08-09 09-10 Net Sales Working Capital Working Capital Turnover Ratio NTPC 05-06 06-07 07-08 08-09 09-10 260701 325344 369462 417913 461687 95843 151564 200005 234862 231281 4532.Efficiency in Assets Utilization .720 2.2 4.5 2.036.2 2.88 2.147 1.668. .3 2.17.193.284.996 It reflects the efficiency of the working capital management how many times the working capital is revolved to generate sales.86 2.

668. 16 1.4.215 3.870. 1.22 7.2 to Rs. i ed Assets Turnover Ratio = Net sales / Net Fixed Assets TATA 05-06 06-07 07-08 08-09 09-10 Net Sales NTPC 05-06 06-07 07-08 369462 08-09 09-10 46168 7 417913 4532.47.252 1.130 1.2 4.193.209 1. 1.60.937 3.039 3.Efficiency in Assets Utilization e.811 4.328 It shows the productivity of fixed assets. It measures sales revenue per rupee of fixed assets.952 6.229 i ed Assets Turnover Ratio ¦¥ ¦¥ i ed Assets 230895 256841 2.225 1.2 to 1.4 ie a rupee of fixed asset has generated sales of Rs. 10 1.5 5.687 5.377 3. Both TATA & NTPC have fixed assets hovering around 1.269 1.1 7.613 1.29. .

The inventory of the Company has been physically verified during the year by the management under a perpetual inventory system. NTPC Same Throughout 5 years. In respect of materials lying with third parties. these have substantially been physically verified or confirmed by third parties. .Met o of Inventory valuation TATA POWER Same Throughout 5 years. The inventory of the Company has been physically verified during the year by the management under a perpetual inventory system. In our opinion the frequency of verification is reasonable. In our opinion the frequency of verification is reasonable. these have substantially been physically verified or confirmed by third parties. except for fuel which was verified during the year and / or at the end of the year. except for fuel which was verified during the year and / or at the end of the year. In respect of materials lying with third parties.

40% Railway Sidings. etc. etc.77% to 18.40%. Barges.89% to 33.80% to 45. Cable Network.10% Motor Vehicles.02% to 13. 3. Crossings.02% to 5. Depreciation so provided has been determined as being not less than the depreciation which would have been recognized in the Profi t and Loss Account had the rates and the manner prescribed under Schedule XIV to the Companies Act.02% to 33. 1956.95% to 3. 25.40% Buildings 3.91% Furniture.00% Transmission Lines. 3.40% Helicopters 33. . Launches. Roads. Fixtures and Office Equipment 12.Met o of Depreciation NTPC y y y y y y y y y y Depreciation rates used for various classes of assets are: Hydraulic Works 1. etc. been applied.00% Plant and Machinery 1.

Roads.40%. 3.80% to 45.Met o of Depreciation TATA POWER y y y y y y y y y y Depreciation rates used for various classes of assets are: Hydraulic Works 1. been applied. 1956.95% to 3.40% Helicopters 33.02% to 33.89% to 33.02% to 13.40% Railway Sidings.10% Motor Vehicles.77% to 18. etc. Cable Network. etc. Barges.91% Furniture. .00% Transmission Lines. 3. Fixtures and Office Equipment 12. Launches.00% Plant and Machinery 1. Crossings. etc. Depreciation so provided has been determined as being not less than the depreciation which would have been recognized in the Profi t and Loss Account had the rates and the manner prescribed under Schedule XIV to the Companies Act.40% Buildings 3.02% to 5. 25.

Sign up to vote on this title
UsefulNot useful