Assignment 1

Finance for Executives

Ishita Sabharwal MFM/20/68

Nancy Jain MFM/20/95
Rushikesh Bhattad MFM/20/106
Shubhi Garg MFM/20/105
COMPANIES IN
FOCUS
 Vardhman Group
● Vardhman Group is a textile group based in Ludhiana, Punjab, India. Vardhman
Group was established in 1965. The group is engaged in manufacturing and
trading in Yarn and Processed Fabric, Sewing Thread, Acrylic fibre and Alloy
steel.
● Vardhman group was incorporated in 1962 as Vardhman Spinning & General Mills
(VSGML). The company was promoted by VS Oswal and RC Oswal initially and
is now headed by S. P. Oswal.
● The group is structured in such a way as to have a central holding company that is
used for investing in the different group companies.
● The holding company in this case is Vardhman Holdings limited and the group
companies are Vardhman Textiles (61%), Vardhman Industries (65%) and
Vardhman Acrylic (60%). Vardhman textiles in-turn has holding in VMT Spinning
(73.33%), Vardhman threads (100%) and Vardhman yarns and threads (11%).
● Some of the important products of Vardhman group are: simple and blended yarns,
acrylic fibre (brand Varlon), range of threads (apparel sewing, tea bags, industrial
threads, etc.), shirting and trouser materials, forging and automotive components
and steel.
Arvind Limited
● Arvind Limited (formerly Arvind Mills) is a textile manufacturer and the flagship company
of the Lalbhai Group. Its headquarters are in Naroda, Ahmedabad, Gujarat, India, and it has
units at Santej (near Kalol). The company manufactures cotton shirting, denim, knits and
bottomweight (khaki) fabrics. It has also recently ventured into technical textiles when it
started Advanced Materials Division in 2011. It is India's largest denim manufacturer.
Ratio Analysis
Ratio analysis is a quantitative method of gaining insight into a company's
liquidity, operational efficiency, and profitability by studying its financial
statements such as the balance sheet and income statement. Ratio
analysis is a cornerstone of fundamental equity analysis.
Types of Financial Ratios

■ Liquidity ratios
■ Solvency or Leverage ratios
■ Turnover or Activity ratios
■ Profitability ratios
■ Equity-related ratios
Liquidity Ratios
Liquidity ratios measure a company's ability to pay debt obligations and its margin of safety
through the calculation of metrics including the current ratio, quick ratio, and
operating cash flow ratio.
With liquidity ratios, current liabilities are most often analyzed in relation to liquid assets to
evaluate the ability to cover short-term debts and obligations in case of an emergency.
Solvency Ratios
A solvency ratio indicates whether a company’s cash flow is sufficient to meet its long-term liabilities
and thus is a measure of its financial health. An unfavorable ratio can indicate some likelihood that a
company will default on its debt obligations.
Turnover Ratios
Turnover or activity ratios measure the firm’s efficiency in utilising its assets.
Profitability Ratios
Profitability ratios are a class of financial metrics that are used to assess a business's ability to generate
earnings relative to its revenue, operating costs, balance sheet assets, or shareholders' equity over time,
using data from a specific point in time.

Profitability ratios can be compared with efficiency ratios, which consider how well a company uses its
assets internally to generate income (as opposed to after-cost profits).
Equity-related Ratios
The equity ratio is an investment leverage or solvency ratio that measures the amount of assets that are
financed by owners’ investments by comparing the total equity in the company to the total assets.
DuPont Analysis