RATIO ANALYSIS OF

ASIAN PAINTS
 ASIAN PAINTS - AN OVERVIEW

 Vision of Asian paints is Clear Goals for Clear Future and to be the fore
runner of inspiring décor and to actively empower customers to create
their dream homes
 Asian Paints is India’s leading paint company with a group turnover of
Rs 217 billion.
 Asian Paints operates in 15 countries and has 26 paint manufacturing
facilities in the world servicing consumers in over 60 countries.
 The company has come a long way since its small beginning in 1942.
Four friends who were willing to take on the world's biggest, most
famous paint companies operating in India at that time set it up as a
partnership firm. Over the course of 25 years, Asian Paints became a
corporate force and India's leading paints company.
 the group operates around the world through its subsidiaries Asian Paints
Berger, Apco Coatings, SCIB Paints, Taubmans, Asian Paints Causeway
and Kadisco Asian Paints.
 WHAT IS RATIO ANALYSIS
It is a technique of analysis of financial statements
to conduct a quantitative analysis of information in
a company’s financial statements and it is a study
of relationship among various financial factors in a
business.

Ratios can be classified into following 5 categories:

1. Liquidity Ratio
2. Solvency Ratio
3. Activity Ratio
4. Profitability Ratio
5. Capital Structure Ratio
 CURRENT RATIO
 It reflects a company's ability to generate
enough cash to pay off all its debts once they
become due. It's used globally as a way to
measure the overall financial health of a
company.
 A ratio between 1.5 and 3 is generally
considered healthy. A ratio value lower than 1
may indicate liquidity problems for the
company
 Current ratio = Current assets
Current liabilities
CURRENT RATIO OF ASIAN PAINTS

 March 2021 = 9,956.54 / 4575.33

= 2.18
 March 2020 = 5825.70 / 3195.05
=1.82
 QUICK RATIO

 The quick ratio measures a company's capacity to pay its

current liabilities without needing to sell its inventory or
obtain additional financing.
 A result of 1 is considered to be the normal quick ratio. A
company that has a quick ratio of less than 1 may not be
able to fully pay off its current liabilities in the short term,
while a company having a quick ratio higher than 1 can
instantly get rid of its current liabilities.
 QUICK RATIO =QUICK ASSETS
QUICK LIABILITIES
 Quick assets =Current assets-(Stock + Prepaid expenses)
 Quick liabilities =Current liabilities – Bank overdraft
QUICK RATIO OF ASIAN PAINTS

 March 2021 = 6831.96 / 4575.33

= 1.49
 March 2020 =2998.23 / 3195.05
=0.93
 PROPRIETORY RATIO

 Proprietory ratio is a type of solvency ratio that is useful

for determining the amount or contribution of shareholders
or proprietors towards the total assets of the business.
 It helps to determine the financial strength of a company &
is useful for creditors to assess the ratio of shareholders’
funds employed out of total assets of the company.
 Ideal ratio ranges from 60% to 75%
 Proprietory ratio = Shareholders funds
Total tangible assets
 Shareholders funds =Share Capital + Reserves and Surplus
 Total tangible assets=Total tangible assets as per the
balance sheet
 PROPRIETORY RATIO OF
ASIAN PAINTS

 March 2021 = 12091.10 / 17582.67

= 0.69 =69%
 March 2020 = 9453.29 / 13587.62
= 0.70 =70%
 GROSS PROFIT RATIO
 The gross profit ratio shows the proportion of
profits generated by the sale of products or
services, before selling and administrative
expenses.
 It is used to examine the ability of a business to
create sellable products in a cost-effective manner.
 A higher gross profit margin, means the company
has more cash to pay for indirect and other costs
such as interest and one-time expenses and it is a
good sign of management
 Ideal ratio ranges from 20% to 30%.
 Gross profit ratio = Gross Profit x 100
Net sales
 Net sales = Sales – Sales return
 GROSS PROFIT RATIO OF
ASIAN PAINTS

 March 2021 = 4787.51 / 18516.86 * 100

= 25.85
 March 2020 = 4103 / 17194.09 * 100
= 23.86
 DEBT EQUITY RATIO
 The debt-equity ratio is a measure of the relative
contribution of the creditors and shareholders or owners
in the capital employed in business.
 This financial tool gives an idea of how much borrowed
capital (debt) can be fulfilled in the event of liquidation
using shareholder contributions.
 To lower your company’s debt-to-equity ratio, pay down
any loans, increase profitability, improve inventory
management and restructure debt.
 Ideal ratio ranges 2:1
 Debt equity ratio = Debt
Equity
 Debt = Long/Short-term loans, debentures, bills, etc,
 Equity = Proprietor’s funds
 DEBT EQUITY RATIO OF
ASIAN PAINTS

 March 2021 = 651.05 / 12091.10

= 0.69
 March 2020 = 656.6 / 9453.29
= 0.70
 CONCLUSION
 The company's current liabilities during FY21 stood at Rs
59 billion as compared to Rs 44 billion in FY20, thereby
witnessing an increase of 35.3%.
 Current assets rose 59% and stood at Rs 120 billion, while
fixed assets fell 3% and stood at Rs 83 billion in FY21.
 Overall, the total assets and liabilities for FY21 stood at Rs
204 billion as against Rs 161 billion during FY20, thereby
witnessing a growth of 26%.
 Long-term debt down at Rs 145 million as compared to Rs
186 million during FY20, a fall of 22.0%
 The company's current ratio improved and stood at 2.0x
during FY21, from 1.7x during FY20. The current ratio
measures the company's ability to pay short-term and
long-term obligations.
 There is an increase in gross profit ratio from 23.86 in FY
2020 to 25.85 in FY 2021 ,Which indicates that the
company has more cash to pay for indirect expenses and
other costs such as interest and one time expense