accounts assignment final.. (1)

8/3/2019 Accounts Assignment Final.. (1)

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ACKNOWLEDGEMENT

We owe a great thanks to many people who helped and supported us in completion of thisproject.

Our deepest thanks is to our LecturerDr. REENA AGARWAL, the Guide of this project forguiding and correcting various documents of this project with attention and care.

We would also like to thank our Institution and our faculty members without whom this projectwould have been a distant reality.


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INTRODUCTION AND HISTORY OF THE COMPANY

GRASIM INDUSTRIES

Grasim Industries Ltd

Type Public(BSE: 500300) (NSE:GRASIM)

Industry Textile,cement,sponge ironandchemicals

Founded 1948, Mumbai

Headquarters Mumbai,Maharashtra,India

Key people Kumar Mangalam Birla,Chairman&Managing director

Revenue 8,547.87 crores(US$1.91 billion) [1]

Net income 2,092.10 crores(US$466.54 million)[2]

Website Official Website

Grasim Industries Limited (BSE: 500300|NSE: GRASIM) is a Aditya Birla Groupcompany

that started in 1948 and which started as a textile manufacturer. Since then Grasim has

successfully diversified into ViscoseStaple Fiber (VSF),cement,sponge ironand chemicals[3]

Aditya Birla Groupoperates over 40 companies in 12 countries across 4 continents. Grasim is

one of its flagship companies and it is the worlds second largest producer of
http://en.wikipedia.org/wiki/Types_of_business_entityhttp://en.wikipedia.org/wiki/Public_companyhttp://en.wikipedia.org/wiki/Public_companyhttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcode=500300http://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcode=500300http://en.wikipedia.org/wiki/National_Stock_Exchange_of_Indiahttp://www.nseindia.com/marketinfo/companyinfo/companysearch.jsp?cons=GRASIM&section=7http://www.nseindia.com/marketinfo/companyinfo/companysearch.jsp?cons=GRASIM&section=7http://en.wikipedia.org/wiki/Textilehttp://en.wikipedia.org/wiki/Textilehttp://en.wikipedia.org/wiki/Cementhttp://en.wikipedia.org/wiki/Cementhttp://en.wikipedia.org/wiki/Sponge_ironhttp://en.wikipedia.org/wiki/Sponge_ironhttp://en.wikipedia.org/wiki/Chemicalshttp://en.wikipedia.org/wiki/Chemicalshttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Maharashtrahttp://en.wikipedia.org/wiki/Maharashtrahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Chairmanhttp://en.wikipedia.org/wiki/Chairmanhttp://en.wikipedia.org/wiki/Chairmanhttp://en.wikipedia.org/wiki/Managing_directorhttp://en.wikipedia.org/wiki/Crorehttp://en.wikipedia.org/wiki/Crorehttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/Grasim_Industries#cite_note-0http://en.wikipedia.org/wiki/Net_incomehttp://en.wikipedia.org/wiki/Crorehttp://en.wikipedia.org/wiki/Crorehttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/Grasim_Industries#cite_note-1http://en.wikipedia.org/wiki/Grasim_Industries#cite_note-1http://www.grasim.com/http://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcode=500300http://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcode=500300http://en.wikipedia.org/wiki/National_Stock_Exchange_of_Indiahttp://www.nseindia.com/marketinfo/companyinfo/companysearch.jsp?cons=GRASIM&section=7http://en.wikipedia.org/wiki/Aditya_Birla_Grouphttp://en.wikipedia.org/wiki/1948http://en.wikipedia.org/wiki/Viscosehttp://en.wikipedia.org/wiki/Viscosehttp://en.wikipedia.org/wiki/Cementhttp://en.wikipedia.org/wiki/Cementhttp://en.wikipedia.org/wiki/Cementhttp://en.wikipedia.org/wiki/Sponge_ironhttp://en.wikipedia.org/wiki/Chemicalshttp://en.wikipedia.org/wiki/Grasim_Industries#cite_note-2http://en.wikipedia.org/wiki/Aditya_Birla_Grouphttp://en.wikipedia.org/wiki/File:Grasim_logo.jpghttp://en.wikipedia.org/wiki/Public_companyhttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcode=500300http://en.wikipedia.org/wiki/National_Stock_Exchange_of_Indiahttp://www.nseindia.com/marketinfo/companyinfo/companysearch.jsp?cons=GRASIM&section=7http://en.wikipedia.org/wiki/Textilehttp://en.wikipedia.org/wiki/Cementhttp://en.wikipedia.org/wiki/Sponge_ironhttp://en.wikipedia.org/wiki/Chemicalshttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Maharashtrahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Chairmanhttp://en.wikipedia.org/wiki/Managing_directorhttp://en.wikipedia.org/wiki/Crorehttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/Grasim_Industries#cite_note-0http://en.wikipedia.org/wiki/Net_incomehttp://en.wikipedia.org/wiki/Crorehttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/Grasim_Industries#cite_note-1http://www.grasim.com/http://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcode=500300http://en.wikipedia.org/wiki/National_Stock_Exchange_of_Indiahttp://www.nseindia.com/marketinfo/companyinfo/companysearch.jsp?cons=GRASIM&section=7http://en.wikipedia.org/wiki/Aditya_Birla_Grouphttp://en.wikipedia.org/wiki/1948http://en.wikipedia.org/wiki/Viscosehttp://en.wikipedia.org/wiki/Cementhttp://en.wikipedia.org/wiki/Sponge_ironhttp://en.wikipedia.org/wiki/Chemicalshttp://en.wikipedia.org/wiki/Grasim_Industries#cite_note-2http://en.wikipedia.org/wiki/Aditya_Birla_Grouphttp://en.wikipedia.org/wiki/Types_of_business_entity


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ViscoseRayonFiber with about 21% market share. Textile and related products contributes to

15% of the group turnover.

Grasim Industries Limited was incorporated in 1948; Grasim is the largest exporter of ViscoseRayon Fiber in the country, with exports to over 50 countries. Grasim is headquartered

in Nagda, Madhya Pradesh and also has a huge plant at Kharach (kosamba,(Gujarat),India)

FOCUS OF GROWTH POST MFA

In late 1990s and later, the focus was the textile business because of the end ofMulti-Fiber

Arrangement(MFA) which opened a host of opportunities to Indian exporters. In this period,

Aditya Birla Group took a three route strategy for growth.

Rapidly enhance existing capacities

Acquire and Build Garment brands for local and international markets.

Jayashree textiles was acquired by Aditya Birla Nuvo(formerly Indian Rayon), is a leading

producer and exporter of yarns and fabrics to 50 countries with a turnover of $413 million. It

acquired Madura Garments in 2000 to enter the branded garments business. Has brands such

as Louis Philippe, Van Heusen, Peter England, Allen Solly, SF Jeans among others and also

a global supplier to global buyers such as Marks & Spencers, Polo etc.

Vertical integration to get cost advantage

AV Cell Inc., a joint venture between Aditya Birla Group and Tembec, Canada, established

operations in 1998 to produce softwood and hardwood pulp for the purpose of internal

consumption among different units of the Group.

Together, Aditya Birla Group and Tembec, Canada have acquired AV Nackawic Inc., which

produces dissolving pulp, as a further step to integrate. Grasim industries Ltd. is a leading player

in the Viscose Staple Fiber (VSP). The Aditya Birla Group's VSF manufacturing plants straddle

Thailand, Indonesia, India and China. At each of these locations, further capacity expansions are

under way in Thailand by 31 ktpa; in Indonesia by 37 ktpa; in India by 64 ktpa and in Chinaby 30 ktpa. These Brownfield expansions, slated to be completed by the second quarter of 2008,

will further notch up the Group's VSF production from 566 ktpa to 727 ktpa and entail an

investment close to US$ 260 million.

Grasim wants to follow a strategy of backward integration, right from plantation stage to the

final VSF stage. The Group's VSF business operates through its three companies Grasim
http://en.wikipedia.org/wiki/Rayonhttp://en.wikipedia.org/wiki/Rayonhttp://en.wikipedia.org/wiki/Nagdahttp://en.wikipedia.org/wiki/Nagdahttp://en.wikipedia.org/w/index.php?title=Kosamba,(Gujarat),India&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Multi-Fiber_Arrangement&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Multi-Fiber_Arrangement&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Aditya_Birla_Nuvo&action=edit&redlink=1http://en.wikipedia.org/wiki/Rayonhttp://en.wikipedia.org/wiki/Nagdahttp://en.wikipedia.org/w/index.php?title=Kosamba,(Gujarat),India&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Multi-Fiber_Arrangement&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Multi-Fiber_Arrangement&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Aditya_Birla_Nuvo&action=edit&redlink=1


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Industries in India, Thai Rayon Corporation in Thailand and Indo Bharat Rayon in Indonesia,

which also oversees its Chinese operations at Birla Jingwei Fibres, China

JOINT VENTURES

Thai Rayon

Promoted in 1974 by the Aditya Birla Group, Thai Rayon is the sole manufacturer of Viscose

Rayon Staple Fibre (VSF) in Thailand. More than 50 per cent of Thai Rayon's VSF throughout is

directly exported to more than 20 countries worldwide. The VSF meets the stringent quality

expectations of customers in USA, Mexico, Europe, Turkey, Canada, Israel, Australia, South

Korea, Philippines, Indonesia, Pakistan, Bangladesh and Sri Lanka.

PT Indo Bharat Rayon

Marketed under the brand name of 'Birla Cellulose', the company produces a wide range of VSF

in engineered specifications for textiles and non-woven applications. The company's strong focuson environmental protection is reflected through its investments in a sophisticated state-of-the-

art waste-water treatment plant and scientific waste disposal systems.

Looking Forward

They have recently acquired Pulp & VSF Plants in Canada and China respectively. They have

also initiated a Pulp & Plantation Project in Laos.
http://en.wikipedia.org/wiki/Canadahttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Laoshttp://en.wikipedia.org/wiki/Laoshttp://en.wikipedia.org/wiki/Canadahttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Laos


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RAYMONDS

Raymond Limited

Type Public(BSE:500330)

Industry Textiles,EngineeringandAviation

Founded 1925

Headquarters Mumbai,India

Key people Gautam Singhania -Chairman&Managing Director[1] [2]

Products fabrics, garments, designer wear, denim, cosmetics &

toiletries, engineering files & tools, prophylactics and air

charter services

Revenue 1,339crore (US$298.6 million)(2010)
http://en.wikipedia.org/wiki/Types_of_business_entityhttp://en.wikipedia.org/wiki/Public_companyhttp://en.wikipedia.org/wiki/Public_companyhttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcode=500330http://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcode=500330http://en.wikipedia.org/wiki/Textileshttp://en.wikipedia.org/wiki/Textileshttp://en.wikipedia.org/wiki/Engineeringhttp://en.wikipedia.org/wiki/Engineeringhttp://en.wikipedia.org/wiki/Aviationhttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Gautam_Singhaniahttp://en.wikipedia.org/wiki/Chairmanhttp://en.wikipedia.org/wiki/Chairmanhttp://en.wikipedia.org/wiki/Chairmanhttp://en.wikipedia.org/wiki/Managing_Directorhttp://en.wikipedia.org/wiki/Managing_Directorhttp://en.wikipedia.org/wiki/Raymond_Group#cite_note-0http://en.wikipedia.org/wiki/Managing_Directorhttp://en.wikipedia.org/wiki/Raymond_Group#cite_note-0http://en.wikipedia.org/wiki/Raymond_Group#cite_note-1http://en.wikipedia.org/wiki/Raymond_Group#cite_note-1http://en.wikipedia.org/wiki/Crorehttp://en.wikipedia.org/wiki/Crorehttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/File:Raymond_logo.svghttp://en.wikipedia.org/wiki/Types_of_business_entityhttp://en.wikipedia.org/wiki/Public_companyhttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcode=500330http://en.wikipedia.org/wiki/Textileshttp://en.wikipedia.org/wiki/Engineeringhttp://en.wikipedia.org/wiki/Aviationhttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Gautam_Singhaniahttp://en.wikipedia.org/wiki/Chairmanhttp://en.wikipedia.org/wiki/Managing_Directorhttp://en.wikipedia.org/wiki/Raymond_Group#cite_note-0http://en.wikipedia.org/wiki/Raymond_Group#cite_note-1http://en.wikipedia.org/wiki/Crorehttp://en.wikipedia.org/wiki/United_States_dollar


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RATIO ANALYSIS

A relationship between various accounting figures, which are connected with each other,expressed in mathematical terms, is called accounting ratios. Ratio analysis is one of thetechniques of financial analysis to evaluate the financial condition and performance of a businessconcern. Simply, ratio means the comparison of one figure to other relevant figure or figures.Ratio analysis of financial statements is a study of relationship among various financial factors

in a business as disclosed by a single set of statements and a study of trend of these factors asshown in a series of statements.

OBJECTIVE OF RATIO ANALYSIS

This Analysis is primarily designed to meet informational needs of investors, creditorsand management.

The objective of ratio analysis is the comparative measurement of financial data tofacilitate wise investment, credit and managerial decisions. Some examples of analysis,according to the needs to be satisfied, are:

ADVANTAGES & USES OF RATIO ANALYSIS

1. To workout the profitability

2. To workout the solvency

3. Helpful in analysis of financial statement4. Helpful in comparative analysis of the performance

5. To simplify the accounting information6. To workout short-term financial position7. Helpful for forecasting purposes

LIMITATIONS OF RATIO ANALYSIS

1. Limited Comparability

2. False Results

3. Effect of Price Level Changes

4. Costly Technique

5. Misleading Results


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PROFITABILTY RATIO

1. PROFIT MARGIN RATIO/RETURN ON SALES:

It measures the amount of NET PROFIT earned by each rupee of revenue. The pressure onmargin should be analysed by looking at major categories of expenses like: Material,

Salaries, Wages, and Advertising etc. It can be calculated in the following manner:

Profit Margin Ratio = (Profit after Tax/ Sales) * 100

INFOSYS

2009-10 2010-11

PAT 6266 6835SALES 22742 27501

(%) 27.52 24.81

INTERPRETATION

INFOSYS- the profit of Infosys has increased from 2010-2011 which tell that the company

is performing well in the market

2. ASSETS TURNOVER:

Measures the firms efficiency in utilizing its assets. It indicates how many times the assets wereturned over in a period in order to generate. It can be calculated in the following manner: -

Assets Turnover = Sales/Average Total Assets

Where,

Opening & Closing Assets =Inventories + Sundry Debtors +Cash & Bank


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Balance+ Other Current Assets+ Loan & Advances

Average Total Assets = Opening Assets + Closing Assets

2

GRASIM INDUSTRIES

2009-10 2010-11

SALES 22742 27501

AVG.

TOTALASSETS

7839 8501

in times 2.901 3.235

INTERPRETATION:

INFOSEYS-sales has increased with repect to increase deptor of the company


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3. RETURN ON ASSETS / INVESTMENTS:

Measures the profitability from the shareholders point of view.

R.O.I= (PAT/Average Total Assets) 100

Where,Opening & Closing Assets =Inventories +Sundry Debtors +Cash &

Bank Balance+ Other Current Assets +Loan &

Advances

Average Total Assets =Opening Assets +Closing Assets

2

(In crores)

INFOSIYS

2009-10 2010-11 2009-10 2010-11PAT 6266 6835 2636.51 (10487.07)

AVERAGE

TOTAL

ASSETS

7839 8501 95588.075 147036.61

% 79.91 80.43 2.75 (7.12)


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INTERPRETATION

.INFOSEys-the compny profit have increased because of good performance in market


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4. RETURN ON EQUITY:

It measures the efficiency in the use of shareholders funds.

Return on Equity=(PAT/Average Shareholders Equity)*100

Where,

Avg. Shareholders Equity= (Opening +Closing Equity)

2

W/N= GRASIM INDUSTRIES

2009-10= 9467.13+7135.86=11869.42

2010-11= 7135.86+8123.79=11691.72

2

W/N= RAYMONDS

2009-10= 112698.37+117291.07=114994.722

2010-11= 117291.07+106558.49=170570.3

2(in crores)

GRASIM

INDUSTRIES

RAYMONDS

2009-10 2010-11 2009-10 2010-11PAT 6266 6835 2636.51 (10487.07)

AVERAGE

SHAREHOLDERS

EQUITY

19395.31 20365.5 114994.72 170570.3

% 32.20 33.56 2.29 (6.14)


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INTERPRETATION:

Shareholder equity has also increased as well as the the profit of the firm has also increased

which tell about the better performance of the company in the market


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6. EARNING PER SHARE (EPS):

Earnings per share is used for measuring the profitability of an organisation from the

point of view of shareholders.

Earnings Per Share= Net Profit after Tax /No. Of Equity Shares

GRASIM INDUSTRIES RAYMONDS

2009-10 2010-11 2009-10 2010-11

PAT 5988 6266 2636.51 (10487.07)

NO. OF

EQUITY

SHARES

59823651 60000000 61380853 61380853

in Rs. 191.51 128.9 4.29 (17.08)

INTERPRETATION

Eps of the company has reduced which show that the company share value is decreased


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LI QUIDITY RATIOS

1.CURRENT RATIO:

It indicates the companies ability to pay its debt in the short term.

CURRENT RATIOS=CURRENT ASSETS/CURRENT LIABILITIES

CURRENT ASSETS = Inventories +Sundry Debtors +Cash & Bank

Balance +Other Current Assets +Loan &Advances

CURRENT LIABILITIES=Current liabilities + Provisions

(in crores)


2009-10 2010-11 2009-10 2010-11

CURRENT

ASSETS

16664 18237 93010.82 108051.58

CURRENT

LIABILITIES

3872 4455 35728.56 48535.48

In Ratio 4.30 : 1 4.09:1 2.60 : 1 2.22 : 1

INTERPRETATION

The current asset of the company is high than in rrespect tto the current liabilities which tell that

the company can easily pay there liabilities


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2.QUICK RATIO:

Quick ratio shows short-term solvency of a business in a true manner. It is also called acid-testratio and liquid ratio. It is calculated in order to know how quickly current liabilities can be paidwith the help of quick assets. Quick assets mean those assets, which are quickly convertible into

cash.

Quick Ratio=Quick Assets/Current Liabilities

Where,

Quick Assets= Current Assets- Inventories

Liquid assets include Cash in hand, Cash at Bank, Sundry Debtors, Bills Receivable, Short-

term Investments etc. In other words, all current assets are liquid assets except stock and prepaidexpenses.Current liabilities include Sundry Creditors, Bills Payable, Bank Overdraft, OutstandingExpenses etc.


2009-10 2010-11 2009-10 2010-11

LA 64560.44 66742.48

CL 3872 4455 35728.56 48535.48

QR 0.84:1 1.24:1 1.8:1 1.37:1

INTERPRETATION

As this company is dealind in software it has no inventory for it valuation

3. DEBTORS TURNOVER RATIO:

Debtors turnover ratio indicates the relation between net credit sales and average accountsreceivables of the year. This ratio is also known as Debtors' Velocity.

Debtors Turnover Ratio = Sales/Average Debtors


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Where,

Average Debtors = [Opening Debtors+ Closing Debtors]/2

GRASIM INDUSTRIES RAYMONDS2009-10 2010-11 2009-10 2010-11

SALES 22742 27501 133936.91

149653.25

AVERAGE

DEBTORS

3683 4073.5 30070.67 30870.10

In Ratio 6.17 6.75 4.45 4.84

INTERPRETATION

The company is believing more on the credit sales than cash sales

4.AVERAGE DEBT COLLECTION PERIOD:

Its the period over which the debtors are collected on an average basis. It indicates the rapidityor slowness with which the money is collected from debtors.

Average Debt Collection Period =360 Days/Debtors Turnover Ratio


2009-10 2010-11 2009-10 2010-11


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DAYS 360 360 360 360

DEBTORS

TURNOVER

6.17 6.75 4.45 4.84

DAYS 58.34 53.33 80.89 74.38

INTERPRETATION:

The collection period of 2011 is less compared to the collection time

given to the debtor

5. INVENTORY TURNOVER:

Measure the number of times a company's inventory is turned into sales.

Inventory Turnover=COGS/Average Inventory


2009-10 2010-11 2009-10 2010-11

COGS 5926.39 3319.68 141889 147267.73

AVERAGE

INVENTORY

1586.86 628.06 3124.37 34879.56

In times 3.73 5.28 4.54 4.22

INTERPRETATION

As the company is dealing in software it will not have inventory in the book of

account


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SOLVENCY RATIO

1. DEBT-EQUITY RATIO:

Debt equity ratio shows the relationship between long-term debts and shareholders funds'. It is

also known as External-Internal' equity ratio.

Debt Equity Ratio = Debt/Equity

Where,

Debt =Secured loans +Unsecured loans

Equity (Shareholders' Funds) = Share Capital + Reserves and Surplus.


2009-10 2010-11 2009-10 2010-11

DEBT 3236 4867 125270.85 125725.26

EQUITY 21908 24501 117291.07 106558.49

In Ratio .147:1 .198 :1 1.06 :1 1.17 :1

INTERPRETATION:

The ability to pay the dept of the company is very good that why the company equity is high in respect to the

debt


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2. LIABILITY TO EQUITY:

Liability to Equity Ratio = All Liabilities Shareholders` Equitys

Where,

All liabilities = Total liabilities shareholders` equity


2009-10 2010-11 2009-10 2010-11

ALL LIABILITY 1299.29 1053.52 127375.95 125725.26

SHAREHOLDERS

EQUITY

7135.86 8123.79 117291.07 106558.49

In ratio 0.75 0.13 1.08 1.17

INTERPRETATION

GRASIM:

The liability to equity is getting decreased from .75 to .13 which implies that the liability isgetting decreased whereas equity is getting increased. The company is in position to pay of itsdebt.

RAYMONDS:

The ratio is getting decreased from 1.17 to 1.08 which shows that

3 . INTEREST COVERAGE RATIO:


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Measures the protection available to the creditors for payment of interest charges by thecompany. This shows whether the company has sufficient income to cover its interest payments.

Interest Coverage Ratio=Profit Before Interest and Tax Interest Expense


2009-10 2010-11 2010-11 2010-11

PBIT 2621.17 1640.79 - -

INTEREST

EXPENSE

120.39 45.59 - -

In times 21.77 35.99 - -

INTERPRETATIONS

GRASIM:

Interest Coverage ratio is implying adequate safety for payment of interest even if there were to

be a drop in the company`s earnings as the interest expense is getting decreased by 74.8 .as there

is increase from 21.77 times to 35.99 times it indicates that the organization is in a capacity to

pay the interest and the int. of the lenders is secured. Company is in a position to pay off its

interest expenses.

RAYMONDS:

No int. coverage ratio is found out as there was no int. expense.


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CAPITAL MARKET RATIO

1.PRICE EARNING RATIO:

Popular measure extensively used in investment analysis. It is considered as an indicator of afirm's growth prospects.

Price Earning Ratio=Average Stock Price Earning Per Share

Where,

Average Stock Price= {High + Low}Stock Price / 2


2009-10 2010-11 2009-10 2010-11

AVG

STOCK

PRICE

2817.45 2400.45 251.8 300.35

EPS 191.51 128.9 4.29 (17.08)

In Rs. 14.71 18.62 58.69 (17.58)

INTERPRETATION

GRASIM:

The increase in PER from 14.71 to 18.62 shows that the stock market is confident in thecompany`s future earning growth.

RAYMONDS:

There is decrease in the PER from 58.69 to (17.58) which implies that shareholders will have

lower faith in the company`s future earning growth.

COMPARISON:


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2.DIVIDEND YIELD:

Represents the current cash return to shareholders.

Dividend Yield=Dividend per share/Average Stock Price

Where,

Dividend Per Share=Proposed Dividend/No. Of Shares


2009-10 2010-11 2009-10 2010-11

DIVIDEND

PER SHARE

AVERAGE

STOCKPRICE

2817.45 2400.45 251.8 300.35

DIVIDEND

YIELD


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3.PRICE TO BOOK RATIO:

It compares a company`s stock price with the book value (accounting value).

Price to Book Ratio=Market Price Per Share/ Book Value Per Share

Where,

Market Price Per Share=Average Stock Price


2009-10 2010-11 2009-10 2010-11

MARKET

PRICE

2817.45 2400.45 251.8 300.35

BOOK

VALUE PER

SHARE

779 887 191.1 173.6

3.61 2.70 1.32 1.73

INTERPRETATION

GRASIM:

The market price is falling to 2400.45 as a result of which the dividend yield is also reducingfrom 3.61 to 2.70 which shows that the faith in company Stock price is falling.

RAYMONDS:

The market price is rising to 300.35 as a result of which the div. Yield is also increasing from1.32 to 1.73 .

COMPARISION:

Raymonds dividend yield is rising which shows that Raymonds is in a better financial positionthan Grasim industries.


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accounts assignment final.. (1)

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