vishal retail pvt
TRANSCRIPT
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ANKIT JAIN SHYAM (10PG449)ROHIT PANDEY (10PG467)
KANIKA MEHTA (10PG450)SHINJINI BHATTACHARJEE (10PG474)
SANDEEP REDDY C (10PG470)
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Vishal Retail pvt. Ltd.
The company needs loan of Rs.150crs. to infuse additional
working capital, for which it has approached a bank. The bank
has to decide whether to give the loan or not. The bank beforeproviding loan has to look for some key financial ratios so as
to find out the creditably of the company. In this presentation
we will derive and analyse the key financial ratios which will
help in deciding whether to sanction the loan or not.
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Debt Equity Ratio
0.93
1.27
0.850.71 0.75
1.49
1.94
2.86
0
0.5
1
1.5
2
2.5
3
3.5
2002 2003 2004 2005 2006 2007 2008 2009
Vishal Retail
Industry Benchmark
It indicates what proportion of equity and debt the company is using to finance its assets. It isa measure of a company's financial leverage calculated by dividing its total
liabilities by stockholders' equity
Debt Equity Ratio = Total debt/ Shareholders Capital
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Long - term Debt Equity Ratio
0.93
1.27
0.85
0.71
0.3
0.54
0.98
1.44
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
2002 2003 2004 2005 2006 2007 2008 2009
Vishal Retail
Industry Benchmark
The ratio is calculated by taking the company's long- term debt and dividing it by the total
value of its shareholder capital.
Long Term Debt Equity Ratio = Long Term Debt /Shareholders Capital
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Current Ratio
1.38
1.71.79
2.7
1.84
1.551.74
1.59
0
0.5
1
1.5
2
2.5
3
2002 2003 2004 2005 2006 2007 2008 2009
Vishal Retail
Industry Benchmark
The ratio is mainly used to give an idea of the company's ability to pay back its short-term
liabilities (debt and payables) with its short-term assets (cash, inventory, receivables). Thehigher the current ratio, the more capable the company is of paying its obligations.
Current Ratio =Total Current Assets / Total Current Liabilities
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Interest Cover Ratio
6.6
3.48
7.33
6.1
7.05
3.5
2.62
-0.43
-1
0
1
2
3
4
5
6
7
8
2002 2003 2004 2005 2006 2007 2008 2009
Vishal Retail
Industry Benchmark
This ratio used to determine how easily a company can pay interest on outstanding debt. The
interest coverage ratio is calculated by dividing a company's earnings before interest and taxes(EBIT) of one period by the company's interest expenses of the same period.
Interest Cover Ratio = EBIT/Interest Expense
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Turnover Ratios
Debtors RatioIt indicates the velocity of debt collection of a firm. In simple words it indicates the numberof times average debtors are turned over during a year.
Debtors Turnover Ratio = Net Credit Sales / Average Trade Debtors
0 0 0 0
6409.785739.52
16755.17
977.560
2000
40006000
8000
10000
12000
1400016000
18000
Vishal Retail
IndustryBenchmark
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Inventory Ratio
2.08
5.09 5.32 5.07 4.99
3.68
2.492.28
0
1
2
3
4
5
6
7
2002 2003 2004 2005 2006 2007 2008 2009
Vishal Retail
Industry Benchmark
This ratio is compared against industry averages. A low turnover implies poor sales
and, therefore, excess inventory. A high ratio implies either strong sales or ineffective buying.
Inventory Turnover Ratio= Sales/ Average Inventory
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Fixed Assets Turnover Ratio
6.1
11.98
9.61
8.06 8.24
6.74
5.09 4.39
0
2
4
6
8
10
12
14
2002 2003 2004 2005 2006 2007 2008 2009
Vishal Retail
Industry Benchmark
The fixed-asset turnover ratio measures a company's ability to generate net sales from fixed-
asset investments. A higher fixed-asset turnover ratio shows that the company has beenmore effective in using the investment in fixed assets to generate revenues.
Fixed-Asset Turnover Ratio: Net Sale/ TotalFixed Assets
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Creditors velocity and Cash flows
0 13 13 13 13 13 1218
0 -2.48 -4.64 -1.01-28.41
-105.89
-196.72
-65.87
0 -3.7 -7.4 -10.69-25.91
-95.81-114.58-108.27
0 7.88 11.5 11.86
60.38
203.59
356.24
133.35
-300
-200
-100
0
100
200
300
400
2002 2003 2004 2005 2006 2007 2008 2009
Crs velocity Ratio
Cash from Opr Activities
Cash Flow from Inv
activities
Cash flow from Financing
Activities
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ROCE
7.05
12.81
8.92
16.11
24.0222.17
17.45
00
5
10
15
20
25
30
2002 2003 2004 2005 2006 2007 2008 2009
Vishal Retail
Industry Benchmark
A ratio that indicates the efficiency and profitability of a company's capital investments.
ROCE should always be higher than the rate at which the company borrows, otherwise anyincrease in borrowing will reduce shareholders' earnings.
ROCE = EBIT/(Total Assets Current Liabilities)
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RONW
10.66
3.87 4.07
13.89
25.44 25.86
20.43
0
-5
0
5
10
15
20
25
30
2002 2003 2004 2005 2006 2007 2008 2009
Vishal Retail
Industry Benchmark
ratio of net income after taxes to total end of the year net worth . This ratioindicates the return on stockholder's total equity.
RONW = PAT/Shareholders Fund
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EPS = PROFIT AFTER TAX / NUMBER OF EQUITY SHARES
1.192 1.1752.037 2.038
7.513
13.679
18.14
00
5
10
15
20
2002 2003 2004 2005 2006 2007 2008 2009
EPS
EPS
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Rate of Growth
0
125 140.26 129.8 121.3588.94 113.92
-34.840
254.33
76.34 66.0797.14 108.93
66.8138.570
327.08
46.83
195.68 204.04160.05
84.41
-94.75
111.54
-30.1
694.74
310.26
102.2662.17
-332.48
253.66
27.59
221.08 198.82127.32
69.12
-166.94
-400
-200
0
200
400
600
800
2002 2003 2004 2005 2006 2007 2008 2009
Net worth
Net Sales
PBIDT (%)
PAT (%)
CP (%)
It is year-over-year change, expressed as a percentage.
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We see a huge growth potential in the sector andnot only in
this sector but also in thecompany. Though thecompany
has not come upto theexpectations in the last year , it was
still able to maintain its debtors turnover ratio as well as the
current ratio.Looking at the long term analysis of thecompany, decline in
the profits in the year 2009 alonecannot be the only
determinant in thedecision making as to provide the loan or
not.
What a reasonably banker woulddo is - would go ahead with
the proposal of sanctioning the loan of Vishal Retail Pvt Ltdto theextent of 150 crores, seeing the growth potential in
the sector and thecompany.
But what a conservative banker woulddo is refrain from
providing the loan to Vishal Retail Pvt Ltd.
CONCLUSION
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BSE NSE
62.00
(5.60)
62.00
(5.65)
Previous 56.40 56.35
52 W High 86.00 86.40
52 W Low 48.00 47.20
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