Financial Statements Analysis: Cases from Corporate India

219 Pages·2013·2.15 MB·English

by  Sandeep Goel

Financial Statements Analysis
(cid:84)(cid:104)(cid:105)(cid:115)(cid:32)(cid:112)(cid:97)(cid:103)(cid:101)(cid:32)(cid:105)(cid:110)(cid:116)(cid:101)(cid:110)(cid:116)(cid:105)(cid:111)(cid:110)(cid:97)(cid:108)(cid:108)(cid:121)(cid:32)(cid:108)(cid:101)(cid:102)(cid:116)(cid:32)(cid:98)(cid:97)(cid:110)(cid:107)
Financial Statements Analysis
Cases from Corporate India
Sandeep Goel
LONDON NEW YORK NEW DELHI
First published 2014 in India
by Routledge
912 Tolstoy House, 15–17 Tolstoy Marg, Connaught Place, New Delhi 110 001
Simultaneously published in the UK
by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
Routledge is an imprint of the Taylor & Francis Group, an informa business
© 2014 Sandeep Goel
Typeset by
Solution Graphics
A–14, Indira Puri, Loni Road
Ghaziabad, Uttar Pradesh 201 102
All rights reserved. No part of this book may be reproduced or utilised in any
form or by any electronic, mechanical or other means, now known or hereafter
invented, including photocopying and recording, or in any information storage
and retrieval system without permission in writing from the publishers.
British Library Cataloguing-in-Publication Data
A catalogue record of this book is available from the British Library
ISBN 978-0-415-71094-7
Contents
List of Tables vii
List of Figures xi
List of Abbreviations xv
Preface xvii
Acknowledgements xix
Introduction: Business Organisations 1
Part I: ACCOUNTING ENVIRONMENT
1. Accounting: Nature and Scope 13
2. Financial Statements 20
3. Financial Ratios 29
Part II: CORPORATE CASES
4. Construction Sector: Hindustan Construction
Company vs Larsen & Toubro 35
5. Power Sector: NTPC Limited vs TATA Power 56
6. Steel Sector: TATA Steel vs Steel Authority of
India Limited 85
7. Automobile Sector: Maruti Suzuki India Limited
vs Hindustan Motors 103
8. Cement Sector: Associated Cement Company Limited
vs Cement Corporation of India Limited 114
9. Telecom Sector: Bharti Airtel Limited vs Idea Cellular 135
10. Banking Sector: State Bank of India vs ICICI Bank 150
11. BPO Sector: TCS e-Serve Ltd vs Triton Corporation Ltd 168
Notes 188
Select Bibliography 192
About the Author 196
Index 197
(cid:84)(cid:104)(cid:105)(cid:115)(cid:32)(cid:112)(cid:97)(cid:103)(cid:101)(cid:32)(cid:105)(cid:110)(cid:116)(cid:101)(cid:110)(cid:116)(cid:105)(cid:111)(cid:110)(cid:97)(cid:108)(cid:108)(cid:121)(cid:32)(cid:108)(cid:101)(cid:102)(cid:116)(cid:32)(cid:98)(cid:97)(cid:110)(cid:107)
List of Tables
Distinction between Private and Public Company 4
4.1 Profitability Analysis 38
4.2 Return on Investment (ROI) 39
4.3 Return on Equity (ROE/RONW) 39
4.4 Du-Pont Analysis of HCC 40
4.5 Du-Pont Analysis of L&T 41
4.6 Fixed Assets’ Utilisation 42
4.7 Debtors’ Management 44
4.8 Liquidity Trend 45
4.9 Cash Flow Analysis of HCC (INR in million) 47
4.10 Cash Flow Analysis of L&T (INR in million) 47
4.11 Earnings Per Share (EPS) 48
4.12 Price/Earnings Ratio 49
4.13 Price/Book Value 49
4.14 Dividend Yield (DY) 49
4.15 Gross Block Picture (INR in million) 50
5.1 Profitability Statement — NTPC Limited 58
5.2 Profitability Statement — TATA Power 59
5.3 Position Statement — NTPC Limited 62
5.4 Position Statement — TATA Power 63
5.5 Cash Position of NTPC 63
5.6 Cash Position of TATA Power 64
5.7 Cash Flow Indicators of NTPC 64
5.8 Cash Flow Indicators of TATA Power 65
5.9 Profitability Ratios — NTPC 66
5.10 Profitability Ratios — TATA Power 67
5.11 Liquidity, Efficiency and Solvency Ratios — NTPC 70
5.12 Liquidity, Efficiency and Solvency Ratios — TATA Power 70
5.13 Valuation Ratios — NTPC 74
5.14 Valuation Ratios — TATA Power 75
6.1 Profitability Ratios of TATA Steel 88
6.2 Profitability Ratios of SAIL 90
viii  List of Tables
6.3 EPS, DPS and D/P Ratio of TATA Steel 92
6.4 EPS, DPS and D/P Ratio of SAIL 93
6.5 Turnover Ratios of TATA Steel 94
6.6 Turnover Ratios of SAIL 95
6.7 Liquidity Ratios of TATA Steel 95
6.8 Liquidity Ratios of SAIL 96
6.9 Debt–Equity Ratio of TATA Steel and SAIL 97
6.10 Interest Coverage Ratio of TATA Steel and SAIL 98
6.11 Valuation Ratios of TATA Steel 99
6.12 Valuation Ratios of SAIL 100
6.13 Price-Earnings Ratio of TATA Steel and SAIL 100
6.14 Dividend-yield Ratio of TATA Steel and SAIL 101
7.1 Current Ratio of Maruti and Hindustan Motors 104
7.2 Quick Ratio of Maruti and Hindustan Motors 105
7.3 Inventory Turnover Ratio of Maruti and
Hindustan Motors 106
7.4 Debtors’ Turnover Ratio of Maruti and
Hindustan Motors 107
7.5 Debt–Equity Ratio of Maruti and Hindustan Motors 108
7.6 Interest Coverage Ratio of Maruti and
Hindustan Motors 109
7.7 ROCE of Maruti and Hindustan Motors (%) 110
7.8 Earnings per Share of Maruti and Hindustan Motors 111
7.9 Dividend per Share of Maruti and Hindustan Motors 112
8.1 Profitability Variants of ACC and CCIL 115
8.2 Turnover/Operating Efficiency Ratios of ACC
and CCIL 120
8.3 Liquidity Ratios of ACC and CCIL 125
8.4 Solvency Ratios of ACC and CCIL 126
8.5 Cash Flow Position of ACC and CCIL (INR in million) 128
9.1 Gross Profit Ratio of Airtel and Idea (%) 136
9.2 Cash Operating Profit Ratio of Airtel and Idea (%) 137
9.3 EBIT margin of Airtel and Idea (%) 137
9.4 Net Profit Ratio of Airtel and Idea (%) 138
9.5 ROI of Airtel and Idea (%) 139
9.6 ROE of Airtel and Idea (%) 139
9.7 Debtors’ Turnover Ratio of Airtel and Idea 140
9.8 Current Ratio of Airtel and Idea 141
List of Tables  ix
9.9 Quick Ratio of Airtel and Idea 142
9.10 Debt–Equity Ratio of Airtel and Idea 143
9.11 Interest Coverage Ratio of Airtel and Idea 143
10.1 Profitability Ratios of SBI 152
10.2 Profitability Ratios of ICICI Bank 153
10.3 Comparative Picture of ROA of SBI and
ICICI Bank (%) 159
10.4 Advances Position of SBI and ICICI Bank
(INR in million) 160
10.5 Investment Picture of SBI and ICICI Bank
(INR in million) 161
10.6 Deposits of SBI and ICICI Bank (INR in million) 161
10.7 Reserves of SBI and ICICI Bank (INR in million) 162
10.8 Borrowings of SBI and ICICI Bank (INR in million) 163
10.9 Cash flow Position of SBI (INR in million) 164
10.10 Cash flow Position of ICICI Bank (INR in million) 164
10.11 Comparative Analysis of CFO and Net Profit of SBI
(INR in million) 165
10.12 Comparative Analysis of CFO and Net Profit of
ICICI Bank (INR in million) 166
11.1 TCS e-Serve EBT (INR in million) 171
11.2 Triton EBT (INR in million) 172
11.3 ROI of TCS e-Serve and Triton 172
11.4 ROE of TCS e-Serve and Triton 173
11.5 Fixed Assets Turnover Ratio of TCS e-Serve
and Triton 174
11.6 Total Assets Turnover Ratio of TCS e-Serve and Triton 175
11.7 Working Capital Turnover Ratio of TCS e-Serve
and Triton 175
11.8 Debtors’ Turnover Ratio of TCS e-Serve and Triton 176
11.9 Current Ratio of TCS e-Serve and Triton 177
11.10 Super Quick Ratio of TCS e-Serve and Triton 178
11.11 Debt to Equity Ratio of TCS e-Serve and Triton 179
11.12 Interest Coverage Ratio of TCS e-Serve and Triton 179
11.13 Du-Pont Analysis of TCS e-Serve 180
11.14 Du-Pont Analysis of Triton 181