A Summer Training Project Report on

Ratio Analysis Made Simpler

In partial fulfillment for the award of the degree Of
Masters of Business Administration of

IIMT College of Engineering, Greater Noida

Submitted To

UTTAR PRADESH TECHNICAL UNIVERSITY,

LUCKNOW
Batch: 2013-2015

SUBMITTED TO

SUBMITTED BY

MR. RISHI RAJ

RAVI KUMAR

Roll No. 1321670032

ACKNOLEDGEMENT
I would like to express my special thanks of gratitude to my project guide prof. Rishi Raj,
who gave me the golden opportunity to do this wonderful project on the topic RATIO
ANALYSIS MADE SIMPLER which also helped me in doing a lot of Research and i came
to know about so many new thingsI am really thankful to them.
It was really worthwhile to receive help from Mr. Abhishek Das Branch Head of Reliance
Securities Limited, who in person was always present to help us out anytime we felt his
need. Without his Constant support this project would not have been acknowledged as it is
now.
Finally, i would also like to thank my parents and friends who helped me a lot in finishing this
project within the limited time.
I am making this project not only for marks but to also increase my knowledge.
THANKS AGAIN TO ALL WHO HELPED ME.

Ravi Kumar
MBA
Roll No:- 1321670032

PREFACE
Summer training is an integral part of our academic curriculum. During the
training students gets an opportunity to understand the practical aspect of theory.
Training makes the concept clear. This report is the outcome of the summer
training that we have undergone at for the partial fulfillment of Reliance
Securities Ltd. MBA course.
The topic allotted to us by the company Ratio Analysis Made Simpler. The
project is concerned with Demat account and My gold plan, there are the more
specific criticisms that it is over-quantitative and neglects the qualitative aspects
of contribution. The issue has become not how many people should be
employed, but ensuring that all members of staff are making an effective
contribution. And for the future, the questions are what are the skills that will be
required, and how will they be acquired. Preparation of project requires proper
guidance and direction.

COMPANY PROFILE
Reliance Life Insurance

Reliance Life Insurance Company Limited (RLIC) is amongst the leading private
sector life insurers with a private sector market share of 7% in terms of new
business premium. RLIC has a strong distribution network of over 900 offices
across India.
RLIC offers wide range of innovative life insurance products, targeted at
individuals and groups. It offers need based products that caters to three distinct
segments namely protection, retirement and investment plans. RLIC is
committed to emerge as a leading Life Insurer with global scale and standards.

Reliance Securities
Reliance Securities, the broking arm of Reliance Capital is the one of the
Indias leading retail broking houses in India, providing customers with
access to equities, equity options and commodities futures, wealth
management, wealth management services, mutual funds, IPOs and
investment banking.
Reliance Securities has over 7 lac retail broking accounts through its pan
India presence with over 7,000 outlets.

Reliance Money
The third party distribution business of Reliance Capital, branded as
Reliance Money is a comprehensive financial services and solutions
provider, providing customers with access to life and general Insurance
products, money transfer, currency exchange and loans.
To know more about Reliance Securities & Reliance Money click
here: http://www.reliancemoney.com

Reliance General Insurance

Reliance General Insurance (RGI) offers a range of products for the corporate
and individual customers. RGI currently offers insurance products including
Health, Home, Motor, Travel, Fire, Engineering, Marine, Liability and Aviation.
RGI is amongst the leading general insurance companies in India, with a private
sector market share of 7.5%. RGI had a distribution network composed of 127
branches and over 15,500 intermediaries at the end of March 2014.
To know more about Reliance General Insurance click
6

here: http://www.reliancegeneral.co.in

Reliance General Insurance

Reliance General Insurance (RGI) offers a range of products for the corporate
and individual customers. RGI currently offers insurance products including
Health, Home, Motor, Travel, Fire, Engineering, Marine, Liability and
Aviation.
RGI is amongst the leading general insurance companies in India, with a
private sector market share of 7.5%. RGI had a distribution network
composed of 127 branches and over 15,500 intermediaries at the end of
March 2014.
To know more about Reliance General Insurance click
here: http://www.reliancegeneral.co.in

International Businesses
Reliance Capital Limited intends to be a well-respected global player in the
international financial services sector.
Singapore
Reliance Asset Management (Singapore) Pte. Ltd. (RAMS) is a private limited
company with limited liability and is regulated by the Monetary Authority of Singapore
(MAS). RAMS holds a Capital Markets Services (CMS) license issued by MAS, for
carrying out fund management activities under the Securities and Futures Act (SFA).
It was set up as an offshore fund platform of Reliance Capital Asset Management
Limited in 2006 for managing/advising mandates from global institutional and
accredited investors. The core activity of RAMS is asset management focusing on
India equities, alternative & fixed income instruments. RAMS has in-house
capabilities to structure and manage customized mandates and new product
offerings to meet specific client requirements. RAMS is also a registered Foreign
7

Institutional Investors (FII) with Securities & Exchange Board of India.

National Pension System

Reliance Capital Limited was appointed as one of the Points of Presence (POP) for
distribution of Government of Indias Pension Plan under the New Pension System (NPS).
The pension plan is open to all the citizens of India. Interested citizens can open their
account in any of the designated Reliance Capital branches spread across the country.
Electronic Clearing Service (ECS) Auto Debit Mandate Form
Banks list for ECS
Branch List
New Offer document
New composite application form of NPS
New Contribution Instruction Slip
Subscriber change request form
Scheme Preference Change form
Withdrawal request from Tier II

About Reliance Capital limited

RELIANCE CAPITAL

Type

Public company

Traded as

BSE: 500111
NSE: RELCAPITAL

Industry

Financial services

Founded

1986

Founder(s)

DhirubhaiAmbani

Headquarters Mumbai, India

Key people

Anil Ambani
(Chairman)

Products

Asset Management, insurance, broking and distribution,

commercial finance, other Businesses

Revenue

75.44 billion (US$1.3 billion) (2014)

Profit

7.47 billion (US$120 million) (2014)

Employees

18,500 (2014)

Parent

Reliance Anil DhirubhaiAmbani Group

10

Subsidiaries

Reliance Life Insurance,Reliance General Insurance,

Reliance Capital Asset Management Limited, Reliance
Money and Reliance Consumer Finance.

Website

www.reliancecapital.co.in

Reliance Capital Limited (BSE: 500111, NSE: RELCAPITAL) is an

Indian diversified financial services holding company promoted by
Reliance Group.

It is one of the largest financial services companies in India by market

capitalization. Reliance Capital also ranks among the top private sector
financial services and banking groups, in terms of net worth in India. The
company is a constituent of MSCI India and CNX Junior Nifty. As of July
2014, Reliance Capitals market capitalization was over 160
billion (US$2.7 billion), ahead of BajajHoldings, L&T Finance promoted
by Larsen & Toubro and Muthoot Finance. As on March 31, 2013,

11

Reliance Capital had assets worth 455.28 billion (US$7.6 billion), a 16fold increase in 8 years and net worth of 124.83 billion (US$2.1 billion).

Reliance Capital has interests in asset management and mutual

funds; life
insurance and general
insurance; commercial
finance;stock broking; wealth management services; distribution of
financial products; private equity; asset reconstruction; proprietary
investments and other activities in financial services. The company
operates across India and has over 20 million customers and workforce
of approximately 18,500 as of March 31, 2014.
Anil Ambani, promoter of Reliance Group is the Chairman of Reliance
Capital, while Amitabh Jhunjhunwala is the Vice-Chairman and
Sam Ghosh is the Chief Executive Officer.

12

13

History of Anil Ambani

Anil Ambani

Mr Anil Ambani during Reliance Group AGM at Mumbai, 2012

Born

4 June 1959 (age 55)

Mumbai, Maharashtra, India

Residence

Mumbai, Maharashtra, India

Nationality

Indian

Alma mater

University of Mumbai
Wharton School of the University of Pennsylvania

Occupation
Net worth
Spouse(s)

Chairman of Anil DhirubhaiAmbani Group

$ 5 billion (2014)[1]
Tina Ambani

14

Children

Jai AnmolAmbani
Jai AnshulAmbani

Parents

DhirubhaiAmbani
KokilabenAmbani

Relatives

MukeshAmbani (Brother)

Anil DhirubhaiAmbani (Gujarati: () ), born

on 4 June 1959, is an Indian business magnate, investor, and
philanthropist. He is the Chairman of Reliance Group (also refereed to
Reliance ADA Group) which came into existence in June 2005 following a
demerger from Reliance Industries Limited. He leads a large number of
listed corporations including Reliance Capital, Reliance Infra, Reliance
Power and Reliance Communications Ambanisnetworth is $5.9 billion
according to the Forbes billionaire list for 2014.
In India he is one of the largest producers of Bollywood film industry. His
major interest in Entertainment include 44 FM radio stations, nationwide
DTH business, Animation Studios, and several multiplex cinemas
throughout India. He is married to former Bollywood actress, Tina
Munim and has two sons Anmol and Anshul.

15

Career
Anil Ambani joined Reliance Industries, the company founded by his father
DhirubhaiAmbani, in 1983 as Co-Chief Executive Officer and is credited with
having pioneered many financial innovations in the Indian capital markets. He led
India's first foray into overseas capital markets with international public offerings of
global depository receipts, convertibles and bonds. He directed Reliance in its
efforts to raise, since 1991, around US$2 billion from overseas financial markets;
with a 100-year Yankee bond issue in January 1997 being the high point, after
which people regarded him as a financial wizard. He along with his brother,
MukeshAmbani, steeredReliance Industries to its current status as India's leading
textiles, petroleum and petrochemicals company.
After the death of his father in 2005, Anil Ambani took over the reigns of Reliance
Group with interests in Telecom, Entertainment, Financial Services, Power and
Infrastructure. In 2008, Ambani is also credited with India's largest IPO of
Reliance Power which was subscribed in less than 60 second on offer, fastest in
the history of Indian capital markets till date.
Ambani made his debut into the entertainment industry with the takeover
of Adlabs, the movie production-to-distribution-to-multiplex company that owns
India's only domes theatre. Thereafter he expanded his footprint in the industry to
now become the largest producer of Bollywood films.

16

A joint venture worth US$ 825 million with Steven Spielberg catapulted Ambani's
entertainment business to global platform. Along with Steven Spielberg and Stacy
Sneider he has produced a number of films including the Oscar winning Lincoln.

Awards and recognition

Conferred the 'Businessman of the Year 1997' award by India's leading

business magazine Business India, December 1997.[citation needed]

Voted the Businessman of the Year in a poll conducted by The Times of

India TNS, December 2006.

Voted the Best role model among business leaders in the biannual Mood
of the Nation poll conducted by India Today magazine, August 2006.

Conferred the CEO of the Year 2004 in the Platts Global Energy Awards.

Conferred 'The Entrepreneur of the Decade Award' by the Bombay

Management Association, October 2002.

Awarded the First Wharton Indian Alumni Award by the Wharton India
Economic Forum (WIEF) in recognition of his contribution to the establishment
of Reliance as a global leader in many of its business areas, December 2001.

Selected by Asiaweek magazine for its list of 'Leaders of the Millennium in

Business and Finance' and was introduced as the only 'new hero' in Business
and Finance from India, June 1999.

17

Reliance Capital Limited

History of Reliance capital limited

1986
- The Company was incorporated on 5th March, and obtained the
Certificate for Commencement of Business on 27th March. It was
promoted by Reliance Industries Ltd.
1990
- The Company obtained permission from SEBI to take up merchant
banking activities. The Company undertook portfolio management
services
for
reputed
corporate
clients.
- 7,000 No. of equity shares subscribed for by signatories to the
Memorandum of Association.
1991
- 199,93,000 No. of equity shares of Rs 10 each then issued at a par of
which 9,93,000 shares were allotted to Indian Resident Directors, their
friends, etc. 18,00,000 shares were allotted to Reliance Industries Ltd.
18

18,00,000 shares were allotted to investment companies in RIL Group.

The remaining 154,00,000 shares were offered for public subscription
during April 1990, of which 10,00,000 shares were allotted on preferential
basis to employees (including Indian working directors)/workers of the
Company. 77,00,000 shares were allotted on preferential basis to
shareholders of Reliance Industries, Ltd. The balance 67,00,000 shares
were allotted to public.
1992
- 18,70,000 No. of equity shares allotted to Arsina hotels on its
amalgamation in January. 218,70,000 Rights equity shares (Prop. 1:1,
Prem. Rs 30 per share) issued. Another 9600 shares issued to
employees (only 7500 shares taken up).
1993
- The Company issued 125,00,000-12% non-convertible unsecured
redeemable debentures of Rs 100 each with one non-detachable warrant
entitling the holder to apply for 2 equity shares of Rs 10 each at a
premium
ofRs 40 per shares. Accordingly 250,00,000 shares were allotted on
conversion of warrants.
1994
- Pursuant to a resolution at the Extra Ordinary General Meeting held at
12th February, the Company issued 137,00,000-12% non-convertible
redeemable debentures of Rs 100 each to promoters having one warrant
entitling the holder to receive 2 equity shares to Rs 10 each at a premium
of Rs 40 per share within 12 months from the date of allotment.
Accordingly 274,00,000 No. of equity shares were allotted.

19

1995
- The Company issued 142,29,500 Rights equity shares of Rs 10 each at
a premium of Rs 40 per share in proportion 1:5. Another 429,57,200
shares at a premium of Rs 130 per share were issued through a
Prospectus as follows: On firm allotment basis:
(1) 107,14,300 shares to promoters, directors, etc., (ii) 52,26,342 shares
to Ind. Fin. Association (iii) 17,70,000 shares to Indian Mutual Funds. (iv)
78,600
shares
to
NRIs.
- Of the remaining, following were reserved for allotment on a preferential
basis: (i) 12,02,158 shares to Ind. Fin. Institutes (ii) 46,58,500 shares to
Mutual Funds (iii) 76,35,600 shares to NRIs on non-repatriation basis (iv)
15,000
shares
to
employees.
- The Company plans to diversify its activities into money market
operations, project finance advisory services, foreign exchange and
every
sphere
of
financial
services.
- 65,690 shares allotted.
1996
- The company had been allotted a plot by the Mumbai Metropolitan
Region Development Authority (BMRDA) in the BandraKurla Complex,
Mumbai.
- During the year under review, the company sponsored the launch of the
two maiden schemes of the Reliance Capital Mutual Fund.
- Reliance Share & Stock Brokers Ltd. (RSSB), the company's 100%
subsidiary engaged in the broking business, also made satisfactory
progress
during
the
year
under
review.

20

- The Company's Fixed Deposit programme was accorded CARE "AAA"

by Credit Analysis and Research Limited during the year.
1997
- Reliance Capital (RCL) has shelved its plans to enter into auto finance
business because of a sluggish trend in the auto finance segment.
- The Company has received an AAA rating from Credit Analysis and
Research Ltd., for the proposed non-convertible debenture issue
incidentally, its fixed deposit programme was also rated AAA.
- The company sought a fresh rating raising the amount of the proposed
issuer

to

Rs.

300

crore.

- The Company has also become the first non-banking financial company
to receive approval to act as a depository participant.
- The company has been granted approval by the Securities and
Exchange Board of India(SEBI) to act as an `Approved Intermediary'
under the provisions of SEBI's Securities Lending Scheme, 1997.
- The Company has appointed Spectrum Corporate Services Limited, as
its Share Transfer Agents with effect from March 5, 1997.
1998
- The Company's bond/debenture programme is rated by Credit Analysis
& Research Limited as CARE "AA +", indicating that the instruments
carrying this rating are judged to be of high quality by all standards, and
as
high
investment
grade.
- During the year, the Company suspended acceptance/renewal of fixed
deposits. At the end of the financial year, there were 705 deposits
21

aggregating Rs. 0.84 crores due for repayment but which remained
unclaimed on the due dates.
1999
- Reliance Capital (RCL) has decided to move away from the traditional
non-banking finance company (NBFC) mould and convert itself into a
special purpose vehicle-cum-venture capital outfit, which will develop
infrastructure projects and invest in infotech, the Internet, media and biotech start-ups.
2002
- Reliance Capital Ltd has annulled the forfeiture of 2200 equity shares
which were earlier forfeited by the Company due to non-payment of
allotment monies. Hence members should note that the above mentioned
annulled shares will be good delivery in the market.
2003
-Reliance Capital has forfeited 12,61,455 Equity shares due to nonpayment
of
allotment
or
call
money.
-Reliance capital, a NBFC of Reliance group is financing Reliance
Indiamobile
connections.
-Securities and Exchange Board of India has exempted Reliance Capital
Ltd from making an open offer to the shareholders of BSES following its
proposed acquisition of stake in the power generation company.
- Shifted the Company's registered office from Avdesh House, 2nd Floor,
Pritam Nagar 1st Slope, Ellisbridge, Ahmedabad 380006 in the State of
Gujarat to Village Meghpar/Padana, TalukaLalpur, Dist. Jamnagar
361280, in the State of Gujarat.

22

2004
--Reliance Capital Limited acquires 11,24,209 shares representing 5.23%
of the total shareholding/voting rights of Adlabs Films Limited through
open market.
-The Acquirer is making an Open Offer to the public shareholders of
Reliance Capital Ltd ("Target Company") to acquire upto 5,14,61,249 fully
paid up equity shares, representing 20% of the fully expanded voting
equity capital of the Target Company (including the entire share allotment
as well as warrants) at a price of Rs 231 (Rupees Two hundred and thirty
one only) for each Share of the Target Company ("Offer price") to be paid
in cash in accordance with the Regulations.
2005
-Reliance

Capital

Forays

into

Life

Insurance

-Reliance Capital - Acquisition of AMP Sanmar Life Insurance

-Reliance Cap to acquire 14.96 per cent stake in Spanco.
2006
-Reliance

Capital

join

hands

with

TV

18

to

fund

Yatra

-Reliance Capital Limited - Acquisition of Shares by AAA Enterprises

-Reliance Capital to acquire 100% of Travelmate Services.
2007
-Reliance

Money

joins

hand

with

TV

18

unit

-Reliance Cap establishes subsidiary in Singapore.

23

2008
- Reliance Capital Ltd has informed that ShriAnand Bhatt and Shri P. N.
Ghatalia have been appointed as Independent Directors on the Board of
the
Company
with
effect
from
September
15,
2008.
-Reliance

Money

joins

hands

with

DBS

Vickers

-Reliance Money has bought 15 per cent stake in the yet-to-be launched
Hong Kong Mercantile Exchange for an undisclosed amount.
- Reliance Money launched overseas Travel Currency Card, ties up with
Citibank.
-

Reliance

Money

adjudged

Best

Equity

Broking

House.

2009
- Reliance Money, part of the Reliance Anil DhirubhaiAmbani Group, on
Monday launched the multi currency card 'Reliance Money Travel
Currency
Card'
in
association
with
Citibank.
- Reliance Capital Ltd has appointed Dr. BidhubhusanSamal as an
Independent
Director
on
the
Board
of
the
Company.
- Reliance Money ties-up with Kuoni India for retailing FOREX products.
-

Reliance

Mutual

Fund

bags

Lipper

Award

in

Gulf

Region

- Reliance Mutual Fund launches Reliance Infrastructure Fund.

2010
- Reliance Capital Limited has informed that Shri V. N. Kaul, former
Comptroller and Auditor General of India (2002-2008), has been
24

appointed as an Independent Director on the Board of the Company.

- Reliance Money launched new gold coins with India Post logo
-

Reliance

Money

sold

300

kg

of

gold

coins

- Reliance Life Insurnace assets cross Rs. 15,000 crore

2011
- Reliance Money ties up with Muthoot Mini for money transfer biz, May
19,2010.
- Reliance Commercial Finance launches loan against Gold Units.
-

Reliance

Capital

Reliance

signs

deal

launched

with

Nippon

Gold

Life

stakes

Savings

26%
Fund.

2012
- Reliance Power partnered with Chinas Ming Yang for green energy.
- Reliance Life Insurance wins D L Shah National Award from Quality
Council
of
India
- In the backdrop of rising speculation that RBI and government is mulling
to grant new bank licences, Reliance Capital, the financial services arm
of Anil Ambani-led Reliance Group, said it is ready to enter into the
banking
sector.
- Reliance Capital arm launched daily gold accumulation plan.

25

- Nippon Life Insurance signed Final Agreements to Acquire 26 Per Cent

Stake in Reliance Capital Asset Management.

INTRODUCTION
Ratio Analysis
Ratio-analysis is a concept or technique which is
as old as accounting concept. Financial analysis is
a scientific tool. It has assumed important role
as a tool for appraising the real worth of an
enterprise, its performance during a period of
time and its pit falls. Financial analysis is a vital
apparatus for the interpretation of financial
statements. It also helps to find out any crosssectional and time series linkages between
various ratios.
26

Ratio-analysis means the process of computing,

determining and presenting the relationship of
related items and groups of items of the financial
statements. They provide in a summarized and
concise form of fairly good idea about the
financial position of a unit. They are important
tools for financial analysis.

WHY FINANCIAL ANALYSIS

Lenders need
following

it

for

carrying

out

the

Technical Appraisal
Commercial Appraisal
Financial Appraisal
Economic Appraisal
Management Appraisal
27

Uses of Ratio Analysis

Ratio analysis is a technique of analyzing the financial
statements by calculating ratios. Here is the list of uses
of ratio analysis
1. It is useful for inter firm comparison which implies
that company compares its performance with that of its
industry peers.

28

2. It is useful in intra firm comparison which means

that company will compare the performance of various
departments of the company so as to judge the best
department within the company.
3. It is useful in simplifying the accounting figures to
make them understandable to a layman, because it is
easier to understand ratios then plain figures.
4. It is also useful in forecasting and planning for the
future, also it helps in control by comparing the actual
performance with that of forecasted performance and
looking for reason for it.
5. It is also used for analysis of financial statements by
various interested parties like bankers, creditors,
supplier etc. for taking future decision about the
company.

29

ADVANTAGES OF RATIO ANALYSIS

Ratio analysis is very useful tool of management accounting.
With this, we can analyze business's financial position. We also
check company's short term and long term solvency with ratio
analysis. Following are the main advantages of ratio analysis.
1.

Helpful

in

Decision

Making

All our financial statements are made for providing information.

But this information is not helpful for decision making because
financial statements provide only raw information. When we
calculate different ratios in ratio analysis, at that time, we get
useful information. I can explain it with simple example.
Suppose, we calculate our interest coverage ratio which is
10times but our competitor company's interest coverage ratio is
15 times. It means capacity of the profit of our competitor
company is more than us. By seeing this, we can take decisions
for
increasing
our
profitability.
2.

Helpful

in

Financial

Forecasting

and

Planning

Every year we calculate lots of accounting ratios. When we

make trend of all these ratios, we can get useful information for
our future forecasting and planning. For example, we can tell
five
year
collection
period
with
following
way
2007
2008

=
=

90
70

days
days
30

2009
2010
2011

=
=
=

60
50
30

days
days
days

From this trend, we know that we are decreasing the days for
collection money from our debtors. With this information, we
can make two plans. One is effective use of money which we
are getting from our debtors more fastly and second we can
also check the behavior of our debtors by comparing this with
sales trend. Like this, there are lots of ratios which are also
useful
for
better
planning.
3.

Helpful

in

Communication

Ratio analysis are more important from communication point of

view. Suppose, we have to appoint new sales agents for our
company. At that time, we can communicate them by using our
company's sales and profit related ratios. There is no need of
hi-tech for understanding the meaning of any specific ratio. For
example, our gross profit in 2010 is 26.6% and in 2011, it is
28.55%. By just telling this ratio, we can understand whether
our
company
is
growing
or
falling.
4.

Helpful

in

Co-ordination

No company has all the strength points. Company's financial

results shows some strength points and some weak points.
Ratio analysis can create co-ordination between strength points
and
weak
points.

31

5.

Helps

in

Control

Ratio analysis can also use for controlling our business. We can
easily create the standard of each financial item of our balance
sheet and profit and loss account. On this basis, we can also
calculate standard ratios. By comparing standard ratios with
actual accounting ratios, we can find variance. These variance
may be favorable and unfavorable. On this basis, we can control
our
business
from
financial
point
of
view.
6.

Helpful

for

Shareholder's

decisions

For example, I am a shareholder. I want to invest in any

company's shares. Before buying any company's shares, I will
be interested to know company's long term solvency. So, I have
to calculate long term solvency ratios. In which, I have to
calculate fixed assets to net worth ratio, fixed assets to long
term debt ratio. On this basis, I can know the level of fixed
assets and its main resource. After checking my money's
security, I will be interested to know my return on this
investment. ROI, EPS and DPS are most useful ratios which I
can
calculate
for
knowing
this.
7.

Helpful

for

Creditors'

decisions

Creditors are those persons who provide goods on credit to

company or provides short period loan to company. All the
creditors are interested to know whether company will repay
their debt or not. For this, they calculate current ratio and quick
liquid ratio and average payment period. On this basis, they
32

take

8.

decisions.

Helpful

for

employees'

decisions

Every employee wants to increase his salary. He also wants to

get more and more incentives from company. For this, he takes
help from company's profitability ratios. Profitability ratios will
be helpful for employees to pressure on the company for
increasing
their
salary.
9.

Helpful

for

Govt.

decisions

Different companies analyze their accounting ratios and publish

on the net and print newspapers. Govt. collects all these
information. On this basis, Govt. makes policies. If ratios will
wrong, Govt. policies will become wrong. For example, Govt.
collects income data of all companies in different industries for
calculation the national income.

33

LIMITATIONS OF FINANCIAL ANALYSIS

Ratio analysis is used by almost all the accounts managers
for strategic planning and decision making. It also very helpful
tool to know the effect of each item of financial statements by
creating relationship with other items. There is big list of
benefits of ratio analysis but it has also some limitations. So,
account managers and other parties who use ratio and its
analysis should remember these limitations when they take any
decision.
Following are main drawbacks or limitations of ratio
analysis:
1.

Limited

Use

of

Single

Ratio

Sometime, we can not compare our ratios with others. For

example, we have started new business and our financial
results are not still normal. At that time, our profitability ratio
will have limited use because there is not any past data of
profitability
ratios.
2.

Lack

of Adequate Standards

We could not make standards of all ratios. For example, we can

34

not tell what is rule of them of our net profit ratio because there
are lots of factors affect it. In the lack of adequate standards of
ratios, we can not give exact comment on the basis of ratio
analysis.
3.Inherent

Limitation

of

Financial

Accounting

Ratio analysis is just like simplification of financial accounting

data. But there are lots of limitations of financial accounting
which you can read at here. All these limitation will be absorbed
by ratios. This is the one of the important limitation of ratio. I
can say if base is not good, everything will be wrong. If there is
small portion of poison in milk, its effect will be in everything
what
you
will
make.
4.

Changes

of

Accounting

Procedures

If accounting procedures will change, our accounting ratio will

be changed. At that time, we can not compare our current year
ratios with our past year ratios. For example, in past year, we
had used LIFO but current year, we are using FIFO for inventory
valuation. Due to this, figures of closing stock will be different.
On this basis, if we have calculated current ratio, it will not be
comparable
with
past
current
ratio.
5.

Window

Dressing

Because we have shown our financial data through window

dressing. Our ratios will also be affected from it.
6. Personal Bias
This is reality, I saw many CAs who waste their time to optimize
different ratios by changing the project financial statements
35

figures for making attractive projects. All these activities are

done for getting loan. So, this will make the drawback of ratio
analysis.
7. Matchless
Different companies uses different accounting policies, so, we
can not compare their ratios.
8. Price Level Changes
Inflation effect is ignored in calculation of ratios. So, ratio will
not give perfect answer in changing of price level.
9.Ratios are not Substitute of Financial Statements
Ratio analysis is important part of financial statements analysis.
It can never become a substitute of financial statements. We
just use it with cash flow analysis, fund flow analysis and other
analysis.
10. Wrong Interpretation
We can interpretative wrongly. For explaining the effect on
company's position with ratios, there is big need of experience.
Wrong interpretation will be helpful for wrong decisions. So, it is
limitation of ratio analysis that it does not explain all the facts,
it has to explain. For a new accounts manager, it may be
difficult.

36

Concepts
Short-term Solvency Ratios
Debt Management Ratios
Asset Management Ratios
Profitability Ratios
Market Value Ratios
Equations

37

Short-term Solvency or Liquidity Ratios

Current Ratio

The Current Ratio is calculated by dividing Current Assets by Current

Liabilities. Current Assets are the assets that the firm expects to convert into
cash in the coming year and Current Liabilities represent the liabilities which
have to be paid in cash in the coming year. The appropriate value for this ratio
depends on the characteristics of the firm's industry and the composition of its
Current Assets. However, at a minimum, the Current Ratio should be greater
than one.

38

Quick Ratio
The Quick Ratio recognizes that, for many firms, Inventories can be rather illiquid.
If these Inventories had to be sold off in a hurry to meet an obligation the firm
might have difficulty in finding a buyer and the inventory items would likely have
to be sold at a substantial discount from their fair market value.
This ratio attempts to measure the ability of the firm to meet its obligations relying
solely on its more liquid Current Asset accounts such as Cash and Accounts
Receivable. This ratio is calculated by dividing Current Assets less Inventories by
Current Liabilities.

39

Debt Management Ratios

Debt Management Ratios attempt to measure the firm's use of Financial
Leverage and ability to avoid financial distress in the long run. These ratios are
also known as Long-Term Solvency Ratios.
Debt is called Financial Leverage because the use of debt can improve returns to
stockholders in good years and increase their losses in bad years. Debt generally
represents a fixed cost of financing to a firm. Thus, if the firm can earn more on
assets which are financed with debt than the cost of servicing the debt then these
additional earnings will flow through to the stockholders. Moreover, our tax law
favors debt as a source of financing since interest expense is tax deductible.
With the use of debt also comes the possibility of financial distress and
bankruptcy.The amount of debt that a firm can utilize is dictated to a great extent
by the characteristics of the firm's industry. Firms which are in industries with
volatile sales and cash flows cannot utilize debt to the same extent as firms in
industries with stable sales and cash flows. Thus, the optimal mix of debt for a
firm involves a tradeoff between the benefits of leverage and possibility of
financial distress.

40

Debt Ratio, Debt-Equity Ratio, and

Equity Multiplier

The Debt Ratio, Debt-Equity Ratio, and Equity Multiplier are essentially three
ways of looking at the same thing: the firm's use of debt to finance its assets. The
Debt Ratio is calculated by dividing Total Debt by Total Assets. The Debt-Equity
Ratio is calculated by dividing Total Debt by Total Owners' Equity. The Equity
Multiplier is calculated by dividing Total Assets by Total Owners' Equity.

41

Asset Management Ratios

Asset Management Ratios attempt to measure the firm's success in managing its
assets to generate sales. For example, these ratios can provide insight into the
success of the firm's credit policy and inventory management. These ratios are
also known as Activity or Turnover Ratios.

Receivables

Turnover

and

Days'

Receivables

The Receivables Turnover and Days' Receivables Ratios assess the firm's
management of its Accounts Receivables and, thus, its credit policy. In general,
the higher the Receivables Turnover Ratio the better since this implies that the
firm is collecting on its accounts receivables sooner. However, if the ratio is too
high then the firm may be offering too large of a discount for early payment or
may have too restrictive credit terms. The Receivables Turnover Ratio is
calculated by dividing Sales by Accounts Receivables. (Note: since Accounts
Receivables arise from Credit Sales it is more meaningful to use Credit Sales in
the numerator if the data is available.)

42

The Days' Receivables Ratio is calculated by dividing the number of days in a

year, 365, by the Receivables Turnover Ratio. Therefore, the Days' Receivables
indicates how long, on average, it takes for the firm to collect on its sales to
customers on credit. This ratio is also known as the Days' Sales Outstanding
(DSO) or Average Collection Period (ACP).

43

Inventory

Turnover

and

Days'

Inventory

The Inventory Turnover and Days' Inventory Ratios measure the firm's
management of its Inventory. In general, a higher Inventory Turnover Ratio is
indicative of better performance since this indicates that the firm's inventories
are being sold more quickly. However, if the ratio is too high then the firm may
be losing sales to competitors due to inventory shortages. The Inventory
Turnover Ratio is calculated by dividing Cost of Goods Sold by Inventory. When
comparing one firms's Inventory Turnover ratio with that of another firm it is
important to consider the inventory valuation methid used by the firms. Some
firms use a FIFO (first-in-first-out) method, others use a LIFO (last-in-first-out)
method, while still others use a weighted average method.

The Days' Inventory Ratio is calculated by dividing the number of days in a

year, 365, by the Inventory Turnover Ratio. Therefore, the Days' Inventory
indicates how long, on average, an inventory item sits on the shelf until it is sold.

44

Fixed Assets Turnover

The Fixed Assets Turnover Ratio measures how productively the firm is
managing its Fixed Assets to generate Sales. This ratio is calculated by dividing
Sales by Net Fixed Assets. When comparing Fixed Assets Turnover Ratios of
different firms it is important to keep in mind that the values for Net Fixed
Assets reported on the firms' Balance Sheets are book values which can be very
different from market values.

45

Total Assets Turnover

The Total Assets Turnover Ratio measures how productively the firm is
managing all of its assets to generate Sales. This ratio is calculated by dividing
Sales by Total Assets.

46

Profitability Ratios
Profitability Ratios attempt to measure the firm's success in generating income.
These ratios reflect the combined effects of the firm's asset and debt
management.

Profit Margin

The Profit Margin indicates the dollars in income that the firm earns on each
dollar of sales. This ratio is calculated by dividing Net Income by Sales.

47

Return on Assets (ROA) and Return

on Equity (ROE)

The Return on Assets Ratio indicates the dollars in income earned by the firm on
its assets and the Return on Equity Ratio indicates the dollars of income earned
by the firm on its shareholders' equity. It is important to remember that these
ratios are based on Accounting book values and not on market values. Thus, it is
not appropriate to compare these ratios with market rates of return such as the
interest rate on Treasury bonds or the return earned on an investment in a stock.

48

Market Value Ratios

Market Value Ratios relate an observable market value, the stock price, to book
values obtained from the firm's financial statements.

Price-Earnings Ratio (P/E Ratio)

The Price-Earnings Ratio is calculated by dividing the current market price per
share of the stock by earnings per share (EPS). (Earnings per share are
calculated by dividing net income by the number of shares outstanding.)
The P/E Ratio indicates how much investors are willing to pay per dollar of
current earnings. As such, high P/E Ratios are associated with growth stocks.
(Investors who are willing to pay a high price for a dollar of current earnings
obviously expect high earnings in the future.) In this manner, the P/E Ratio also
indicates how expensive a particular stock is. This ratio is not meaningful,
however, if the firm has very little or negative earnings.

Where,

49

Market-to-Book Ratio

The Market-to-Book Ratio relates the firm's market value per share to its book
value per share. Since a firm's book value reflects historical cost accounting, this
ratio indicates management's success in creating value for its stockholders. This
ratio is used by "value-based investors" to help to identify undervalued stocks.

Where,

50

How a Ratio is expressed?

As Percentage - such as 25% or 50% . For

example if net profit is Rs.25,000/- and the sales is
Rs.1,00,000/- then the net profit can be said to be
25% of the sales.

As Proportion
-The above figures may be
expressed in terms of the relationship between net
profit to sales as 1 : 4.

As Pure Number /Times -The same can also be

expressed in an alternatively way such as the sale
is 4 times of the net profit or profit is 1/4th of the
sales.

51

Classification of Ratios

Balance
Sheet
Ratio

P&L Ratio orBalance

Income/Reve Sheet
and
nue
Profit & Loss
Statement
Ratio
Ratio

Financial
Ratio

Operating Ratio

Composite Ratio

52

Current
Ratio
Quick
Asset Ratio
Proprietary
Ratio
Debt
Equity
Ratio

Gross
ProfitFixed
Asset
Ratio
Turnover Ratio,
Operating Ratio Return on Total
Expense Ratio Resources
Net profit Ratio Ratio,
Stock TurnoverReturn on Own
Ratio
Funds
Ratio,
Earning
per
Share
Ratio,
Debtors
Turnover Ratio,

Format of balance sheet for

ratio analysis
LIABILITIES

ASSETS

53

NET
WORTH/EQUITY/OWNED
FUNDS
Share
Capital/Partners
Capital/Paid
up
Capital/
Owners Funds
Reserves ( General, Capital,
Revaluation & Other Reserves)
Credit Balance in P&L A/c

FIXED ASSETS : LAND &

BUILDING,
PLANT
&
MACHINERIES
Original Value Less Depreciation
Net Value or Book Value or
Written down value

LONG
TERM
LIABILITIES/BORROWED
FUNDS : Term Loans (Banks
& Institutions)
Debentures/Bonds, Unsecured
Loans, Fixed Deposits, Other
Long Term Liabilities

NON CURRENT ASSETS

Investments in quoted shares &
securities
Old stocks or old/disputed book
debts
Long Term Security Deposits
Other Misc. assets which are not
current or fixed in nature

CURRENT LIABILTIES
Bank Working Capital Limits
such as CC/OD/Bills/Export
Credit
Sundry
/Trade
Creditors/Creditors/Bills
Payable, Short duration loans
or deposits
Expenses
payable
&
provisions
against
various
items

CURRENT ASSETS: Cash &

Bank
Balance,
Marketable/quoted
Govt.
or
other
securities,
Book
Debts/Sundry
Debtors,
Bills
Receivables, Stocks & inventory
(RM,SIP,FG) Stores & Spares,
Advance Payment of Taxes,
Prepaid expenses, Loans and
Advances recoverable within 12
months

54

INTANGIBLE ASSETS
Patent,
Goodwill,
Debit
balance
in
P&L
A/c,
Preliminary or Preoperative
expenses

Some important notes

Liabilities have Credit balance and Assets have Debit
balance
Current Liabilities are those which have either become due
for payment or shall fall due for payment within 12 months
from the date of Balance Sheet
Current Assets are those which undergo change in their
shape/form within 12 months. These are also called
Working Capital or Gross Working Capital
Net Worth & Long Term Liabilities are also called Long
Term Sources of Funds
Current Liabilities are known as Short Term Sources of
Funds
Long Term Liabilities & Short Term Liabilities are also
called Outside Liabilities

55

 Current Assets are Short Term Use of Funds

Assets other than Current Assets are Long Term Use of
Funds
Installments of Term Loan Payable in 12 months are to be
taken as Current Liability only for Calculation of Current
Ratio & Quick Ratio.
If there is profit it shall become part of Net Worth under
the head Reserves and if there is loss it will become part of
Intangible Assets
Investments in Govt. Securities to be treated current only
if these are marketable and due. Investments in other
securities are to be treated Current if they are quoted.
Investments in allied/associate/sister units or firms to be
treated as Non-current.
Bonus Shares as issued by capitalization of General
reserves and as such do not affect the Net Worth. With
Rights Issue, change takes place in Net Worth and Current
Ratio.

56

Reliance capital limited

Profit & Loss A\C
Standalone
Standalone Profit &
Loss account

------------------- in Rs. Cr. ------------------Mar '13 Mar '12 Mar '11 Mar '10 Mar '09
12 mths 12 mths 12 mths 12 mths 12 mths

Income
Sales Turnover
3,828.00 3,268.00 1,840.39 2,366.62
Excise Duty
0.00
0.00
0.00
0.00
Net Sales
3,828.00 3,268.00 1,840.39 2,366.62
Other Income
40.00
49.00
46.36
3.78
Stock Adjustments
0.00
0.00
0.00
0.00
Total Income
3,868.00 3,317.00 1,886.75 2,370.40
Expenditure
Raw Materials
0.00
0.00
0.00
0.00
Power & Fuel Cost
0.00
0.00
0.00
0.00
Employee Cost
165.00 141.00 109.47 121.64
Other Manufacturing
0.00
0.00
0.00
0.00
Expenses
Selling and Admin
0.00
0.00
291.32 470.33
Expenses
Miscellaneous
791.00 464.00
37.22
56.60
Expenses

2,939.88
0.00
2,939.88
-9.39
0.00
2,930.49
0.00
0.00
149.08
0.00
356.49
89.77
57

Preoperative
ExpCapitalised
Total Expenses

0.00

0.00

0.00

0.00

0.00

956.00 605.00 438.01 648.57 595.34

Mar '13 Mar '12 Mar '11 Mar '10 Mar '09
12 mths 12 mths 12 mths 12 mths 12 mths

Operating Profit
2,872.00
PBDIT
2,912.00
Interest
2,179.00
PBDT
733.00
Depreciation
29.00
Other Written Off
0.00
Profit Before Tax
704.00
Extra-ordinary items
0.00
PBT (Post Extra-ord
704.00
Items)
Tax
42.00
Reported Net Profit
662.00
Total Value Addition
956.00
Preference Dividend
0.00
Equity Dividend
319.00
Corporate Dividend Tax 36.00
Per share data (annualised)
Shares in issue (lakhs) 2,456.33
Earning Per Share
26.95
(Rs)
Equity Dividend (%)
130.00
Book Value (Rs)
468.67

2,663.00
2,712.00
2,065.00
647.00
26.00
0.00
621.00
0.00

1,402.38
1,448.74
1,263.02
185.72
14.33
0.00
171.39
25.23

1,718.05
1,721.83
1,290.92
430.91
18.16
0.00
412.75
15.58

2,344.54
2,335.15
1,237.84
1,097.31
21.22
0.00
1,076.09
0.93

621.00

196.62

428.33 1,077.02

102.00
519.00
605.00
0.00
184.00
7.00

-33.23
229.27
438.01
0.00
159.66
1.57

88.91
339.42
648.57
0.00
159.66
27.14

109.00
968.02
595.34
0.00
159.66
27.14

2,456.33 2,456.33 2,456.33 2,456.33

21.13

9.33

13.82

39.41

75.00
449.61

65.00
286.11

65.00
283.31

65.00
277.10

58

59

Mar '12

Mar '11

Mar '10

Mar '09

12 mths 12 mths

12 mths

12 mths

12 mths

246.00 246.00
246.00 246.00
0.00
0.00
0.00
0.00
11,266.0
10,798.00
0
0.00
0.00
11,512.0
11,044.00
0
11,385.0
9,725.00
0

246.16
246.16
0.00
0.00

246.16
246.16
0.00
0.00

246.16
246.16
0.00
0.00

Mar '13

Sources Of Funds
Total Share Capital
Equity Share Capital
Share Application Money
Preference Share Capital
Reserves
Revaluation Reserves
Networth
Secured Loans

6,781.53
0.00

6,712.90 6,560.28
0.00

0.00

7,027.69

6,959.06 6,806.44

13,646.11

6,522.02 4,937.04

Unsecured Loans

5,207.0
4,593.00
0

4,836.91

5,436.13 8,842.49

Total Debt

16,592.
14,318.00
00

18,483.02

11,958.15 13,779.5

25,510.71

18,917.21 20,585.9

Total Liabilities

28,104.
25,362.00
00
Mar '13 Mar '12
12 mths 12 mths

Mar '11

Mar '10

Mar '09

12 mths

12 mths

12 mths

60

Application Of Funds
Gross Block
245.00
Less: Accum. Depreciation
94.00
Net Block
151.00
Capital Work in Progress
3.00
13,675.
Investments
00
Inventories
0.00
Sundry Debtors
0.00
Cash and Bank Balance
745.00
Total Current Assets
745.00
18,983.
Loans and Advances
00
Fixed Deposits
0.00
19,728.
Total CA, Loans & Advances
00
Deffered Credit
0.00
5,192.0
Current Liabilities
0
Provisions
261.00
5,453.0
Total CL & Provisions
0
14,275.
Net Current Assets
00
Miscellaneous Expenses
0.00
28,104.
Total Assets
00
Contingent Liabilities

265.00
102.00
163.00
0.00

157.34
78.32
79.02
110.03

211.20
125.69
85.51
82.25

351.63
252.69
98.94
93.79

13,825.00

11,166.66

0.00
193.00
436.00
629.00

0.00
16.69
833.19
849.88

15,566.00

13,995.42

0.00

337.97

16,195.00

15,183.27

0.00

0.00

0.00

0.00

4,590.00

896.30

1,028.12

213.94

231.00

201.39

208.27

239.59

4,821.00

1,097.69

1,236.39

453.53

11,374.00

14,085.58

8,000.04 11,537.7

0.00

69.42

25,362.00

25,510.71

1,829.0
1,086.00
0

1,225.77

10,676.04 8,746.49
0.00
121.23
227.09
348.32

0.53
81.47
74.52
156.52

8,722.86 11,834.7
165.25

0.00

9,236.43 11,991.2

73.37

109.01

18,917.21 20,585.9

274.06
61

389.61

Book Value (Rs)

468.67

449.61

286.11

283.31

62

277.10

Financial Ratio of Reliance

capital limited
Standalone
Previous Years

Reliance Capital
Key Financial Ratios

Mar '13 Mar '12 Mar '11 Mar '10 Mar '09
Investment Valuation Ratios
Face Value
10.00
Dividend Per Share
13.00
Operating Profit Per
116.92
Share (Rs)
Net Operating Profit
155.84
Per Share (Rs)
Free Reserves Per
-Share (Rs)
Bonus in Equity Capital
-Profitability Ratios
Operating Profit
75.02
Margin(%)
Profit Before Interest
73.50
And Tax Margin(%)
Gross Profit Margin(%) 74.26
Cash Profit Margin(%) 17.86

10.00
7.50

10.00
6.50

10.00
6.50

10.00
6.50

108.41

57.09

69.94

95.45

133.04

74.92

96.35

119.69

--

234.77

233.68

228.78

--

--

--

--

81.48

76.20

72.59

79.74

79.49

73.30

71.63

77.95

80.69
16.43

75.42
11.91

71.82
14.52

79.02
34.83
63

Adjusted Cash
17.86
Margin(%)
Net Profit Margin(%)
17.11
Adjusted Net Profit
17.11
Margin(%)
Return On Capital
10.25
Employed(%)
Return On Net
5.75
Worth(%)
Adjusted Return on Net
5.75
Worth(%)
Return on Assets
468.67
Excluding Revaluations
Return on Assets
468.67
Including Revaluations
Return on Long Term
12.05
Funds(%)
Liquidity And Solvency Ratios
Current Ratio
1.94
Quick Ratio
3.62
Debt Equity Ratio
1.44
Long Term Debt Equity
1.08
Ratio
Debt Coverage Ratios
Interest Cover
1.32
Total Debt to Owners
1.44
Fund
Financial Charges
1.34
Coverage Ratio
Financial Charges
Coverage Ratio Post
1.32
Tax

16.43

11.91

14.52

34.83

15.64

12.10

14.30

32.48

15.64

12.10

14.30

32.48

10.59

5.64

9.02

11.48

4.69

3.29

4.92

14.45

4.69

3.03

4.74

15.18

449.61

283.28

280.32

272.66

449.61

283.28

280.32

272.66

12.25

5.85

9.85

15.37

1.92
3.36
1.30

6.50
13.81
2.63

2.48
7.43
1.72

1.57
26.31
2.02

0.98

2.50

1.49

1.26

1.30

1.16

1.35

1.91

1.30

2.63

1.72

2.02

1.31

1.15

1.34

1.93

1.26

1.19

1.28

1.80

64

Management Efficiency Ratios

Inventory Turnover
-Ratio
Debtors Turnover Ratio 39.67
Investments Turnover
-Ratio
Fixed Assets Turnover
-Ratio
Total Assets Turnover
-Ratio
Asset Turnover Ratio
0.14

--

--

--

--

31.17

26.69

23.35

22.05

--

--

--

--

--

--

--

--

--

--

--

--

0.13

0.08

0.12

0.16

Average Raw Material

-----Holding
Average Finished
-----Goods Held
Number of Days In
1,193.95 1,108.07 2,755.29 1,216.93 1,412.84
Working Capital
Profit & Loss Account Ratios
Material Cost
-----Composition
Imported Composition
of Raw Materials
-----Consumed
Selling Distribution
--3.46
5.06
2.14
Cost Composition
Expenses as
Composition of Total
-----Sales
Cash Flow Indicator Ratios
Dividend Payout Ratio
48.18
35.45
70.32
55.03
19.29
Net Profit
65

Dividend Payout Ratio

Cash Profit
Earning Retention
Ratio
Cash Earning
Retention Ratio
AdjustedCash Flow
Times

46.16

33.76

66.18

52.24

18.88

51.82

64.55

23.72

42.80

81.63

53.84

66.24

28.56

45.81

82.01

24.01

26.27

81.90

34.69

13.27

Mar '13 Mar '12 Mar '11 Mar '10 Mar '09
Earnings Per Share
Book Value

26.95
468.67

21.13
449.61

9.33
286.11

13.82
283.31

39.41
277.10

66

Reliance capital limited

Profit & Loss A\C
Consolidated
Reliance Capital
Consolidated Profit &
Loss account

Previous Years
------------------- in Rs. Cr. ------------------Mar '13 Mar '12 Mar '11 Mar '10 Mar '09
12 mths 12 mths 12 mths 12 mths 12 mths

Income
Sales Turnover
Excise Duty
Net Sales
Other Income
Stock Adjustments
Total Income
Expenditure
Raw Materials
Power & Fuel Cost
Employee Cost
Other Manufacturing
Expenses
Selling and Admin
Expenses
Miscellaneous
Expenses

7,470.00 6,577.00 5,386.82 6,107.87 5,932.96

0.00
0.00
0.00
0.00
0.00
7,470.00 6,577.00 5,386.82 6,107.87 5,932.96
89.00
49.00
111.65
-2.49
-41.93
0.00
0.00
0.00
0.00
0.00
7,559.00 6,626.00 5,498.47 6,105.38 5,891.03
0.00
0.00
607.00

0.00
0.00
548.00

0.00
0.00
496.82

0.00
0.00
535.35

0.00
0.00
554.07

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

869.69

729.60

3,683.00 3,256.00 3,198.44 2,615.31 2,058.31

67

Preoperative
ExpCapitalised
Total Expenses

0.00

0.00

0.00

0.00

0.00

4,290.00 3,804.00 3,695.26 4,020.35 3,341.98

Mar '13 Mar '12 Mar '11 Mar '10 Mar '09
12 mths 12 mths 12 mths 12 mths 12 mths

Operating Profit
3,180.00
PBDIT
3,269.00
Interest
2,343.00
PBDT
926.00
Depreciation
56.00
Other Written Off
0.00
Profit Before Tax
870.00
Extra-ordinary items
0.00
PBT (Post Extra-ord
870.00
Items)
Tax
127.00
Reported Net Profit
743.00
Minority Interest
62.00
Share Of P/L Of
-131.00
Associates
Net P/L After Minority
Interest & Share Of
772.00
Associates
Total Value Addition 4,290.00
Preference Dividend
0.00
Equity Dividend
376.00
Corporate Dividend Tax 47.00
Per share data (annualised)

2,773.00
2,822.00
2,250.00
572.00
54.00
0.00
518.00
0.00

1,691.56
1,803.21
1,462.04
341.17
49.96
0.00
291.21
-1.08

2,087.52
2,085.03
1,340.58
744.45
67.63
104.67
572.15
18.72

2,590.98
2,549.05
1,268.13
1,280.92
56.71
51.90
1,172.31
31.89

518.00

290.13

590.87 1,204.20

190.00
328.00
7.00

56.89
232.66
4.79

149.15 181.09
440.57 1,023.06
10.35
7.84

-137.00

0.92

-3.16

-0.45

459.00

228.61

415.81

983.83

3,804.00 3,695.26 4,020.35 3,341.98

0.00
0.00
0.00
0.00
196.00 171.07 159.66 159.66
33.00
27.75
27.14
27.14

68

Shares in issue (lakhs) 2,456.33 2,456.33 2,456.33 2,456.33 2,456.33

Earning Per Share
30.25
13.35
9.47
17.94
41.65
(Rs)
Equity Dividend (%)
0.00
0.00
0.00
0.00
0.00
Book Value (Rs)
487.35 479.09 317.14 313.64 303.44

Balance sheet of Reliance

capital limited
Consolidated
Consolidated Balance Sheet of
Reliance Capital

Sources Of Funds
Total Share Capital
Equity Share Capital
Share Application Money
Preference Share Capital
Init. Contribution Settler
Preference Share Application
Money
Employee Stock Opiton
Reserves

------------------- in Rs. Cr. ------------------Mar '13

Mar '12

Mar '11

Mar '10

Mar '09

12 mths

12 mths

12 mths

12 mths

12 mths

246.00
246.00
0.00
0.00
0.00

246.00
246.00
0.00
0.00
0.00

246.16
246.16
0.00
0.00
0.00

246.16
246.16
0.00
0.00
0.00

246.16
246.16
0.00
0.00
0.00

0.00

0.00

0.00

0.00

0.00

0.00
0.00
0.00
0.00
0.00
11,725.00 11,522.00 7,543.79 7,457.82 7,207.20

69

Revaluation Reserves
Networth
Secured Loans
Unsecured Loans
Total Debt
Minority Interest
Policy Holders Funds
Group Share in Joint Venture
Total Liabilities

Application Of Funds
Gross Block
Less: Accum. Depreciation
Net Block
Capital Work in Progress
Investments
Inventories
Sundry Debtors
Cash and Bank Balance
Total Current Assets
Loans and Advances
Fixed Deposits
Total CA, Loans & Advances
Deffered Credit
Current Liabilities
Provisions

0.00
11,971.00
14,388.00
3,684.00
18,072.00
516.00
0.00
0.00
30,559.00
Mar '13

0.00
11,768.00
11,698.00
3,895.00
15,593.00
131.00
0.00
0.00
27,492.00
Mar '12

0.00
7,789.95
15,338.28
4,815.34
20,153.62
162.80
0.00
0.00
28,106.37
Mar '11

0.00
7,703.98
8,747.41
5,938.92
14,686.33
93.75
0.00
0.00
22,484.06
Mar '10

0.00
7,453.36
4,954.48
9,154.09
14,108.5
83.26
0.00
0.00
21,645.1
Mar '09

12 mths

12 mths

12 mths

12 mths

12 mths

636.00
202.00
434.00
5.00
15,087.00
144.00
839.00
1,582.00
2,565.00
22,497.00
0.00
25,062.00
0.00
8,885.00
1,144.00

468.00
188.00
280.00
1.00
14,759.00
127.00
405.00
1,125.00
1,657.00
18,646.00
0.00
20,303.00
0.00
7,558.00
293.00

438.77
224.71
214.06
111.31
12,301.37
185.39
103.45
1,928.97
2,217.81
17,120.93
0.00
19,338.74
0.00
3,121.99
827.74

414.91
245.25
169.66
88.86
11,340.59
38.80
190.87
592.08
821.75
13,377.02
272.41
14,471.18
0.00
2,736.10
936.04

530.68
326.62
204.06
97.76
9,874.24
37.68
296.24
1,124.70
1,458.62
12,479.6
42.83
13,981.1
0.00
1,685.22
939.81

70

Total CL & Provisions

Net Current Assets
Minority Interest
Group Share in Joint Venture
Miscellaneous Expenses
Total Assets
Contingent Liabilities
Book Value (Rs)

10,029.00 7,851.00 3,949.73 3,672.14 2,625.03

15,033.00 12,452.00 15,389.01 10,799.04 11,356.1
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
90.62
85.91
113.02
30,559.00 27,492.00 28,106.37 22,484.06 21,645.1
2,771.00 2,316.00 1,511.11
487.35
479.09
317.14

330.66
313.64

71

826.89
303.44

Financial Ratio of Reliance

capital limited
Consolidated
Reliance Capital

Previous Years
------------------- in Rs. Cr. ------------------Mar '13 Mar '12 Mar '11 Mar '10 Mar '09

Investment Valuation Ratios

Face Value
10.00
Dividend Per Share
-Operating Profit Per Share (Rs) 129.46
Net Operating Profit Per Share
304.11
(Rs)
Free Reserves Per Share (Rs)
-Bonus in Equity Capital
-Profitability Ratios
Operating Profit Margin(%)
42.57
Profit Before Interest And Tax
41.54
Margin(%)
Gross Profit Margin(%)
41.82
Cash Profit Margin(%)
10.09
Adjusted Cash Margin(%)
10.06
Net Profit Margin(%)
10.79
Adjusted Net Profit Margin(%) 10.79
Return On Capital
10.56
Employed(%)
Return On Net Worth(%)
6.78

10.00
-112.89

10.00
-65.21

10.00
-84.99

10.00
-105.48

267.76

213.54

248.66

241.54

---

263.67
--

262.80
--

254.51
--

42.16

31.40

34.17

43.67

41.02

29.85

32.99

42.64

41.34
5.77
5.79
6.91
6.91

30.47
5.17
2.32
5.50
4.12

33.07
9.99
9.99
7.07
7.07

42.71
19.38
19.38
17.08
17.08

10.12

6.27

8.61

11.56

3.89

2.94

5.68

13.83
72

Adjusted Return on Net

5.85
Worth(%)
Return on Assets Excluding
487.35
Revaluations
Return on Assets Including
487.35
Revaluations
Return on Long Term Funds(%) 12.36
Liquidity And Solvency Ratios
Current Ratio
1.71
Quick Ratio
2.48
Debt Equity Ratio
1.51
Long Term Debt Equity Ratio
1.14
Debt Coverage Ratios
Interest Cover
1.35
Total Debt to Owners Fund
1.51
Financial Charges Coverage
1.38
Ratio
Financial Charges Coverage
1.37
Ratio Post Tax
Management Efficiency Ratios
Inventory Turnover Ratio
51.88
Debtors Turnover Ratio
12.01
Investments Turnover Ratio
51.88
Fixed Assets Turnover Ratio
19.45
Total Assets Turnover Ratio
0.25
Asset Turnover Ratio
0.26
Average Raw Material Holding
-Average Finished Goods Held
-Number of Days In Working
697.84
Capital
Profit & Loss Account Ratios
Material Cost Composition
-Imported Composition of Raw
-Materials Consumed
Selling Distribution Cost
--

2.80

0.50

5.76

14.21

479.09

313.45

310.14

298.83

479.09

313.45

310.14

298.83

11.68

6.85

12.33

23.89

1.72
2.56
1.33
1.01

2.04
4.79
2.59
2.59

1.28
3.91
1.91
1.03

0.89
5.28
1.89
0.40

1.23
1.33

1.20
2.59

1.45
1.91

1.97
1.89

1.25

1.12

1.57

2.05

1.23

1.26

1.45

1.89

51.79
25.87
51.79
16.99
0.24
0.24

29.06
36.61
29.06
12.28
0.19
0.21

-25.08
157.46
19.97
0.27
19.97

157.46
16.17
157.46
13.57
0.28
13.57

---

---

---

-2.88

681.58 1,056.18 636.50

689.07

--

--

--

--

--

--

--

--

--

4.88

4.10

2.61
73

Composition
Expenses as Composition of
-Total Sales
Cash Flow Indicator Ratios
Dividend Payout Ratio Net
52.09
Profit
Dividend Payout Ratio Cash
48.73
Profit
Earning Retention Ratio
39.66
Cash Earning Retention Ratio 44.13
Adjusted Cash Flow Times
23.87

--

--

--

--

50.00

68.28

43.10

18.39

44.72

52.96

30.84

16.61

30.61
40.37
40.61

-412.15
-61.60
163.81

57.48
69.46
24.01

82.10
83.79
12.25

74

Comparison with Competitors

Balance Sheet

------------------- in Rs. Cr. ------------------Reliance

Capital

Bajaj
Holdings

Bajaj
Finserv

L&T
Finance

Muthoo
Financ

Mar '13

Mar '13

Mar '13

Mar '13

Mar '1

Sources Of Funds
Total Share Capital
Equity Share Capital
Share Application Money
Preference Share Capital
Reserves
Revaluation Reserves

246.00
246.00
0.00
0.00
11,266.00
0.00

111.29
111.29
0.00
0.00
5,075.46
0.00

79.56
79.56
0.00
0.00
2,327.95
0.00

2,466.76
1,716.76
0.00
750.00
1,813.79
0.00

371.7
371.7
0.0
0.0
2,554.0
0.0

Net worth
Secured Loans
Unsecured Loans

11,512.00
11,385.00
5,207.00

5,186.75
0.00
0.00

2,407.51
0.00
0.00

4,280.55
0.00
744.61

2,925.7
13,191.9
2,288.4

Total Debt

16,592.00

0.00

0.00

744.61

15,480.3

75

Total Liabilities

28,104.00

5,186.75

2,407.51

5,025.16

18,406.0

Reliance
Capital

Bajaj
Holdings

Bajaj
Finserv

L&T
Finance

Muthoo
Financ

Mar '13

Mar '13

Mar '13

Mar '13

Mar '1

Application Of Funds
Gross Block
Less: Accum. Depreciation

245.00
94.00

120.25
90.78

346.17
276.54

0.63
0.11

358.0
95.3

Net Block
Capital Work in Progress

151.00
3.00

29.47
0.00

69.63
0.27

0.52
0.00

262.6
5.5

13,675.00
0.00
0.00
745.00
745.00
18,983.00
0.00

4,927.94
0.00
0.00
138.96
138.96
538.60
0.00

2,366.72
0.00
1.63
2.11
3.74
41.09
0.00

4,875.48
0.00
0.00
48.94
48.94
585.62
0.00

97.5
0.0
734.0
795.0
1,529.0
21,477.4
0.0

19,728.00

677.56

44.83

634.56

23,006.4

0.00
5,192.00
261.00
5,453.00

0.00
30.53
417.69
448.22

0.00
18.52
55.42
73.94

0.00
340.52
144.89
485.41

0.0
4,691.4
274.6
4,966.1

Investments
Inventories
Sundry Debtors
Cash and Bank Balance
Total Current Assets
Loans and Advances
Fixed Deposits
Total CA, Loans &
Advances
Deffered Credit
Current Liabilities
Provisions
Total CL & Provisions

76

Net Current Assets

Miscellaneous Expenses

14,275.00
0.00

229.34
0.00

-29.11
0.00

149.15
0.00

18,040.3
0.0

Total Assets

28,104.00

5,186.75

2,407.51

5,025.15

18,406.0

1,829.00
468.67

289.54
466.04

8.83
151.30

0.00
20.57

467.9
78.7

Contingent Liabilities
Book Value (Rs)

77

78

Competition

Name
Bajaj Holdings
Bajaj Finserv
Reliance Capital
L&T Finance
Muthoot Finance
ReligareEnterp
CPSE ETF
JM Financial
Tata Inv Corp
SE Investments
Future Consumer
JSW Holdings
Signet Ind
ILandFS
Indiabulls Sec
HDFC Gold ETF
PNB Gilts
MOSt M50 ETF
VikasGlobalOne
BF Investment
Kalyani Invest

Last Price Market Cap.

Sales Net Profit
(Rs. cr.) Turnover
1,325.60
14,753.07
799.61
733.35
922.10
14,672.67
144.49
83.39
585.00
14,400.36 3,169.00
409.00
69.50
11,947.89
171.98
311.33
174.00
6,908.91 4,927.88
780.07
323.50
5,768.97
184.53
-129.50
24.56
4,222.13
41.50
3,147.26
86.52
71.05
556.50
3,066.05
220.88
178.68
392.45
1,591.78
207.93
56.25
9.85
1,584.08
342.86
30.41
820.25
910.45
43.33
32.96
294.20
858.68
612.47
15.65
26.50
831.02
101.08
42.44
26.50
691.06
76.31
87.26
2,667.65
410.62
21.70
390.62
346.26
61.38
110.90
334.98
30.75
312.71
171.59
3.32
82.20
309.63
6.69
19.95
645.25
281.67
0.20
17.91
79

Total Asse

5,186.7
2,407.5
28,104.0
5,025.1
18,406.0
3,460.4

1,629.8
1,920.9
820.1
1,564.3
724.1
302.3
103.2
332.7

3,744.8

73.4
644.5
297.8

Summit Sec
VisagarPolytex
Onelife Capital

Axis Gold ETF

SBI Gold ETF
HexaTradex
Industrial Inv
Weizmann Forex
8K Miles Soft
Kotak Nifty ETF
Nahar Capital
ICICI Gold ETF
MOSt NASDAQ 100
Inventure Grow
IDBI Gold ETF
KananiInd
Hang Seng BEES
Birla Gold ETF
McDowell Hold
Williamson Mago
STEL Holdings
IIFL NIFTY ETF
MOSt M100 ETF
CanaraRobeco

Almondz Global
TCI Finance

256.00
135.00
161.00

279.09
226.62
215.10

6.18
62.76
--

5.00
0.94
--

2,649.00
2,640.10
36.20
82.35
155.00
173.80
784.00
78.20
2,645.00
239.00
10.80
2,684.10
8.80
1,872.00
2,735.90
44.50
52.40
30.55
812.00
11.13
2,705.00

203.20
201.73
199.99
185.68
179.25
174.57
173.18
130.96
123.84
110.15
90.72
89.72
87.06
82.59
62.37
62.27
57.41
56.38
53.79
49.00
32.97

36.10
20.19
4,700.42
7.22
10.89
12.69
70.60
11.25
27.20
--

0.31
14.02
18.28
0.09
21.98
-0.33
0.14
3.63
-8.45
2.55
-

12.30
23.90

31.84
30.77

35.67
15.57

5.84
5.59

80

413.7
33.1
47.9

230.2
522.5
157.7
23.1

472.0

169.8

55.0

82.1
315.6
114.7

132.7
27.1

Religare Gold
MOSt Gold ETF
Nagreeka Cap
BLB
Prime Sec
ICICI CNX 100

2,660.00
2,672.00
16.85
3.60
6.65
86.00

30.40
29.27
21.26
19.03
17.83
16.47

16.19
127.76
-13.28
-

2.83
-3.01
-51.49
-

Reliance Nifty
R Shares CNX
Welspun Invest
Spectacle
Religare Nifty
Blue Chip
INFRA BEES
PSU BANK BEES
Kotak PSU Bank
Kotak MF-GETF
Quantum Index
R Shares Bank
Quantum Gold
R Shares Gold
JUNIOR BEES
SHARIA BEES
BANK BEES
NIFTYBEES
Liquid Bees

78.49
75.40
28.55
1.65
718.00
0.55
330.00
378.60
380.25
2,575.05
809.40
1,611.00
1,298.05
2,518.00
161.75
174.00
1,540.00
781.50
1,000.00

15.07
14.25
10.43
8.49
6.63
3.04
2.96
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00

1.12
-4.02
-

-11.86
-0.10
0.10
-

81

161.6
118.2
142.6

36.9
10.3

2.3

82