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Case Analysis

Harsh P Patel
ID No.14BBA027
Financial Accounting (BM322)
BBA + MBA Dual Degree Programme Sem 5
Indukaka Ipcowala Institute of Management (I2IM)
Charotar University of Science and Technology (CHARUSAT)

Study A Sample Annual Reports Of Parle For Five Years


1. Prepare an analysis of the companies fixed assets turnover
Fixed Asset Turnover Ratio This ratio measures sales per rupee of investment in fixed assets.
It is defined as;

Fixed Asset Turnover ratio =

Avg . net
Net Sales
assets

This ratio is supposed to measure the efficiency with which fixed assets are employed. A high
ratio indicates a high degree of efficiency in asset utilization and a low ratio reflects inefficient
use of asset.

particulars
Ratio

FIXED ASSET RATIO


June 30 March 31
Dec 31
2016
2016
2016
(billion)
(billion)|
(billion)
3.11
3.18
3.23

Sep 30
2016
(billion)
3.30

Jun 30
2016
(billion)
3.34

Fixed Asset Ratio (In Times)


3.4
3.34

3.35

3.3

3.3
3.23

3.25
3.18

3.2
3.15

3.11

3.1
3.05
3
2.95

jun 30 2016

march 31 2016

dec 31 2016

sep 30 2016

june 30 2015

Ratio

Interpretation: From this graph we can interpret that ratio of fixed assets of June 30 2015 is the
highest in comparison to others. A high ratio (3.34) indicates a high degree of efficiency in asset
utilization and a low ratio reflects inefficient use of asset that is (3.11) in June 30 2016
accounting year.

2. Do you see any industry pattern? Explain

Due to detoriation in revenue of -8.24 % in the second quarter 2016 year on year.
Dean Foods Co's asset turnover ratio fell to 3.11 but remained above company
average.

For every Dollar on the Balance Sheet, Dean Foods Co relized $3.11 in annual
sales.

Within Consumer Non Cyclical sector 7 other companies have achieved higher
asset turnover ratio than Dean Foods Co.

While Asset turnover ratio total ranking has deteriorated compare to previous
quarter from to 107

3. Explain any trends in operating Cycle.

Operating cycle refers the time between paying for goods supplied to you and the final
receipt of the cash to you from their sale. It is desirable to keep cycle short as possible as
it increase effectiveness of operating cycle.

Raw material

Cash

WIP

Sales Debtors/
Receivables

Finished
goods

If operating cycle is shorter it is good for the company it shows inventories are moving
though organization rapidly, trade receivables are being collected quickly, organization
taking maximum credit from supplier. It also indicates that company is less depend on

external finance providers.


Excessive operating cycle represent too much money invested in inventories and trade
receivables so as a solution the funds are invested elsewhere for gaining high return.

4. Why is your study important for analyzing financial statements?

Helps in assessing and predicting the earning prospects and growth rates and to

assess the operational efficiency of the management of a company.


Valuable technique for analyzing the financial position of the company
Useful in analyzing the performance of the company with its competitors, and within

the industry.
Extremely useful for the company in decision-making process
Helpful in identifying the weak and strength point of the company and also helpful in
forecasting, and planning for future.

References

http://csimarket.com/stocks/singleEfficiencyat.php?code=DF
http://amigobulls.com/stocks/DF