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There is a continuous flow of funds from Short term to Long term. However the criticality of flow has been reducing over years. Indicates that the
funds are being well managed. This also supports the fact that there is adequate Liquidity which is evident from the various other Ratio analysis.
Trend shows that there is a steep increase in investments – both current and Long term
There is also a large increase in WIP capital.
RATIO ANALYSIS
The following slides illustrate the various ratios and interpretations.
Ratios 2012 2013 2014 2015 2016 Ratios 2012 2013 2014 2015 2016
Liquidity Ratios
Current Ratio 1.25 1.31 1.33 1.32 1.38 Activity Ratios
Quick Ratio 1.13 1.21 1.24 1.21 1.28
Cash Ratio 0.33 0.29 0.36 0.39 0.42 Short term Activity Ratios
Cash Conversion Cycle 10 21 24 33 40 Inventory Turnover Ratio (no of times) 17 17 17 15 15
Dividend Payout Ratio (NP) % 20.5 23.83 28.26 24.82 23.39 Inventory Holding period (in days) 21 21 21 25 25
Dividend Payout Ratio (CP) % 18.37 20.6 23 20.84 19.51
Earnings Retention Ratio 79.5 76.17 71.14 75.18 76.61 Receivables Turnover Ratio (no of times) 5 4 3 3 3
Cash Earnings Retention Ratio 81.63 79.4 77 79.16 80.49 Average Collection Period (in days) 75 102 117 120 131
Payables Turnover Ratio (no of times) 4 4 3 3 3
Average Payment Period (in days) 86 102 114 112 116
Profitability Ratios
PBID Margin (%) 12.16% 12.18% 10.91% 12.78% 11.63% Long term Activity Ratios
PBT Margin (%) 11.16% 10.82% 9.37% 10.94% 10.19% Fixed Assets Turnover Ratio 9.88 7.82 6.63 6.92 6.63
PAT Margin (%) 7.56% 7.35% 5.83% 7.39% 7.13% Total Assets Turnover Ratio 1.42 1.18 0.97 0.92 0.86
Capital Employed Turnover Ratio 2.06 2.75 2.23 2.12 1.80
Return on Assets (%) 10.25% 8.48% 5.21% 6.70% 6.16%
Return on Networth (Equity) (%) 25.41% 18.72% 12.49% 14.82% 12.28% Per Share Ratios
Earnings Per Share 34.15 29.37 21.23 28.19 25.64
Book Value Per Share 134.38 156.88 169.94 190.24 208.73
Leverage Ratios Dividend Per Share 7 7 6 7 6
Debt Equity Ratio 0.03 0.04 0.09 0.02 0.03 Revenue from Operations/Share (Rs.) 456.76 404.79 369.54 398.68 375.34
Debt to Capital Employed 0.10 0.01 0.09 0.05 0.04 PBDIT Per Share 54.92 48.69 39.74 48.75 41.83
PBT Per Share 50.43 43.27 34.15 41.71 36.67
Net Profit Per Share 34.15 29.37 21.23 28.19 25.64
RATIO ANALYSIS
Healthy Liquidity Ratios and very low Debt-Equity Ratio indicating that there is enough funds to
meet with immediate expenses
Decrease in the Inventory turnover ratio, increase in Inventory Holding period indicate the
reduction in demand.
Increase in Average collection period and Average Payment period indicate that the procurement
payment period is well aligned with the collection period in order to ensure that current liabilities
are met adequately with current assets
All of these also suggest that there is an increase in WIP Capital as supported by the Fund flow
analysis as well.
The Cash conversion cycle – time taken to realize capital employed into sales has increased from
10 days to 40 days over the last five years
Return on Asset, Equity and Capital Employed have all been on the decline indicating that the
assets and funds are under utilized. This is directly supported by the fact that the orders have
decreased considerably over the years.
The positive fact is that PAT margin has been consistently maintained.
RATIO ANALYSIS – LIQUIDITY RATIOS
While Thermax showed revenue decline Return on equity measures how efficiently a firm
from 2011 to 2013, there has been a can use the money from shareholders to generate
gradual increase since then which is a profits and grow the company. ROE is a
positive sign for the investors. profitability ratio from the investor's point of view
—not the company. The steadily decreasing ratios
are a cause of concern.
RATIO ANALYSIS – roi RatioS
Earnings Retention Ratio
82
80
78
76
74
72
70
68
66
The graph above shows Thermax has a While the total assets has been increasing, the
healthy debt-to-equity ratio and there is asset turnover ratio has been decreasing and
no need of concern in this regard. is indicative of poor utilization of assets.
were to be bought. In spite of fall in 2015, The company’s profitability has been
the steadily increasing EV is a positive declining over the years.
indication about the company’s
valuation.
TREND ANALYSIS