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Analysis of Oberoi Reality from business and financial perspective
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PART-1
Project Objectives and Overall Research Approach
Introduction
This RAP is the requirement for getting BSc (Hons) in Applied Accounting set by Oxford Brooks
University. After completion of part 2 of ACCA a student will be eligible for doing RAP. This
thesis paper helps to implement knowledge on accounting and business techniques, which is
gained throughout ACCA. Besides, this thesis paper will help to learn and implement
information regarding referencing that assure to my employers that I have all relevant skill and
knowledge in accounting and finance.
Reasons for Choosing the TopicBefore selecting the topic I went through a detail analysis of each possible option given by
Oxford Brooks University. Each of the topic is equally interesting but I have to choose only one
among 20 options. During this cross out process I have considered few information, which are
mentioned bellow-
Available information
I can easily use my knowledge and learned techniques during the
research works
Chance to learn more about business techniques.
Get to know financial conditions of a particular company and
Interpretation of information will also be improved
Know about industry situation
Chosen Organization & Rationale behind choosing Oberio Real Estate
To conduct the research Oberoi Real estate has been chosen the selection of Oberio Real Estate
indicate my research interest, which is Indian Real Estate sector. In this regard i need to choose
another company from the same industry. Selection of another company from same industry
other than Oberoi is for fair business and financial comparison.
Report Page 1
It is important to mention that, I have to use Annual Report (2013-2015) of both of the
companies. Here it is also significant to declare that i use Standalone Annual Report (2013-
2015) to get a clear picture about the industry as a whole along with financial performance and
business performance of Oberoi Real estate.
To attain the objective ACCA textbook help me a lot. l apply my knowledge which i gained from
my course of ACCA.
The rationale behind the selection of Oberoi Reality for analysing the business and financial
performance are as follows:
Oberoi Reality is top ranked company in real estate sector in India influence me to choose
Oberoi Reality for research and analysis. In addition to this, Oberoi Reality made many
significant construction works for expanding their business. Moreover being a public listed
company Oberoi Reality it is easy to get all required information. Shareholders, investors have
the legal right to know about financial information as a result Oberoi Reality provides detailed
financial information to them.
Oberoi Reality Profile
Oberoi Reality Ltd. is a top real estate developer firm which has focus on constructing premium
developments in Mumbai. In early 1980, it was incorporated as Oberoi Constructions which later
changed to Oberoi Realty Limited and was listed on Bombay Stock Exchange in 2010 (Wikipedia).
o Projects:
Most of the Projects of Oberoi Reality constructed in various location of Mumbai. Projects of
Oberoi Reality is divided into five parts as per the types of the projects which are-
Residential
Commercial
Retail
Social Infrastructure
Hospitality
Report Page 2
The company has already completed 39 projects, among which most of them are residential
projects.
Aim of this Project
Project aim of the research is to get the insight of the company’s business and financial
performance in last three financial years. By using financial ratio we try to get the financial
situation of the company and using various business model it is try to be understand the
external and internal business environment the of the company and comparative analysis we
will help us to recognize actual position of the company in the industry. Besides, in this
research report we try to find out the future prospect of the company. In addition to this,
during conducting this research works, overall situation of the industry will also be analysed.
Using effective business analysis tools we can get to know whole industry situation. In precise
manner, it can be said that, this report will try to obtain the answer of the following question-
Financial performance of the company
Internal strength and external strength of the company
Brief overview of Industry
Get to know the overall external environment where this company is
doing business.
For attaining these objectives we collect data from the last three annual reports of the business
and other publications, Newspapers.
Financial performance:
We collect and analyse the information from company’s annual report to know the financial
performance of Oberoi Reality, which reflected through company’s return on capital employed,
profitable ratio, Earnings per shares etc. Financial performance will be measured by answering
the following questions:
i. How profitable the company is?
ii. Liquidity position of the company?
Report Page 3
iii. Performance comparison with its competitor
Business performance:
For getting the overall business performance of the company using suitable business models. It
would be determined by answering the following questions:
i. What are the major opportunities and threats for the
company
ii. What are industry situation and company’s capability to
cope up with it?
iii. What are strength and weakness of the company, which
must require attention?
Background of research approach:
After the selection of the topic i have gathered all necessary information to do my research .As
Oberoi reality is a public listed therefore information is readily available in the internet,
newspapers and magazines and other sources of database.
To get the clear picture of Oberoi reality I would try to calculate the financial ratios of this
company, which are-
Profitability
Liquidity
Gearing
Investor ratios
Then comparison of the ratios of both the companies and evaluate their performance. This will
help me to conclude the companies’ position in the industry.
Finally, I use PESTEL, and SWOT analysis to find out the company’s both external and internal
competitive environment, after reading through the company’s business nature and structure.
Limitations of the models also considered when selecting the appropriate model.
Report Page 4
PART-2
Information gathering and accounting and business Techniques
Sources of information
To do any type of research reliability and accuracy of source of information is highly mandatory.
Therefore collecting right information from right source is very crucial for conducting research.
Primary Source
Primary source of information is one the method to collect information. It includes conducting
survey, interviewing people from respective sector. As the nature of my research is required
information from secondary sources which includes- newspaper, various article, journal etc. So
that necessity of using primary source is not needed.
Secondary Source
Secondary sources of information is very crucial for any research work. It helps a researcher to
get information from various source which ensure good quality of a research paper.
According to the University of Maryland Libraries-
“Secondary sources are less easily defined than primary sources. Generally, they are accounts
written after the fact with the benefit of hindsight. They are interpretations and evaluations of
primary sources.”
In this report I mostly depend on the secondary sources of information, as this information is
easily available. In this regard I would like to mention that I use various online newspaper,
online article published in newspaper and journal. In addition to this, various business journal
also used.
Reason of using Secondary Sources-
Ease of Access
There are many advantages to using secondary research. This includes the
relative ease of access to many sources of secondary data. In the past
secondary data accumulation required marketers to visit libraries, or wait for
reports to be shipped by mail. Now with the availability of online access,
Report Page 5
secondary research is more openly accessed. This offers convenience and
generally standardized usage methods for all sources of secondary research.
Low Cost to acquire
The use of secondary data has allowed researchers access to valuable
information for little or no cost to acquire. Therefore, this information is
much less expensive than if the researchers had to carry out the research
themselves.
Methods used to collect information
Annual Reports of Oberoi Reality and Godrej properties
I have used official website of Oberoi Reality, to gather information related to company’s
background, last three financial years annual reports. In this report information from Annual
Report are used to get result of various financial ratios. We gather three years data to do the
trend analysis.
Electronic research
I collected majority of the information from internet for doing this report. As there is load of
information it is very important to careful sorting of information. In this report which sources
were more reliable, information were taken from there. For my better understanding and for
achieving the research goal I have browsed through other web pages. I also used some of their
contents for clear definition in my project.
ACCA Text books
My report may in complete if not paper F7 Financial Reporting will not help. It leads me through
the whole project for conducting financial analysis of the project. My knowledge of Business
analysis enhance by Paper F9. It also helps me to the application of business models.
Report Page 6
Limitations in information gathering
Company’s annual reports, newspaper articles, and websites are the main source for gathering
the information. I depend on these sources to complete the project. . I have tried my level best
to provide precise and applicable information considering the following:
Sometimes the exact information may not be possible to collect from various websites.
So considering this issue and ensure the reliability, data was obtained from various
government sites.
Limitations of the financial ratios include:
o Ratios are only useful when comparison take place within similar industry and
two or many comparable company and performance over a long period – but
this information is not always available.
o Ratio calculation cannot provide accurate information unless the financial
statement provides right information. Hence, it might give altered justification.
o Ratios deal with quantity rather than quality – ratio does not address issues like
product quality, customer service and so on (though those factors play an
important role in financial performance)
Limitations of the SWOT Analysis include:
o SWOT unable to set issues on main concern basis
o SWOT analysis cannot provide solutions or provide any other alternative
solutions
o SWOT analysis generate too many ideas but not help to choose the best one
o SWOT produce burden of information many of these are not useful.
Limitations of the PESTEL Analysis include:
o time and cost are the main obstacle for users to the accessibility of the data
o External environment is not constant it changes every moment. As its regularly
changing, PESTL analysis must also conduct in regular basis because it depends
Report Page 7
on it. Due to time and cost constraints, companies are not doing this analysis
regularly. So the ultimate benefit of PESTL analysis is not possible to achieve.
o PESTL analysis sometimes leads huge loss for company. Because the results of
PESTL are subjective so that people can misinterpret in many ways. So in the
long run company can face massive damage in its growth rate.
Ethical issues
As I have attempted the ACCA Professional Ethics Module, which was, a prerequisite to
beginning work on my project. Ethics is significant to everyday life in general and also applying
ethical issue in the accounting field in particular is very much crucial.
o Integrity:
Considering the issue of plagiarism, I have tried to reference others work, report, ideas
accordingly in order to safeguard against this threat. For completing my research, I have relied
mostly on secondary information, which I have stated clearly.
o Objectivity:
Accordingly, in the R.A.P preparation guide, I have tried to be unbiased when undertaking my
research. I never try to provide only that information that supports my view of the company
have selected. According to me, neatly sums up the other ethical issue I faced. Undoubtedly
Oberoi Reality is doing well than its rivals therefore I could run the risk of slanting my research.
An Explanation of the accounting and business techniques
o Financial Ratios
Financial statement analysis refers to: (1) comparing the firm’s performance with that of other
firms in the same industry, (2) evaluating trends in the firm’s financial position over time. For
analyzing and summarizing large quantities of financial data calculating, the f financial ratios are
the most convenient way.
Gross Profit Margin: This is a profitability indicator for a company. It
measured by dividing Gross profit by Revenue and present through
Report Page 8
percentage. The higher the margin is, the better the company
performance is.
Operating Profit Margin: This profitability indicator indicates the
operating profit percentage over revenue. This ratio is representing by
percentage.
Net Profit Margin: This is a profitability indicator measurement tools. The
ratio measured by dividing Net profit by revenue. It is representing by
percentage of revenue.
Current Ratio: current ratio is liquidity measure indicators. This ratio
indicates how much a company is liquidating to pay off its current
obligation. This liquidity ratio measures a company’s capability to pay off
its short-term obligations by short-term asset. The higher the ratio, the
more liquid the company is.
Quick Ratio: Quick ratio is another form of liquidity measurement
indicator. This ratio is also known as acid ratio, this ratio mainly a testing
measurement to test the company’s ultimate capability to pay off its
current liabilities.
Gearing Ratio: This ratio show the financial leverage. it explain the
degree to which a firm’s activities are funded by owner’s funds versus
creditor’s funds
Return on Capital Employed: this ratio measures a company’s
profitability. As well as profitability with the efficiency of its capital is
employed.
Asset Turnover: This is calculated as a ratio by dividing Revenue by
Capital employed. The higher the ratio, the more efficient management
is.
Report Page 9
Business Techniques
o SWOT Analysis:
SWOT is a critical method for analysing the internal and external environment of the company.
We can try to find out whether the internal and external environment favourable or non-
favourable for the growth of the company or not.
Strengths: Strength of the company mainly analyzes the internal
strength, which is an advantage over its competitor.
Weaknesses: Weaknesses of a company indicate internal
disadvantageous part of the company. It shows the company’s
overall weak management policies, infrastructure.
Opportunities: it refers to the external factors that can help a
company to achieve its mission. It presents the untapped sectors,
ability to converge existing platforms, growing opportunities in
emerging Sectors. Therefore, it directly enhances the success of
the company. Therefore, the essential purpose of this section is to
identify strategic opportunities, so that company can increase its
profitability and sustainability.
Threats: It identifies the external factors, which can create barrier
to achieve the company’s goal. It demonstrates that competitor’s
power, so they can gain advantage by developing holistic system,
increasing presence of independent service provider. it also affect
the company’s internal operating system.
Report Page 10
o PESTEL Analysis:
PESTEL analysis Stands for "Political, Economic, Social, and Technological analysis" and
describes a framework of macro-environmental factors used in the environmental
scanning component of strategic management. PESTLE is a mnemonic which in its expanded
form denotes P for Political, E for Economic, S for Social, T for Technological, L for Legal and
E for Environmental. It gives a bird’s eye view of the whole environment from many
different angles that one wants to check and keep a track of while contemplating on a
certain idea/plan (PESEL Analysis) Inserting Environmental factors expanded it to PESTEL or
PESTLE, which is popular in the United Kingdom. It is a part of the external analysis when
conducting a strategic analysis or doing market research, and gives an overview of the
different macro environmental factors that the company has to take into consideration. It is
a useful strategic tool for understanding market growth or decline, business position,
potential and direction for operations. The growing importance of environmental or
ecological factors in the first decade of the 21stcentury have given rise to green business
and encouraged widespread use of an updated version of the PEST framework. STEER
analysis systematically considers Socio-cultural, Technological, Economic, Ecological, and
Regulatory factors.
Political: Factors are how and to what degree a government
intervenes in the economy. Specifically, political factors include
areas such as tax policy, labor law, environmental law, trade
restrictions, tariffs, and political stability. Political factors may also
include goods and services which the government wants to provide
or be provided (merit goods) and those that the government does
not want to be provided (demerit goods or merit bads).
Report Page 11
Furthermore, governments have great influence on the health,
education, and infrastructure of a nation.
Economic: Factors include economic growth, interest rates,
exchange rates and the inflation rate. These factors have
major impacts on how businesses operate and make decisions. For
example, interest rates affect a firm's cost of capital and therefore
to what extent a business grows and expands. Exchange rates
affect the costs of exporting goods and the supply and price of
imported goods in an economy
Social: Factors include the cultural aspects and include health
consciousness, population growth rate, age distribution, career
attitudes and emphasis on safety. Trends in social factors affect the
demand for a company's products and how that company
operates. For example, an aging population may imply a smaller
and less-willing workforce (thus increasing the cost of labor).
Furthermore, companies may change various management
strategies to adapt to these social trends (such as recruiting older
workers).
Technological: Factors include technological aspects such as R&D
activity, automation, technology incentives and the rate
of technological change. They can determine barriers to entry,
minimum efficient production level and influence outsourcing
decisions. Furthermore, technological shifts can affect costs,
quality, and lead to innovation.
Report Page 12
Environmental To sustain in this competitive market in the end an
industry need to be environment friendly. So like the previous
factors we examine whether the authority is friendly or not.
Legal Favourable legal frame works to the industry are badly
important to the growth of the industry as well as company. Again,
in that case, we examine whether law and regulation is favourable
to the industry or company or not.
PART -3
Results, Analysis, Conclusions and Recommendations
Financial Performance Analysis
Financial Ratios always provide the in-depth view about financial scenario of a company.
However performance of a company not only judged by quantitative performance, assessment
of qualitative performance is also required, which is often ignored during financial ratio
analysis. However, in this report, I largely depend on financial ratio analysis to get the real
picture of my selected company Oberoi Reality and use it as a mechanism for comparative
analysis with Godrej.
I have also done business performance by analysing PESTEL, SWOT and Porter’s five forces to
get a qualitative view of the company. Eventually I have looked at the amount of R&D
expenditure Oberoi Reality has made in the last 3 years to measure an understanding of what
importance the company is giving in case of advance technologies.
o Profitability Ratios
Profitability is a company’s ability to generate revenues in excess of the costs incurred in
producing those revenues.
Profitably is analysed as follows:
Report Page 13
Gross Profit Margin (%)
Oberoi Godrej0
20
40
60
80 70.4653.27
70.88 35.88
71.3756
201320142015
Source: Annual Report 2013, 2014 & 2015 of Oberoi Reality (Standalone) & Godrej (Standalone)
The company has experienced almost stable Gross profit margin (GPM) is throughout three
financial year. The stable trend of Oberoi’s GPM is a result of stable revenue generating
capacity of the company throughout three financial years. There is so such tectonic shift has
been observed which may harm the GPM. On the other hand, there is unstable movement
observed in Goderj GPM.
Operating Profit Margin (%)
2013 2014 20150
10203040506070 59.8 58.23
56.0740.74
28.0241.92
Oberoi Godrej
Source: Annual Report 2013, 2014 & 2015 of Oberoi Reality (Standalone) & Godrej (Standalone)
Operating Profit Margin (OPM) of Oberoi is tending to reduce year to year. In FY2015 OPM of
the company declined nearly 1%. Due to increase in Operating cost, the company is facing this
decline in FY2015. Component of the operating cost increasing year to year such as employee
cost increased by 4.07%, dep. Cost increased by 44% and Administrative expense increased by
0.74%. On the other hand, Godrej has faced instability in OPM throughout three financial years.
Net Profit Margin (%)
Report Page 14
Oberoi Godrej05
1015202530354045
44.1
25.06
41.81
12.74
40.05
17.82013
2014
2015
Source: Annual Report 2013, 2014 & 2015 of Oberoi Reality (Standalone) & Godrej (Standalone)
Net Profit Margin of Oberio Reaity is stable in FY 2013 to FY2015. Stable finance cost as well as
net operating profit cause of this result. Higher tax payment caused slight decline in NPM. On
the other hand, Godrej has experienced lower net profit margin compare to Oberoi Reality
throughout three financial years.
Return On Capital Employed
2013 2014 201502468
10121416
12.79
7.21
13.7813.77
6.487.9
OberoiGodrej
Source: Annual Report 2013, 2014 & 2015 of Oberoi Reality (Standalone) & Godrej (Standalone)
It is method of getting the situation of the company regarding its employed capital efficiency
against profitability of the company. Oberoi Reality performance in this regard is satisfactory.
Efficiency of capital employed to generate EBIT is satisfactory. Due to improving operating
profit year to year put employed capital at safe zone. Moreover, capital employment of the
company is increasing (total asset).
Asset Turnover (%)
Report Page 15
2013 2014 20150
5
10
15
20
10.775.02
18.158.84
5.52
15.69
Oberoi Exponential (Oberoi) Godrej
Source: Annual Report 2013, 2014 & 2015 of Oberoi Reality (Standalone) & Godrej (Standalone)
This ratio measures management’s efficiency in generating revenue from its net assets. The
higher the ratio, the more efficient management has been. In FY 2015, Oberoi Reality has
ensured improvement compare to last two financial year. On the other hand, compare to
Oberoi Reality, Godrej appeared low.
Liquidity Ratio
Liquidity ratio, expresses a company's ability to repay short-term creditors out of its total cash.
The following liquidity ratios would be analyses for the research work.
Current Ratio
2013 2014 20150
0.5
1
1.5
2
2.5
3
2.142.61 2.342.32
1.66 1.4
OberoiGodrej
Source: Annual Report 2013, 2014 & 2015 of Oberoi Reality (Standalone) & Godrej (Standalone)
A company is using current ratio to get the view of its capability to pay off its short term liability
by using its current asset. Oberoi Reality current asset is mainly comprise of inventories which
is 38.34% in FY2015 and 43.26% in FY2014 this indicates that inventory portion in current asset
slight decline year but one of the major component is short term loan and advances is
Report Page 16
comprised of 53.59% in FY2015 and 31.78% in FY2014 which increased by 5% from last financial
year. Therefore current asset base of the company increased by 33.34% from last financial
years and put the business in secured position to pay off its short term liability of the company
as. On the other hand, Godrej’s current ratio is also more than the norm, which indicates that
the company is capable in paying its short term obligation at any given time.
Acid Test Ratio
2013 2014 20150
0.51
1.52 1.48 1.48 1.44
1.711.24
1.01OberoiGodrej
Source: Annual Report 2013, 2014 & 2015 of Oberoi Reality (Standalone) & Godrej (Standalone)
Acid test ratio indicates the company’s capability to pay off its current liability by using it
current asset excluding inventories. Acid test ratio indicates that oberoi in secure position to
pay off its debtor at any point in time as acid test ratio is more that Comparing with current
ratio, acid test shows that there is lower contribution of inventory in current assets for Oberoi
Reality. As mentioned above, inventories of Obeori is stable year to year, which is 38.38% in
FY2015 and 43.26% in FY2014 of total current asset. This indicates that the company is under
secured position of not being default to pay off short term debts. However, Godrej is also in
comfortable zone compare to Oberoi Reality.
Receivables Days
2013 2014 20150
10
20
30
40
50
17.32 24.4113.24
47.1 42.71 45.75 OberoiGodrej
Source: Annual Report 2013, 2014 & 2015 of Oberoi Reality (Standalone) & Godrej (Standalone)
Report Page 17
Receivables days indicate about the fact how well a company manages its debtor and efficiency
of debt collection team in collecting debt. Oberoi Reality is taking fewer days in collecting
receivables. The company is trying to maintain stable pattern in receivables. Analysis of three
years data gives the impressive impression about the company. In FY 2015 it is 13.24 days,
24.41 days in FY2014 and 17.32 days in 2013 took to realize working capital tied up with
receivables. Receivable of the company is always in a acceptable manner. It shows strong credit
control policy of the company. On the other hand, Godrej doing relatively poor compare to
Oberoi Reality.
Payables Days
Oberoi Godrej0
50
100
150
200
31.24
173.62
31.76
81.84
44.2272.12
2013
2014
2015
Source: Annual Report 2013, 2014 & 2015 of Oberoi Reality (Standalone) & Godrej (Standalone)
Payables days are indicating company’s capability to pay of its suppliers. In the graph it is clearly
represent that Oberoi is taking less time to pay off its suppliers. However payables are
increasing in FY2015 compare to FY2014, it is still at suitable range. Though payables days of
Oberoi increased in FY2015 compared to FY2014, there is no severe potential threat exist that
Oberoi might harm the good relations with suppliers in future, but in long run if this increasing
trend continues it may harm the relationship with the suppliers. On the other hand, payables
days of Godrej showing improving trend all over three financial years.
Report Page 18
Inventory Holding Days
2013 2014 20150
200400600800
10001200140016001800
978.96
1299.44
1730.37
1038.34586.270000
000001
1199.21 Oberoi
Godrej
Source: Annual Report 2013, 2014 & 2015 of Oberoi Reality (Standalone) & Godrej (Standalone)
Inventory holding days of Oberoi Reality is gradually increasing year to year. According to the
business nature the company need to hold inventory at large scale to meet the demand of
ongoing project. In FY2015 it is 38.80% higher compared to FY2014.
Inventory holding days is indicating the company’s capability to consume it inventory which
held up in godown. Taking up more projects caused for, inventory consumption days of the
increased year to year. For Oberoi higher inventory holding up is a reason for lower acid test
ratio. On the other hand, Godrej is managing its inventory better than Oberoi.
Gearing Ratio
2013 2014 20150
0.20.40.60.8
11.2
0.01 0.02 0.02
0.57
0.85000000000000
10.99
OberoiGodrej
Source: Annual Report 2013, 2014 & 2015 of Oberoi Reality (Standalone) & Godrej (Standalone)
Gearing ratios essentially tells us the amounts of risk associated to the company. A highly
geared company is more unpredictable. but in this scenario, Oberoi Reality is not a highly
geared company. Gearing ratio is stable which is because of company policy to low debt
financing. Therefore small gearing is actually meeting company’s objective.
Investor Ratio
EPS
Report Page 19
20132014
2015
02468
109.98
8.99
9.29
7.28
5.28 6.42OberoiGodrej
EPS is very crucial and important figure for common stockholders, because through this they
get to know earning of the company in future and based on this value of the stock may
increase, Oberoi Reality EPS figure is comparatively high which indicates higher earning and
strong financial position of the company. Therefore common people attracted to the Oberoi
share compare to Godrej
Brief Overview of Indian Real Estate Sector
Real Estate sector is the backbone of the Indian economy. It is one of the major contributors to
the Indian economy. It is contributing 8.5% in total gross domestic production of India (Agarwal
A).According to the Department of Industrial Policy and Promotion (DIPP), India has received
RS 24097.91 million from April 2000-June 2015 in construction development sector (Townships,
housing, built-up infrastructure, and construction-development projects). This sector is divided
into four sub sector-
a. Housing
b. Retail
c. Hospitality
d. commercial
The housing sub-sector contributes 5-6% in GDP while contribution of other sub-sectors is
growing significantly (Corporate Catalyst (PVT) Ltd 2015). Therefore, for the analysis of PESTEL
will give a broad view regarding overall situation of entire industry.
Report Page 20
PESTEL Analysis
Political- Development and growth of any industry largely depend on stable political environment.
Political instability or reluctance or indifference of political parties precisely ruling party to any
particular industry will deter the growth of that particular industry. In this case, Indian real
estate sector is getting sufficient support from government. The Indian Government is showing
its keen interest for further development and cooperation towards the real estate sector of
India. I addition to this, Government is taking proactive measure to resolve the political
stalemates and introduce timely economic reforms that are posing to be major interruptions in
the development of this sector. Government is enacting rules and regulation for the balanced
growth of this sector. Such as-
Real Estate Investment Trust (REIT)
Open up Foreign direct investment
Real Estate Regulatory Bill
Report Page 21
All of these measures have been taken by the government for the growth of this sector. So that
it can be said, government has firm willingness to ensure sustainable development of this
sector.
Economic-Economic environment is very crucial for growth of any particular industry. Favourable
economic policy, stimulation package for investor, low interest rate, various financing source,
investment fund for investors, in recent time policy regarding foreign direct investment boosts
the confidence of investors and help the industry flourish. Indian real estate industry is
bestowed with various positive economic policy changes. In this regard, we can name-
Real Estate Investment Trust (REIT) and Infrastructure Investment Trust
(InvIts) is formed to attract investment, foster growth and development
real estate and infrastructure industries. key advantages of the trust
structure are mentioned below (Bera, Shah, Valsan, Fong & Limaye
2015)-
A. Increased transparency, professional management, a steady
stream of dividends
B. Access to an alternative source of capital.
C. Increased requirements for public disclosures
D. likely rise in institutional investors should see transparency and
governance improve,
E. Necessitate the need for professional management.
FDI: The Indian Government allow foreign direct investment in
construction sector by relaxing the established norms. Capital
requirement for foreign direct investment was USD 10 million which is
reduced to USD 5 million and minimum floor area requirement also
reduced to 20000 sq meter from 50000 sq meter (Business Standard 4
January 2014). In addition to this, government complete removed
Report Page 22
minimum land requirements for serviced plots, which was 10 hectares
(The Indian Express 29 October 2014).
Social-Social environment of any country composed of society’s beliefs, values, customs, practices and
behaviours. A business operates in a society, where people from different walks of life live
together. A business operates in an ever changing social environment so the social environment
is always complicated for any industry to operate.
Growing Urbanization: Rapid increase in urbanization is playing vital role
for the growth in Real Estate sector. As increasing number of living in
urban than it is inevitable to ensure better habitat, metros, hospitality
and commercial space.
Urbanization to Fuelling Housing Demand in Leading Cities-
2001 2011 2021 20260
100200300400500600
286357
432534
Urban Population (in Million)
Urban Population (in Million)
Note from: Population Projection in India, Register General of India
Indian Population increased at an unprecedented rate, with almost 71
million people added to urban population from 2001-2011. If Indian
population increased at this rate then it is expected to reach 534 million
in 2026.This offer tremendous opportunity for real estate development,
precisely housing.
Report Page 23
Housing for ALL by 2022: In addition to this, Prime Minister of India
Narendra Modi launches Housing for All by 2022 initiative (Housing for all
by 2022, 2015). This massive development program known as – “Housing
for All by 2022”, which will therefore necessitate a dynamic public-
private partnership. Private sector firms have shown a burgeoning
interest in the lower-income housing landscape, mostly in the urban
context. The government also made some policy in this regard which
declared in the 2014-15 Budget. It is mentioned in 2014-15 Budget that-
borrowing costs for developers will be lower, and increasing homebuyer
loan limits for affordable housing from INR 2.5 million (USD 39,000) to
INR 6.5 million (USD 100,000) in metropolitan cities and to INR 5 million
(USD 78,000) in other cities (Bera, Shah, Valsan, Fong & Limaye 2015).The
Government of India will construct 30 million houses by 2022 for weaker
section and lower income group through public – private partnership and
interest subsidy (Indian Brand Equity Forum 2015).
SMART CITY: Indian government is going to build up 100 smart cities in
India. Indian government want to ensure housing for all by 2022 in
addition to this, government want to construct smart cities around India.
Smart city mainly promote core infrastructure and give a decent quality
of life to its citizen, a clean and sustainable environment an application of
Smart Solution (Ministry of Urban Development, Government of India,
2015). Ministry of Urban Development has already allocated RS 7060
crore rupee for the development of 100 smart cities in Union Budget
2014-2015 (Grant Thornton 2015).
Technology-
Report Page 24
Suitable technological environment is very much crucial for the development and progress of
any sort of industry. Real estate sector largely depends on construction technology. Indian real
estate sector is coping up with fast paced changing construction technology. Conventional
technology is time consuming and caused to escalate the project cost therefore realtors are
look at alternate technologies (Kharakhanis, N 2013).
Environment- Environment is become much uttered word in the world of business. All sectors regardless its
size are concern about environmental protection. Therefore in many cases, establishing ETP is
mandatory. In addition to establishing ETP, increasing use of renewable energy, conservation of
energy ensures to protect environment. Government of India initiates to promote Green
Affordable housing with the collaboration of State Government.
According to Anita Agnihotri, Secretary, Housing Ministry-
“With increased urbanization, there is a growing need to develop and promote housing
structures which are not only affordable but also sustainable and scalable.” (Business Line,
September 7, 2014)
Indian Green Building Council (IGBC), which is the integral part of Confederation of Indian
Industry (CII) formed in the year 2001, to enable a sustainable built environment for all and
facilitate India to be one of the global leaders in the sustainable built environment by
2025.IGBC set the target to establish 10 billion sft green building base in the country by 2022
(BS Reporter 2014). In addition to this, IGBC is also engage in rating of green building.
Legal:Legal environment of any country need to be favourable for expansion of any particular
industry. Government need to formulate or enact law in such manner which facilitates the
growth of an industry. Indian Real Estate Sector has been supported by the enactment of new
law, which is widely known real Estate Bill (Development & Regulation). The government of
India enacts the Real estate Bill (Development &Regulation) which aims to protect consumer
interest and introduce standardization business practice and transaction in the sector. This bill
also enables inflow of foreign direct investment (Corporate Catalyst (PVT) Ltd 2015).
Report Page 25
SWOT Analysis
Financial and Strategic SWOT Analysis provides a comprehensive insight into the company’s
history, corporate strategy, business and financial structure, management and operations. The
report contains a detailed SWOT analysis, information on the company’s products and services,
key competitors, as well as detailed financial information. Data on this page may have come in
part, or entirely, from one or more data providers. Please contact us for further information.
We are not responsible for any errors or omissions on this page. This website is for information
purposes only
Strength
High profitability and revenue – Oberoi Reality is generating high return
as the business eyes on premium developments. The company ensure
high quality of products use of high quality of about new acquisitions,
Oberoi Reality is doing best in terms of maintaining healthy balance
sheet, access to finance, and superior land bank quality with no debt,
high returns and strong cash flow (KARVY 2014).
Skilled workforce - The Company has a strategy to improve its workforce
capacity and company already started various training program for its
workforce. In addition to this, company also provide various benefit
scheme for its employees at various level.
Brand portfolio- Obroi Reality establish itself aas high end relators among
customers. Oberoi Reality emphasize on premium developments for its
customers. Oberoi reality has been awarded as Master Brand in 2012 by
CMO Council, CMO Asia and Asian Confederation on Business (Press
Release 2012). According to the Reem Kundani (Vice President,
Marketing & Corporate Communications)-
Report Page 26
“Brand ‘Oberoi Realty’ encompasses the entire universe of its purpose,
principles, products, expressions and perceptions and we try to bring the
brand alive innovatively through all its experiences. Having created
several landmark developments over the last three decades, Oberoi
Realty has endeavoured to enhance the quality of life of its customers
and constantly striven to build trust with its stakeholders”(press Release
2012).
Weaknesses
Less Locational Diversification- Locational Diversification is very
important to the sustainable growth, revenue generation or in another
way it is crucial mechanism for strong balance sheet. Oberoi Relaity, is
mainly Mumbai based company and most of its project situated in
aristocratic area of Mumbai. Less locational diversification may hamper
revenue generation in future. So that the company need to take initiative
to diversify its project location in near future. However Oberoi Reality is
moving out from home market (Mumba ) at slow pace. In next 2-3 years
competitive positioning is expected to change in NCR outside Mumbai
and new markets will contribute 10-15% in volumes (KARVY, 2014).
Opportunities
Demography - 64.9% of the India population is between 15 and 64 years
which, in other words, states that over 700 million are legal candidates to
have a car. (Index Mundi) This number is growing.
Economy - The eyes of the world are on India’s economy. There is a lot of
demand for Indian products. Many journals such as The Economist and
India is growing economic power house. Indian economy will grow by
7.4% this fiscal year, outpacing China to become world’s fastest growing
economy (The Times of India 9 February 2015). The per capita net
Report Page 27
national income raised by 10.1% to RS. 88,538 from RS. 80,380 compare
to previous year (The Times of India 9 February 2015). This is an
opportunity for the company to have trustworthy providers as well as
employees.
Threats
Economy – A fast growing economy could mean more competitors. At
the same time, high demand of products could bring inflation that affects
the company’s potential clients budged. The following statement was
taken from bbc.co.uk: “Raging inflation and a gradual increase in
borrowing costs has dampened domestic demand, alongside lackluster
investment sentiment,” said Radhika Rao of Forecast Pte.
Highly Segmented –Oberoi Reality highly concentred to the highly
segmented market or in other way it can be said, Oberoi Reality focused
on premium product developments. Oberoi Reality highly concentrated
in premium segment which is susceptible to economic slowdown.(Care
Ratings July 20,2015).
Conclusion and Recommendations:
As it is mentioned earlier, in this report for analysis purpose, Annual Report (standalone) has
been used. It is also important to mention that product category of both of the company almost
identical. It clearly stated the rationale behind selecting Oberoi Reality Limited for my analysis.
In this report business performance and financial performance of Oberoi Reality Limited is
analysed. Here for financial purpose ratio analysis is used, so that financial performance of
Oberoi Reality Limited can be understand and evaluate. In this analysis, it is found; Oberoi
Reality Limited is maintaining stable and high Gross Profit Margin (GPM) throughout three
financial years, along with GPM, other profitability ratio is showing stable over the years and
attained tremendous performance over its competitor Godrej. If Oberoi Reality Limited could
have maintain the momentum of this high return then profitability will get better much in
Report Page 28
coming years. Return on Capital Employed (ROCE), (calculate based information collected from
standalone annual report) also give improve scenario of the company. Liquidity position of the
company is satisfactory. Oberoi Reality Limited has sufficiency in terms of paying current
liability by using its current asset. According to the Standalone Annual Report 2015, investors
are likely to be optimistic and net profit left high EPS.
Being top ranked real estate developers in India Oberoi Reality Limited has to abide by laws and
restrictions, corporate governance code, which the company is meeting successfully. Moreover
Indian overall real estate sector is getting favourable environment for doing business.
Government of India is trying its level best to ensure best possible facilities to stimuli the
industry. Government of India have already formulated industry friendly regulations which
protect the interest of both parties (Customers & sellers). Oberoi reality Limited is capable
enough to utilize the facilitation of the government and move forward with pride and dignity.
REFERENCE
1. Obeori Reality, (WikiArticle),June 15, 2015 Available From: https://en.wikipedia.org/wiki/Oberoi_Realty (Accessed: 22 September 2015)
2. Available from: http://pestleanalysis.com/what-is-pestle-analysis/ (Accessed: 22 September 2015)
3. Agarwal, A. 2013, Real estate: Propeller of growth for Indian economy, Money Control. Availablefrom:www.moneycontrol.com/master_your_money/stocks_news_consumption.php?
autono=1073556 (Accessed: 22 September 2015)
4. Ministry of Commerce & Industry, Department of Industrial Policy & Promotion, Fact Sheet on Foreign Direct Investment (FDI) APRIL 2000 to JUNE 2015, Available From: http://dipp.nic.in/English/Publications/FDI_Statistics/2015/india_FDI_ June2015.pdf (Accessed: 22 September 2015)
Report Page 29
5. Corporate Catalyst India (PVT) Ltd., A Brief Report on Real Estate Sector in India. Available From: http://www.cci.in/pdfs/surveys-reports/Real-Estate-Sector-in-India.pdf(Accessed: 23 September 2015)
6. JLL ,Indian Real Estate: The Modi Impact, Available from: http://www.ap.jll.com/asia-pacific/en-gb/Research/IndiaPaper-ModiFirstYr-Final.pdf?630f252e-4857-4ed5-bf2e-55bb1234b977 (Accessed: 22 September 2015)
7. Office Of The Registrar General & Census Commissioner, Census of India 2001: Population Projections for India and states 2001-2026, Available from: https://nrhm-mis.nic.in/Part%20B%20Demographic%20and%20Vital%20Indicators/Population%20Projection%20Report%202006%20by%20RGI.pdf (Accessed: 22 September 2015)
8. PM INDIA, Housing for All by 2022" Mission - National Mission for Urban Housing, Available from:http://pmindia.gov.in/en/news_updates/housing-for-all-by-2022-mission-national-mission-for-urban-housing/?comment=disable (Accessed: 22 September 2015)
9. Bera, S, Shah A, Valsan, S Fong, L & Limaye A, Indian Real Estate: The Modi Impact, September 2015, Available from: http://www.ap.jll.com/asia-pacific/en-gb/Research/IndiaPaper-ModiFirstYr-Final.pdf?630f252e-4857-4ed5-bf2e-55bb1234b977 (Accessed: 22 September 2015)
10. BS Reporter 2014, Govt relaxes FDI policy for real estate sector. Business Standard 4 December 2014.Availbale from: http://www.business-standard.com/article/economy-policy/govt-relaxes-fdi-policy-for-real-estate-sector-114120300710_1.html [Accessed 7 October 2015]
11. PTI 2014, Government relaxes FDI norms for construction, real estate sector. The Indian Express 29 December 2014. Available from: http://indianexpress.com/article/business/economy/government-relaxes-fdi-norms-for-construction-real-estate-sector/ [Accessed 7 October 2015]
12. Indian Brand Equity Forum 2015, Real Estate Industry India, Government Initiatives. Available from: http://www.ibef.org/industry/real-estate-india.aspx [7 October 2015]
13. Ministry of Urban development , Government of India 2015, Available from: http://smartcities.gov.in/writereaddata/SmartCityGuidelines.pdf (Accessed: 22 September 2015)
Report Page 30
14. Grant Thornton 2015, Indian Real Estate Hand book 2015. Available from: http://www.grantthornton.in/industrysectors/indian-real-estate-sector-handbook-3/ [Accessed: 22 September 2015]
15. Kharakhanis, N 2013, Technology Innovations in Real Estates. 3 September 2013. Luxury Home Expo: Expert View. Available from: http://economictimes.indiatimes.com/technology-innovations-in-real-estate-narendra-kharkhanis-pashmina-builders/exposhow/22260155.cms. (Accessed: 22 September 2015)
16. HYDERABAD 2015, ‘Housing Ministry to promote green buildings, The Hindu 7 September. Available From: http://economictimes.indiatimes.com/news/economy/indicators/india-to-grow-at-7-4-this-year-outpacing-china/articleshow/46179512.cms(Accessed:23September 2015)
17. BS Reporter 2015, ‘IGBC targets 10 billion sft green building base, The Business Standard 4 September. Available From: http://www.business-standard.com/article/current-affairs/igbc-targets-10-billion-sft-green-building-base-by-2022-114090401367_1.html (Accessed: 23 September 2015)
18. Corporate Catalyst India (PVT) Ltd, A Brief Report on Real Estate Sector in India, Available from: http://www.cci.in/pdfs/surveys-reports/Real-Estate-Sector-in-India.pdf (Accessed: 23 September 2015)
19. KARVY, Obiroy Reality, 22 July 2014, pp-6 Available from: http://bsmedia.business-standard.com/_media/bs/data/market-reports/equity-brokertips/2014-07/14060227950.27165500.pdf (Accessed: 23 September 2015)
20. Press Release for immediate issue, Oberoi Realty a Master Brand 2012 Status Awarded by CMO Council & CMO Asia & Asian Confederation of Business Available from: http://www.oberoirealty.com/system/pdfs/37/original/Oberoi_Realty_wins_Master_Brand_2012_status_by_CMO_Council___CMO_Asia___Asian_Confederation_of_Business.pdf (Accessed: 23 September 2015)
21. Press Release for immediate issue, Oberoi Realty a Master Brand 2012 Status Awarded by CMO Council & CMO Asia & Asian Confederation of Business Available from: http://www.oberoirealty.com/system/pdfs/37/original/Oberoi_Realty_wins_Master_Brand_2012_status_by_CMO_Council___CMO_Asia___Asian_Confederation_of_Business.pdf (Accessed: 23 September 2015)
Report Page 31
22. KARVY, Obiroy Reality, 22 July 2014, pp-5 Available from: http://bsmedia.business-standard.com/_media/bs/data/market-reports/equity-brokertips/2014-07/14060227950.27165500.pdf (Accessed: 23 September 2015)
23. Business 2012, India's economic growth better than forecast, BBC News 31 august 2012, Available from: http://www.bbc.com/news/business-19432961, (Accessed: 23 September 2015)
24. Brief Rational, Care Ratings, Available from: http://www.careratings.com/upload/CompanyFiles/PR/INCLINE%20REALTY%20PRIVATE%20LIMITED-07-20-2015.pdf (Accessed: 23 September 2015)
APPENDIX
Report Page 32
Appendix-1 Extracts from Annual Reports of Oberoi Reality Ltd (Income Statements)Oberoi Reality Ltd
Profit and Loss AccountFinancial Year Ending : March 2015 2014 2013
Revenue 7,610,555,000 7,058,558,000.00 7,424,950,000.00
Less : Cost Of Sales/Services (2,178,537,000)
(2,055,564,000.00)
(2,193,069,000.00)
Opening Balance of works in progress (8,665,675,000)
-4793354000.00 -3880848000.00
Gross Profit 5,432,018,000 5,002,994,000 5,231,881,000GP Margin 71.37% 70.88% 70.46%
Less : Operating Cost (1,164,540,000)
(892,882,000.00) (791,609,000.00)
Profit/(Loss) From Operations 4,267,478,000 4,110,112,000 4,440,272,000Net Finance Costs (1,747,000.00) (2,617,000.00) (3,365,000.00)Profit/(Loss) Before Tax 4,265,731,000 4,107,495,000.00 4,436,907,000.00Tax Expense And Zakat/ provision for taxation
(1,218,032,000)
(1,156,254,000) (1,162,184,000)
Profit/(Loss) After Tax 3,047,699,000 2,951,241,000 3,274,723,000Profit/(Loss) After Tax And Before Extraordinary Item Attributable To Shareholders
3,047,699,000 2,951,241,000 3,274,723,000
Net Profit/(Loss) For The Year Attributable To Shareholders
3,047,699,000 2,951,241,000 3,274,723,000
Retained Profit/(Loss) Brought Forward 6,225,964,000 3,274,723,000 0Prior Year AdjustmentsRestated Retained Profit/(Loss) Brought Forward
6,225,964,000 3,274,723,000 0
Profit/(Loss) Available For Appropriation 9,273,663,000 6,225,964,000 3,274,723,000Unappropriated Profit/(Loss) Carried Forward
9,273,663,000 6,225,964,000 3,274,723,000
Report Page 33
Appendix-2 Extracts from Annual Reports of Oberoi Reality Ltd (Balance Sheet)Oberoi Reality Ltd
Balance SheetFinancial Year Ending :
March 2015 2014 2013
NON-CURRENT ASSETSFixed And Operating
Assets 14,973,213,000 15,598,697,000 15,343,832,000
14,973,213,000 15,598,697,000 15,343,832,000CURRENT ASSETS
Inventories 10,327,855,000 8,754,076,000 5,881,993,000Trade Receivables 276,123,000 591,947,000 352,260,000Other Receivables 698,950,000 663,600,000 637,500,000
Cash And Bank Balances 874,813,000 3,444,634,000 9,216,545,000Other Current Assets 14,787,405,000 6,783,085,000 3,040,501,000
26,965,146,000 20,237,342,000 19,128,799,000CURRENT LIABILITIES
Trade Payables 263,942,000 170,049,000 187,696,000Other Payables 10,444,757,000 6,800,570,000 7,966,828,000
Provisions For Liabilities 825,003,000 777,195,000 777,714,00011,533,702,000 7,747,814,000 8,932,238,000
NET CURRENT ASSETS/(LIABILITIES)
15,431,444,000 12,489,528,000 10,196,561,000
30,404,657,000 28,088,225,000 25,540,393,000FINANCED BY :
SHAREHOLDERS' EQUITYShare Capital 3,282,380,000 3,282,333,000 3,282,333,000
Reserves 26,410,369,000 24,058,915,000 21,781,477,000Retained Profits/(Losses)
29,692,749,000 27,341,248,000 25,063,810,000
Report Page 34
Minority Interests29,692,749,000 27,341,248,000 25,063,810,000
NON-CURRENT LIABILITIESBorrowings 466,996,000 429,866,000 270,492,000
Provisions For Liabilities 11,244,000 9,636,000 10,887,000Other Non-Current
Liabilities 233,668,000 307,475,000 195,204,000
711,908,000 746,977,000 476,583,00030,404,657,000 28,088,225,000 25,540,393,000
Appendix-3- Extracts from Annual Reports of Godrej Ltd (Income Statements)Godrej Ltd
Profit and Loss AccountFinancial Year Ending : March 2015 2014 2013
Revenue 7,187,000,000.00 7,665,569,778.00 4,894,951,683.00
Less : Cost Of Sales/Services (3,162,200,000)(4,915,116,194.00
)(2,287,491,765.00
)Gross Profit 4,024,800,000 2,750,453,584 2,607,459,918GP Margin 56% 35.88% 53.27%Less : Operating Cost (1,012,200,000) (602,914,930.00) (613,214,812.00)Profit/(Loss) From Operations 3,012,600,000 2,147,538,654 1,994,245,106
Net Finance Costs (1,575,400,000)(1,185,402,140.00
)(598,193,373.00)
Non-Operating Income 0 0 0Profit/(Loss) Before Tax 1,437,200,000 962,136,514.00 1,396,051,733.00Tax Expense And Zakat/ provision for taxation
(158,000,000) 14,380,837 (169,374,255)
Profit/(Loss) After Tax 1,279,200,000 976,517,351 1,226,677,478Profit/(Loss) After Tax And Before Extraordinary Item Attributable To Shareholders
1,279,200,000 976,517,351 1,226,677,478
Extraordinary ItemNet Profit/(Loss) For The Year Attributable To Shareholders
1,279,200,000 976,517,351 1,226,677,478
Retained Profit/(Loss) Brought Forward
2,203,194,829 1,226,677,478 0
Prior Year Adjustments
Report Page 35
Restated Retained Profit/(Loss) Brought Forward
2,203,194,829 1,226,677,478 0
Profit/(Loss) Available For Appropriation
3,482,394,829 2,203,194,829 1,226,677,478
Un-appropriate Profit/(Loss) Carried Forward
3,482,394,829 2,203,194,829 1,226,677,478
Appendix-4- Extracts from Annual Reports of Godrej Ltd (Balance Sheet)Godrej Ltd
Balance Sheet
Financial Year Ending : March
2015 2014 2013
NON-CURRENT ASSETSFixed And Operating Assets
1,220,400,000 1,111,770,828 580,873,799
Other Non-Current Assets
7,426,300,000 4,457,741,217 2,612,127,224
8,646,700,000 5,569,512,045 3,193,001,023
CURRENT ASSETS
Inventories 10,389,400,000 9,283,312,564 6,506,111,576
Trade Receivables 900,900,000 1,162,342,259 631,584,122
Cash And Bank Balances
3,565,000,000 6,525,191,207 474,535,569
Cash in hand& at banks
3,565,000,000 6,525,191,207 474,535,569
Other Current Assets 22,291,100,000 19,206,526,758 16,867,126,964
37,146,400,000 36,177,372,788 24,479,358,231
CURRENT LIABILITIES
Borrowings 18,859,800,000 13,166,907,326 4,256,146,862
Trade Payables 624,800,000 1,105,204,334 1,088,099,338
Other Current Liabilities
6,508,000,000 7,019,343,512 4,773,535,976
26,496,100,000 21,768,878,413 10,537,911,203
NET CURRENT 10,650,300,000 14,408,494,375 13,941,447,028
Report Page 36
ASSETS/(LIABILITIES)
19,297,000,000 19,978,006,420 17,134,448,051
FINANCED BY :
SHAREHOLDERS' EQUITYShare Capital 996,800,000 991,232,600 780,461,030
Reserves 18,185,700,000 16,910,311,447 12,862,476,771
Retained Profits/(Losses)
19,182,500,000 17,901,544,047 13,642,937,801
Minority Interests
19,182,500,000 17,901,544,047 13,642,937,801
NON-CURRENT LIABILITIESBorrowings 54,800,000 2,037,033,000 3,460,925,000
Provisions For Liabilities
45,500,000 28,579,179 27,817,241
Other Non-Current Liabilities
14,200,000 10,850,194 2,768,009
114,500,000 2,076,462,373 3,491,510,250
19,297,000,000 19,978,006,420 17,134,448,051
APPENDIX 5Formulas used in ratio calculation
Profitability ratios:1. Gross profit margin = Gross profit / Sales * 1002. Net profit margin = Operating profit / Sales * 1003. Return on Capital employed
= profit before interest and tax / average capital employed *100 Liquidity ratios:
1. Quick ratio = (Current assets – inventory) / Current liability2. Current Ratio = current asset / current liability
Efficiency ratios:1 Inventory days = Inventory / cost of sales * 3652. Receivables days = Receivable / Sales * 3653. Payable days = payables / Cost of Sales * 365
Gearing ratios:1. Gearing ratio = long term debt / debt + equity
Investor ratios:1. Earnings per share = Profit after tax and preference dividend / weighted average
number of shares
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