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DAYANANDA SAGAR COLLEGE OF ENGINEERING Financial Ratio Analysis Submitted To: Mrs. Padma Faculty Member Department of MBA-VTU Submitted By: Mr.Santosh Hegde

Cox & Kings Financial Ratios

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Page 1: Cox & Kings Financial Ratios

DAYANANDA SAGAR COLLEGE OF ENGINEERING

Financial Ratio Analysis

Submitted To:

Mrs. Padma

Faculty Member

Department of MBA-VTU

Submitted By:

Mr.Santosh Hegde

1DS12MBA62

MBA 2nd Semester

Page 2: Cox & Kings Financial Ratios

CONTENTS1. About Cox & Kings2. Balance Sheet for 2009-20123. Profit & Loss Account for 2009-20124. Cash Flow Statement for 2009-20125. Financial Ratios

Liquidity Ratio Current Ratio Quick Ratio

Long Term Solvency Ratio Debt Equity Ratio Interest Coverage Ratio

Turnover Ratio Stock Turnover Ratio Debtor’s Turnover Ratio Total Assets Turnover Ratio Fixed Assets Turnover Ratio

Profitability Ratios Gross Profit Ratio Net Profit Ratio Operating Profit Ratio Return On Capital Employed Earnings per Share Dividend Payout Ratio

6. Conclusion7. Bibliography

Page 3: Cox & Kings Financial Ratios

About Cox & Kings Ltd

Cox And Kings is the longest established travel company in the world, its history stretching back to 1758 when Richard Cox was appointed as regimental agent to the Foot Guards in India under the command of Lord Ligonier.

By 1878, C&K were agents for most British regiments posted overseas, including the Royal Cavalry, Artillery and Infantry, as well as the Royal Wagon Train and the Household Brigade. The Royal Navy was next and in 1912, The Royal Air Force came under its wings.

Between 1750's and 1950's, Cox & Kings was witness to an exciting era in Indian history, and, in its own way, helped to shape it. In 1947, the British administration departed, but bound by strong ties to India, Cox & Kings stayed on and flourished. Today, Cox & Kings is a premium brand in all travel related services in the Indian subcontinent, employing over 5000 trained professionals.

Its India operations are headquartered in Mumbai and have the status of a limited company. It has over 12 fully owned offices in India across key cities such as New Delhi, Chennai, Bangalore, Kolkata, Ahmedabad, Kochi, Hyderabad, Pune, Goa, Nagpur and Jaipur.

The worldwide offices are located in UK, USA, Japan, Russia, Singapore and Dubai. It has associate offices in Germany, Italy, Spain, South Africa, Sweden and Australia.

The principal services offered by the company are:

Destination Management

Outbound Tourism

Business Travel

Incentive & Conference Solutions

Domestic Holidays

NRI

Trade Fairs

Foreign Exchange

Insurance

Page 4: Cox & Kings Financial Ratios

Balance Sheet Of Cox & Kings ---------------in Rs.Cr.------------------Particulars Mar’12 Mar’11 Mar’10

12mnths 12mnths 12mnthsSources Of FundsTotal Share Capital 68.26 68.26 62.92Equity Share Capital 68.26 68.26 62.92Share Application Money 0.00 0.00 0.00Preference Share Capital 0.00 0.00 0.00Init. Contribution Settler 0.00 0.00 0.00Pref Share Application Money 0.00 0.00 0.00Employee Stock Option 0.00 0.00 0.00Reserves 1,124.11 1,136.25 744.14Revaluation Reserves 0.00 3.34 3.05Net worth 1,192.37 1,207.85 810.11Secured Loans 3,271.27 544.33 294.60Unsecured Loans 434.90 300.00 209.73Total Debt 3,706.17 844.33 504.33Minority Interest 0.00 0.00 0.00Policy Holders Funds 0.00 0.00 0.00Group Share in Joint Venture 0.00 18.13 4.75Total Liabilities 4,898.54 2,070.31 1,319.19

Mar’12 Mar’11 Mar’10Application Of FundsGross Block 5,137.91 401.56 351.22Less: Accum. Depreciation 560.30 81.94 61.54Net Block 4,577.61 319.62 289.68Capital Work in Progress 123.75 64.12 20.45Investments 304.17 211.23 258.38Inventories 17.26 7.20 6.56Sundry Debtors 715.06 407.74 302.04Cash and Bank Balance 1,053.27 352.45 287.59Total Current Assets 1,785.59 767.39 596.19Loans and Advances 858.72 374.13 265.34Fixed Deposits 0.00 606.51 85.76Total CA, Loans & Advances 2,644.31 1,748.03 947.29Deferred Credit 0.00 0.00 0.00Current Liabilities 2,673.17 259.12 176.95Provisions 78.13 35.00 34.37Total CL & Provisions 2,751.30 294.12 211.32Net Current Assets -106.99 1,453.91 735.97Minority Interest 0.00 0.00 0.00Group Share in Joint Venture 0.00 19.78 12.65Miscellaneous Expenses 0.00 1.65 2.08Total Assets 4,898.54 2,070.31 1,319.21Contingent Liabilities 149.84 15.02 15.75Book Value (Rs) 87.34 176.45 128.26

Profit & Loss Account Of Cox & Kings ---------------in Rs.Cr.--------------Particulars Mar’12 Mar’11 Mar’10

12mnths 12mnths 12mnthsIncomeSales Turnover 837.94 495.61 399.66Excise Duty 0.00 0.00 0.00Net Sales 837.94 495.61 399.66Other Income 134.85 37.03 41.52Stock Adjustments 0.00 0.00 0.00Total Income 972.79 532.64 441.18ExpenditureRaw Materials 0.00 0.00 0.00Power & Fuel Cost 0.00 0.00 0.00Employee Cost 385.16 129.70 99.48Other Manufacturing Expenses 0.00 0.00 0.00Selling and Admin Expenses 0.00 115.35 92.69Miscellaneous Expenses 285.47 21.54 20.45Preoperative Exp Capitalized 0.00 0.00 0.00Total Expenses 670.63 266.59 212.62

Mar’12 Mar’11 Mar’10Operating Profit 167.31 229.02 187.04PBDIT 302.16 266.05 228.56Interest 184.29 54.39 26.97PBDT 117.87 211.66 201.59Depreciation 49.13 18.55 15.07Other Written Off 0.00 0.00 0.00Profit Before Tax 68.74 193.11 186.52Extra-ordinary items -2.15 -0.54 0.00PBT (Post Extra-ord Items) 66.59 192.57 186.52Tax 39.64 62.63 51.69Reported Net Profit 26.98 130.59 134.81Minority Interest 0.00 0.00 0.00Share Of P/L Of Associates -14.62 1.50 0.96Net P/L After Minority Int & Share Of Associates 74.90 128.97 133.85Total Value Addition 670.63 266.59 212.63Preference Dividend 0.00 0.00 0.00Equity Dividend 13.65 6.83 6.29Corporate Dividend Tax 2.21 1.11 1.05Per share data (annualized)Shares in issue (lakhs) 1,365.28 682.64 629.23Earnings Per Share (Rs) 1.98 19.13 21.42Equity Dividend (%) 0.00 0.00 0.00Book Value (Rs) 87.34 176.45 128.26

Page 5: Cox & Kings Financial Ratios

Cash Flow Of Cox & Kings --------------in Rs.Cr.----------------Particulars Mar’12 Mar’11 Mar’10

12mnths 12mnths 12mnthsNet Profit Before Tax 68.74 193.10 186.51Net Cash From Operating Activities -136.58 95.05 51.22Net Cash (used in)/from Investing Activities -2660.39 -81.34 -339.92Net Cash (used in)/from Financing Activities 2483.64 573.25 591.19Net (decrease)/increase In Cash and Cash Equivalents -313.33 586.96 302.49Opening Cash & Cash Equivalents 1327.73 373.85 71.36Closing Cash & Cash Equivalents 1014.40 960.81 373.85

Financial RatiosUse of Financial Ratios:

Liquidity Position Solvency Position Operating Efficiency Profitability

Limitations of Financial Ratios:

Calculated from financial statements which are themselves subject to many limitations For analysis, many ratios & factors are to be considered Calculated ratios require comparison Various terms are to be explained for inter-firm comparison Price level to be considered while making comparison Ratio analysis is based on judgment of the analyst

Page 6: Cox & Kings Financial Ratios

LIQUIDITY RATIOS / SHORT TERM SOLVENCY RATIOS

Current Ratio: The current ratio is popular financial ratio used to test a company’s liquidity by deriving the proportion of current assets available to cover current liabilities

Formula:

Analysis: The Standard ratio in this case is 2:1. In the year 2010-2011, the ratio is higher than 2011-2012. It reflects under trading or unemployed or unutilized resources. This is a very bad sign of management. It indicates a decrease in the working capital of Cox & Kings to pay out its current obligations as compared to 2010-2011

Cause: In 2010-2011, Current Assets are proportionately higher than the years 2009-2010 & 2011-2012.

Mar'10 Mar'11 Mar'1201234567

Current Ratio

Current Ratio Of Cox & Kings -------in Rs.Cr.--------Particulars Mar’12 Mar’11 Mar’10Current Ratio 0.85 5.94 4.48

Page 7: Cox & Kings Financial Ratios

Quick Ratio / Acid Test Ratio: Quick Ratio is the ratio of quick assets (generally current asset less inventory) to current liabilities; indicates a company’s ability to satisfy current liabilities with its most liquid assets

Formula:

Analysis: The standard ratio in this case is 1:1. This means for every Re.1 of Current Liabilities, there should be Re.1 of Current Assets. This ratio is also used for testing the solvency of the enterprise. The quick ratio value being higher than 1 indicates that the quick assets are enough to pay out the quick liabilities. Its value in 2011-2012 has decreased over its value in 2009-2011 indicating a fall in the capacity of the company to pay out the obligations. Since the ratio is 0.95 the company needs to work on its liquidity ratio

Cause: In 2011-2012, the Liquid Assets are proportionately lower than the year 2009-2010 & 2010-2011.

Mar'12 Mar'11 Mar'1001234567

Qucik Ratio

Quick Ratio Of Cox & Kings -------in Rs.Cr.--------Particulars Mar’12 Mar’11 Mar’10Quick Ratio 0.95 5.91 4.44

Page 8: Cox & Kings Financial Ratios

LONG TERM SOLVENCY RATIO

Debt Equity Ratio: Debt to Equity ratio indicates the relationship between the external equities or outsiders funds and the internal equities or shareholders funds.

Formula:

Analysis: The standard ratio in this case is 0.5:1(Long-Term Debt: Shareholder’s Fund). The position of the creditors will be uncomfortable if the ratio is higher than this.

Mar'12 Mar'11 Mar'100

0.51

1.52

2.53

3.5

Debt Equity Ratio

Debt Equity Ratio Of Cox & Kings -------in Rs.Cr.--------Particulars Mar’12 Mar’11 Mar’10Debt Equity Ratio 3.11 0.70 0.62

Page 9: Cox & Kings Financial Ratios

Interest Coverage Ratio: This ratio is used to determine how easily a company can pay interest on outstanding debt.

Formula:

Analysis: The lower the ratio, the more the company is burdened by debt expenses. The ratio is decreasing year by year. If the company’s ratio is 1.5 or lower, its ability to meet interest expenses may be questionable.

Cause: Due to less in earnings.

Mar'12 Mar'11 Mar'10012345678

Interest Coverage Ratio

Interest Coverage Ratio Of Cox & Kings -------in Rs.Cr.-----Particulars Mar’12 Mar’11 Mar’10Interest Coverage Ratio 1.54 4.31 6.86

Page 10: Cox & Kings Financial Ratios

ACTIVITY / TURNOVER RATIOS

Inventory Turnover Ratio / Stock Turnover Ratio: It is the ratio of cost of goods sold to inventory. This ratio indicates how many times inventory is created and sold during the period. It indicates whether investment in inventory is efficiently used or not.

Formula:

Analysis: In 2011-2012, the ratio is higher than in the year 2010-2011. It shows a good sign of the management.

Cause: The turnover on the year 2011-2012, is higher than in the year 2010-2011, 2009-2010.

Mar'12 Mar'11 Mar'100

10

20

30

40

50

60

Stock Turnover Ratio

Stock Turnover Ratio Of Cox & Kings -------in Rs.Cr.--------Particulars Mar’12 Mar’11 Mar’10Stock Turnover Ratio 48.55 32.73 31.58

Page 11: Cox & Kings Financial Ratios

Debtor’s Turnover Ratio: The ratio reveals the number of days the debtors enjoyed as credit period allowed to them. It shows how receivables or debtors are converted into cash. It is a test of the liquidity of the debtors of a firm. This ratio is also analyzed to study the debt collection policy of an enterprise. A large credit period indicates a very bad collection policy.

Formula:

Analysis: Allowing the customers extended time to pay is essentially providing them free credit. If customers fail to pay or take their time in paying, it could cost the business in bad debt expenses or, if the inventory to create the goods or the labor for the services was financed, in high interest expense - all of which hurts business profits. To improve this ratio, collect from customers as soon as possible.

Mar'12 Mar'11 Mar'101.341.361.381.4

1.421.441.461.481.5

1.52

Debtor's Turnover Ratio

Debtor’s Turnover Ratio Of Cox & Kings -----in Rs.Cr.----Particulars Mar’12 Mar’11 Mar’10Debtor’s Turnover Ratio 1.49 1.40 1.50

Page 12: Cox & Kings Financial Ratios

Total Assets Turnover Ratio: This ratio is used for comparing Sales to the total assets of the business. It also reveals the extent of utilization of the total assets in the business. The ratio proves the efficiency of the management operational activities. The higher the ratio the larger is the rate of return on capital invested in total assets.

Formula:

Total Asset Turnover = Sales/Total Assets

Analysis: During 2009-2010 and 2010-2011 the ratio proves the inefficiency of the management in operational activities. The rate of return on capital investment is not sufficient of the company in the year 2011-2012.

Cause: Comparing 2009-2010 and 2010-2011, we see that Total Assets (especially Fixed Assets) is proportionately higher in the year 2009-2010.

Mar’12 Mar’11 Mar’100

0.050.1

0.150.2

0.250.3

0.350.4

Total Asset Turnover Ratio

Total Asset Turnover Ratio Of Cox & Kings -----in Rs.Cr.----Particulars Mar’12 Mar’11 Mar’10Total Asset Turnover Ratio 0.38 0.27 0.37

Page 13: Cox & Kings Financial Ratios

Fixed Asset Turnover Ratio: This ratio reveals the relationship between the Fixed Assets and Proprietors’ fund of concern. It also shows whether the financial planning of a concern is sound or not or how much of the fixed assets are converted by the Proprietors’ fund. The ratio is applicable for the purpose of testing the solvency position and efficiency of the management

Formula:

Where,

Fixed Assets = Gross Block – Depreciation + Net Block + Capital Work In Progress

Proprietor’s Fund = Equity Share Capital + Preference Share Capital + Reserves and Surplus

Analysis: There has been a decrease in the value of the ratio in 2011-2012 as compared to 2010-2011 & 2009-2010. Since the ratio is declining over time, the company has either over invested in fixed assets or it needs to issue new products to revive its sales.

Cause: Since the efficiency of the firm to generate revenues from investments in fixed assets has gone down.

Mar'12 Mar'11 Mar'100

0.51

1.52

2.53

3.54

Fixed Assets Ratio

Fixed Assets Ratio Of Cox & Kings -------in Rs.Cr.--------Particulars Mar’12 Mar’11 Mar’10Fixed Assets Ratio 0.34 3.16 3.51

Page 14: Cox & Kings Financial Ratios

PROFITABILITY RATIOS

Gross Profit Ratio: The gross profit ratio shows the proportion of profits generated by the sale of products or services, before selling and administrative expenses. In essence, it reveals the ability of a business to create sellable products in a cost effective manner.

Formula:

Analysis: The value of the ratio has been decreased for the financial year 2011-2012 compared to its value in 2009-2010 and 2010-2011 indicating that it has made less profit.

Cause: Decrease in the ratio may be:

Purchase of raw materials at unfavorable rates Over investment or inefficient use of resources Excessive competition, compelling to sell at reduced prices

Mar'12 Mar'11 Mar'100

10

20

30

40

50

Gross Profit Ratio

Gross Profit Ratio Of Cox & Kings -------in Rs.Cr.--------Particulars Mar’12 Mar’11 Mar’10Gross Profit Ratio (%) 14.10 42.46 43.02

Page 15: Cox & Kings Financial Ratios

Net Profit Ratio: The ratio indicates the ratio of the net profit to net sales. The amount left out of the proprietors’ fund may be known from the ratio. The ratio is very helpful for measuring the profitability of the business. It is also helpful to measure the operational efficiency of the management of the concern. The more the ratio, greater is the profitability of the business.

Formula:

Analysis: The ratio of 2011-2012 is less than 20009-2010 and 2010-2012. This means that the profit position has decreased from the previous years.

Cause: This has happened due to more than proportionate increase in :

Material Price and Direct expenditure

Mar'12 Mar'11 Mar'1005

101520253035 Net Profit Ratio

Net Profit Ratio Of Cox & Kings -------in Rs.Cr.--------Particulars Mar’12 Mar’11 Mar’10Net Profit Ratio (%) 4.14 24.84 32.43

Page 16: Cox & Kings Financial Ratios

Operating Profit Ratio: This ratio indicates the profitability of current operations. This ratio does not take into account the company’s capital and tax structure.

Formula:

Analysis: Operating Profit Ratio is supposed to be below 70%. Here the ratio is well below 70%. This is favorable for the company as it provides larger margin of profit to meet operation expenses.

Mar'12 Mar'11 Mar'108.89

9.29.49.69.810

10.210.410.610.8

Operating Profit Ratio

Operating Profit Ratio Of Cox & Kings -------in Rs.Cr.--------Particulars Mar’12 Mar’11 Mar’10Operating Profit Ratio (%) 9.43 10.67 10.23

Page 17: Cox & Kings Financial Ratios

Return on Capital Employed: Return on Capital Employed is a measure of the returns that a business is achieving from that capital employed, usually expressed in percentage terms. Capital employed equals a company’s equity plus Non- current liabilities (or Total Assets – Current Liabilities)

Formula:

Analysis: If the company’s ratio is 20% or more is considered very well. Since the company has lower value of ROCE which indicates lower profitability.

Mar'12 Mar'11 Mar'1002468

10121416

Return on Capital Employed

Return on Capital Employed Of Cox & Kings -----in Rs.Cr.----Particulars Mar’12 Mar’11 Mar’10Return on Capital Employed (%) 5.80 11.44 14.10

Page 18: Cox & Kings Financial Ratios

Earnings per Share: The term Earnings per Share represents the portion of the company’s earnings, net of taxes and preferred stock dividends, that is allocated to each share of common stock.

Formula:

Analysis: The Earning per Share is the indicator of what the shareholders are earning. Here the EPS has dropped from 11.24 in 2011 to 5.69 in 2012. A decrease in the EPS value in the year 2011-2012, over the previous year indicates a low earning value for the share holders.

Cause: Due to decrease in total earnings of the company EPS has been decreased

Mar'12 Mar'11 Mar'1002468

1012

Earnings per Share

Earnings per Share Of Cox & Kings --------in Rs.Cr.--------Particulars Mar’12 Mar’11 Mar’10Earnings per Share 5.69 11.24 7.96

Page 19: Cox & Kings Financial Ratios

Dividend Payout Ratio: The dividend payout ratio is the amount of dividends paid to stockholders relative to the amount of total net income of a company. The amount that is not paid out in dividends to stockholders is held by the company for growth. The amount that is kept by the company is called retained earnings.

Formula:

Analysis: The Dividend payout value jumped by a margin of around 10% in 2011-2012, as compared to its previous year value.

Cause: Dividend Payout value has increased due to adoption of liberal dividend policy.

Mar'12 Mar'11 Mar'100

5

10

15

20

25

Dividend Payout Ratio

Dividend Payout Ratio Of Cox & Kings --------in Rs.Cr.--------Particulars Mar’12 Mar’11 Mar’10Dividend Payout Ratio 20.41 10.34 14.65

Page 20: Cox & Kings Financial Ratios

CONCLUSION

The current short term solvency ratios have fallen drastically the long term solvency ratios are still well in place. The company is struggling to create a net profit. Though Cox & Kings has a good operating profit scenario the company seems to fail somehow to produce substantial net and gross profits.

The company needs to think out their options to take an early control of the degrading situation. At present the short term solvency seems to be a problem. If the situation is not handled well then it will not take time to effect on the long term existence of the company.

The Earning per Share of the company seems to have drastically fallen in the year 2011-2012 compared to the year 2010-2011. This can be due to the knowledge of the shareholders about the depleting short term solvency capacity of the company.

The company needs to focus on improving sales and generating more revenue. They should improve their current assets situation and reach a level where they can cover their current liabilities with their current assets.

This can not only improve their short term solvency problems but also create a better conception in the shareholders’ mind about the company; resulting to increase in the share prices and growth in the EPS.

Page 21: Cox & Kings Financial Ratios

BIBLIOGRAPHY http://www.coxandkings.com http://www.moneycontrol.com http://accountingexplained.com http://www.investopedia.com