Ratio ANALYSIS OF CEAT TYRES
Ratio ANALYSIS OF CEAT TYRES
Ratio ANALYSIS OF CEAT TYRES
Working Capital:
Working capital is the capital available for conducting the day-to-day
operations of an organization; normally the excess of current assets over current
liabilities.
Working capital (abbreviated WC) is a financial metric which
represents operating liquidity available to a business, organization or other entity,
including governmental entity. Along with fixed assets such as plant and
equipment, working capital is considered a part of operating capital. Gross working
capital equals to current assets. Net working capital (NWC) is calculated as current
assets minus current liabilities.[1] It is a derivation of working capital, that is
commonly used in valuation techniques such as DCFs (Discounted cash flows). If
current assets are less than current liabilities, an entity has a working capital
deficiency, also called a working capital deficit.
A company can be endowed with assets and profitability but short of liquidity if its
assets cannot readily be converted into cash. Positive working capital is required to
ensure that a firm is able to continue its operations and that it has sufficient funds
to satisfy both maturing short-term debt and upcoming operational expenses. The
management of working capital involves managing inventories, accounts
receivable and payable, and cash.
Calculation
The basic calculation of the working capital is done on the basis of the gross
current assets of the firm.
Basic formula
working capital = Gross Current assets
Net working capital = Current assets Current liabilities.
It exports to over 110 countries across the world. In April 2007, the de-merger of
its investment business to a separate investment and finance company was
approved. CEAT is the only tyre company to be awarded the ISO/TS 16949:2002
certification. It is also the 1st Indian tyre company to get a TUV certificate.
Comparison of sales:YEAR
Sales
2007-08
2,32,996
2008-09
2,51,369
2009-10
2,80,747
2010-11
3,46,892
2011-12
4,49,202
sales
600000
500000
400000
300000
sales
200000
100000
0
2007-08
2008-09
2009-10
2010-11
2011-12
Interpretation:The above graph shows the comparison of sales of the company. In 2007-08 the
sales of the company was around 2, 32,996 it increases to 2, 51,369 in next years.
In 2011-12 it reaches to 4, 49,202. This shows that the companys turnover is
double in last five year.
2007-08
2008-09
7.54
2009-10
22.28
2010-11
161.04
-16.11
2011-12
148.60
PAT
180
160
140
120
100
80
60
40
20
0
-20
-40
PAT
2007-08
2008-09
2009-10
2010-11
2011-12
Interpretation:The above graph shows the profit after tax of the company of last five year. In
2007-08 the profit of the company was very low & it was 7.54%. In 2008-09 it
increases to 22028% in 2009-10 it reaches to 160.04% which is very good for the
company in 2010-11 the company had made a loss of 16.11% which is not good
for the company. In last year the company had made a profit of 148.60%.
Comparison of dividend:YEAR
2007-08
2008-09
2009-10
2010-11
2011-12
3.42
6.85
13.70
0.00
13.70
DIVIDEND
DIVIDEND
16
14
12
10
8
DIVIDEND
6
4
2
0
2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
Interpretation:The above graph shows the dividend paid by the company to its share holders in
last five year. In 2010-11 the company had not paid the dividend to its share holder
because of the company had made a loss of 16.11%
WORKING CAPITAL
OF CEAT TYRES LTD
(2) Liquidity ratio:These ratios indicate the poison of liquidity. They are
computed to ascertain whether the company is capable of meeting its
short term obligation.
- current ratio
- liquid ratio
- acid teat ratio
Proprietary ratio
10
(4) Turnover ratio:These ratios show the efficiency with which resources
are employed in business.
- Fixed assets turnover ratio
- Total assets turnover ratio
- Stock turnover ratio
- Debtors ratio
- Creditors ratio
(5) Coverage ratio:These ratios show how better the debts payment is
covered by profits in business.
- Debt service coverage ratio
- Interest coverage ratio
11
(B) Calculation and interpretation of ratio:1. Profitability ratio:(A) Gross profit ratio = Gross profit * 100
Sales
Gross profit = sales-cogs
2011-12
95285.29*100
464899.71
20.50%
2010-11
56358.1*100
346892.25
16.25%
2009-10
86341.11*100
280747.60
30.75%
2008-09
61059.5*100
251369.25
24.29%
2007-08
67308.86* 100
232996.67
28.59%
Interpretation:Profitability ratio shows the profit of the company. Gross profit of the company in
2007-08 was 28.59% it reaches 24.29% in next year. In 2009-10 the gross profit of
the company was 30.75%. In 2010-11 the companys profit was very low.
12
2010-11
2228.33 * 100
346892.25
0.64%
2009-10
16104.15* 100
280747.60
5.74%
2008-09
1611.16 * 100
251369.25
0.64%
2007-08
14860.44* 100
232996.67
6.38%
2011-12,
3.72%
2007-08, 6.92%
2010-11, 4.00%
2008-09, 8.39%
2009-10,
3.28%
Interpretation:Net profit ratio shows the profitability of the company. In 2007-08 the profit of the
company was 6.38% in 2008-09 the profit of the company was 0.64% which is
very low as compare to last year. In 2011-12 the profit of the company is
0.39%which is very low in the five years.
13
2010-11
290534.15+23627.15*100
346892.25
90.56%
2009-10
194406.49+16310.03*100
280747.60
75.05%
2007-08,
81.09%
2008-09,
87.44%
2008-09
190309.75+29488.53*100
251369.25
87.44%
2007-08
165627.81+23134.4*100
232996.67
81.09%
2011-12,
87.71%
2010-11,
90.56%
2009-10,
75.05%
Interpretation:Operating expenses ratio shows that how much expenses had made by the
company in one year. In 2007-08 the expenses of the company was 81.09% & it
reaches to 90.56% in the year 2010-11. In the year 2009-10 the expenses ratio was
75.05% which is low as compare to the other years.
14
2010-11
1063.53*100
346892.25
.31%
2009-10
1188.79*100
280747.60
0.42%
2008-09
1669.92*100
251369.25
0.66%
2007-08
1176.23*100
232996.67
0.50%
2011-12,
0.21%
2007-08, 0.50%
2010-11, 0.31%
2008-09, 0.66%
2009-10, 0.42%
15
2010-11
8675.85*100
346892.25
2.33%
2009-10
5901.44*100
280747.60
2.10%
2008-09
6723.61*100
251369.25
2.67%
2007-08
5841.79*100
232996.67
2.51%
2007-08, 2.51%
2011-12, 4.27%
2008-09, 2.67%
2010-11, 2.33%
2009-10,
2.10%
Interpretation:Financial expenses shows the companys financial expenses which the company
had made for improving its performance, its productivity, & for its development.
In 2007-08it was 2.51% & it reaches to 4.27% which is double in five years. In
2008-09 it was 2.67%, in 2010-11 it was 2.33%.
16
2010-11
23627.15*100
346892.25
4.00%
2009-10
16310.03*100
280747.60
3.28%
2008-09
29488.53*100
251369.25
8.39%
2007-08
2313.44*100
232996.67
6.92%
2011-12,
3.72%
2007-08, 6.92%
2010-11, 4.00%
2008-09, 8.39%
2009-10,
3.28%
17
2010-11
3324.19*100
127327.98
2.61%
2009-10
23899.65*100
94076.50
25.40%
2011-12, 1.94%
2007-08,
25.34%
2008-09
3317.22*100
88650.58
3.74%
2007-08
19731.04*100
77864.81
25.34%
2010-11, 2.61%
2009-10,
25.40%
2008-09, 3.74%
Interpretation:The above ratio shows the return on capital employed by the company on one year.
The company had earned 25.34% return on its capital employed. In 2011-12 its
return is very low & it is 1.94% of its total capital which is very low & not good
for the company.
18
2010-11
2228.33*100
64914.52
3.43%
2009-10
16104.15*100
62871.45
25.61%
2011-12, 2.68%
2007-08,
28.95%
2008-09
1611.16*100
48838.15
3.30%
2007-08
14860.44*100
51325.73
28.95%
2010-11, 3.43%
2009-10,
25.61%
2008-09, 3.30%
Interpretation:Return on shareholders funds shows the hoe much return the shareholder were get
in return. In 2007-08 the ratio was 28.95% & after that the return of the company
were declined & reaches to 3.30% in 2008-09. In 2009-10 it increases to 25.61%
which is good for the company.
19
2010-11
2228.33-0*100
64914.52
3.43%
2009-10
16104.15-0*100
62871.45
25.61%
2011-12, 2.68%
2007-08,
28.95%
2008-09
1611.16-0*100
48838.15
3.30%
2007-08
14860.44-0*100
51325.73
28.95%
2010-11, 3.43%
2009-10,
25.61%
2008-09, 3.30%
Interpretation:This ratio indicates the earning of equity share holders of the company. In 2007-08
the ratio was 28.95% & after that the return of the company were declined &
reaches to 3.30% in 2008-09. In 2009-10 it increases to 25.61% which is good for
the company.
20
2010-11
2228.33
3424.35
0.65 rs
2009-10
16104.15
3424.35
4.70 rs
2011-12, 0.53
2008-09
1611.16
3424.25
0.47 rs
2007-08
14860.44
3424.25
4.34 rs
2010-11, 0.65
2007-08, 4.34
2009-10, 4.7
2008-09, 0.47
Interpretation:Earnings per share shows that how much profit each equity shareholders received.
In 2007-08 the earnings of the company was 4.34 Rs & it reaches to 4.70 Rs in
2009-10.in 2008-09, 2010-11 it was 0.47 Rs & 0.65 Rs accordingly. This ratio is
not good for the company.
21
2010-11
107.20
0.65
164.92 rs
2009-10
107.20
4070
22.81 rs
2008-09
107.20
0.47
228.09 rs
2007-08
107.20
4.33
24.76 rs
2007-08, 24.76
2008-09,
228.09
2011-12,
202.26
2010-11,
164.92
2009-10, 22.81
Interpretation:price earnings ratio shows that how much return the shareholders had made by its
current market price in the market. In 2007-08 it was around 24.76 Rs, in 2008-09
the earnings was 228.09 Rs, in 2010-11 it was 164.92 Rs. This ratio is very good
for the company.
22
2010-11
108402.33
106734.27
1.02:1
2009-10
92238.09
75467.05
1.22:1
2008-09
73964.32
48904.12
1.51:1
2007-08
69055.52
52827.32
1.31:1
2011-12,
0.82
2007-08, 1.31
2010-11, 1.02
2008-09, 1.51
2009-10, 1.22
Interpretation:Current ratio shows that how much current assets & current liabilities were there in
the company. In 2007-08 it was 1.31:1 which means that the company had 1.31
current assets against its current liabilities. In 2008-09 it was 1.51:1, in 2009-10 it
was 1.22:1, & in 2011-12 it was 0.82:1 which was very low in the five years.
23
2010-11
51656.03
106734.27
0.48:1
2009-10
51630.52
75467.05
0.68:1
2008-09
52022.69
48904.12
1.06:1
2007-08
34949.52
52827.32
0.66:1
2011-12, 0.5
2007-08, 0.66
2010-11, 0.48
2008-09, 1.06
2009-10, 0.68
Interpretation:Liquid ratio shows that how much liquidity the company has in the market.
Whether the company is liable to pay its liabilities or not. This all were calculated
on the bases of liquidity ratio. The company has more liquidity in 2008-09 which
was 1.06:1 means the company is in strong position to repay its liabilities. In 201112 it was 0.50:1 which shows that the company had borrowed more money from
the market.
24
2010-11
4788.06
106734.27
0.05:1
2009-10
13998.91
75467.05
0.19:1
2008-09
20151.84
48904.12
0.41:1
2007-08
4158.70
52827.32
0.08:1
2007-08, 0.08
2011-12, 0.2
2010-11, 0.05
2008-09, 0.41
2009-10, 0.19
Interpretation:Acid test ratio shows that how much cash is there in the hand of the company
against its liquid liabilities. In 2007-08 it was around to 0.08:1, in 2009-10 it was
0.41:1. In last year it was around to 0.2:1 which is very low & it is not good for the
company.
25
2010-11
64914.52
265504.23
24.45%
2009-10
62871.45
198365.44
31.69%
2008-09
48838.15
157725.72
30.96%
2007-08
51325.73
149025.21
104.69%
2011-12,
22.13%
2007-08,
104.69%
2010-11,
24.45%
2009-10,
31.69%
2008-09,
30.96%
Interpretation:Proprietary ratio shows the total proprietary fund against its total assets. In 2007-08
The proprietary ratio was around 104.69% which is very high against its total
assets. In 2008-09 it was around 30.96%, in 2009-10 it was 31.69% & in 2011-12
it was 22.30% which is good for the company.
26
2010-11
62413.46
64914.52
963.15%
2008-09,
81.52%
2009-10,
49.63%
2009-10
31205.11
62871.45
49.63%
2007-08,
51.71%
2008-09
39812.43
48838.15
81.52%
2007-08
26539.08
51325.73
51.71%
2011-12,
84.36%
2010-11,
963.15%
Interpretation:The above ratio shows how much debt the company has against its equity share
holders. In 2007-08 the company has 51.71% debts against its equity. In 2010-11 it
reaches to 963.15% which is very high & not good for the company, in 2011-12 it
was around 84%. This ratio shows that the company has more debt against its
equity share holders.
27
2010-11
62413.46
3524.35
18.23%
2009-10
31205.11
3424.35
9.11%
2008-09
39812.43
3424.25
11.63%
2007-08
26539.08
3424.25
7.75%
2007-08,
7.75%
2011-12,
16.69%
2008-09,
11.63%
2009-10,
9.11%
2010-11,
18.23%
Interpretation:Capital gearing ratio shows the companys long term borrowing funds which a
company had borrowed. In 2007-08 the company had 7.75% of the total equity. In
2008-09 it was around 11.63%, in 2009-10 it was around 9.11% in 2011-12 it was
16.69% which shows that the company had had taken more borrowings from out
siders.
28
2010-11
148448.92
127327.98
1.17:1
2007-08, 1.01
2009-10
100276.58
94076.56
1.07:1
2008-09
79494.69
88650.58
0.89:1
2007-08
79009.96
77864.81
1.01:1
2011-12, 1.2
2008-09, 0.89
2010-11, 1.17
2009-10, 1.07
Interpretation:The above ratio shows that how much fixed assets were there in the company
against its fixed capital. In 2007-08 it was around 1.01:1 which is good for the
company. In 2008-09 it reaches to 0.89:1 means the company has 0.89 fixed assets
against its 1 capital. In 2011-12 it was around 1.2:1 which is good for the
company.
29
2010-11
346892.25
148448.92
2.34 times
2009-10
280747.60
100276.58
2.80 times
2008-09
251369.25
79494.69
3.16 times
2007-08
67308.86
79009.96
0.85 times
2007-08, 0.85
2011-12, 3.1
2008-09, 3.16
2010-11, 2.34
2009-10, 2.8
Interpretation:
Fixed assets turnover ratio shows that how much fixed assets were there in the
company against sales of the company. In 2007-08 it was around 3.16 times of the
sales. In 2009-10 it was 2.8 times, in 2011- 12 the fixed assets turnover ratio was
3.1 times of its sales.
30
2010-11
346892.25
169213.86
2.05 times
2009-10
280747.60
130272.83
2.16 times
2008-09
251369.25
114982.95
2.19 times
2007-08
67308.86
101815.99
0.66 times
2007-08, 0.66
2011-12, 1.52
2008-09, 2.19
2010-11, 2.05
2009-10, 2.16
Interpretation:Total assets turnover ratio shows the total assets of the company against its sales.
In 2007-08 the total assets were 2.19 times of its sales which are good for the
company. In 2010-11 it was around 2.05% , in 2011-12 the total assets were 1.52
times of the sales.
31
2010-11
46867.97+0*360
346892.25
49 days
2009-10
37631.61+0*360
280747.60
48 days
2008-09
31870.85+0*360
251369.25
46 days
2007-08
30790.82+0*360
67308.86
165 days
2011-12
360
96
3.75 times
2010-11
360
49
7.35 times
2009-10
360
48
7.5 times
2008-09
360
46
7.83 times
2007-08
360
165
2.18 times
2011-12, 96
2007-08, 165
2010-11, 49
2008-09,
46
2009-10,
48
Interpretation:Debtors ratio shows that how much debt the company has to recover from the
debtors of the company. In 2007-08 debtors turnover ratio was around 2.18 times
or more than 160 days in a single year. In 2008-09 it was 46 days; in 2009-10 this
ratio was 48 days. In 2011-12 it increases to 96 days.
32
2010-11
28308.34+0*360
264969.78
38 days
2009-10
49159.76+0*360
172825.69
102 days
2008-09
29496.17+0*360
170428.51
62 days
2007-08
37039.33+0*360
147852.83
90 days
2011-12
360
71
5.07 times
2010-11
360
38
9.47 times
2009-10
360
102
3.53 times
2008-09
360
62
5.8 times
2007-08
360
90
4 times
2011-12, 71
2007-08, 90
2010-11, 38
2008-09, 62
2009-10, 102
Interpretation:The above ratio shows credit period which the company gave to its creditors. In
2007-08 this ratio was around 90 days. It reaches to 71 days in 2011-12. In 200809 the creditors ratio was 62 days; in 2009-10 it was 102 days.
33
2010-11
290534.15
19856.58
14.63 time
2009-10
194406.49
11395.63
17.06 times
2007-08, 16.85
2008-09, 18.92
2008-09
190309.75
10059.92
18.92 times
2007-08
165687.81
9833.61
16.85 times
2011-12, 17.87
2010-11, 14.63
2009-10, 17.06
Interpretation:Stock turnover ratio shows that how much stock were being turnover in one year.
In 2007-08 the stock turnover ratio of the company was 16.85 times. In 2008-09
the turnover ratio was 18.92 times; in 2009-10 it was 17.06%. In 2011-12 the ratio
was 17.87 times. This ratio of the company is very good for the company.
34
2010-11
13501.08
-24358.83
10857.75 times (loss)
2009-10
24946.07
14290.45
1.75 times
2008-09
11615.74
-24652.55
13036.81 times(loss)
2007-08
23853.44
-20845.2
3008.24 times
2011-12, 0.56
2007-08,
3008.24
2010-11,
10857.75
2008-09,
13036.81
2009-10, 1.75
Interpretation:This ratio show that how much debt covered by the company in one year. Debt
service coverage ratio shows that how much debt the company recovers in the last
five year. In 2007-08 the debt coverage ratio of the companywas3008.24 times. In
2011-12 it was around to 0.56 times which is very low in the five year. In 2008-09
the company has a loss of 13036.80 times of its profit.
35
2010-11
3717.22
6552.56
0.42 times
2009-10
23899.65
5683.13
4.21times
2011-12, 0.16
2008-09
3324.19
7849.52
0.57 times
2007-08
2426.99
15600.78
3.47 times
2010-11, 0.42
2007-08, 3.47
2009-10, 4.21
2008-09, 0.57
Interpretation:Interest coverage ratio shows the companys interest recovery from the creditors.
In 2007-08 it was 3.47 times, in 2011-12 it was around to 0.16 times or in 2009-10
this ratio of the company was 4.21 times which is very high.
36
37