8/9/2019 Vishal Retail Pvt

1/17

ANKIT JAIN SHYAM (10PG449)ROHIT PANDEY (10PG467)

KANIKA MEHTA (10PG450)SHINJINI BHATTACHARJEE (10PG474)

SANDEEP REDDY C (10PG470)

8/9/2019 Vishal Retail Pvt

2/17

Vishal Retail pvt. Ltd.

The company needs loan of Rs.150crs. to infuse additional

working capital, for which it has approached a bank. The bank

has to decide whether to give the loan or not. The bank beforeproviding loan has to look for some key financial ratios so as

to find out the creditably of the company. In this presentation

we will derive and analyse the key financial ratios which will

help in deciding whether to sanction the loan or not.

8/9/2019 Vishal Retail Pvt

3/17

Debt Equity Ratio

0.93

1.27

0.850.71 0.75

1.49

1.94

2.86

0

0.5

1

1.5

2

2.5

3

3.5

2002 2003 2004 2005 2006 2007 2008 2009

Vishal Retail

Industry Benchmark

It indicates what proportion of equity and debt the company is using to finance its assets. It isa measure of a company's financial leverage calculated by dividing its total

liabilities by stockholders' equity

Debt Equity Ratio = Total debt/ Shareholders Capital

8/9/2019 Vishal Retail Pvt

4/17

Long - term Debt Equity Ratio

0.93

1.27

0.85

0.71

0.3

0.54

0.98

1.44

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

2002 2003 2004 2005 2006 2007 2008 2009

Vishal Retail

Industry Benchmark

The ratio is calculated by taking the company's long- term debt and dividing it by the total

value of its shareholder capital.

Long Term Debt Equity Ratio = Long Term Debt /Shareholders Capital

8/9/2019 Vishal Retail Pvt

5/17

Current Ratio

1.38

1.71.79

2.7

1.84

1.551.74

1.59

0

0.5

1

1.5

2

2.5

3

2002 2003 2004 2005 2006 2007 2008 2009

Vishal Retail

Industry Benchmark

The ratio is mainly used to give an idea of the company's ability to pay back its short-term

liabilities (debt and payables) with its short-term assets (cash, inventory, receivables). Thehigher the current ratio, the more capable the company is of paying its obligations.

Current Ratio =Total Current Assets / Total Current Liabilities

8/9/2019 Vishal Retail Pvt

6/17

Interest Cover Ratio

6.6

3.48

7.33

6.1

7.05

3.5

2.62

-0.43

-1

0

1

2

3

4

5

6

7

8

2002 2003 2004 2005 2006 2007 2008 2009

Vishal Retail

Industry Benchmark

This ratio used to determine how easily a company can pay interest on outstanding debt. The

interest coverage ratio is calculated by dividing a company's earnings before interest and taxes(EBIT) of one period by the company's interest expenses of the same period.

Interest Cover Ratio = EBIT/Interest Expense

8/9/2019 Vishal Retail Pvt

7/17

Turnover Ratios

Debtors RatioIt indicates the velocity of debt collection of a firm. In simple words it indicates the numberof times average debtors are turned over during a year.

Debtors Turnover Ratio = Net Credit Sales / Average Trade Debtors

0 0 0 0

6409.785739.52

16755.17

977.560

2000

40006000

8000

10000

12000

1400016000

18000

Vishal Retail

IndustryBenchmark

8/9/2019 Vishal Retail Pvt

8/17

Inventory Ratio

2.08

5.09 5.32 5.07 4.99

3.68

2.492.28

0

1

2

3

4

5

6

7

2002 2003 2004 2005 2006 2007 2008 2009

Vishal Retail

Industry Benchmark

This ratio is compared against industry averages. A low turnover implies poor sales

and, therefore, excess inventory. A high ratio implies either strong sales or ineffective buying.

Inventory Turnover Ratio= Sales/ Average Inventory

8/9/2019 Vishal Retail Pvt

9/17

Fixed Assets Turnover Ratio

6.1

11.98

9.61

8.06 8.24

6.74

5.09 4.39

0

2

4

6

8

10

12

14

2002 2003 2004 2005 2006 2007 2008 2009

Vishal Retail

Industry Benchmark

The fixed-asset turnover ratio measures a company's ability to generate net sales from fixed-

asset investments. A higher fixed-asset turnover ratio shows that the company has beenmore effective in using the investment in fixed assets to generate revenues.

Fixed-Asset Turnover Ratio: Net Sale/ TotalFixed Assets

8/9/2019 Vishal Retail Pvt

10/17

Creditors velocity and Cash flows

0 13 13 13 13 13 1218

0 -2.48 -4.64 -1.01-28.41

-105.89

-196.72

-65.87

0 -3.7 -7.4 -10.69-25.91

-95.81-114.58-108.27

0 7.88 11.5 11.86

60.38

203.59

356.24

133.35

-300

-200

-100

0

100

200

300

400

2002 2003 2004 2005 2006 2007 2008 2009

Crs velocity Ratio

Cash from Opr Activities

Cash Flow from Inv

activities

Cash flow from Financing

Activities

8/9/2019 Vishal Retail Pvt

11/17

ROCE

7.05

12.81

8.92

16.11

24.0222.17

17.45

00

5

10

15

20

25

30

2002 2003 2004 2005 2006 2007 2008 2009

Vishal Retail

Industry Benchmark

A ratio that indicates the efficiency and profitability of a company's capital investments.

ROCE should always be higher than the rate at which the company borrows, otherwise anyincrease in borrowing will reduce shareholders' earnings.

ROCE = EBIT/(Total Assets Current Liabilities)

8/9/2019 Vishal Retail Pvt

12/17

RONW

10.66

3.87 4.07

13.89

25.44 25.86

20.43

0

-5

0

5

10

15

20

25

30

2002 2003 2004 2005 2006 2007 2008 2009

Vishal Retail

Industry Benchmark

ratio of net income after taxes to total end of the year net worth . This ratioindicates the return on stockholder's total equity.

RONW = PAT/Shareholders Fund

8/9/2019 Vishal Retail Pvt

13/17

EPS = PROFIT AFTER TAX / NUMBER OF EQUITY SHARES

1.192 1.1752.037 2.038

7.513

13.679

18.14

00

5

10

15

20

2002 2003 2004 2005 2006 2007 2008 2009

EPS

EPS

8/9/2019 Vishal Retail Pvt

14/17

Rate of Growth

0

125 140.26 129.8 121.3588.94 113.92

-34.840

254.33

76.34 66.0797.14 108.93

66.8138.570

327.08

46.83

195.68 204.04160.05

84.41

-94.75

111.54

-30.1

694.74

310.26

102.2662.17

-332.48

253.66

27.59

221.08 198.82127.32

69.12

-166.94

-400

-200

0

200

400

600

800

2002 2003 2004 2005 2006 2007 2008 2009

Net worth

Net Sales

PBIDT (%)

PAT (%)

CP (%)

It is year-over-year change, expressed as a percentage.

8/9/2019 Vishal Retail Pvt

15/17

We see a huge growth potential in the sector andnot only in

this sector but also in thecompany. Though thecompany

has not come upto theexpectations in the last year , it was

still able to maintain its debtors turnover ratio as well as the

current ratio.Looking at the long term analysis of thecompany, decline in

the profits in the year 2009 alonecannot be the only

determinant in thedecision making as to provide the loan or

not.

What a reasonably banker woulddo is - would go ahead with

the proposal of sanctioning the loan of Vishal Retail Pvt Ltdto theextent of 150 crores, seeing the growth potential in

the sector and thecompany.

But what a conservative banker woulddo is refrain from

providing the loan to Vishal Retail Pvt Ltd.

CONCLUSION

8/9/2019 Vishal Retail Pvt

16/17

BSE NSE

62.00

(5.60)

62.00

(5.65)

Previous 56.40 56.35

52 W High 86.00 86.40

52 W Low 48.00 47.20

8/9/2019 Vishal Retail Pvt

17/17