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Bharti Airtel

Ratio Analysis[Type the document subtitle]

1/16/2010


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Bharti Airtel Ltd.

(Rs crore)

Balance sheet

Mar ' 09 Mar ' 08

Sources of funds

Owner's fund

Equity share capital 1,898.24 1,897.91

Share application money 116.22 57.63

Preference share capital - -

Reserves & surplus 25,627.38 18,283.8

Loan funds

Secured loans 51.73 52.42

Unsecured loans 7,661.92 6,517.9

Total 35,355.48 26,809.71

Uses of funds

Fixed assets

Gross block 37,266.70 28,115.65

Less : revaluation reserve 2.13 2.13

Less : accumulated depreciation 12,253.34 9,085.00

Net block 25,011.23 19,028.52

Capital work-in-progress 2,566.67 2,751.08

Investments 11,777.76 10,952.85


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Mar ' 09 Mar ' 08

Net current assets

Current assets, loans & advances 10,466.63 8,439.38

Less : current liabilities & provisions 14,466.89 14,362.33

Total net current assets -4,000.26 -5,922.95Miscellaneous expenses not written 0.09 0.20

Total 35,355.48 26,809.71

Profit loss account

Mar ' 09 Mar ' 08

IncomeSale 34,048.32 25,761.11

Expenses

Material consumed 12.41 33.85

Manufacturing expenses 8,627.13 7,339.01

Personnel expenses 1,397.54 1,297.88

Selling expenses 2,210.43 1,842.51

Administrative expenses 8,608.03 4,588.53

Expenses capitalized - -

Cost of sales 20,855.54 15,101.78

Operating profit 13,192.78 10,659.34

Other recurring income 235.99 266.91

Adjusted PBDIT 13,428.77 10,926.24

Financial expenses 434.16 393.43

Depreciation 3,206.28 3,166.58

Other write offs 178.82 266.07

Adjusted PBT 9,609.50 7,100.16

Tax charges 321.78 632.43

Adjusted PAT 9,287.72 6,467.73

Non recurring items -1,497.74 -162.

Other non cash adjustments -46.15 -60.67

Reported net profit 7,743.84 6,244.19

Earnings before appropriation 19,541.05 11,778.12

Equity dividend 379.65 -


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Preference dividend - -

Dividend tax 64.52 -

Retained earnings 19,096.89 11,778.12


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(Rs crore)

Cash flow

Mar ' 09 Mar ' 08

Profit before tax 8,161.54 6,972.54

Net cash flow-

operating activity11,853.15 10,459.85

Net cash used in

investing activity10,894.38 -11,648.41

Net cash used in fin.

Activity-672.00 898.03

Net inc/dec in cash

and equivalnt286.77 -290.53

Cash and equivalnt

begin of year503.31 793.47

Cash and equivalnt

end of year790.08 502.94


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RATIO ANALYSIS OF BHARTI AIRTEL

A.PROFITABILITY RATIO:

1. Gross Profit ratio = gross profit/sales *100

Mar 09 = 13192.78/34048.32 *100

= 38.74%

Mar 08 = 10659.34/25761.11 *100

= 41.37%

The gross profit ratio has decreased from the previous year that shows the company is not doingwell. The more the gross profit the greater is the earning capacity of the company. The company

should try to increase its revenue in order to have a better gross profit ratio.

2. Net Profit Ratio = net profit/sale*100

Mar 09 = 7743.84/34048.32*100

= 22.74%

Mar 08 = 6244.19/25761.11*100

= 24.2%

Here also we can observed that the net profit ratio has decreased from the previous year which is

the clear indication that the company is not doing well.net profit ratio is used to measure theoperational efficiency of the management. Hence the company should try to increase its net

profit to increase the ratio.

3. Return On Investment = profit after tax/average total assets*100

Mar 09= 9287.72/31082.595*100

= 29.01%

Return on investment indicates the profit earning capacity/profitability as compared to capitalemployed by the company. The ROI is a very good indicator of judging the utilization of

resources and capital of the company. By referring to previous year data we find that there wasincrease of less than 1% which shows the inefficiency of the company.


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4. Earning per Share = profit after tax/no. equity share

Mar 09= 928772/18982.40

= 48.93

Mar 08= 646773/18979.07

= 34.08

EPS means the portion of cost profit allocated to each share of common stock. EPS serves as anindicator o companys profitability and having a look over data we can say that profitability

position has become stronger.

The ultimate purpose of any company is to increase the shareholders wealth. So that it is alsobeneficial for the companys goodwill.

B.LIQUIDITY RATIO

1. Current Ratio=current assets/current liabilities

Mar 09=10466.63/14466.89

=0.72

Mar 08=8939.39/14362.33

=0.62

It is a widely used indicator of a company ability to pay its debt in short term. So, here we canobserve from the data that the ability of the company to pay its debts has increased. The current

ratio is 1.16:1 but the current ratio is expected to be at least 2:1, which is the satisfactory positionof the company but the company should try to increase the current ratio.

C.SOLVENCY RATIO

1. Debt To Equity Ratio= (secured loans + unsecured loans)/shareholders equity

Mar 09 = (7661.92+51.73)/27641.84

= 0.28

Mar 08 = (6517.92+52.42)/20239.36 =0.32


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The debt to equity ratio measures the relationship of the capital provided by the creditors to theamount provided by shareholders. It also shows the efficiency of the management in financial

planning. From above data we can conclude that debt to equity ratio has decreased from theprevious year which shows the increase in the shareholders equity.

2. Liability to Equity ratio= (debt +current liabilities/shareholders equity)

Mar 09 = 22128.81/27641.84

= 0.8

Mar 08= 20880.25/20239.36

= 1.03

The liability to equity ratio is more useful in the case of firms that keep rolling over short term

obligations since these are available for the firms use for a long period of time, they may havebeen invested in long term assets such as plant and machinery. From the above data we can

conclude that it has decreased from the previous year which is good for the company.

D.ACTIVITY RATIO/ TURNOVERRATIO

1. Fixed Asset Turnover Ratio= sales/fixed assets

= 34048.32/32691.175

= 1.04

This is a measure of firms efficiency in utilizing its assets here we can observe that the value is

just 1.04 which shows the company is not managing its assets efficiently the company has moreassets than it really needs for its operation.

2. Current Assets Turnover Ratio= sales/current assets

=34048.32/31082.595

=1.095

This ratio establishes a relation between the current assets and sale of the company. From

observing the above value we can conclude that the company is using 1.1 times its current assetsfor achieving its sale.


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