GLOBAL BUSINESS PROJECT III

Financial Analysis Of Bharti Airtel Ltd.

Interim Report
(Date of submission: 25th October 2012)

Course Name:Global Business Project III Faculty Guide:Prof. Sarvanan

Submitted By: Kedar Goyal 10BSUHH010025

Objective
By looking at the balance sheet, cash flow statement and income statement, trying to determine a company's value. In financial terms attempts to measure a company's intrinsic value. It is conducted with the aim of detailed and objective assessment and analysis of past financial companies results, and forecasts of the same in the future. Financial analysis is extremely important and should be implemented when investing and in equity of the company. With financial analysis, investors evaluate their investment in the company, and try to discover possible errors of existing company management. Predicting the state of future liquidity, profitability, debt and company activities.

Technical Analysis:The point of technical analysis is to properly identify setups where you historically have a high probability of success on any given trade, ideally along with a favorable risk to reward ratio. The purpose of technical analysis is to carry out price forecasts. By processing historical market data of any instrument, and trying to anticipate how it should be traded. There are several premises in favor of the reliability of technical analysis that are based on the experience and prolonged observation.

Methodology
The project will be done in the following steps: Data will be collected from the secondary sources like company website and other sites like moneycontrol.com. Fundamental Analysis: It will be conducted using various tools such as ratio analysis, Cash flows, and Companys historical performance etc., which will be carried out by looking into the Financial Statements and the balance sheet of the Company. Technical Analysis: We try to use purely numeric methods to figure out where the price is going. Their methods may look at the price, volume, and trends etc. Their tools are usually something that grabs the numbers and helps them figure out a "pattern" in the market. This may include moving averages, Bar chart, Line chart, Candle stick and other such indicators.

The balance sheet, income statement etc will be taken. After collecting all the required data, the analysis will be done on the company.

What is an investment

Investment means something that is purchased with money that is expected to produce income or profit. Investments can be broken into three basic groups: ownership, lending and cashequivalents.

Ownership

Investment

Lending

Cash Equivalents

Ownership investments are the most volatile and profitable class of investment. The following are examples of ownership investments:

Stocks
Stocks are literally certificates that say you own a portion of a company. More broadly speaking, all traded securities, from futures to currency swaps, are ownership investments. When you buy one of these investments, you have a right to a portion of a company's value or a right to carry out a certain action. Your expectation of profit is realized by how the market values the asset you own the rights to. Eg: If you own shares in L&T and L&T posts a record profit, other investors are going to want L&T shares too. Their demand for shares drives up the price, increasing your profit if you choose to sell the shares.

Business
The money put into starting and running a business is an investment. Entrepreneurship is one of the hardest investments to make because it requires more than just money. Consequently, it is also an ownership investment with extremely large potential returns. By creating a product or service and selling it to people who want it, entrepreneurs can make huge personal fortunes. Eg: Bill Gates, founder of Microsoft and one of the world's richest men.

Real Estate
Land, Houses, apartments or other dwellings that you buy to rent out or repair and resell are investments. The mortgage meltdown of 2008 and the underwater mortgages it produced are a good illustration of the dangers in considering your primary residence an investment

Precious Objects
Gold, Silver and other precious objects can all be considered an ownership investment - provided that these are objects that are bought with the intention of reselling them for a profit. Precious metals and collectibles are not necessarily a good investment for a number of reasons, but they can be classified as an investment nonetheless. They have a risk of physical depreciation (damage) and require upkeep and storage costs that cut into eventual profits.

Lending Investments
they tend to be lower risk than ownership investments and return less as a result. A bond issued by a company will pay a set amount over a certain period, while during the same period the stock of a company can double or triple in value, paying far more than a bond - or it can lose heavily and go bankrupt, in which case bond holders usually still get their money and the stockholder often gets nothing. Savings Account Even if you have nothing but a regular savings account, you can call yourself an investor. You are essentially lending money to the bank, which it will dole out in the form of loans. Bonds Bond is a catchall category for a wide variety of investments from CDs and Treasuries to international debt issues. The risks and returns vary widely between the different types of bonds, but overall, lending investments pose a lower risk and provide a lower return than ownership investments.

Cash Equivalents
These are investments that are "as good as cash," which means they're easy to convert back into cash. Money Market Instruments With money market Instruments, the return is very small, 1 to 2%, and the risks are also small. Money market funds are more liquid than other investments, meaning you can write checks out of money market accounts just as you would with a checking account. When considering an investment, things to be done. Before investing you should thoroughly research the company. Also, you should try to verify information independently and not simply rely on the information provided by the company. If investing in a companys business, investors should research that companys market, its competition, and business plan. If investing in a company that will manage your money or make investments with your money, you should research the background of the company and its management. For background research, the first step may be a simple search on google.com. Each business carries a unique set of challenges and investors should be aware of the relevant experience of the company and its managers. This information should be included in the disclosure documents, but investors should verify this information with outside sources to ensure the veracity of the information. If the company or its managers have little or no relevant experience in the proposed business, investors should consider this a serious risk of the investment.

How to analyze the company before investing Fundamental Analysis Technical Analysis Invest in Good Company Earnings Current Valuations of the Shares Future Earnings Growth Debit status of the Company

What is Fundamental analysis? Fundamental analysis involves looking at any numbers that can show something about what a companys worth. That includes the financial statements and ratios derived from those numbers that can give you more insight into whether the company is performing well, indifferently or

badly. Fundamental analysis focuses on creating a portrait of a company, identifying the intrinsic or fundamental value of its shares and buying or selling the stock based on that information. ic, value. If the intrinsic value is lower than the prevailing share price the analyst will rate the stock as a buy; if its lower, then the analyst will recommend a sell. And if intrinsic value is broadly in line with the market price the share will be labeled a hold. These recommendations usually have a one-year time horizon Fundamental analysis is basically done for long term and mid term investment which is also called as delivery based investment or trading. The main important aim behind is to study and understand the company in which you are planning to invest your hard earned money and get excellent returns. Basically one should be able to judge at least how the company has done in past years, its debit status, its current valuation, its future growth prospects, its earning capacity etc So that based on these terms he can at least decide whether to invest in this company or not. Technical Analysis Technical analysis is a method of evaluating securities by analyzing the statistics generated by market activity, such as past prices and volume. Technical analysts do not attempt to measure a security's intrinsic value, but instead use charts and other tools to identify patterns that can suggest future activity. Just as there are many investment styles on the fundamental side, there are also many different types of technical traders. Some rely on chart patterns; others use technical indicators and oscillators, and most use some combination of the two. In any case, technical analysts' exclusive use of historical price and volume data is what separates them from their fundamental counterparts. Unlike fundamental analysts, technical analysts don't care whether a stock is undervalued - the only thing that matters is a security's past trading data and what information this data can provide about where the security might move in the future. The field of technical analysis is based on three assumptions: 1. 2. 3. The market discounts everything. Price moves in trends. History tends to repeat itself.

1. The Market Discounts Everything A major criticism of technical analysis is that it only considers price movement, ignoring the fundamental factors of the company. However, technical analysis assumes that, at any given time, a stock's price reflects everything that has or could affect the company - including

fundamental factors. Technical analysts believe that the company's fundamentals, along with broader economic factors and market psychology, are all priced into the stock, removing the need to actually consider these factors separately. This only leaves the analysis of price movement, which technical theory views as a product of the supply and demand for a particular stock in the market. 2. Price Moves in Trends In technical analysis, price movements are believed to follow trends. This means that after a trend has been established, the future price movement is more likely to be in the same direction as the trend than to be against it. Most technical trading strategies are based on this assumption. 3. History Tends To Repeat Itself Another important idea in technical analysis is that history tends to repeat itself, mainly in terms of price movement. The repetitive nature of price movements is attributed to market psychology; in other words, market participants tend to provide a consistent reaction to similar market stimuli over time. Technical analysis uses chart patterns to analyze market movements and understand trends. Chart Types There are four main types of charts that are used by investors and traders depending on the information that they are seeking and their individual skill levels. The chart types are: the line chart, the bar chart, the candlestick chart and the point and figure chart. Line Chart The most basic of the four charts is the line chart because it represents only the closing prices over a set period of time. The line is formed by connecting the closing prices over the time frame. Line charts do not provide visual information of the trading range for the individual points such as the high, low and opening prices. However, the closing price is often considered to be the most important price in stock data compared to the high and low for the day and this is why it is the only value used in line charts.

Bar Charts The bar chart expands on the line chart by adding several more key pieces of information to each data point. The chart is made up of a series of vertical lines that represent each data point. This vertical line represents the high and low for the trading period, along with the closing price. The close and open are represented on the vertical line by a horizontal dash. The opening price on a bar chart is illustrated by the dash that is located on the left side of the vertical bar. Conversely, the close is represented by the dash on the right. Generally, if the left dash (open) is lower than the right dash (close) then the bar will be shaded black, representing an up period for the stock, which means it has gained value. A bar that is colored red signals that the stock has gone down in value over that period. When this is the case, the dash on the right (close) is lower than the dash on the left (open).

Candlestick Charts The candlestick chart is similar to a bar chart, but it differs in the way that it is visually constructed. Similar to the bar chart, the candlestick also has a thin vertical line showing the period's trading range. The difference comes in the formation of a wide bar on the vertical line, which illustrates the difference between the open and close. And, like bar charts, candlesticks also rely heavily on the use of colors to explain what has happened during the trading period. A major problem with the candlestick color configuration, however, is that different sites use different standards; therefore, it is important to understand the candlestick configuration used at the chart site you are working with. There are two color constructs for days up and one for days that the price falls. When the price of the stock is up and closes above the opening trade, the candlestick will usually be white or clear. If the stock has traded down for the period, then the candlestick will usually be red or black, depending on the site. If the stock's price has closed above the previous days close but below the day's open, the candlestick will be black or filled with the color that is used to indicate an up day.

Point and Figure Charts The point and figure chart is not well known or used by the average investor but it has had a long history of use dating back to the first technical traders. This type of chart reflects price movements and is not as concerned about time and volume in the formulation of the points. The point and figure chart removes the noise, or insignificant price movements, in the stock, which can distort traders' views of the price trends. These types of charts also try to neutralize the skewing effect that time has on chart analysis. When first looking at a point and figure chart, you will notice a series of Xs and Os. The Xs represent upward price trends and the Os represent downward price trends. There are also numbers and letters in the chart; these represent months, and give investors an idea of the date. Each box on the chart represents the price scale, which adjusts depending on the price of the stock: the higher the stock's price the more each box represents.

\ Earnings This is very important parameter. Broadly look into its last 5 or 10 years earnings whether the company has posted profits or losses. Its all about earnings. The bottom line is investors want to know how much money the company is making and how much it is going to make in the future. To find the earning status ratios used are EPS - Earning per share Current valuation This is another very important factor which most of the investor forgets while doing their investments. Generally most of the investors invest at higher valuations of shares and when share prices start coming down then they keep worrying, so this should not happen. Before investing one should check the current valuation of the share price and invest only when the share price is at right price and not at over priced share. This is what happened in January 2008. Most of the people invested at very high valuations and later on the share prices started to correct (falling down). Future earnings growth It is very important to analyze how the company is going to do in future. How will be its returns or its profits etc? Basically most of the investors invest in shares taking into consideration Companys future

growth prospects. Debit status For any company to perform well in the future it is very important to be debt free or less debit because if company is having large debits like borrowings, loans then it becomes difficult for it to plan for any acquisitions, expansion plans take over plans, dividend payout and very important its most of the net profit goes in paying the interest and loans and other debits. So in other words if the company is having fewer debits or no debit then they are having lots of cash in hand and they are free to take any decision in coming future. To find the debit status of the company the ratios used are

Earnings Earning Per Share - EPS EPS plays major role in investment decision. EPS is calculated by taking the net earnings of the company and dividing it by the outstanding shares. EPS = Net Earnings / Outstanding Shares For example If Company A had earnings of RS 1000 crores and 100 shares outstanding, then its EPS becomes 10 (RS 1000 / 100 = 10). Second example If Company B had earnings of RS 1000 crores and 500 shares outstanding, then its EPS becomes 2 (RS 1000 / 500 = 50). One should look for high EPS stocks and the higher the better is the stock. One should compare the EPS from one company to another, which are in the same industry/sector and not from one company from Auto sector and another company from IT sector. Before we move on, you should note that there are three types of EPS numbers:

Trailing EPS - Trailing EPS means last years EPS which is considered as actual and for ongoing current year. Current EPS - Current EPS means which is still under projections and going to come on financial year end. Forward EPS - Forward EPS which is again under projections and going to come on next financial year end But the EPS alone doesnt tell you the whole story of the company so for this information, we need to look at some more ratios as following. Its not advisable to make your investment decisions based on only single ratio analysis. EPS is the base for calculating PE ratio. Importance of Earnings Earnings are profits. Quarterly or yearly companys increasing earnings generally makes its stock price move up and in some cases some companies pay out a regular dividend. This is Bullish sign and indicates that the companys is in growth. When the company declares low earnings then the market may see bearishness in the stock price and hence its share price starts deceasing and corrects further if the company doesnt provide any sufficient justification for low earnings.

Conclusion - Keep a close watch on quarterly earnings and trade or invest accordingly or manipulate your investing. Following are the most popular and important tools/ratios to find excellent growth stocks which focuses on earning, growth, and value of the companys. To make you understand more easily we have explained in very simple steps.

Dividend Yield If you are a value investor or looking for dividend income then you should look for Dividend Yield figure of the stock. This measurement tells you what percentage return a companies pays out to shareholders in the form of dividends. Older, well-established companies tend to payout a higher percentage then do younger companies and their dividend history can be more consistent. You calculate the Dividend Yield by taking the annual dividend per share and divide by the

stocks price. That is Dividend Yield = annual dividend per share / stock's price per share For example If a companys annual dividend is RS 1.50 and the stock trades at RS 25, the Dividend Yield is 6%. (RS 1.50 / RS 25 = 0.06). Check out companys PAT (profit after tax) of every quarterly if you are short term to mid term trader and if you are long term investor then check out its yearly PAT. The company should have posted consistent growth.

About the company Bharti Airtel Limited, commonly known as Airtel, is an Indian telecommunications services company headquartered at New Delhi, India. It operates in 20 countries across South Asia, Africa and the Channel Islands. Airtel has GSM network in all countries, providing 2G, 3G and 4G services depending upon the country of operation. Airtel is the world's third-largest mobile telecommunications company with over 261 million subscribers across 20 countries as of August 2012. It is the largest cellular service provider in India, with 186.9 million subscribers at the end of August 2012.Airtel is the third largest in-country mobile operator by subscriber base, behind China Mobile and China Unicom. Airtel has GSM network in all countries, providing 2G, 3G and 4G services depending upon the country of operation. Airtel is the world's fourth-largest mobile telecommunications company[4] with over 261 million subscribers across 20 countries as of August 2012.[5] It is the largest cellular service provider in India, with 185.92 million subscribers as of September 2012.[6] Airtel is the third largest in-country mobile operator by subscriber base, behind China Mobile and China Unicom. Airtel is the largest provider of mobile telephony and second largest provider of fixed telephony in India, and is also a provider of broadband and subscription television services. It offers its telecom services under the airtel brand, and is headed by Sunil Bharti Mittal. Bharti Airtel is the first Indian telecom service provider to achieve Cisco Gold Certification. It also acts as a carrier for national and international long distance communication services. The company has a submarine cable landing station at Chennai, which connects the submarine cable connecting Chennai and Singapore. The businesses at Bharti Airtel have been structured into three individual strategic business units (SBUs) - Mobile Services, Airtel Telemedia Services & Enterprise Services. The mobile business provides mobile & fixed wireless services using GSM technology across 22 telecom circles while the Airtel Telemedia Services business offers broadband & telephone services in 95 cities and has recently launched a Direct-to-Home (DTH) service, Airtel digital TV. The company provides end-to-end data and enterprise services to the corporate customers through its

nationwide fiber optic backbone, last mile connectivity in fixed-line and mobile circles, VSATs, ISP and international bandwidth access through the gateways and landing station. The call center operations for the mobile services have been outsourced to IBM Daksh, Hinduja TMT, Teletech & Mphasis. The companys mobile network equipment partners include Ericsson and Nokia. Ratio Analysis Liquidity Ratio Liquidity Ratios are ratios that come off the Balance Sheet and hence measure the liquidity of the company as on a particular day i.e the day that the Balance Sheet was prepared. These ratios are important in measuring the ability of a company to meet both its short term and long term obligations. Current ratio: This ratio is obtained by dividing the 'Total Current Assets' of a company by its 'Total Current Liabilities'. The ratio is regarded as a test of liquidity for a company. It expresses the 'working capital' relationship of current assets available to meet the company's current obligations. Current Ratio = Total Current Assets/ Total Current Liabilities Quick ratio: This ratio is obtained by dividing the 'Total Quick Assets' of a company by its 'Total Current Liabilities'. Sometimes a company could be carrying heavy inventory as part of its current assets, which might be obsolete or slow moving. Thus eliminating inventory from current assets and then doing the liquidity test is measured by this ratio. The ratio is regarded as an acid test of liquidity for a company. It expresses the true 'working capital' relationship of its cash, accounts receivables, prepaids and notes receivables available to meet the company's current obligations. Quick Ratio = Total Quick Assets/ Total Current Liabilities 1) Current Ratio 2012 2011 2010 2009 2008 0.15752608 0.168502966 0.199898785 0.244677419 0.173819961

Interpretation: - The optimal ratio is 2:1. In order to survive, firms must be able to meet their short-term obligations-pay their creditors and repay their short-term debts. Thus, the liquidity of the firm is one measure of a firm's financial health. But in the case of Airtel the current Ratio is always been below 1 i.e. Current Assets is less than Current Liability and the firm may not be

able to fulfill its obligations. Therefore they should try and increase there Current Assets and decrease Current Liabilities.

Current Ratio
0.3 0.25 0.2 0.15 0.1 0.05 0 year 2012 year 2011 year 2010 year 2009 year 2008

2) Quick Ratio 2012 2011 2010 2009 2008 0.217 0.166 0.194 0.244 0.168

Interpretation: - The main difference between the current ratio and the quick ratio is that the latter does not include inventories, while the former does. If the quick ratio is greater than one, there would seem to be no danger that the firm would not be able to meet its current obligations. If the quick ratio is less than one, but the current ratio is considerably above one, the status of the firm is more complex.

Quick Ratio
0.3 0.25 0.2 0.15 0.1 0.05 0 year 2012 year 2011 year 2010 year 2009 year 2008

3) Net working capital Ratio 2012 2011 2010 2009 2008 -0.242228927 -0.258330142 -0.313007325 -0.349334228 -0.483561072

Interpretation:- Net Working Capital (which is also known as Working Capital or the initials NWC) is a measurement of the operating liquidity available for a company to use in developing and growing its business. The working capital can be calculated very simply by subtracting a companys total current liabilities from its total current assets. Negative working capital means that a company currently is unable to meet its short-term liabilities with its current assets (cash, accounts receivable and inventory). Leverage Ratio 1) Any ratio used to calculate the financial leverage of a company to get an idea of the company's methods of financing or to measure its ability to meet financial obligations. There are several different ratios, but the main factors looked at include debt, equity, assets and interest expenses.

Debt ratio: It is a financial ratio that indicates the percentage of a company's assets that are provided via debt. It is the ratio of total debt (the sum of current liabilities and long-term liabilities) and total assets (the sum of current assets, fixed assets, and other assets such as 'goodwill'). Debt ratio = total liabilities/ total assets

Debt-equity ratio: it compares a companys total liabilities to its shareholders equity. A lower percentage means that the company is using less leverage and has a better and stronger equity position.

1) Debt to Equity Ratio: 2012 2011 2010 2009 2008 0.269705969 0.137136946 0.279021814 0.324588706 0.046403915

A measure of a company's financial leverage calculated by dividing its total liabilities by stockholders' equity. It indicates what proportion of equity and debt the company is using to finance its assets. A high debt/equity ratio generally means that a company has been aggressive in financing its growth with debt. This can result in volatile earnings as a result of the additional interest expense. A ratio of 1:1 is usually considered to be satisfactory ratio although there cannot be rule of thumb or standard norm for all types of businesses. In case of airtel the Debt is higher than equity and they should try to bring their debt down because Overusing leverage leaves the company at risk as the cost of financing this borrowing can outweigh the return provided by the expansion. The more debt a company has outstanding, the more its earnings must go to making the interest payments.

Debt to Equity Ratio

0.35 0.3 0.25 0.2 0.15 0.1 0.05 0 year 2012 year 2011 year 2010 year 2009 year 2008

2) Debt Ratio 2012 2011 2010 2009 2008 0.212416083 0.120598444 0.218152506 0.245048674 0.316958157

Interpretation:- A ratio that indicates what proportion of debt a company has relative to its assets. The measure gives an idea to the leverage of the company along with the potential risks the company faces in terms of its debt-load. A debt ratio of less than 1 indicates that a company has more assets than debt. Its good hat airtel has more Assets than its Debts thats a good sign.

Debt Ratio
0.35 0.3 0.25 0.2 0.15 0.1 0.05 0 year 2012 year 2011 year 2010 year 2009 year 2008

3) Interest coverage 2012 2011 2010 2009 2008 2011 2010 2009 2008 2007 12.61824324 37.81978799 18.76267281 17.39348371 16.28368794

Interpretation :- 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. The lower the ratio, the more the company is burdened by debt expense. When a company's interest coverage ratio is 1.5 or lower, its ability to meet interest expenses may be questionable. An interest coverage ratio below 1 indicates the company is not generating sufficient revenues to satisfy interest expenses. Therefore Airtel is generating enough revenues to pay their interest.

Interest Coverege
40 35 30 25 20 15 10 5 0 year 2012 year 2011 year 2010 year 2009 year 2008

Profitability Ratio They show how successful a company is in terms of generating returns or profits on the Investment that it has made in the business. If a business is liquid and efficient it should also be Profitable.

1) Gross Profit margin :2012 2011 2010 2009 2008 35.30% 39.20% 38.80% 41.30% 40.60%

Interpretation:- A financial metric used to assess a firm's financial health by revealing the proportion of money left over from revenues after accounting for the cost of goods sold. Gross profit margin serves as the source for paying additional expenses and future savings. This metric can be used to compare a company with its competitors. More efficient companies will usually see higher profit margins. Airtel is earning good profits and is consistent and they can save and invest accordingly.

Gross Profit Margin

42.00% 40.00% 38.00% 36.00% 34.00% 32.00% year 2012 year 2011 year 2010 year 2009 year 2008

2) Net Profit margin:2012 2011 2010 2009 2008

20.30% 26.40% 22.70% 24.20% 22.60%

Interpretation: The net profit margin, also known as net margin, indicates how much net income a company makes with total sales achieved. A higher net profit margin means that a company is more efficient at converting sales into actual profit. Net profit margin analysis is not the same as gross profit margin. Under gross profit, fixed costs are excluded from calculation. With net profit margin ratio all costs are included to find the final benefit of the income of a business. Airtel is incurring many indirect expenses so its should control on it, although net profit margin looks quite healthy.

Net Profit Margin

30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% year 2012 year 2011 year 2010 year 2009 year 2008

3) Return on Equity The Return on Equity of a company measures the ability of the management of the company to generate adequate returns for the capital invested by the owners of a company. Generally a return of 10% would be desirable to provide dividends to owners and have funds for future growth of the company 2012 2011 2010 2009 2008 17.50% 25.60% 28% 23.80% 35.20%

Interpretation: - Return on Equity (ROE) is an indicator of company's profitability by measuring how much profit the company generates with the money invested by common stock owners. In Airtel the return on equity is decreased over the period of time in 2008 its because of recession. And later because of Mobile portability service which is started.

Return on Equity
40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% year 2012 year 2011 year 2010 year 2009 year 2008

Activity Ratio Accounting ratios that measure a firm's ability to convert different accounts within its balance sheets into cash or sales. Activity ratios are used to measure the relative efficiency of a firm based on its use of its assets, leverage or other such balance sheet items. These ratios are important in determining whether a company's management is doing a good enough job of generating revenues, cash, etc. from its resources.

1) Average collection period The average collection period ratio shows how long it takes for a firm to collect on its receivables. You can think about this ratio as a measure of the quality of a firm's credit and collection procedures. In other words, this ratio shows how smart a firm is at deciding to whom to extend credit. This ratio also shows how effective a firm is in collecting from customers 2012 22.49869788 days 2011 21.2809346 days 2010 26.96246476 days 2009 38.79995342 days 2008 28.60720408 days Interpretation:- Average collection period measures the average number of days that accounts receivable are outstanding. This activity ratio should be the same or lower than the company's credit terms.

As a rule, outstanding receivables should not exceed credit terms by more than 10-15 days. Airtel managed their recievables quite well it has brought than the Avg. No. of days as ACP. 2) Total assets turnover 2012 2011 2010 2009 2008

0.678728992 0.852376908 0.962960742 0.960806867 1.065472449

Interpretation:- The total asset turnover represents the amount of revenue generated by a company as a result of its assets on hand. This equation is a basic formula for measuring how efficiently a company is operating. There is no set number that represents a good total asset turnover value because every industry has varying business models. One general rule of thumb is that the higher a company's asset turnover, the lower the profit margins, since the company is able to sell more products at a cheaper rate. Airtels assets turnover ratio has been decreasing over the period and according to the statement its a good sign. 3) Receivable Turnover 2012 2011 2010 2009 2008

16.000926 16.91655028 13.35189506 9.278361655 12.58424273

Interpretation: An accounting measure used to quantify a firm's effectiveness in extending credit as well as collecting debts. The receivables turnover ratio is an activity ratio, measuring how efficiently a firm uses its assets. By maintaining accounts receivable, firms are indirectly extending interest-free loans to their clients. A high ratio implies either that a company operates on a cash basis or that its extension of credit and collection of accounts receivable is efficient. A low ratio implies the company should re-assess its credit policies in order to ensure the timely collection of imparted credit that is not earning interest for the firm. Airtels receivable ratio tells that its managing its receivables efficiently.