Beruflich Dokumente
Kultur Dokumente
Presentation on
Godrej Interio ( Furniture Industry)
Presented By:- LTB05
Deeptanshu Dwivedi 057
Asem Naocha Singh 056
Maitrey Pandey 058
Poorva Narain 080
Priyanka 088
Pros
Huge market still untapped
Largest open market economy
Consumers are exposed to information age and
becoming more demanding in terms of product quality,
usage and design.
Business model is outdated, unorganized and high on
operating cost.
Cons
No Do-It Yourself culture
Needs to change sourcing strategy
Competitors with very low prices
Low home and garden expenditure
Godrej Interio
Home Town
Zuari
Usha Lexus
Durian
Damro
Horizontal Analysis
Financial statements present comparative information for at
least two years.
Calculates the amount and percentage changes from the
previous year to current year.
Trend Analysis
Calculation of percentage changes in financial statement
items for a number of successive years.
It is an extension of horizontal analysis.
First a value of 100 is assigned to the items in the financial
statement in the base year and then express the amounts in
the following years as a percentage of the base year value.
Vertical Analysis
Proportional expression of the amount of each item
on a financial statement to the statement total.
Common size statements are prepared in which the
items within each statement are expressed in
percentages of some common number and always
add up to 100.
It is conventional to express items in the profit and
loss account as percentage to sales and balance
sheet items as percentages of the total of
shareholders` equity and liabilities.
Ratio
Ratio Analysis
Analysis
Profitability
Profitability
Ratio
Ratio
Profit
Profit Margin
Margin
Asset
Turnover
Asset Turnover
Return
Return on
on Assets
Assets
Return
on
Return on Equity
Equity
Earning
Per
Earning Per Share
Share
Liquidity
Liquidity
Ratios
Ratios
Current
Current Ratio
Ratio
Quick
Ratio
Quick Ratio
Debtor
Debtor Turnover
Turnover
Inventory
Inventory Turnover
Turnover
Solvency
Solvency
Ratios
Ratios
Debt
Debt to
to Equity
Equity
Ratio
Ratio
Liability
Liability to
to
Equity
Ratio
Equity Ratio
Interest
Interest
Coverage
Coverage Ratio
Ratio
Capital
Capital
Market
Market
Ratios
Ratios
Price
Price Earning
Earning Ratio
Ratio
Dividend
Yield
Dividend Yield
Price
Price to
to Book
Book Ratio
Ratio
PROFITABILITY RATIOS
1.Profit Margin/Return on Sales
Measures the amount of net profit
earned by each rupee of revenue.
Profit Margin = [PAT Sales] x 100
The pressure on margin should be
analyzed by looking at major
categories of expenses such as
material , salaries ,wages
,advertising etc.
2010 2011
2011 2012
2012 2013
2013 2014
2014 2015
11.29
%
14.01
%
6.6%
8.23% 10.23
%
Comment on Net Profit Margin: It has been observed Godrej Industries Limited (GIL)
enjoy a profit margin of 11.99 % in the year ending March 2011 which got increased
to 14.01 % in year 2012. This increase in net profit margin is due to the reason of
substantial increase in the net sales and relatively lower increase in the expenses or
cost of sales.
Then it is observed there is a substantial decrease in the net profit margin from 14.01
% in the year 2012 to 6.6 % in the year 2013. It was apparent that though there was
an increase in the sales turnover yet there was a substantial increase in the expenses
category (power and fuel from 97.48 crore in 2012 to 108.82 crore in 2013) and that
even after the increase in the sales the company experiences the pressure in its profit
margin.
Again it is observed that there is an increase in the net profit margin from 6.6 % in the
year 2013 to 8.23 % in the tear 2014. It is because of the reason of an increase in
other income from 93.54 crore in 2013 to 144.98 crore in 2014 although the even
though there is a decrease in the net sales and an increase in the cost of sales.
The net profit margin increases in the year 2015 also from 8.23 % to 10.23% and this
is due to the reason of a substantial decrease in the cost of sales (decrease in raw
materials consumption as a result of more efficient employees).
2.
Asset Turnover
Measures the firm's efficiency in utilizing its
assets. It indicates how many times the assets were
turned over in a period in order to generate sales.
Asset Turnover = [Sales Average Total Assets]
High: we can infer that the enterprise is managing
its assets efficiently.
Low: it implies that there is presence of more assets
than a business needs for its operations.
Decrease in asset turnover could be because of
excess capacity , frequent breakdown, nonavailability of raw materials or power, strikes and
lock outs and so on.
2010 2011
2011 2012
2012 2013
2013 2014
2014 2015
0.75
times
0.99
times
0.73
times
0.55
times
0.47
times
3.
20112012
20122013
9%
13.95 4.85
%
%
20132014
20142015
4.55
%
4.77
%
4.Return on Equity
Measures the profitability from the
shareholders` point of view. It measures the
efficiency in the use of shareholders` funds.
Return on Equity= [PAT Average
Shareholders Equity] x100
Shareholders` expect managers to earn an
ROE higher than the firm's cost of equity.
Decrease: may imply lack of opportunities
that would yield higher returns.
2010-2011
2011-2012
2012-2013
2013-2014
2014-2015
13.32
%
17.35
%
20112012
20122013
20132014
20142015
2.89
per
share
3.57
per
share
4.43
per
share
LIQUIDITY RATIOS
1.
Current Ratio
Indicates the company's ability to pay its debts in the
short-term. It shows the amount of current assets a
company has per rupee of current liabilities.
Current Ratio = Current Assets Current Liabilities
Rule of the thumb: current ratio is expected to be atleast
2:1.
A large current ratio by itself is not satisfactory measure
of liquidity
when inventories constitute a major part of the current
assets. Quick Ratio is calculated as a supplement to the
current ratio.
2010-2011
2011-2012
2012-2013
2013-2014
2014-2015
2010-2011
2011-2012
2012-2013
2013-2014
2014-2015
0.6:1
3.
Debtor Turnover
2010-2011
2011-2012
2012-2013
2013-2014
2014-2015
9.53
times
11.24
times
10.73
times
11.95
times
13.99
times
High: Debtors are being converted rapidly into cash and the quality of
the company's portfolio of debtors is good.
It has been observed that Godrej company debtors turnover in march
2011 was 9.53 and we witnessed that it has increase to 11.23 in next year
i.e. march 2012 which was good for the company in collection of its
outstanding debts and in march 2013 it was slightly decrease to 10.73 and
again the company mange to increase its debtors turnover to 11.95 in
march 2015 and it has moved towards a very good progress in march 2015
in debtors turnover to 13.99 in collection of its outstanding debts.
20112012
20122013
20132014
20142015
5.Inventory Turnover
Measure the number of times a company's
inventory is turned into sales.
Inventory Turnover= Cost of Goods Sold
Average Inventories
High: indicates efficient inventory
management .fast-moving inventory. It runs lower
risk of obsolescence and reduces interest,
insurance and storage charges.
Average Inventory holding Period= 360 days
Inventory Turnover
2010-2011
2011-2012
2012-2013
2013-2014
2014-2015
6.01
times
7.2
times
11.29
times
6.65
times
9.3
times
20102011
20112012
20122013
20132014
20142015
59.9 50
31.8 54.1 38.7
days days 8
3
0
days days days
SOLVENCY RATIOS
2010-2011
2011-2012
2012-2013
2013-2014
2014-2015
2010-2011
2011-2012
2012-2013
2013-2014
2014-2015
2010-2011
2011-2012
2012-2013
2013-2014
2014-2015
You
can calculate the interest coverage ratio of any company by dividing the
profit before interest and tax by the interest expenses. In general, a high
coverage ratiomay suggest a company is "too safe" and is neglecting
opportunities to magnifyearningsthroughleverage. An interest coverage
ratio below 1.0 indicates that a company is not able to meet its interest
obligations.
Because a company's failure to meet interest payments usually results in
default, the interest coverage ratio is of particular interest tolendersand
bondholdersand acts as amargin of safety. However, because the interest
coverage ratio is based on current earnings and current expenses, it primarily
focuses a company's short-term ability to meet interest obligations.
Some industries tend to have higher interest coverage ratios than others,
and cyclical companies in particular can experience significant swings in their
interest coverage ratios (especially during recessions). Thus, comparison of
interest coverage ratios is generally most meaningful among companies
within the same industry, and the definition of a "high" or "low" ratio should
be made within this context.
2010-2011
2011-2012
2012-2013
2013-2014
2014-2015
41.69
39.88
99.71
87.61
78.216
The price earnings ratio of Godrej during the year 2010-11 was 41.61
which in the year decreased to 39.88 in the year 2011-2012, this shows
that the investors are not confident about the companys future earnings
growth. The earning power of the company decreased this year.
During the year 2012-2013 the earnings ratio of Godrej company
increased to 99.71 which shows that the investors are confident about
the company and they are ready to pay 99.71 rupees to the company for
1 rupee earning. The earning power of the company increased this year.
The price earnings ratio of Godrej company again decreased during the
year 2013-14 to 78.21 which shows that the investors are not confident
about the companys future earnings growth and they are not ready to
pay 78.21 rupees to the company for 1 rupee earnings. The earning
power of the company again decreased this year.
Dividend Yield
Represents the current cash return
to shareholders.
Dividend Yield = Dividend Per
Share Average Stock Price
Total return to shareholder consists of
dividend and change in stock price.
2.
20102011
20112012
20122103
20132014
20142015
2010-2011
2011-2012
2012-2013
2013-2014
2014-2015
6.11
6.61
6.07
6.87
8.14