Ratio Analysis
RATIO ANALYSIS (ALL VALUES IN Rs. MILLION) 1. GROSS PROFIT MARGIN (%):
GROSS PROFIT = NET SALES – COGS
= TOTAL REVENUE – (Employee Benefit Expense + Operating and Other Expenses + Finance Costs)
= 53107 – (22510+21598+1025) = 7974
GROSS PROFIT MARGIN = (NET SALES – COGS)/NET SALES = (7974/ 53107)*100 = 15.01497% 2. RETURN ON ASSET(RoA)
RETURN ON ASSET = (PAT/TOTAL ASSET)*100
= (4606/63454)*100 = 7.258%
This indicates that around 7.3% of all assets have been utilized by Tech Mahindra to generate revenue & profit. 3. RETURN ON SHAREHOLDER’S FUNDS(RoS)
RETURN ON SHAREHOLDER’S FUNDS = (PAT/ SHAREHOLDER’S FUNDS)*100
= (4606/34432)*100 = 13.377%
This indicates that, shareholders can expect a profitability of around 13.4% if invested in Tech Mahindra. 4. RETURN ON INVESTMENT (RoI)
CAPITAL EMPLOYED (CE) = SHARE CAPITAL + RESERVES & SURPLUS + LONG TERM LOANS – NON OPERATING ASSETS – FICTITIOUS ASSETS
= 34432 + 6000 = 40432
RETURN ON INVESTMENT = (OPBT/CE)*100
= (5790/40432)*100 = 14.32%
Where, OPBT is Operating Profit Before Tax.
This ratio gives the overall performance of the company, Tech Mahindra.
TURNOVER RATIOS:
These ratios tell the effectiveness of utilization of resources & assets in generating revenue. 5. ASSET TURNOVER RATIO
ASSET TURNOVER RATIO = NET SALES/ TOTAL ASSET = 53107/63454 = 0.837 = 4:5
This ratio increases when the company is utilizing its assets effectively. 6. FIXED ASSET TURNOVER RATIO
FIXED ASSET TURNOVER RATIO = NET SALES/ FIXED ASSET = 53107/8153 = 6.513
7. WORKING CAPITAL TURNOVER RATIO
WORKING CAPITAL TURNOVER RATIO = NET SALES/ WORKING CAPITAL
= 53107/2802 = 18.95
Where, WORKING CAPITAL = CURRENT ASSETS – CURRENT LIABILITIES = 19809-17007 =2802
8. DEBTOR’S TURNOVER RATIO
DEBTOR’S TURNOVER RATIO = NET CREDIT SALES/ AVERAGE RECEIVABLES
= 53107/12431 = 4.272
Where, AVERAGE RECEIVABLES = DEBTORS + BILLS RECEIVABLES
CREDIT PERIOD = 12 MONTHS/4 = 3
GROSS PROFIT = NET SALES – COGS
= TOTAL REVENUE – (Employee Benefit Expense + Operating and Other Expenses + Finance Costs)
= 53107 – (22510+21598+1025) = 7974
GROSS PROFIT MARGIN = (NET SALES – COGS)/NET SALES = (7974/ 53107)*100 = 15.01497% 2. RETURN ON ASSET(RoA)
RETURN ON ASSET = (PAT/TOTAL ASSET)*100
= (4606/63454)*100 = 7.258%
This indicates that around 7.3% of all assets have been utilized by Tech Mahindra to generate revenue & profit. 3. RETURN ON SHAREHOLDER’S FUNDS(RoS)
RETURN ON SHAREHOLDER’S FUNDS = (PAT/ SHAREHOLDER’S FUNDS)*100
= (4606/34432)*100 = 13.377%
This indicates that, shareholders can expect a profitability of around 13.4% if invested in Tech Mahindra. 4. RETURN ON INVESTMENT (RoI)
CAPITAL EMPLOYED (CE) = SHARE CAPITAL + RESERVES & SURPLUS + LONG TERM LOANS – NON OPERATING ASSETS – FICTITIOUS ASSETS
= 34432 + 6000 = 40432
RETURN ON INVESTMENT = (OPBT/CE)*100
= (5790/40432)*100 = 14.32%
Where, OPBT is Operating Profit Before Tax.
This ratio gives the overall performance of the company, Tech Mahindra.
TURNOVER RATIOS:
These ratios tell the effectiveness of utilization of resources & assets in generating revenue. 5. ASSET TURNOVER RATIO
ASSET TURNOVER RATIO = NET SALES/ TOTAL ASSET = 53107/63454 = 0.837 = 4:5
This ratio increases when the company is utilizing its assets effectively. 6. FIXED ASSET TURNOVER RATIO
FIXED ASSET TURNOVER RATIO = NET SALES/ FIXED ASSET = 53107/8153 = 6.513
7. WORKING CAPITAL TURNOVER RATIO
WORKING CAPITAL TURNOVER RATIO = NET SALES/ WORKING CAPITAL
= 53107/2802 = 18.95
Where, WORKING CAPITAL = CURRENT ASSETS – CURRENT LIABILITIES = 19809-17007 =2802
8. DEBTOR’S TURNOVER RATIO
DEBTOR’S TURNOVER RATIO = NET CREDIT SALES/ AVERAGE RECEIVABLES
= 53107/12431 = 4.272
Where, AVERAGE RECEIVABLES = DEBTORS + BILLS RECEIVABLES
CREDIT PERIOD = 12 MONTHS/4 = 3