finance-project - INDUSTRY ANALYSIS Company Name Market Cap...

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INDUSTRY ANALYSIS Company Name Market Cap (Rs. In Cr.) P/E (X) P/BV (X) EV/EBIDTA (X) ROE (%) ROCE (%) D/E (X) Bharti Airtel 143,717.14 18.62 3.26 8.25 29.3 28.5 0.20 Reliance Comm. 19,277.95 0.00 0.39 18.38 0.9 2.2 0.54 Tata Comm 6,322.73 40.50 0.88 9.31 4.5 3.2 0.35 Based on above table, we can roughly identify how well those three communication companies perform in the communication industry. Ratio Analysis: 1
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Various Financial Ratio Analyses are used to analyze the financial performance of Bharti Airtel Ltd. for 3 years from 2008 to 2010. Its performance also compared against Liquidity ratios help in determining the ability of a firm to meet its short term obligations. Liquid assets are those that can be converted into cash quickly. The short-term liquidity ratios show the firm’s ability to fulfill its short-term obligations. Thus a higher ratio (#1 and #2) would suggest a greater liquidity and lower risk for short-term lenders. The Rules of Thumb for acceptable values are: Current Ratio (2:1), Quick Ratio (1:1). (Data taken for analysis from www.yahoofinance.com, www.moneycontrol.com) While high liquidity means that the company will not default on its short-term obligations, one should keep in mind that by retaining assets as cash, valuable investment opportunities may be lost. Obviously, cash by itself does not generate any return. Only if it is invested will we get future return. 1. Current Ratio Current Ratio = Current Asset / Current Liability It is a simple guide to the ability of a company to meet its short term obligations. The current ratio is a good diagnostic tool as it measures whether or not your business has enough resources to pay its bills over the next 12 months. Higher the ratio, higher is the liquidity. 2
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The current ratio of all the three companies has consistently remained less than 1. So its current liability is greater than the current asset which implies that its short term liquidity requirements might be financed by long term sources. For the year 2010, the ratio of Bharti Airtel is better than the current ratios of Reliance and Tata Communication as it is higher. 2.
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finance-project - INDUSTRY ANALYSIS Company Name Market Cap...

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