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Trend overview India - B11033 | Assignment 7 Bharat...

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B11033 | Assignment 7 Bharat Electronics Limited ( Capital Structure) Calculation of different Debt to Equity Ratios Bharat Electronics Limited The various Debt-to-Equity ratios have been calculated from the data provided in the Standalone Balance Sheets of the Annual Reports of Bharat Electronics Limited and Capitaline Database. In the case of Bharat Electronics, Current Liabilities include Sundry Creditors, Advances from customers, Trade and other deposits, unclaimed dividend and other liabilities. Similarly, total provisions include provisions for tax, corporate dividend tax, gratuity, dividend, proposed equity, contingencies and others. For the calculations, total unsecured loans are taken as the sum of Fixed Deposits and unsecured long term loans from others. The Total Debt (TD) is evaluated as the sum of Long Term Debts (LTD), Current Liabilities (CL) and Provisions, since Bharat Electronics has not taken any Short Term Debts. For all calculations, total equity has been taken to be the Net Worth of the firm as reflected in the standalone Balance Sheets. Interest bearing Liabilities (IBL) are the sum of Long Term Loans and Short Term Loans, but they turn out to be equal to Long Term Loans in the case of Bharat Electronics Limited because of the absence of Short Term Loans. BEL (All non-ratio figures in Rs. Crores 1,2 ) Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Secured Loans 0.41 0.73 1.21 1.38 0.88 Unsecured Loans 0 0 0 0 0.84 Total Long Term Debt 0.41 0.73 1.21 1.38 1.72 Current Liability 7597.43 4431.02 4138.54 3291.58 2829.08 Total Provisions 676.9 631.7 652.11 494.16 1146.51 Total Debt 8274.74 5063.45 4791.86 3787.12 3977.31 Total Equity 5002.57 4345.67 3807.12 3233.13 2592.15 LTD/Equity Ratio 0.000 0.000 0.000 0.000 0.001 Total Debts/Equity Ratio 1.654 1.165 1.259 1.171 1.534 IBL/Equity Ratio 0.000 0.000 0.000 0.000 0.001 Analysis As seen from the table, the company has not taken any short term debts in the past five years. All the long term debt taken in the past four years has been in the form of secured loans mainly as liability on leased assets secured by vehicles on lease. The company is trying to remain debt free and its LTD/Equity ratio and IBL/Equity ratio is negligible.
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The above graph shows the trend followed by the Total Debts-to-Equity ratio of Bharat Electronics Limited in the last five years. The TD/E ratio saw a sharp fall in the year 2008 as compared to 2007. This can be attributed to the writing back of a large number of provisions in 2008 as a conservative reaction of the firm to the economic downturn. The firm continued its conservative approach over the next couple of years. Another increase in the ratio from 2010 to 2011 can be attributed to the booming business and order books of the firm, due to which the Advances from Customers and Credit Balances have increased with an accompanying increase in the Current Liabilities of the firm. Surrogate Debt Items
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Trend overview India - B11033 | Assignment 7 Bharat...

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