Indian Manufacturing Unit

Indian Manufacturing Unit - Financial Statement Analysis:...

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Financial Statement Analysis: Financial Ratio Analysis of Deccan Chronicle Holdings Pvt. Ltd. And its nearest rival DB Corp Ltd. The calculations of all the ratios mentioned below are provided in the excel sheet attached. Short Term Liquidity Ratios for DCHL Current Ratio Current Assets/Current Liabilities 2.51 2.77 3.02 Quick Ratio (Current Assets-Inventory)/Current Liabilities 2.24 2.61 2.52 Average Daily Expenses (COGS+Operating Expense+Tax- Depreciation)/365 122.96 111.80 131.11 Current Assets Cover Current Assets/Average Daily Expenses 1014.28 925.54 596.71 Cash Cover Cash/Average Daily Expenses 572.36 529.21 274.34 Cash Ratio Cash/Current Liabilities 1.42 1.59 1.39 DB Corp Ltd. Current Ratio 2.70 2.71 1.82 Quick Ratio 2.37 2.36 1.50 Average Daily Expenses 263.56 240.08 306.62 Current Assets Cover 224.53 233.85 130.07 Cash Cover 65.68 80.24 14.74 Cash Ratio 0.79 0.93 0.21 As in newspaper industry,newspapers get published very soon in large quantities and to produce that much apart from raw materials other expenses are also incurred.So to analyse those companies,cash cover(how well equipped a company is to provide for its daily expenses),current ratio (as the market sees a lot of trade)are appropriate.Both the companies are having the optimum current ratio. We see that the performance of DCHL has increased tremendously over the last few years but it has not happened so much in DB Corp Ltd.Also,we see that Average daily expenses for both the companies have risen this year over the last year either due to increase in raw materials cost and hence COGS getting high.And DCHL is able to meet its expenses with the cash available for a much longer duration compared to DB Corp Ltd.One reason for DBCorp keeping low cash cover would be its aggressive working capital management policies and would also stretching its supplier’s payments. So in all the parameters,we see that DCHL is better. Long Term Liquidity ratios for DCHL Total Debt to Equity Ratio (Long Term Liabilities+Current Liabilities)/Net Worth 0.70 0.63 0.61 Long Term Debt to Equity Ratio Long Term Liabilities/Net Worth 0.31 0.34 0.38 Times Interest Coverage Ratio EBIT/Interest Charge 5.01 9.72 3.93 Equity Multiplier Ratio Total Assets/Net Worth 1.70 1.63 1.61 Net Gain From Borrowed Funds 44841.26 64435.47 43391.67 Gearing Net Gain From Borrowed Funds/Average Total Equity 35.33 53.52 39.15
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Cash Coverage Ratio (EBIT+Depreciation)/Interest 5.89 10.66 4.38 Total Debt Ratio (Total Assets-Total Equity)/Total Assets 0.41 0.39 0.38 DB Corp Ltd Total Debt/Equity 0.55 0.81 3.04 Long Term Debt/Equity 0.29 0.49 2.19 Equity Mulitplier 1.60 1.8 6 4.05 Cash Coverage Ratio 26.34 9.61 2.89 Total Debt Ratio 0.38 0.46 0.75 We see that Debt/Equity ratio is increasing for DCHl but decreasing for DB Corp.This is not good for the shareholders of DBCorp as firstly,the company is not able to save tax which would
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This note was uploaded on 03/09/2012 for the course MBA 101 taught by Professor Xxx during the Spring '12 term at Xavier.

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Indian Manufacturing Unit - Financial Statement Analysis:...

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