The Game Of Financial Ratios (Best Combination) Case Study Help
For the purpose of ratio analysis; data from ten industriesis used to determine which industry shows the relevant financial data in order to find the best combination.
Cement Company chosen for ratio analysis, is: Shree Cement co., whose total assets are 73,286.9 million, net loss is 5,898 millionin 2013-2014 as given in the annual report. Though given data shows in Exhibit 1 indicates towards loss incurrence.However, both the companies show similar ratio analysis, such as: current ratio, quick ratio,fixed asset turnover ratio and receivable turnover ratio.(company, 2014)
Retail industry needs less borrowing as they rely on franchises, which is why their fixed assets are very less and similar to the company operating in the same industry.
Oil and Gas
While comparing fixed assets turnover of anonymous company with the Bharat petroleum; the calculated ratios are 8.75 and 7.93 because, petroleum Company has extensive fixed assets, such as:huge plants.
This industry needs no finished goods and no borrowings because of the lees capital requirements thatâ€™s why it shows best combination with financial data provided in column G.
The company chosen to compare for ratio analysis is Tata motors, whose fixed assets is 1,51,193 million and net profit is 1,74,060 million INR,and data given in the case study shows fixed assets to be 77,165 and net profit after tax to be 1,08,912 million INR.
RELIANCE JIO is used to compare the financial ratios, and its data is similar to the column E of Exhibit 1 because the shareholdersâ€™ equity is greater than borrowings, and financial ratios also reflect the same financial performance.
HDFS bank of India is chosen for ratio analysis, whose annual report shows its cash to be: 253,456 million, fixed assets: 29,399 million INR and its equity is more than its borrowings, which are similar with the data given where shareholdersâ€™ funds are greater than borrowings.HDFCâ€™s income is 490551 and anonymous bank also shows similar profit, which is 499,185.