Name: Arish Roll No:-2013203 section: C

Company:- Gujarat Pipavav Port Ltd. Solvency Ratios:- The solvency ratio indicates whether a companys cash flow is sufficient to meet its short-term and long-term liabilities. The lower a company's solvency ratio, the greater the probability that it will default on its debt obligations.

Different Ratios Of Gujarat Pipavav

Gujarat Pipavav Port Ltd.
Currency: Rs. Million (NonAnnualised) Dec-07 12 mths Dec-08 12 mths Dec-09 12 mths Dec-10 12 mths Dec-11 12 mths Dec-12 12 mths

Debt equity Debt Assets Interest coverage Fixed Charge Coverage

2.939905 0.659853 -0.1524 -0.13877

4.026945 0.751673 1.207933 1.117287

5.511573 0.818564 0.472076 0.446504

2.612916 0.617286 1.035211 0.967821

2.341493 0.572922 2.382251 2.118936

1.594517 0.372851 2.952013 2.472931

Conclusions 1)Debt equity ratio nearly doubled in 08 and 09 which can be explain by increased amount of debt in balance sheet and negative profits from year 2003 to 2011, however profit increased by more than 200% in dec 11. 2) Debt Assets ratio stabilized after being worsen due to hight debt and large depreciation in total assest calue, in dec 09. 3) Company is barely manages to cover its interest costs and fixed cost however shown a dramatically positive trend in 2011 n 2012 due to high EBIT.

(Rs. Million)

04-Mar 12 mths

05-Mar 12 mths 783.8 762.1 -375.6

05-Dec 9 mths 706 676.2 -277.9

06-Dec 12 mths 1,416.20 1,349.60 -671.4

07-Dec 12 mths 1,657.30 1,516.00 -770.4

08-Dec 12 mths 2,035.00 1,724.10 -872.5

09-Dec 12 mths 2,255.40 2,207.10 -1,104.30

10-Dec 12 mths 2,950.40 2,839.30 -538.5

11-Dec 12 mths 4,122.50 3,958.90 543.5

12-Dec 12 mths 4,314.70 4,160.30 682.7

Total income Sales PAT(PE)

544.4 492.9 2,835.70

Altman Z Score Calculator

Calculates the Altman Z Score for a company. The Altman Z Score was designed as a way to rank a manufacturing company's risk of going bankrupt. A Z Score above 3.0 is safe; 2.73.0 is a warning; 1.8 to 2.7 means there is a chance the company will declare bankruptcy in the next two years; and less than 1.8 means the company is severely distressed. The original Z-score formula was as follows:[1] Z = 1.2T1 + 1.4T2 + 3.3T3 + 0.6T4 + 0.999T5. T1 = Working Capital / Total Assets. Measures liquid assets in relation to the size of the company. T2 = Retained Earnings / Total Assets. Measures profitability that reflects the company's age and earning power. T3 = Earnings Before Interest and Taxes / Total Assets. Measures operating efficiency apart from tax and leveraging factors. It recognizes operating earnings as being important to long-term viability. T4 = Market Value of Equity / Book Value of Total Liabilities. Adds market dimension that can show up security price fluctuation as a possible red flag. T5 = Sales/ Total Assets. Standard measure for total asset turnover (varies greatly from industry to industry).

Result:- 2.2074
Analysis:- Z score is in the medium range. Though company is out of crisis zone, it is mandatory to take precautionary steps and keep tab of the figures to avoid bankruptcy. However looking at the nature of business and history of the company, as company had never defaulted on its interest payment even in the years of negative cash cycle(2003, 2004 and 2006,2007), I see not much risk in providing finance to this firm.