Financial ratios are mathematical comparisons of Financial statement accounts or

categories. Financial ratios are the most common and widespread tools used to analyze
a business' financial standing. In a sense, financial ratios don't take into consideration
the size of a company or the industry.
In this reports we will be discussing some key financial ratios for the past three years of
airtel to understand the financial position of airtel.

Liquidity Ratio
This ratios shows the cash levels of a company and the ability to turn other assets into
cash to pay off liabilities and other current obligations.
Current Ratio
The current ratio helps investors and creditors understand the liquidity of a company and
how easily that company will be able to pay off its current liabilities. This ratio expresses
a firm's current debt in terms of current assets. A higher current ratio is always more
favorable than a lower current ratio because it shows the company can more easily
make current debt payments. The current ratio also sheds light on the overall debt
burden of the company. If a company is weighted down with a current debt, its cash flow
will suffer.
Airtel Airtel Airtel Reliance
Communication
March 2014 March 2013 March 2012 March 2014
0.98 0.74 1.38 1.35

If you compare the ratios of Airtel and Reliance communications for march 2014.
This shows that airtel is in bad position in comparison to airtel since airtel does
not have enough current assets to dispose its liabilities since the current assets
are less than current liability in the case of airtel where as for reliance it is more
than 1 which means that reliance has enough current assets to dispose current
liability.
Moreover year on year analysis shows that the ratio has declined from 2012 to
2014 and the company is not well off to clear its current liabilities so it might have
to sell some of its capital assets which it could have used in day to day operating
activities.
QUICK RATIO
The acid test ratio measures the liquidity of a company by showing its ability to pay off its
current liabilities with quick assets. If a firm has enough quick assets to cover its total
current liabilities, the firm will be able to pay off its obligations without having to sell off
any long-term or capital assets. Quick assets are current assets that can be converted to
cash within 90 days or in the short-term.

March 2014 March 2013 March 2012 March 2014
Airtel Airtel Airtel Reliance Comm
0.98 0.74 1.37 1.23

In terms of quick ratio also the ratio of reliance comm is better than airtel and year on
year the quick ratio of airtel has declined from 1.37 to 0.98. This shows that it would be
difficult for airtel to pay its current liabilities with its current assets.
EFFICIENCY RATIO
Efficiency ratios also called activity ratios measure how well companies utilize their
assets to generate income. Efficiency ratios often look at the time it takes companies to
collect cash from customer or the time it takes companies to convert inventory into
cashin other words, make sales.

INVENTORY TURNOVER RATIO
Efficiency ratios also called activity ratios measure how well companies utilize their
assets to generate income. Efficiency ratios often look at the time it takes companies to
collect cash from customer or the time it takes companies to convert inventory into
cashin other words, make sales.
March 2014 March 2013 March 2012 March 2014
Airtel Airtel Airtel Reliance
45380 21595 1296 41.55
For airtel it has sold a large number of goods in comparison to inventory and there is
lack of wastage in terms of inventory. The value is rising on year on year basis showing
that airtel is doing well in clearing off its inventory. The ratio is very less for reliance.
FIXED ASSET TURNOVER RATIO:
This ratio explains how efficiently you are using your fixed assets to produce sales.
Higher value means you are using your fixed assets efficiently.

March 2014 March 2013 March 2012 March 2014
Airtel Airtel Airtel Reliance
0.70 0.69 0.70 0.17

The ratio of airtel for the year 2014 is higher than reliance. This shows airtel is more
efficient in using its fixed assets to produce sales than reliance but the figure has not
changed much from 2012 to 2014. This shows that airtel has not done much to improve
the efficiency of its fixed assets. This could have helped them to increase their sales
adding to the gross profit
SOLVENCY RATIO
Solvency ratios show a company's ability to make payments and pay off its long-term
obligations to creditors, bondholders, and banks. Better solvency ratios indicate a more
creditworthy and financially sound company in the long-term.
DEBT TO EQUITY RATIO
A debt ratio of .5 means that there are half as many liabilities than there is equity. In
other words, the assets of the company are funded 2-to-1 by investors to creditors. This
means that investors own 66.6 cents of every dollar of company assets while creditors
only own 33.3 cents on the dollar. A debt to equity ratio of 1 would mean that investors
and creditors have an equal stake in the business assets.
Creditors view a higher debt to equity ratio as risky because it shows that the investors
haven't funded the operations as much as creditors have. In other words, investors don't
have as much skin in the game as the creditors do.
March 2014 Feb 2013 Jan 2012 March 2014
Airtel Airtel Airtel Reliance Comm
0.12 0.23 0.28 0.96

The debt to equity ratio of airtel is decresing on year on year basis. This shows the
money invested by the owners is increasing in comparison to creditors so creditors will
have more faith in the company to invest.
If we compare the same with reliance reliance has a higher debt to equity ratio which
depicts that there a large amount of money invested by creditors and its nearly equal to
the money invested by the owners which might turn out to be a negative sentiment.
PROFITABILITY RATIO
Investors and creditors can use profitability ratios to judge a company's return
on investment based on its relative level of resources and assets. In other words,
profitability ratios can be used to judge whether companies are making enough
operational profit from their assets.
RETURN ON ASSET
The return on assets ratio measures how effectively a company can turn earn a return
on its investment in assets. In other words, ROA shows how efficiently a company can
covert the money used to purchase assets into net income or profits.
March 2014 March 2013 March 2012 March 2014
Airtel Airtel Airtel Reliance Comm
7.09 5.79 6.90 0.96

The increase in return on assets from 6.90 to 7.09 depicts that company has
increased its efficiency to use its total assets to convert it to income.
Lower value for reliance depicts that airtel is better off in terms of return on assets
GROSS MARGIN RATIO
Gross margin ratio is a profitability ratio that measures how profitable a company can
sell its inventory. It only makes sense that higher ratios are more favorable. Higher ratios
mean the company is selling their inventory at a higher profit percentage.

March 2014 March 2013 March 2012 March 2014
Airtel Airtel Airtel Reliance
18.16 14.65 18.57 -2.06
Airtel has shown profit but reliance has shown a loss so the gross margin ratio is
negative.

OPERATING MARGIN RATIO
The operating profit margin ratio is a key indicator for investors and creditors to see how
businesses are supporting their operations. If companies can make enough money from
their operations to support the business, the company is usually considered more stable.
On the other hand, if a company requires both operating and non-operating income to
cover the operation expenses, it shows that the business' operating activities are not
sustainable.
A higher operating margin is more favorable compared with a lower ratio because this
shows that the company is making enough money from its ongoing operations to pay for
its variable costs as well as its fixed costs.
March 2014 March 2013 March 2012 March 2014
Airtel Airtel Airtel Reliance
32.65 29.7 32.79 16.25


NET PROFIT MARGIN RATIO
The profit margin ratio directly measures what percentage of sales is made up of net
income. In other words, it measures how much profits are produced at a certain level of
sales.
This ratio also indirectly measures how well a company manages its expenses relative to
its net sales. That is why companies strive to achieve higher ratios. They can do this by
either generating more revenues why keeping expenses constant or keep revenues
constant and lower expenses.
March 2014 March 2013 March 2012 March 2014
AIRTEL AIRTEL AIRTEL RELIANCE COMM
12.99 10.38 13.56 5.86

RETAIN ON CAPITAL EMPLOYED
The return on capital employed ratio shows how much profit each dollar of employed
capital generates. Obviously, a higher ratio would be more favorable because it means
that more dollars of profits are generated by each dollar of capital employed.
For instance, a return of .2 indicates that for every dollar invested in capital employed,
the company made 20 cents of profits.
Investors are interested in the ratio to see how efficiently a company uses its capital
employed as well as its long-term financing strategies.
March 2014 March2013 March 2012 March 2014
Airtel Airtel Airtel reliance
13.36 12.18 13.97 1.64



INVESTMENT RATIO
The investment ratio show investors what they should expect to receive from
their investment They might receive future dividends, earnings, or just an appreciated
stock value. These ratios are helpful for investors to predict how much stock prices will
be in the future based on current earnings and dividend measurements. For instance, a
downward trend in earnings per share and dividend yield point to profitability problems
and could even raise going concern issues. All of these issues point to a lower stock
evaluation.
EARNING PER SHARE

Earning per share is the same as any profitability or market prospect ratio. Higher
earnings per share is always better than a lower ratio because this means the company
is more profitable and the company has more profits to distribute to its shareholders.
Although many investors don't pay much attention to the EPS, a higher earnings per
share ratio often makes the stock price of a company rise. Since so many things can
manipulate this ratio, investors tend to look at it but don't let it influence their decisions
drastically.
March 2014 March 2013 March 2012 March 2014
Airtel Airtel Airtel Reliance
16.51 13.42 15.09 3.57