Financial Analysis Of

&
GROUP 7:
Atul Garg (IT-11)
Hitesh Gandhi (DM-51)
Neetha Nannapaneni (DM-86)
Rohit Chandak (FN-081)
Vaqar Hussain (IT-32)

 What is Financial Statement Analysis?

Financial Statement Analysis is the reviewing and evaluating a companys financial statements to
understand the financial health of the company and hence enabling more effective decision
making.

It makes financial data more useful to investors, shareholders, managers and other interested
parties.

Analysis Performed :

JSW Steel

VISA Steel
Ratio

Ratio

Horizontal

Horizontal

Vertical

Vertical

 BALANCE SHEET
As at
Shareholder's Fund
Share Capital
Share warrants
Reserves and Surplus
Total
Loan Funds
Secured Loans
Unsecured Loans
Total
Deferred Tax Liability
Total:

Schedule

31-Mar-11

31-Mar-10

Rs. Cr
31-Mar-09

563.18
529.38
16132.71
17225.27

527.11

537.01

9179.23
9706.34

7,422.24
7,959.25

7,675.82
4,275.52
11951.34
2,317.04
31493.65

8,987.51
2,597.59
11585.1
1,964.95
23256.39

8,214.61
3,058.02
11,272.63
1,421.16
20,653.04

27,407.35
6,305.20
21,102.15
6,169.05
27,271.20
4,098.81

21,795.58
4,929.44
16,866.14
6,684.27
23,550.41
1,768.35

16,896.75
3,810.31
13,086.44
9,242.06
22,328.50
1,250.11

7
8
9
10

4,138.41
838.65
1886.88
3,324.43

2,585.77
563.25
287.11
2,123.39

10,188.37

5,559.52

2,051.42
398.14
419.96
1,744.88
17.24
4,631.64

9,667.33
397.4
10,064.73
123.64
31,493.65

7,357.67
264.22
7,621.89
-2,062.37
23,256.39

7,476.28
80.93
7,557.21
2,925.57
20,653.04

3
4

APPLICATION OF FUNDS
Fixed Assets:
Gross Block
Less: Depreciation
Net Block
Capital Work-in-Progress
Total
Investments
Current Assets, Loans and Advances:
Inventories
Sundry Debtors
Cash and Bank Balances
Loans and Advances
Other Current Assets
Total
Less: Current Liabilities and Provisions:
Liabilities
Provisions
Total
Net Current Assets(Liabilities)
Total:

11
12

 Profit and Loss Account :

Year ended
31.03.2011
INCOME:
Domestic Turnover
Export Turnover
Sale of Carbon Credits
Less: Excise Duty
Net Turnover
Other Income
Total Income
EXPENDITURE:
Materials
Employees Remuneration and benefits
Manufacturing and Other Expenses
Interest and Finance Charges(Net)
Depriciation
Profit before Taxation and Exceptional Items
Exceptional Items

Year ended
31.03.2010

Year ended
31.03.2009

21,429.87
3,662.22
38.67
25,130.76
196.52
23,163.24
282.64
23,445.88

16,460.61
2,935.82
60.21
19,456.64
1,254.16
18,202.48
532.84
18,735.32

10,680.50
4,450.21
48.58
15,179.29
1,178.04
14,001.25
259.56
14,260.81

14,254.10
534.47
3,801.14
695.18
1,378.71
20,663.60
2,782.28

10,460.68
365.2
3,103.70
862.68
1,123.41
15,915.67
2,819.65

8,450.10
288.75
2,429.29
797.25
827.66
12,793.05
1,467.76

2,819.65
796.91
2,022.74
3,883.15
5,905.89

790.13
677.63
219.13
458.50
3,505.86
3,964.36

-125
-9.9
-28.92
-177.7
-34.31
-202.28
5,327.78

20.45
---28.99
-18.71
-8.11
-45.85
3,883.15

106.34
105.94

22.7
22.7

Exchange Loss
----Profit before Taxation
2,782.28
Provision for Taxation
771.61
Profit after Taxation
2,010.67
Profit brought forward from earlier years
5,327.78
Amount available for Appropriation
7,338.45
Appropriations:
Transfer (to)/from Debenture Redemption Reserve Transfer to Capital Redemption Reserve
Dividends on Preference Shares
-27.9
Proposed Final Dividend on Equity Shares
-273.32
Corporate Dividend Tax
-48.87
Transfer to General Reserve
-4200
Balance carried to Balance Sheet
2,788.36
Earnings per share (Equity Shares, par value of Rs.10 each)(in Rs.)
Basic
97.17
Diluted
96.33

 Ratios :
Profitability
Ratios:
Net Profit Ratio

Gross Profit
ratio

Return on
Capital
Employed

Return on
Equity

Earnings per
Share

Diluted earning
per Share

Return on Total
Assets

PAT
Turnover
Net Profit Ratio

2011
2,010.67
23,163.24
0.09

2010
2,022.74
18,202.48
0.11

2009
458.50
14,001.25
0.03

Gross Profit
Turnover
Ratio

2,782.28
23,163.24
0.12

2,819.65
18,202.48
0.15

1,467.76
14,001.25
0.10

PAT
Capital employed
Ratio

2,010.67
29,176.61
0.07

2,022.74
21,291.44
0.10

458.50
19,231.88
0.02

PAT
Stakeholder's Equity
Ratio

2,010.67
17,225.27
0.12

2,022.74
9,706.34
0.21

458.50
7,959.25
0.06

PAT (-) Dividend Expense

No of Shares outstanding
Earning per Share (Basic)

1,978.24
1,989.01
424.58
203,595,864.00 187,048,682.00 187,048,666.00
97.17
106.34
22.70

PAT (-) Dividend Expense

No of Shares outstanding
Earning per Share (Diluted)

1,978.24
1,989.01
424.58
205,363,404.00 187,746,815.00 187,048,666.00
96.33
105.94
22.70

PAT
Total Assets
Ratio

Liquidity Ratios:
Current Ratio

Liquid Ratio

Current Assets
Current Liabilities
Ratio
Current Assets-(Inventories +
Prepaid Expenses)
Current Liabilities
Ratio

2,010.67
31,493.65

2,022.74
23,256.39

458.50
20,653.04

0.06

0.09

0.02

10,188.37
10,064.73
1.01

5,559.52
7,621.89
0.73

4,631.64
7,557.21
0.61

6,049.96
10,064.73
0.60

2,973.75
7,621.89
0.39

2,580.22
7,557.21
0.34

Turnover
Ratios:
Asset Turnover
Ratio

Creditor
Turnover Ratio

Debtor
Turnover Ratio

Inventory
Turnover Ratio

Solvency Ratios
Debt Equity
Ratio

Debt-Capital
Employed ratio

Sales
Net Fixed Assets
Ratio

23,163.24
27,271.20
0.85

18,202.48
23,550.41
0.77

14,001.25
22,328.50
0.63

Credit Purchases
Average Creditor or Closing Credit
Ratio

14,254.10
0.00

10,460.68
1,642.34
0.16

8,450.10
1,644.43
0.19

Credit Sales
Closing Debtor
Ratio

23,163.24
838.65
27.62

18,202.48
563.25
32.32

14,001.25
398.14
35.17

Cost of goods sold

Average Inventory
Ratio
Inventory Holding Period
(Months)

14,254.10
3,362.09
4.24

10,460.68
2,318.60
4.51

8,450.10
2,051.42
4.12

2.83

2.66

2.91

Long term Debts

Equity
Ratio

11,951.34
17,225.27
0.69

11,585.10
9,706.34
1.19

11,272.63
7,959.25
1.42

Long term Debts

Net Worth + Long term loans
Ratio

11,951.34
29,176.61
0.41

11,585.10
21,291.44
0.54

11,272.63
19,231.88
0.59

PBIT
Interest
Ratio

3,477.46
695.18
5.00

3,682.33
862.68
4.27

2,265.01
797.25
2.84

PAT
Dividend
Ratio

2,010.67
301.22
6.68

2,022.74
206.62
9.79

458.50
47.70
9.61

Coverage Ratios
Interest
Coverage Ratio

Dividend
Coverage Ratio

 BALANCE SHEET
As at
SOURCES OF FUNDS
Shareholder's Fund
Share Capital
Reserves and Surplus
Total
Loan Funds
Secured Loans
Unsecured Loans
Total
Deferred Tax Liability
Total:

Schedule

1
2

3A

31-Mar11

1100
2432.86
3532.86

31-Mar10

1100
2046.93
3146.93

Rs.Million
31-Mar09

1100
1,701.46
2,801.46

3 13,732.38 11,076.99 8,891.69

348.82
350.39
38.02
14081.2 11427.38 8,929.71
597.01
301.10
14.48
18211.07 14875.41 11,745.65

APPLICATION OF FUNDS
Fixed Assets:
Gross Block
Less: Depreciation
Net Block
Capital Work-in-Progress
Total
Investments
Current Assets, Loans and Advances:
Inventories
Sundry Debtors
Cash and Bank Balances
Loans and Advances
Interest Accrued on Deposits
Total
Less: Current Liabilities and Provisions:
Liabilities
Provisions
Total
Net Current Assets(Liabilities)
Miscellaneous Expenditure
Share issue Expenses
Total:

4
9,319.91 9,265.60 8,448.16
1,610.78 1,129.31
666.93
7,709.13 8,136.29 7,781.23
13,905.38 7,700.70 5,410.43
21,614.51 15,836.99 13,191.66
5
610.40
600.40
304.65
6
7
8
9

3,956.80
479.86
885.08
1,593.81
19.35
6,934.90

3,417.07
648.78
833.41
1,415.77
18.15
6,333.18

3,565.08
823.73
704.55
1,240.07
18.53
6,351.96

10 10,807.54
11
141.2
10,948.74
-4,013.84

7,780.24
139.47
7,919.71
-1,586.53

8,146.62
7.32
8,153.94
-1,801.98

24.55
51.32
18,211.07 14,875.41 11,745.65

 Profit and Loss Account :

31.03.2011 31.03.2010
INCOME:
Sales
Less: Excise Duty
Net Turnover
Other Income
Total Income

13,404.10
345.09
13,059.01
269.78
13,328.79

11,983.07
413.65
11,569.42
145.41
11,714.83

EXPENDITURE:
Materials
9,661.27
8,136.60
Expenses
1,611.54
1,601.87
Interest(Net)
709.38
651.40
Depriciation
482.05
468.18
Total
12,464.24
10,858.05
Profit before Taxation and Exceptional
Items
864.55
856.78
Exceptional Items
Loss on Exchange Fluctuation(net)
Profit before Taxation
864.55
856.78
Provision for Taxation
Current Tax
182.61
96.00
Fringe Benefit Tax
0.00
0.00
MAT Credit Entitlement
(127.74)
Deferred Tax
295.91
286.62
Profit/(Loss) after Taxation
513.77
474.16
Balance brought forward from previous year
310.10
(35.37)
Amount available for Appropriation
823.87
438.79
Appropriations:
Proposed Dividend
110.00
110.00
Income Tax on Proposed Dividend
17.84
18.69
Balance carried forward to Balance Sheet
696.03
310.10
Earnings per share (Equity Shares, par value of Rs.10 each)(in Rs.)
Basic
4.67
4.31
Diluted
4.67
4.31

31.03.2009
10,571.11
221.05
10,350.06
54.54
10,404.60

8,102.37
1,486.76
321.54
307.91
10,218.58
186.02
1,184.67
(998.65)
0.00
4.20
(334.71)
(668.14)
632.77
(35.37)
0.00
0.00
(35.37)
(6.07)
(6.07)

 Ratios :
Profitability Ratios:
Net Profit Ratio

Gross Profit ratio

Return on Capital
Employed

Return on Equity

Earnings per Share

Diluted earning per

Share

Return on Total
Assets

Liquidity Ratios:
Current Ratio

Liquid Ratio

Turnover Ratios:
Asset Turnover Ratio

Creditor Turnover
Ratio

PAT
Turnover
Ratio
Gross Profit
Turnover
Ratio

2011
513.7700
13,059.0100
0.0393
864.5500
13,059.0100
0.0662

2010
474.1600
11,569.4200
0.0410
856.7800
11,569.4200
0.0741

2009
-668.14
10,350.06
-0.06
186.02
10,350.06
0.02

PAT
Capital employed
Ratio
PAT
Stakeholder's Equity
Ratio
PAT (-) Dividend Expense
Number of Shares Outstanding
Earnings per Share (Basic)

513.7700
474.1600
-668.14
17,614.0600
14,574.3100
11,731.17
0.0292
0.0325
-0.06
513.7700
474.1600
-668.14
3,532.8600
3,146.9300
2,801.46
0.1454
0.1507
-0.24
513.7700
474.1600
-668.14
110,000,000.0000 110,000,000.0000 110,000,000.00
4.6706
4.3105
-6.07

PAT (-) Dividend Expense

Number of Shares Outstanding
Earnings per Share (Basic)

513.7700
474.1600
-668.14
110,000,000.0000 110,000,000.0000 110,000,000.00
4.6706
4.3105
-6.07

PAT
Total Assets
Ratio

513.7700
21,614.5100
0.0238

474.1600
15,836.9900
0.0299

-668.14
13,191.66
-0.05

Current Assets
Current Liabilities
Ratio
Current Assets-(Inventories +
Prepaid Expenses)
Current Liabilities
Ratio

6,934.9000
10,948.7400
0.6334

6,333.1800
7,919.7100
0.7997

6,351.96
8,153.94
0.78

2,978.1000
10,948.7400
0.2720

2,916.1100
7,919.7100
0.3682

2,786.88
8,153.94
0.34

Sales
Net Fixed Assets
Ratio

13,059.0100
21,614.5100
0.6042

11,569.4200
15,836.9900
0.7305

10,350.06
13,191.66
0.78

Credit Purchases

9,661.2700

8,136.6000

8,102.37

Average Creditor or Closing

Credit
Ratio
Debtor Turnover
Ratio

Inventory Turnover
Ratio

Solvency Ratios
Debt Equity Ratio

Debt-Capital
Employed ratio

Coverage Ratios
Interest Coverage
Ratio

Dividend Coverage
Ratio

9,982.6400
1.0333

6,964.0500
0.8559

7,871.39
0.97

13,059.0100
479.8600
27.2142

11,569.4200
648.7800
17.8326

10,350.06
823.73
12.56

9,661.2700
3,686.9350
2.6204

8,136.6000
3,491.0750
2.3307

8,102.37
#REF!
#REF!

4.5794

5.1487

Long term Debts

Equity
Ratio

14,081.2000
3,532.8600
3.9858

11,427.3800
3,146.9300
3.6313

8,929.71
2,801.46
3.19

Long term Debts

Net Worth + Long term loans
Ratio

14,081.2000
17,614.0600
0.7994

11,427.3800
14,574.3100
0.7841

8,929.71
11,731.17
0.76

1,573.9300
709.3800
2.2187

1,508.1800
651.4000
2.3153

507.56
321.54
1.58

513.7700
110.0000
4.6706

474.1600
110.0000
4.3105

-668.14
0.00
NA

Credit Sales
Closing Debtor
Ratio
Cost of goods sold
Average Inventory
Ratio
Inventory Holding Period
(Months)

EBIT
Interest
Ratio
PAT
Dividend
Ratio

#REF!

Horizontal Analysis

FY11
23,445.880
Net Turnover
25.143
YoY Growth(%)
8.68%
Net Profit Ratio
-21.889
YoY Growth(%)
12.01%
Gross Profit Ratio
-22.468
YoY Growth(%)
11.67%
ROE
-44.000
YoY Growth(%)
6.89%
RoCE
-27.476
YoY Growth(%)
96.320
Diluted EPS
-9.082
YoY Growth(%)
6.38%
RoTA
-26.646
YoY Growth(%)
0.694
Debt/Equity
-41.871
YoY Growth(%)
1.012
Current Ratio
38.782
YoY Growth(%)
5.000
Interest Coverage Ratio
17.138
YoY Growth(%)

JSW Steel
Visa Steel
FY10
FY09
FY11
FY10
FY09
18,735.320 14,260.810 13,059.01 11,714.83 10,404.60
31.376
23.233
11.474
12.593
52.380
11.11%
3.27%
3.93%
4.10%
-6.46%
239.341
-78.361
4.109
163.488 -201.850
15.49%
10.48%
6.62%
7.41%
1.80%
47.767
-49.683
-10.608
312.042
-81.775
20.84%
5.76%
14.54%
15.07%
-23.85%
261.757
-74.409
3.500
163.176 -292.332
9.50%
2.38%
2.92%
3.25%
-5.70%
298.490
-78.999
10.248
157.123 -238.166
105.941
22.700
4.670
4.311
-6.074
366.701
-76.170
8.339 -170.967 -254.848
8.70%
2.22%
2.38%
2.99%
-5.06%
291.780
-78.836
20.508
159.113 -216.903
1.194
1.416
3.990
3.631
3.188
-15.726
44.083
9.879
13.922
58.725
0.729
0.613
0.634
0.800
0.779
19.015
-18.538
-20.718
2.653
-32.672
4.268
2.841
2.220
2.315
1.579
50.244
-55.622
-4.116
46.674
-82.197

 Vertical Analysis

FY11

JSW Steel
FY10

FY09

FY11

Visa Steel
FY10

FY09

SOURCES OF FUNDS
Shareholder's Fund
Share Capital
Share Warrants
Reserves and Surplus

3.27%
3.07%
93.65%

5.43%

6.75%

31.14%

34.95%

39.27%

94.57%

93.25%

68.86%

65.05%

60.73%

Loan Funds
Secured Loans
Unsecured Loans

64.23%
35.77%

77.58%
22.42%

72.87%
27.13%

97.52%
2.48%

96.93%
3.07%

99.57%
0.43%

100.50%
23.12%
77.38%
22.62%

92.55%
20.93%
71.62%
28.38%

75.67%
17.06%
58.61%
41.39%

43.12%
7.45%
35.67%
64.33%

58.51%
7.13%
51.38%
48.62%

64.04%
5.06%
58.99%
41.01%

Investments
Current Assets, Loans and Advances:
Inventories
Sundry Debtors
Cash and Bank Balances
Loans and Advances
Other Current Assets

40.62%
8.23%
18.52%
32.63%
0.00%

46.51%
10.13%
5.16%
38.19%
0.00%

44.29%
8.60%
9.07%
37.67%
0.37%

57.06%
6.92%
12.76%
22.98%
0.28%

53.96%
10.24%
13.16%
22.35%
0.29%

56.13%
12.97%
11.09%
19.52%
0.29%

Less: Current Liabilities and

Provisions:
Liabilities
Provisions

96.05%
3.95%

96.53%
3.47%

98.93%
1.07%

98.71%
1.29%

98.24%
1.76%

99.91%
0.09%

APPLICATION OF FUNDS
Fixed Assets:
Gross Block
( -) Depreciation
Net Block
Capital Work-in-Progress

 Ratio Analysis :
Different types of Ratios :

Profitability Ratios

Liquidity Ratios

Turnover Ratios

Solvency Ratios

Coverage Ratios

Capital Market Ratio

1) Profitability Ratios :

Profitability ratios are used to assess a business's ability to generate earnings as compared to its
expenses and other relevant costs incurred during a specific period of time.

For most of these ratios, having a higher value relative to a competitor's ratio or the same ratio
from a previous period is indicative that the company is doing well.

i.

Net Profit Ratio = PAT/Net Sales * 100

Ratio of profitability calculated as net income divided by revenues, or net profits divided
by sales.
It measures how much out of every rupee of sales a company actually keeps in earnings.

VISA Steel NP Ratio

JSW Steel NP Ratio

4.15

12

4.1

10

4.05

4
6
3.95
4

3.9

3.85
3.8

0
FY2011

FY2010

FY2011

FY2010

ii.

Gross Profit Ratio = Gross Profit/ Total Revenue * 100

It is the percent of total sales revenue that the company retains after incurring the
direct costs associated with producing the goods and services sold by a company.

VISA Steel GP Ratio

7.6

JSW Steel GP Ratio

20

7.4
15

7.2
7

10

6.8
6.6

6.4
0

6.2
FY2011

iii.

FY2011

FY2010

FY2010

Return On Capital Employed (ROCE)= PAT/Capital Employed

A ratio that indicates the efficiency and profitability of a company's capital investments.
ROCE should always be higher than the rate at which the company borrows, otherwise
any increase in borrowing will reduce shareholders' earnings.

VISA Steel (ROCE)

3.3

JSW Steel (ROCE)

10
9
8
7
6
5
4
3
2
1
0

3.2
3.1
3
2.9
2.8
2.7
FY2011

FY2010

FY2011

FY2010

iv.

Return On Equity (ROE) = PAT/Stakeholders Equity

ROE measures a corporation's profitability by revealing how much profit a company
generates with the money shareholders have invested.
The ROE is very useful for comparing the profitability of a company to that of other
firms in the same industry.

VISA Steel (ROE)

15.2
15.1
15
14.9
14.8
14.7
14.6
14.5
14.4
14.3
14.2

25
20
15
10
5
0
FY2011

v.

JSW Steel (ROE)

FY2010

FY2011

FY2010

Return On Total Assets = PAT/Total Assets

It is an indicator of how effectively a company is using its assets to generate earnings.
The greater it is the more effectively that company is said to be using its assets.

VISA Steel (ROTA)

3.5

JSW Steel (ROTA)

10
9
8
7
6
5
4
3
2
1
0

3
2.5
2
1.5
1
0.5
0
FY2011

FY2010

FY2011

FY2010

vi.

Earning Per Share (EPS) :

EPS is the portion of a company's profit allocated to each outstanding share of common
stock.
It serves as an indicator of a company's profitability.

VISA Steel

JSW Steel
108

4.7

106

4.6

104

4.5

102

4.4

100
98

4.3

96

4.2

94

4.1
FY2011

92
FY2011

FY2010

FY2010

2) Liquidity Ratios :

Liquidity ratios are used to determine a company's ability to pay off its short-terms debts
obligations.
The higher the value of the ratio, the larger the margin of safety that the company possesses
to cover short-term debts.

i.

Current Ratio = Current Assets/Current Liabilities

The Current ratio is a liquidity ratio that measures a company's ability to pay short-term
obligations.
The higher the current ratio, the more capable the company is of paying its obligations.

VISA Steel Current

Ratio
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0

1.2
1
0.8
0.6
0.4
0.2
0
FY2011

ii.

JSW Steel Current

Ratio

FY2010

FY2011

FY2010

Quick Ratio = Current Assets-(Inventories + prepaid Expenses)/Current Liabilities

Quick ratio measures a company's ability to meet its short-term obligations with its
most liquid assets.
The higher it is the better the position of the company.

VISA Steel Liquid

Ratio

JSW Steel Liquid

Ratio

0.4

0.7

0.35

0.6

0.3

0.5

0.25

0.4

0.2

0.3

0.15
0.1

0.2

0.05

0.1

0
FY2011

FY2010

FY2011

FY2010

iii.

Debt Equity Ratio= Long Term Debts/Equity

The DE Ratio is the measure of a company's financial leverage calculated by dividing its
total liabilities by stockholders' equity.
It indicates what proportion of equity and debt the company is using to finance its
assets.

VISA Steel Debt

Equity Ratio

JSW Steel Debt

Equity Ratio

4.1

1.4

1.2

3.9

3.8

0.8

3.7

0.6

3.6

0.4

3.5

0.2

3.4

0
FY2011

FY2010

FY2011

FY2010

3) Turnover Ratios :
i.

Asset Turnover Ratio = Sales / Net Fixed Assets

It is the amount of sales generated for every rupee's worth of assets.

VISA Steel Asset

Turnover Ratio

JSW Steel Asset

Turnover Ratio

0.8

0.86

0.7

0.84

0.6

0.82

0.5

0.8

0.4

0.78

0.3
0.2

0.76

0.1

0.74

0.72
FY2011

FY2010

FY2011

FY2010

ii.

Inventory Turnover Ratio = Cost Of Goods Sold / Closing Inventory

It is the Ratio showing how many times a company's inventory is sold and replaced over
a period of time.

VISA Steel Inventory

Turnover Ratio
2.7

4.55
4.5
4.45
4.4
4.35
4.3
4.25
4.2
4.15
4.1

2.6
2.5
2.4
2.3
2.2
2.1
FY2011

iii.

JSW Steel Inventory

Turnover Ratio

FY2010

FY2011

FY2010

Debtor Turnover Ratio = Net Sales / Average Debtors

It measures the efficacy of a companys credit and collection policy.
It shows the number of times companys debtors turn into cash each year.

VISA Steel Debtor

Turnover Ratio

JSW Steel Debtor

Turnover Ratio

30

34

25

32

20

30

15
28

10

26

5
0

24
FY2011

FY2010

FY2011

FY2010

4) Coverage Ratios :

i.

These are the accounting ratios that help measure a company's ability to meet its
obligations satisfactorily.

Interest Coverage Ratio = Earnings Before Interest and Tax(EBIT) / Interest

It is the ratio used to determine how easily a company can pay interest on outstanding debt.
The lower the ratio, more the company is burdened by debt expense.

VISA Steel Interest

Coverage Ratio

JSW Steel Interest

Coverage Ratio

2.34
2.32
2.3
2.28
2.26
2.24
2.22
2.2
2.18
2.16

5.2
5
4.8
4.6
4.4
4.2
4
3.8
FY2011

FY2010

FY2011

FY2010

5) Capital Market Ratios :

i.

Relate the market price of a companys share to the companys earnings.

P/E Ratio = Price Per Share/ Earnings Per Share

The P/E Ratio is ranked as key factor in picking stocks.

P/E Ratio
9.7
9.6
P/E Ratio

9.5
9.4
VISA Steel

JSW Steel

 CONCLUSION :
1. GP, NP ratio : Declining for both companies
Expenses increased
2. ROCE, ROE : Declining for both companies

Not generating enough returns in comparison to the rate of increase in the capital
employed.

3. EPS : Declined for JSW, Increased for Visa

JSW increased share allotment, while it remained same for Visa steel.

4. Current Ratio, Liquid Ratio : Increased for JSW, declined for Visa.

Debtors and inventories increased for JSW more than their short term liabilities.
Vice-versa for Visa.

5. Debt Equity ratio : Increased for Visa, Declined for JSW

JSW long term loans declined while the same increased for Visa, but can imply
conservative approach in utilizing shareholders money.

6. Debtor turnover ratio, Inventory turnover ratio : Increased for JSW, declined for Visa

JSW increased the amount of debtors or recovery time increased. Opposite in the
case of Visa.
Higher average inventory for Visa due to lower sales.
7. Interest coverage ratio gone up for JSW, declined for Visa.
JSW improving its ability to pay its interests.

Overall, we conclude that JSW Steel is doing better than VISA Steel and would recommend
investment in JSW Steel shares rather than VISA steel shares.

Thank You!