bvc comp. 4 chapter

8/9/2019 Bvc Comp. 4 Chapter

1/15

CHAPTER - IV

DATA ANALYSIS & INTERPRETATION

INTRODUCTION

Data analysis is the process of evaluating data using analytical reasoning and logical

reasoning to examine each component of the data provided. This form of analysis is just one

of the many steps that must be completed when conducting a research experiment. Data from

various sources is gathered, reviewed and then analyzed to from some sort of finding or

conclusion. There are a variety of specific data analysis methods. Some of which include data

mining, text analytics, business intelligence, and data visualizations.

MEANING OF FINANCIAL ANALYSIS:

Financial Statements nalysis is an analysis which critically examines the

relationship between various elements of the Financial Statements. !t focuses on the

evaluation of past operations as revealed by the analysis of basic statements

MEANING OF RATIO ANALYSIS"

#atio$analysis means the process of

computing, determining and presenting the relationship of related items and

groups of items of the financial statements.

OBJECTIVES OF RATIO ANALYSIS:

Following are the important objectives of #atio nalysis"$

% To help in providing a part of information needed in the process of decision$ma&ing.

% To focus on facts on a comparative basis and facilitate drawing of conclusions relating to

the performance of a firm.

% To evaluate the performance of a firm in determining the important aspects of a business

such as li'uidity, solvency, operational efficiency, overall profitability capital gearing,

etc.


2/15

% To throw light on the degree of efficiency in the management and the effectiveness in the

utilization of its assets.

% To provide the way for effective control of the enterprise in the matter of achieving the

physical and monetary targets.

• To help management in discharging its basic functions li&e forecasting, planning, co$

ordination, communication, control, etc

CLASSIFICATION OF RATIOS:

i. (alance Sheet #atios or Financial #atios

ii. )rofit * +oss ccount #atios or perating #atios

iii. -omposite #atios

Balance Shee Ra!"# "$ F!nanc!al Ra!"#

#atios calculated from the different items as appearing in the (alance Sheet of a

concern are called (alance Sheet #atios, e.g. -urrent #atio, +i'uid #atio, Debt$e'uity #atio,

and so on.

P$"%! & L"## Acc"n Ra!"# "$ O'e$a!n( Ra!"#

#atios calculated from the different items as appearing in the )rofit * +oss ccount of a

concern are called )rofit * +oss ccount #atios or operating #atio, e.g. ross )rofit #atio,

/et )rofit #atio, perating #atio.

C")'"#!e Ra!"#

#atios calculated, ta&ing some items as appearing in the (alance Sheet and ta&ing some

items as appearing in )rofit * +oss ccount are called 0ixed #atios or -omposite #atios,

e.g. return on /et 1orth, #eturn on !nvestment 2#!3, -apital Turnover #atio, etc.


3/15

C$$en $a!":- !t is the relationship between the current assets and current liabilitiesof a concern.

current ratio of 4"5 2current assets twice of current liabilities3 is satisfactory. The Formula

for computation of current ratio is given below"

C$$en A##e# *Current Assets

Current Liablities

+!c, $a!": - !t is the ratio between 6uic& -urrent ssets and -urrent

+iabilities. They should be at least e'ual to 5.

+!c, C$$en A##e#: -ash7(an& (alances 8 #eceivables upto 9 months 8 'uic&ly

realizable securities such as ovt. Securities or 'uic&ly mar&etable7'uoted shares and

(an& Fixed Deposits.

cid Test or 6uic& #atio : 6uic& -urrent ssets7-urrent +iabilities

De e.!/ $a!":-it is the relationship between borrower;s fund 2Debt3 and wner;s

-apital 2


4/15

Ca'!al Gea$!n( Ra!":

This ratio is also &nown as >-apital Structure #atio? or +everage #atio?. !t is used to analyze

capital structure of the company. !t establishes the relationship between fixed interest,

dividend bearing securities and e'uity shareholders; funds. !t is an indicator of the degree of

ris& involved in the total capital employed in the business. !t can be calculated as follows"

Ca'!al Gea$!n( Ra!" *¿ Interest ∧ Dividend bearing Funds

Equity Shareholder s' Funds

1here,

Fixed !nterest and Dividend bearing Funds : )reference Share -apital 8 Debentures 8

+ong$Term +oans


5/15

-apital


6/15

Table 4.1 #h"9!n( c")'"#!!"n "% c$$en Ra!":

year -urrent assets 2#S.3 -urrent liabilities 2#S.3 -urrent ratio

4G$45 H4.44 54.9H I.IH

45$455 4J.J9 4J. 5.I

455$454 I.4J 44.I9 5.IH

454$45I IH.4H 44.JK 5.K5

45I$45H IH.G5 5G.44 5.L4

Graph 4.1 showing current Ratio


7/15

2009-2010 2010-2011 2011-2012 2012-2013 2013-20140

0.5

1

1.5

2

2.5

3

3.5

curent ratio

curent ratio

Table 4.2 #h"9!n( c")'"#!!"n "% .!c, Ra!":

year Quick asset Current liabilities Quick ratio

2009-2010 21.83 12.64 1.73

2010-2011 14.83 27.00 0.55

2011-2012 18.08 22.36 0.81

2012-2013 25.58 22.75 1.12

2013-2014 25.66 19.22 1.34

Graph 4.2 showing the quick Ratio:


8/15

2009-2010 2010-2011 2011-2012 2012-2013 2013-20140

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

quick ratio

quick ratio

Table 4.3 showing composition of debt equit Ratio:

Year on! ter" liabilities

#$%.&

'ntan!ible net (ort)

#$%.&

*ebt equity

ratio

2009-2010 44.41 35.11 1.26

2010-2011 19.18 31.62 0.61

2011-2012 20.69 32.38 0.64

2012-2013 18.63 30.81 0.60

2013-2014 17.94 27.3 0.66

Graph 4.3 showing debt equit Ratio:


9/15

0

0.2

0.4

0.6

0.8

11.2

1.4

debt equit ratio

+ebt equity ratio

Table 4.4 showing composition of operating pro!t Ratio"

year ,eratin! rot #$%.& /et sale #$%.& ,eratin!

rot ratio

2009-

2010

13.00 29.42 44.19

2010-

2011

14.21 44.23

32.13

2011-

2012

9.38 22.83 41.19

2012-2013

5.73 21.45 26.71

2013-

2014

1.48 19.4 7.63

Graph 4.4 showing operating pro!t Ratio:


10/15

2009-2010 2010-2011 2011-2012 2012-2013 2013-20140

5

10

15

20

25

30

35

40

45

50

44.19

32.13

41.19

26.71

7.63

operating pro!t ratio

oeratin! rot ratio

Table 4.# showing composition of assets turno$er ratio"

year /et sales #$%.& an!ible assets #$%.& ssets turnoer

ratio

2009-2010 29.42 35.11 0.84

2010-2011 44.23 31.62 1.40

2011-2012 22.83 32.38 0.71

2012-2013 21.45 30.81 0.70

2013-2014 19.4 27.3 0.71

Graph 4.4#assets turno$er Ratio:


11/15

0

0.2

0.4

0.6

0.8

1

1.2

1.4

assets turno$er ratio

assets turnoer ratio

Table 4.% showing composition of net pro!t ratio:

Year /et rot #$%.& /et sales #$%.& /et rot ratio

2009-2010 -8.19 29.42 -27.84

2010-2011 3.27 44.23 7.39

2011-2012 0.93 22.83 4.07

2012-2013 -1.57 21.45 -7.32

2013-2014 -3.51 19.4 -18.09


12/15


13/15

0

0.2

0.4

0.6

0.8

1

1.2

1.4

0.74

0.31

0.76

1.16

1.31

debtor turno$er ratio

+ebtor turnoer ratio

Table 4.( showing the current assets turno$er ratio:

Year /et sales #$%.& Current assets

#$%.&

Current assets turnoer

ratio

2009-2010 29.42 42.22 0.70

2010-2011 44.23 27.76 1.59

2011-2012 22.83 30.27 0.75

2012-2013 21.45 34.24 0.63

2013-2014 19.4 34.91 0.56

Graph 4.( current assets turno$er ratios:


14/15

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

current assets turno$er ratio

current assets turnoer

ratio

Table 4.) showing the return on assets ratio:

year /et rot ater ta #$%.& an!ible net (ort)

#$%.&

$eturn on assets

2009-2010

-8.19

35.11 -0.23

2010-2011 3.27 31.62 0.10

2011-2012 0.93 32.38 0.029

2012-2013 -1.57 30.81 -0.051

2013-2014 -3.51 27.3 -0.13


15/15

Graph 4.) showing the return on assets ratios:

-0.25

-0.2

-0.15

-0.1

-0.05

0

0.05

0.1

return on assets ratio

bvc comp. 4 chapter

Documents