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Financial Anbalysisbpsm

The document analyzes various financial ratios for Micromax, an electronics company, compared to industry averages for 2012-2009. It examines liquidity ratios like the current ratio, solvency ratios like the debt-to-equity ratio, profitability ratios like return on capital employed, and activity/cash flow ratios like fixed asset and inventory turnover. The conclusions drawn are that Micromax has lower debt levels but higher profitability than competitors, and utilizes assets well to generate sales despite having lower inventory turnover.

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Dinesh Raghavendra
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85 views2 pages

Financial Anbalysisbpsm

The document analyzes various financial ratios for Micromax, an electronics company, compared to industry averages for 2012-2009. It examines liquidity ratios like the current ratio, solvency ratios like the debt-to-equity ratio, profitability ratios like return on capital employed, and activity/cash flow ratios like fixed asset and inventory turnover. The conclusions drawn are that Micromax has lower debt levels but higher profitability than competitors, and utilizes assets well to generate sales despite having lower inventory turnover.

Uploaded by

Dinesh Raghavendra
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Financial Analysis

Liquidity ratios- Ability to pay cash expenses in the short term as they come due
Current Ratio 2012 2011 2010 2009
Micromax 1.77 1.67 1.49 1.47
Industry 1.83 1.77 1.83 2.3

Conclusion-

Solvency ratios- Information about firms financial leverage and ability to meet long term
obligations

Debt-Equity Ratio 2012 2011 2010 2009
Micormax 0.05 0.06 0.02 0.06
Industry 1.08 0.92 0.89 1.01

Conclusion- Debt to equity are lower than the competitors which states that it employs less of
borrowed funds and hence it makes company less prone to solvency risks and interest obligation
.

Profitability Ratios- Information about how well the company generates operating and net
profits from its sales

ROCE (%)
micromax 6.72 97.72 238.03 86.1
industry 0 3.5 7.16 6.1


Conclusion- Profitability ratio of company is more than its competitors which states that the
company is doing well and it is good at generating profits, revenues and cash flows.


Activity Ratios/ Cash Flow Ratio- Information about how well the firm utilizes its assets


Fixed Assets
turnover ratio 2012 2011 2010 2009
micromax 95.3 187.12 157.32 39.13
Industry 0.94 1.26 1.39 1.59



Inventory
turnover ration 2012 2011 2010 2009
micromax 4.72 11.59 23.63 10.28
Industry 6.81 8.89 10.51 9.68

Conclusion- The inventory turnover ratio are very low for Micromax as compared to
industry which states that the inventory held minimum number of days as a result of which
the costs gets increased. Even the company is utilising its assets to generate additional sales
and revenue

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