Revenue or turnover or top line is income that a company receives from its normal business activities. Revenue Growth is used to measure how fast a company's business is expanding. The figure shows the annual rate of increase/decrease in a company's revenue or sales growth in terms of percentage change from the previous year. An ideal company should have an steady upward trend. Year-over-year performance is frequently used by investors seeking to gauge whether a company's financial performance is improving or worsening.
Compound Annual Growth Rate of Bharti Airtel Ltd.
1 year Revenue
Liquidity and Credit Analysis 2012 2011 2010 Reported Net Profit
6,600.20 5,096.30 5,730.00 7,716.90 9,426.15
A company's total earnings (or profit). Net income is calculated by taking revenues and adjusting for the cost of doing business, depreciation, interest, taxes and other expenses. This number is found on a company's income statement and is an important measure of how profitable the company is over a period of time. The measure is also used to calculate earnings per share. Often referred to as "the bottom line" since net income is listed at the bottom of the income statement. Bharti Airtel has shown an increasing profit over the years. Although it has been decreased from what it was in 2010 but a considerable rise has been observed in 2014 than 2013 and 2012.
Ratios Current Ratio Quick Ratio Debt Equity Ratio Long Term Debt Equity Ratio Interest Cover Dividend Payout Ratio Net Profit
2014 0.93 0.98 0.13 0.11 7.42 10.90
2013 0.65 0.75 0.24 0.18
2012 1.02 1.37 0.29 0.17
2011 0.63 0.73 0.23 0.17
Higher current ratio implies healthier short term liquidity comfort level. A current ratio below 1 indicates that the company may not be able to meet its obligations in the short run. However, it is not always a matter of worry if this ratio temporarily falls below 1 as many times companies squeeze out short term cash sources to achieve a capital intensive plan with a longer term outlook. Bharti Airtel’s average current ratio over the last 5 financial years has been 0.43 times which indicates that the Company has been facing liquidity problems to meet its short term obligations. Long Term Debt to Equity Ratio Companies operating with high debt to equity on their balance sheets are vulnerable to economic cycles. In times of slowdown in economy, companies with high levels of debt find it increasingly difficult to service the interest on their borrowings as profit margins decline. We believe that long term debt to equity ratio higher than 0.6 - 0.8 could affect the business of a company and its results
ofoperation. Bharti Airtel’s long term debt to equity ratio over the last 5 financial years has been reducing which indicates that the Company is comfortably placed to meet its obligations. Earlier in 2010, 2011, 2012 the debt equity ratio was higher and then in 2014 it has been reduced to 0.13 which is good for the company as it may not have difficulties in paying the debt because of less debt. Interest Coverage Ratio Interest coverage ratio indicates the comfort with which the company may be able to service the interest expense (i.e. finance charges) on its outstanding debt. Higher interest coverage ratio indicates that the company can easily meet the interest expense pertaining to its debt obligations. In our view, interest coverage ratio of below 1.5 should raise doubts about the company’s ability to meet the expenses on its borrowings. Interest coverage ratio below 1 indicates that the company is just not generating enough to service its debt obligations. Bharti Airtel’s average interest coverage ratio over the last 5 financial years has been 14.10 times which indicates that the company has been generating enough for the shareholders after servicing its debt obligations.
Dividend Payout Ratio Net Profit This ratio identifies the percentage of earnings (net income) per common share allocated to paying cash dividends to shareholders. The dividend payout ratio is an indicator of how well earnings support the dividend payment. Here's how dividends "start" and "end." During a fiscal year quarter, a company's board of directors declares a dividend. This event triggers the posting of a current liability for "dividends payable." At the end of the quarter, net income is credited to a company's retained earnings, and assuming there's sufficient cash on hand and/or from current operating cash flow, the dividend is paid out. This reduces cash, and the dividends payable liability is eliminated. Bharti Airtel’s dividend payout ratio has been increasing over the years this shows that company is regularly giving dividend to its shareholder. It means that company is earning much profit above its retained earning so its giving to its shareholder in the form of dividend.
FUNDAMENTAL ANALYSIS OF TATA STEEL
Compound Annual Growth Rate of Tata Steel Ltd.
1 year Revenue
Liquidity and credit analysis 2013 2012 2011 Reported Net Profit
The net profit of the company is increasing over the years although it has not shown a great rise but the downfall has also not been seen.
Current Ratio Quick Ratio Debt Equity Ratio Long Term Debt Equity Ratio
0.62 0.27 0.39 0.39
0.57 0.32 0.43 0.43
0.86 0.61 0.47 0.47
The most important ratio is Net Profit Margin percentage or Net margin. It tells us how much out of every sale TATASTEEL gets to keep after everything else has been paid for. It is highly variable from one industry sector to another. An ideal company has consistent profit margins. Gross Profit Margin = ( Revenue - Cost of Revenue ) / Revenue Net Profit Margin = Net Income / Revenue
0.93 0.69 0.45 0.45
From an investor's perspective, ROE is a key ratio. The ROE (after subtracting preferred shares) tells common shareholders how effectively their money is being employed. Ideal long term average ROE should be above 15%. Average 2 year ROE of Tata Steel Ltd. : -3%