company analysis

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COMPANY ANALYSIS

involves :

involves the competitive position of a firm, its earning and profitability, the efficiency with which it operates, its financial position and its future with respect to the earning of its shareholders.

Nature and Style of Management :

Nature and Style of Management Personality traits of managers: Intelligence Initiative Energy or drive Communicative skills Self-assurance Perception Creativity Social participation Emotional maturity persuasiveness

Abilities of Management:

Abilities of Management 1) Ability to maintain the competitiveness of the firm. 2) Expand firm within to ensure growth. 3) Maintain profit margins through cost control and marketing efforts. 4) Maintain efficient production by proper utilization of plant and machinery and inventory management. 5) Financing the company adequately for execution of its expansion plans. 6) Maintaining harmonious relation with employees and unions and motivating them to give their best to the organization. 7) Employing scientific management techniques to cut down on avoidable costs and to enhance employee productivity. 8) Working with the government 9) Giving weight-age to innovation and research and development activities. 10) Emphasizing training and development. 11) Maintaining good relations with customers and the communities and discharging its social responsibilities.

R.L. Mashelkar:

R.L. Mashelkar Appointed as Director RIL 64 yrs old Padmabhushan awardee Credited with bringing scientific research to the shop floor of the Indian industry, for steering India’s way the protracted techno-legal argument in famous turmeric patent case (US company had patented the spice known for its therapeutic effects) and for mentoring several well-known scientist. Presently president of Indian National Science Academy Market BUZZ--------May Join one of Tata Companies.

Financial Analysis :

Financial Analysis 1. Correctness 2. Consistency 3. Completeness 4. Comparability NEED

SOURCES:

SOURCES Operating Results: The income statement. Financial position: The balance sheet Statement of Cash flow Ratio Analysis

Operating Results: The income statement. :

Operating Results: The income statement. 1) Earnings from regular operations. 2) The Matching Principle 3) Implications of inventory costing methods 4) Depreciation accounting 5) Provision for income tax 6) Earnings per share 7) Interim Earning reports

Financial position: The balance sheet:

Financial position: The balance sheet Assets are assigned values based on accounting principles. Liability values Book value of shareholders equity AND

Notes to Financial Statement::

Notes to Financial Statement: Contingent liabilities for taxes, dividend and pending law suits. Particulars on options outstanding, leases, loans, and other financial arrangements. Changes in accounting principles and techniques Important events occurring after the balance sheet date.

Statement of Cash flow::

Statement of Cash flow: Ability of the firm to generate positive future net cash flows, to meet its obligations, Firm’s ability to pay dividends, The firm’s need for external financing, the reasons for difference between net income and associated cash receipts and payments, and the effects on an enterprise’s financial position of both its cash and non-cash investing and financing transactions during the period.

PowerPoint Presentation:

Liquidity ratios ( A) Current ratio Liquid ratio Absolute Liquid ratio (B) Debtor turnover Creditor Turnover Inventory Turnover Debt/Equity Ratio Debt/total capital Interest Coverage Capital Gearing Inventory Turnover Debtor Turnover Working capital turnover Payables turnover In relation to sales GP Ratio Operating ratio Operating Profit ratio Net Profit ratio Expense ratio (B) In relation to investments ROI ROCE Return on Equity Capital Return on total resources Earnings per share Price-Earning ratio Solvency And Leverage ratios Activity ratios Profitability Ratios Classification of ratios

USEFUL Ratios:

USEFUL Ratios Earnings Per Share Price Earning Ratio Dividend Yield Pay-Out ratio

Earning per Share :

Earning per Share Helps in determining the market price per share Helps in estimating the company’s capacity to pay dividend Helps in deciding whether equity capital is effectively used.

Price Earning Ratio:

Price Earning Ratio Useful in financial forecasting. Helps in knowing Whether share prices are over or under valued. (Suppose EPS of ABC is Rs.20, its MP is Rs.140 and PE of same company is 8. It means MP of ABC should be 8X20=160. Thus share is undervalued. Helps in deciding whether to buy the shares or not

Pay Out Ratio:

Pay Out Ratio Indicates what proportion of earning per share has been used form paying dividend. Indicates amount of earnings that have been ploughed back in the business. The lower the ratio the higher is the amount ploughed back in the business.

Dividend Yield Ratio:

Dividend Yield Ratio Particularly useful for the investors who are interested only in dividend income.

ZEE Telefilms:

ZEE Telefilms

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