IIM Bangalore

PGP 2013
Financial Accounting- Group Assignment on Financial Statement Analysis

Sections

E&F

Instructor

Lata Chakravarthy

Teaching Assistant

Divya Pareek

Objective
The objective of this assignment is to help you get hands-on experience in analyzing the
business performance of real life companies within the industry and macro-economic context.
Choice of industry and company
Each group comprising not more than six members, should choose a different industry.
Within that industry, the group can choose three companies (preferably those which have
significantly similar lines of business/categories of products/services and are competitors to
each other). While all members of the group will contribute to industry analysis, the group
will split into 3 groups of two members for company analysis. Each sub-group will choose
one of the three companies as the main company for analysis and another company for
comparison. The financial statements of years 2011-12 and 2012-13 should be used for
analysis.
The selected companies should be listed on either BSE or NSE or both. Do not select
companies from banking & financial services sector as their financial statements are unique;
also, do not choose HLL which is extensively discussed in the text book. The selected
industry and companies should be posted on discussion board by the group. The deadline for
submission of industry/company names is Saturday, 10th August 2013.
Assignment Deliverables
1. Completed template of financial ratios and other measures of financial performance
for the company selected by your group. The template file name is
FSA_assgnmt_template_2013.xlsx and can be found under Course Documents in
Moodle. There is also a hard copy as part of this document.
2. A 1-2 page write-up on evaluation of your companys metrics, covering the
following:
a. Section A: A brief summary of your companys business, its key success
factors in the context of the industry in which it operates and the macroeconomic factors which impacted the industry and company during the period
of your analysis.

b. Section B: An evaluation of your companys performance over last two years

covering profitability, efficiency and leverage using Du Pont analysis and any
other significant ratio.
c. Section C: A brief evaluation over time of your companys cash flows,
liquidity position and growth.
d. Section C: A crisp summary of overall performance of the company as
compared to industry average and competitor and your forecast about future
performance.
Report should be written in full sentences, not as bullet points. You will be rewarded for your
effort, not results. Hence, a good faith effort will get credit, not an outsourced analyst report.
Submission deadline: Upload on Moodle by 29th Aug 2013.
File name should be groupname_indutryname_companyname.pdf.
Combine the word document and excel sheet into a single pdf file.
Source of annual report/financial statements/financials should be clearly disclosed.

Assignment on Financial Statement Analysis

Group Identity

Names of Group members

Industry chosen for analysis
Company chosen for analysis

Ratios and other financial measures

ROE & Du Pont Ratios

1
2

ROE (Net Profit/Equityavg)

Profitability (Net Profit/Net Revenue)

Efficiency (Turnover = Net Revenue/Total

Assetsavg)

4
II

Leverage (Total Assetsavg/Equityavg)

Additional Profitability Ratios

Gross Profit Margin % (Net Rev - COGS/Net

Rev)

SG&A % (SG&A Expense/Net Revenue)

Important Expense % (Important

Expense/Net Revenue)

III

Additional Efficiency Ratios

Accounts Receivable Turnover (Net

Revenue/ARavg

Average Collection Period or DSO (AR/Net

Revenue 365)

Inventory Turnover (COGS/Invavg

Days' Inventory [Inventory avg/ COGS365]

Accounts Payable Turnover (Purchases/ Apavg)

Days Payables Outstanding (DPO) [365 /

(Purchases / Accts Payableavg)]

Cash Conversion Cycle (Days' Inventory- Days

Payables Outstanding + Days Sales
Outstanding)

Industry
Average
2013

201213

201112

Your
analysis

Fixed Assets Turnover (Net Revenue/Net

Fixed Assets)

IV

Additional Leverage Ratios

Debt to Equity (Total Liabilities/Total Equity)

Times Interest Earned (Earnings before

Interest Exp and Taxes / Interest Exp)

Return on Financial Leverage (ROE - ROA)

V
1
2

Cash Liquidity and Cash Sources & Uses

Working Capital (CA - CL)
Current Ratio (CA / CL)

3
4

Quick Ratio [(Cash + ST Securities + AR) / CL)]

OCFCL (Operating CF / CL)

OCFCX (Operating CF / Capital Expenditures)

VI

Growth

Sales growth [(current year net Rev - previous

year net Rev)/ previous year net Rev]

Net Profit Growth [(current year Net profit previous year Net profit)/ previous year Net
profit]

This is to inform you that the last date to submit the Financial Analysis Assignment is postponed to
Saturday 31st August 2013 latest by 8:00 AM by which time, the soft copy should be uploaded on
Moodle and hard copy submitted to PGP Office. You are requested to submit the Assignment on or
before the extended deadline as late submission will not be entertained and will be considered as
not submitted.
Kindly note to mention the following details in your submission:
Group Number:
Team Number:
Team Members' Names (Roll Numbers)
-Industry Name :
Company Name:
*The weightage for evaluation of different aspects of the assignment will be as follows:*

30 % for Industry Analysis (This part of the report can be common for all members of the
group)

10 % for calculation of ratios

10% for analysis of company performance vis--vis industry

10% for analysis of company performance vis--vis its competitor

20% for analysis and interpretation of company performance as compared to the past (past
year as well as trends over the last 10 years, with more emphasis on the former)

20 % for integrated analysis of overall performance presented in the Report, structure of the
Report and manner of presentation.
For industry analysis you are expected to cover the size, competitive structure, CAGR, current
market conditions and global outlook for future, macro-economic factors which impact the industry,
key drivers of growth and profitability, countries which dominate the industry and India's position,
current capacity levels vis--vis demand and future outlook with respect to the same, game changers
in the industry and likely opportunities and threats relating to the same, constraints faced by the
industry and innovations if any to overcome the same.

The deadline for the project is Saturday 31st August 2013 latest by 8:00 AM by which time,
the soft copy should be uploaded on Moodle and hard copy submitted to PGP Office.
Industry Analysis- Make a separate report for the same, common to all the three teams, and
cover all the topics mentioned by Divya ma'am in the project description mail. The length of
this report is left to your discretion, but keep it as crisp as possible(like the length of an
Executive Summary). The 2 page report on the company analysis is different from this
Industry analysis report.
Industry averages- You don't need to specifically calculate all the ratios for industry
averages. Get them from reliable sources/websites.
I am listing a few resources based on personal research- capitaline, aceanalyser.com,
moneycontrol.com
In case you are still finding difficulty in obtaining them, follow the method stated by the
tutor.
As far as the comments/analysis columns in the excel template are concerned, you can
simply mention 'Above/Below' or 'Good/Bad' . The in depth analysis should be a part of the
report instead.