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We have derived the financial ratios of above Industries from the firms financial
statements. Objective of this project is to
Draw and analyze a comparison of financial ratios among the above FMCG
industries
Analyze the ratios between different time periods.
1) LIQUIDITY RATIOS: Liquidity ratios are financial metrics that are used to
determine a companys ability to pay off its short term obligations.
Current Ratio: Dabur has the highest Current Ratio among the three.
However for FMCG industries Current Ratio is not a very good indicator of
Liquidity as Low CR could indicate operational efficiency as Inventory and
Account Receivables are low. Compared to other industries , FMCG in
general have a shorter operating cycle hence have lower CR.
Quick Ratio: Daburs Quick ratio is below 1, which indicates that liquid
assets are slightly les than 1. As observed from the balance sheets, Dabur
has the highest % of Inventory i.e. 50% of cash.
2) LEVERAGE RATIO:
The debt to equity ratio and debt ratio has been decreasing for the three
industries which is a good indicator of the industries performance. Ideal
debt to equity ratio should be less than 1. For FMCG this ratio is typically
less than 1 as because they are in a mature sector, growth is typically in
single digits. Taking on additional debt is meaningless, because internal
accruals may be sufficient for any expansion.
Net working capital to current assets.