Yes Bank 2009 Objective:- The intent of financial statements is to provide information useful in economic decision making. In particular, the data should be useful in making investment and credit decisions. Financial statements should provide a reliable indication of a company's financial position, operating results, and changes in financial position. Also, statement components and categories should aid in decisions. Financial statements may provide information in addition to that specified by authoritative requirements and regulatory groups. In as much as management knows the most about the business, it is encouraged to identify certain circumstances and explain their financial effects on the enterprise. Note that the Financial Accounting Standards Board (FASB) Statement of Financial Accounting Concepts No. 1, "Objectives of Financial Statements," provides reporting goals Page 1
Objective:The intent of financial statements is to provide information useful in economic decision making. In particular, the data should be useful in making investment and credit decisions. Financial statements should provide a reliable indication of a company's financial position, operating results, and changes in financial position. Also, statement components and categories should aid in decisions. Financial statements may provide information in addition to that specified by a
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Yes Bank 2009
Objective:-
The intent of financial statements is to provide information useful in economic decision making.
In particular, the data should be useful in making investment and credit decisions. Financial
statements should provide a reliable indication of a company's financial position, operating
results, and changes in financial position. Also, statement components and categories should aid
in decisions. Financial statements may provide information in addition to that specified by
authoritative requirements and regulatory groups. In as much as management knows the most
about the business, it is encouraged to identify certain circumstances and explain their financial
effects on the enterprise. Note that the Financial Accounting Standards Board (FASB) Statement
of Financial Accounting Concepts No. 1, "Objectives of Financial Statements," provides
Long term assets / total Assets 0.84 0.87 0.89 0.89 0.89
Bonus component in equity capital (%) - - - - -
Cash Flow:-
(Rs in Cr.)
Page 14
Yes Bank 2009
Mar '
09
Mar '
08 Mar ' 07
Mar '
06
Mar '
05
Profit Before Tax 465.92 306.54 143.68 84.45 -5.58
Net Cash Flow-Operating Activity -364.59 -196.48 1,801.35 -165.96 -55.36
Net Cash Used In Investing Activity -60.20 -49.54 -1,222.69 -70.09 -108.61
Net Cash Used in Fin. Activity 719.93 580.74 498.60 398.61 217.00
Net Inc/Dec In Cash And Equivalent 295.14 334.73 1,077.26 162.55 53.03
Cash And Equivalent Begin of Year 1,627.57 1,292.84 215.58 53.03 0.00
Cash And Equivalent End Of Year 1,922.70 1,627.57 1,292.84 215.58 53.03
RATIOS ANALYSIS:-
Page 15
Yes Bank 2009
PROFITABILITY RATIO
A profitability ratio measures the degree of operating success of a company. The only reason
why investors are interested in a company is that they think they will earn a reasonable return in
the form of capital gain and dividends on their investments. The share holders will not be
interested in a company that does not earn sufficient margin on its sales. The failure to earn an
adequate rate of profit over a period will also drain the company’s cash and impair its liquidity.
Commonly used Profitability Ratios:-
Profit margin ratio
Asset turnover ratio
Return on asset ratio
Return on equity ratio
Earnings per share ratio
Gross Profit ratio
Net profit ratio
1. PROFIT MARGIN RATIO:
This ratio, also known as Return on sales (ROS), measures the amount of net profit earned by
each rupee of revenue. This indicates relationship between profit after tax and sales for the year.
This ratio indicates amount of net profit earned for each rupee of revenue.
Formula = Profit after Tax Sales
Profit margin ratio in 2009 = 30384 = 12.53% 2423.90
Profit margin ratio in 2008 = 20002 = 12.57 % 1590.84
Page 16
Yes Bank 2009
Profit margin ratio in 2007 = 9437 = 12.80 % 736.75
Comment:-
The profit margin ratio of Yes Bank shows decrease, 12.80 % in 2007 to 12.57 % in 2008. This ratio provides some indication of cut-off in profit margin of company. In the year 2009 the profit margin level of the company decreases more from the level of 2008. It decreases from 12.57 of 2008 to the level of loss 12.53 in 2009. It is bad for company’s profit earning capacity. It affects company’s credit in the market. The company has to take certain steps immediately to improve their management, which lead the company to sufficient profit earning level.
2. ASSETS TURNOVER RATIO:
Page 17
Yes Bank 2009
This ratio measure firm’s efficiency in utilizing its assets. It indicates how many times the assets
were turned over in a period and there by generated sales. If assets turnover is high, the is
managing its assets efficiently. If it is low, it means the company has more assets then it really
needs for its operation. This ratio shows the firm’s ability in generation sales from all financial
resources committed total assets.
Formula= Sales______ Average Total Assets
Assets turnover ratio in 2009 = 2423.90 = 12.43 times 194.88
Assets turnover ratio in 2008 = 1590.84 = 11.96 times 133.01
Assets turnover ratio in 2007= 736.75 = 8.5 times 86.66
Page 18
Yes Bank 2009
Comment: -
In the year 2007, Yes Bank had sales of about Rs. 8.5 per rupee of investment in
assets as compare to about Rs. 11.96 in 2008. The increase of 3.46 in sales per rupee of
investment indicates significant improvement in utilization of assets in the year 2008. The higher
this ratio the greater is the efficiency with which the fix assets being used. This ratio also shows
increase in the year 2009 from the year 2008. It shows that company has made good use of their
Funds by utilizing them into assets. This ratio suggests that the company is utilizing its fixed
assets efficiently.
Page 19
Yes Bank 2009
3. RETURN ON ASSETS /RETURN ON INVESTMENT:
This ratio measures profitability from a given level of investment. It is an excellent indicator of
overall performance of a company.
Formula= Profit after tax * 100 Average Total Assets
Return on assets /return on investment in 2009 = 30384 = 15.24% 19941.61
Return on assets /return on investment in 2008 = 20002 = 14.24% 14042.93
Return on assets /return on investment in 2007 = 9437 = 12.36 % 7632.99
Average Total Assets = Current year’s total assets + Previous Year’s Total Assets2
Average Total Assets In 2009 = 22900.80 + 16982.42 = 19941.61 2
Average Total Assets In 2007 = 16982.42 + 11103.44 = 14042.93 2
Average Total Assets In 2006 = 11103.44 + 4162.54 = 7632.99 2
Page 20
Yes Bank 2009
Comment:
This ratio shows overall performance of the company. We can see that it shows
increasing trend. The continuous increase in the ratio describes that the investments made by the
company is not going in the profitable manner for the company. It shows that the company’s
performance is decrease in the no. of years.
4. RETURN ON EQUITY:
Page 21
Yes Bank 2009
This ratio measures profitability from the stand point of the company’s share holders. It
measures the efficiency with which share holders funds are employed in order to moderate the
influence of share holders transactions such as share issue, buy back and retained earnings,
analysts generally use the average of beginning and ending amounts of the year.
Formula= Profit after TaxAverage shareholder’s equity
Return on equity in 2009 = 30384 = 37.41 812.11
Return on equity in 2008= 20002 = 30.33
659.46
Return on equity in 2007= 9437 = 23.98 393.53
Page 22
Yes Bank 2009
Comment:- Shareholders expect managers to earn an ROE higher than the firm’s cost of capital.
The ROE of firms in an industry tends to be driven closer to the industry mean over time. From
the year 2007 to 2008, Yes Bank’s ROE increased. It increases on continues basis. It will create
the good impression of company in the mind of the shareholder. It continually shows increasing
trend also in the year 2009. Shareholders invests in the company with keep in their mind that to
earn some profit. This continually increase the interest of shareholder to invest in the company.
5. EARNING PER SHARE:-
Page 23
Yes Bank 2009
Financial analysts regard the earning per share (EPS) as an important measure of profitability.
EPS is useful in comparing performance over time. But it is not of much help in making
comparisons across firms because the no. of equity shares can differ even if all of them have
identical amount of share holder’s equity. It is useful as an input into the price earning ratio.
Formula= Profit After Tax No. of equity Shares
Earnings per share in 2009= 30384 = 10.23 2969
Earnings per share in 2008 = 20002 = 6.76 2958
Earnings per share in 2007 = 9437 = 3.37 2800
Page 24
Yes Bank 2009
Comment:-
This ratio shows the profitability of the firm from the owner’s point of view. In the
year 2007, EPS is Rs. 3.37 but then after the EPS ratio has increasing trend and it reach at Rs.
10.23 in the year 2009. This financial position of the company shows a considerable increase
from its position of the previous year. The EPS capacity of company increase more in the year
2009 compare to the year 2008. The overall financial position of the company is satisfactory. It
increases the attraction of shareholders to invest in the company. It also affects the current
market price of the share in the share market. As we have shown in the past, the high EPS always
attracts the investors to invest in company’s share.
GROSS PROFIT RATIO:-
This ratio is found out to know the gross profit margin in respect to sales. This is used to know how much the firm is earning for the specific level of sales.
Formula= Gross Profit * 100 Sales
Gross Profit Ratio in 2009 = 527.65 * 100 = 21.77% 2423.90
Gross Profit Ratio in 2008 = 350.08 * 100 = 22%
1590.84
Gross Profit Ratio in 2007 = 172.41 * 100 = 23.40%
Page 25
Yes Bank 2009
736.75
Comment:
Here gross profit of the firm is decreasing from the year 2007 to 2008. But after 2008 gross profit again
start to increase in the year 2009, but at the decreasing rate. The increase in the ratio is low compared to
decrease in the ratio. This shows that firm’s earnings are not in respect to sales.
LIQUIDITY RATIO :
Liquidity is the ability of a business to meet its short-term obligations when they fall due. An
enterprise should have enough cash and other current assets which can be converted into cash, so
that it can pay its suppliers and lenders on time. The most commonly used ratios are:
Page 26
Yes Bank 2009
Current ratio Quick ratio Debtor turnover ratio Inventory turnover ratio
1. CURRENT RATIO:-
This is the ratio of current assets to current liabilities. It is a widely used indicator of a
company’s ability to pay its debts in the short term. It shows the amount of current assets a
company has per rupee of current liabilities.
Formula= Current assets Current liabilities
Current ratio in 2009 = 1,326.86 = 0.45
2,918.10
Current ratio in 2008 = 729.70 = 0.52 1,404.13
Current ratio in 2007 = 376.88 = 0.30 1,228.68
Page 27
Yes Bank 2009
Comment:-
The Current ratio indicates the working position of the company. There has been
considerable deterioration in the current ratio of the company from 2008 to 2009. As we have
seen on one hand current assets and current liabilities both are increasing. The decrease in
current ratio means, that in the year 2009 compared to 2008 the company had less current assets
to meet its current liabilities. As shown that the decrease in the year 2009 is less as compared to
increase in the year 2008. The situation of working capital of the company is more declined year
to year. If immediate steps are not to be taken by the company to remedy the situation, the
company will be put into considerable trouble.
2. QUICK RATIO/ACID TEST RATIO:
The quick ratio or acid test ratio is computed as a supplement to the current ratio. This ratio
relates relatively more liquid current assets, usually current assets less inventories, to current
liabilities. All current assets are not equally liquid. While cash is readily available to make
payments to suppliers and debtors can be quickly converted into cash, inventories are two steps
Page 28
Yes Bank 2009
away from conversion into cash. Thus, a large current ratio by itself is not a satisfactory measure
of liquidity when inventories constitute a major part of the current assets.
Formula= Quick assets (current assets-stock-debtors) Current Liabilities
Quick ratio in 2009 = 1,326.86 = 0.45 2,918.10
Quick ratio in 2008 = 729.70 = 0.52 1,404.13
Quick ratio in 2007 = 376.88 = 0.30 1,228.68
Page 29
Yes Bank 2009
Comment:-
Company’s inventories drove the improvement in the current ratio of the company. Once, we remove them there is no change in the liquidity measure of the company. As we have seen in the year 2008, there is a continuous decrease. It shows that the company’s liquidity is continually decreases. The more cash in the company shows more liquidity of the company. We show that ratio is in the decreasing trend. It also describes the less liquidity of cash in the company. In the year 2008 ratio is more compared to 2007 but it again decreases in the year 2009.
DEBTORS TURNOVER RATIO:-
The debtor turnover ratio measures efficacy of a firm’s credit and collection policy and shows
the no. of times each year the debtors turn into cash. It provides some indication of the quality of
a firm’s debtors and collection efforts. High debtor turnover indicates that debtors are being
converted rapidly into cash and the quality of the company portfolio of debtor is good. The
ability of a company to collect credit from its customer in a prompt manner enhances its
liquidity. Debtor turnover is the ratio of sales to average debtors.
Formula= Credit sales
Avg. debtors
Page 30
Yes Bank 2009
3. PRICE-TO-BOOK RATIO:-
This ratio measures and compares the market price of company’s share with its book value. Book value is equal to the amount of share holders equity divided by the no. of shares.
Formula = Market price per share Book value per share
Price-to-book ratio in 2009 = 296.98 = 29.69 10.00
Price-to-book ratio in 2008 = 295.79 = 29.57 10.00
Price-to-book ratio in 2006 = 280.00 = 28.00 10.00
Page 31
Yes Bank 2009
Comment: The low price to book ratio is often seen as an indication of under pricing of the stock. A price to book ratio of more than one means that the market expects the stock to earn at a rate higher than the required note. Both the profit earning and profit bearing ratios are affected by the choice of accounting methods since the denominator is an accounting variable. This ratio shows decreasing trend. It continually increases from 28 to 29.57 and from 29.57 to 29.69.