Project Report on Airtel

Funds flow, Cash flow & Financial

statement Analysis
Submitted To: Submitted By:

XXXXXXXXXXX XXXXXXXXXXX

In Partial Fulfillment of the

Requirements of MBA Program
Batch (2022-2024)
 ACKNOWLEDGEMET

The satisfaction and euphoria that accompany the successful completion of

any work would be incomplete unless we mention some of the persons, as an
expression of gratitude, which made it possible, whose constant guidance and
encouragement served as a beckon light and crowned the efforts and success.

We take this opportunity of expressing our gratitude to Dr. Jayasree who has
always been of immense help during the making of this project, which helped
us a great deal in enhancing our knowledge by virtue of practical application.
Her guidance and support carried us all through the preparationof this project.

Last but not the least I would also like to acknowledge contributions
of various official websites and books named in the references for helping me
with the data collection and analysis which have provided me with the
relevant information for me to successfully complete my Project Report.
 INDEX

S.No CONTENTS
1. Introduction

2. Research Methodology

3. Company Profile

4.
Review of Literature
5. Data Analysis & Interpretation

6.
Conclusion & Recommendations
7.
References
 Chapter – I
Introduction
Finance:-
Financial management is that managerial activity which is concerned with the planning
and control of firm’s financial resources. As a separate activity or discipline it is of
recent origin. It was a branch of economics till 1890 still today it has no unique body of
knowledge of its own and draws heavily on economics for its theoretical concepts. The
subject of financial management is of immense interest to both academicians and
practicing managers. It is of great interest to academicians, because the subject is still
developing and are still certain areas where controversies exist for which no enormous
solution have been reached as yet. The most crucial decision of the firm are those which
relate to finance and an understanding of the theory of financial management provides
than with conceptual and analytical insights to make those decisions skillfully.

Meaning Of Finance:-
Finance is rightly been termed as ‘master key’ providing accretes to are sources required for
running business activities. Finance is the management of monetary affairs of a company.

Definition of Finance:-
Ray G Jones and Dean Dudely observe that the word finance come indirectly from Latin word
“Finis”.
In simple words “Finance is economics and Accounting”. Economics is proper utilization of
scare resources and accounting Economics is proper utilization of scarce resources and
Accounting is keeping a record or tract of things.
Kenneth Ridgeley and Ronald Bums Accent, “Financing is the process of organizing the flow of
funds so that a business can carry out its objectives in the most efficient manner of meeting its
obligation as they are due”
Scope Of Finance:-
What is finance? What are firm’s financial activities? How are they related to firm’s
other activities?
There exists an inseparable relation between finance on one hand and on the other.
Almost all kinds of business activities directly or indirectly involved the acquisition and
use of funds. E.g.: recruitment and promotion of employees, buying of machines,
advertising, sales promotion activities requires outlay of cash and therefore affect
financial resources. Finance functions or decision includes investment decision, finance
decision, dividend decision, and liquidity decision.
A firm performs functions simultaneously and continuously in the normal course of
business. They do not necessarily occur in a sequence. Finance functions call for skillful
planning control and execution of firm’s attitudes.

Objectives of the Study:-

1. To ascertain the overall profitability of the company.
2. To analyze trends on the basis of ratios for consecutive 4 years.
3. To gain insight as to how a financial statement can be use to predict future.
4. To analyze working capital funds with the help of ratios.

Scope of Study:-
The scope of the study is limited to Bharti Airtel and is an attempt to find out the
financial position during past 4 years from the Annual report of the company with special
reference to financial analysis.
 Chapter – 2
Research Methodology
Research Design:-
Research design of study is a conceptual structure a sketch or plan laid out for conducting the
study. It is considered as a blue print of the final copy of the project where it shows the activities
undertaken while doing the study. It constitutes the steps taken beginning with of collection of
clarifying it. Analyzing, interpreting, processing and finally putting it is an actual form.
Methodology:-
No series assumptions so far were made as to limit the usefulness of the study was made
at any stage. However the following assumptions were made –
A study period of four years (2017 to 2022)

Objectives of the study and the research design as agreed upon by the company and the
researcher are sufficient, accurate and correct portray true state affairs of Ratio analysis
of the company.

Published information from the company is accurate and true.

Research Design:-
Research design means a search of facts, answers to question and solution to problems. The data
are analyzed through ratio analysis common size balance sheet, comparative balance sheet and
fund flow analysis.
It is a prospective investigation. Research is a systematic logical study of an issue or problem
through scientific method. It is a systematic and objective analysis and recording of controlled
observation that may lead to the development of generalization, principles, resulting in prediction
and possibly ultimate control of events there are various designs, which are descriptive and
helpful for analytical research.
Data Source:-
This study makes extensive use of secondary data collected in the forms of annual reports. The
nature of secondary data collected was both qualitative and quantitative in nature. Considering
the above plan, research plan for the study is essentially a combination of qualitative and
quantitative aspects.
The secondary sources of data can be divided in to mainly two parts.

Internal
 Accounting section
 Finance section
 HRD department
 Miscellaneous records

External
 Information for published materials like,
 Annual reports of the company
 Balance sheets and profit and loss accounts
 Magazines
There was also primary data, which was through discussions held with the concerned company
officials from finance department. The primary data was obtained through survey method i.e.
personal interview method.
Techniques of Analysis:-
The data are analyzed through ratio analysis common size balance sheet, comparative balance
sheet and fund flow analysis.
Limitations Of The Study:-

1. The study is limited to Bharti Airtel and the finding need not apply in similar sense
to other firms.

2. The inferences that have been framed only on the basis of financial statement.

3. Based on the limited information it is not possible to arrive at a proper conclusion.

4. Limitations of Financial analysis.

 Chapter – 3
Company Profile
Bharti Airtel Limited, commonly known as (d/b/a) Airtel, is an
Indian multinational telecommunications services company based in New Delhi. It operates in 18
countries across South Asia and Africa, as well as the Channel Islands. Currently, Airtel
provides 4G and 4G+ services all over India and 5G service in selected cities. Currently offered
services include fixed-line broadband, and voice services depending upon the country of
operation. Airtel had also rolled out its VoLTE technology across all Indian telecom circles. It is
the second largest mobile network operator in India and the second largest mobile network
operator in the world.  Airtel was named India's 2nd most valuable brand in the first ever Brandz
ranking by Millward Brown and WPP plc.

Airtel is credited with pioneering the business strategy of outsourcing all of its business
operations except marketing, sales and finance and building the 'minutes factory' model of low
cost and high volumes. The strategy has since been adopted by several operators. Airtel's
equipment is provided and maintained by Ericsson, Huawei, and Nokia Networks whereas IT
support is provided by Amdocs. The transmission towers are maintained by subsidiaries and joint
venture companies of Bharti including Bharti Infratel and Indus Towers in India. Ericsson agreed
for the first time to be paid by the minute for installation and maintenance of their equipment
rather than being paid upfront, which allowed Airtel to provide low call rates
of ₹1 (1.3¢ US)/minute.

In 1984, Sunil Mittal started assembling push-button phones in India, which he earlier used to

import from a Singaporean company, Singtel, replacing the old-fashioned, bulky rotary
phones that were in use in the country then. Bharti Telecom Limited (BTL) was incorporated and
entered into a technical tie-up with Siemens AG of Germany for the manufacture of electronic
push-button phones. By the early 1990s, Bharti was making fax machines, cordless phones and
other telecom gear. He named his first push-button phone as 'Mitbrau'.

In 1992, he successfully bid for one of the four mobile phone network licenses auctioned
in India. One of the conditions for the Delhi cellular licenses was that the bidder have some
experience as a telecom operator. So, Mittal clinched a deal with the French telecom
group Vivendi. He was one of the first Indian entrepreneurs to identify the mobile telecom
business as a major growth area. His plans were finally approved by the Government in
1994[12] and he launched services in Delhi in 1995, when Bharti Cellular Limited (BCL) was
formed to offer cellular services under the brand name AirTel. Within a few years, Bharti
became the first telecom company to cross the 2 million mobile subscriber mark. Bharti also
brought down the STD/ISD cellular rates in India under the brand name 'India one'.

In 1999, Bharti Enterprises acquired control of JT Holdings, and extended cellular operations to
Karnataka and Andhra Pradesh. In 2000, Bharti acquired control of Skycell Communications, in
Chennai. In 2001, the company acquired control of Spice Cell in Calcutta. Bharti Enterprises
went public in 2002, and the company was listed on Bombay Stock Exchange and National
Stock Exchange of India. In 2003, the cellular phone operations were re-branded under the single
Airtel brand. In 2004, Bharti acquired control of Hexacom and entered Rajasthan. In 2005,
Bharti extended its network to Andaman and Nicobar. This expansion allowed it to offer voice
services all across India.

Airtel launched "Hello Tunes", a caller ring back tone service (CRBT), in July 2004 becoming
the first operator in India to do so. The Airtel theme song, composed by A.R. Rahman, was the
most popular tune in that year.

In May 2008, it emerged that Airtel was exploring the possibility of buying the MTN Group, a
South Africa-based telecommunications company with coverage in 21 countries in Africa and
the Middle East. The Financial Times reported that Bharti was considering offering US$45
billion for a 100% stake in MTN, which would be the largest overseas acquisition ever by an
Indian firm. However, both sides emphasize the tentative nature of the talks, while The
Economist magazine noted, "If anything, Bharti would be marrying up," as MTN has
more subscribers, higher revenues and broader geographic coverage. However, the talks fell
apart as MTN Group tried to reverse the negotiations by making Bharti almost a subsidiary of the
new company.[16] In May 2009, Bharti Airtel again confirmed that it was in talks with MTN and
the companies agreed to discuss the potential transaction exclusively by 31 July 2009. Talks
eventually ended without agreement, some sources stating that this was due to opposition from
the South African government.
In 2009, Bharti negotiated for its strategic partner Alcatel-Lucent to manage the network
infrastructure for the fixed-line business. Later, Bharti Airtel awarded the three-year contract
to Alcatel-Lucent for setting up an Internet Protocol access network across the country. This
would help consumers access internet at faster-speed and high-quality internet browsing on
mobile handsets.

In 2009, Airtel launched its first international mobile network in Sri Lanka. In June 2010, Bharti
acquired the African business of Zain Telecom for $10.7 billion making it the largest ever
acquisition by an Indian telecom firm. In 2012, Bharti tied up with Wal-Mart, the US retail giant,
to start a number of retail stores across India. In 2014, Bharti planned to acquire Loop
Mobile for ₹7 billion (US$88 million), but the deal was called off later.

On 18 November 2010, Airtel rebranded itself in India in the first phase of a global rebranding
strategy. The company unveiled a new logo with 'airtel' written in lower case. Designed by
London-based brand agency, The Brand Union, the new logo is the letter 'a' in lowercase, with
'airtel' written in lowercase under the logo. On 23 November 2010, Airtel's Africa operations
were rebranded to 'airtel'. Sri Lanka followed on 28 November 2010 and on 20 December 2010,
Warid Telecom rebranded to 'airtel' in Bangladesh.

Acquisitions and mergers

MTN Group merger negotiations

In May 2005, it emerged that Airtel was exploring the possibility of buying the MTN Group, a
South Africa-based telecommunications company with operations in 21 countries in Africa and
the Middle East. The Financial Times reported that Bharti was considering offering
US$45 billion for a 100% stake in MTN, which would be the largest overseas acquisition ever by
an Indian firm. However, both sides emphasized the tentative nature of the talks. The
Economist magazine noted, "If anything, Bharti would be marrying up", as MTN had more
subscribers, higher revenues and broader geographic coverage. However, the talks fell apart as
MTN Group tried to reverse the negotiations by making Bharti almost a subsidiary of the new
company.

In May 2009, Airtel confirmed that it was again in talks with MTN and both companies agreed to
discuss the potential transaction exclusively by 31 July 2009. Airtel said "Bharti Airtel Ltd is
pleased to announce that it has renewed its effort for a significant partnership with MTN
Group" The exclusivity period was extended twice up to 30 September 2009. Talks eventually
ended without agreement.

A solution was proposed where the new company would be listed on two stock exchanges, one
in South Africa and one in India. However, dual-listing of companies is not permitted by Indian
law.

Airtel India

Main article: Airtel India

Bharti Telecom (BTL) is a holding company of Bharti Airtel with Bharti Enterprises
and Singtel owning 50.56 percent and 49.44 percent, respectively, in BTL, which in turn owns
35.80 percent of Bharti Airtel.

Airtel India is the second largest provider of mobile telephony after Jio and the second largest
provider of fixed telephony in India and is also a provider of broadband and subscription
television services. It offers its telecom services under the Airtel brand, and is headed by Sunil
Bharti Mittal.

Broadband

Airtel provides broadband internet access through DSL, internet leased lines and MPLS
(multiprotocol label switching) solutions, as well as IPTV and fixed line telephone services.
Until 18 September 2004, Bharti provided fixed line telephony and broadband services under the
Touchtel brand. Bharti now provides all telecom services including fixed line services under the
common brand Airtel. As of June 2019, Airtel provides Telemedia services; in 99 cities. [74] As on
30 June 2019, Airtel had 2.342 million broadband subscribers.

Airtel Broadband provides broadband and IPTV services. Airtel provides both capped as well as
unlimited download plans. However, Airtel's unlimited plans are subject to free usage policy
(FUP), which reduces speed after the customer crosses a certain data usage limit. In most of the
plans, Airtel provides only 64KByte/second beyond FUP which is equal to other competitors'
tariffs. The maximum speed available for home users under the new V-Fiber program is up to
300Mbit/s and with DSL is 16Mbit/s.
In May 2012, Airtel Broadband and some other Indian ISPs temporarily blocked file sharing
websites such as vimeo.com, megavideo.com, and thepiratebay.se, without giving any legal
information to customers.

In June 2011, The Economic Times reported that the Telemedia business was merged with
Mobile and DTH businesses.

Digital television
Main article: Airtel digital TV

The digital television business provides Direct-to-Home (DTH) TV services across India under

the brand name Airtel digital TV. It started services on 9 October 2008 and had about
16.027 million customers at the end of June 2019.

Banking
Main article: Airtel Payments Bank

Airtel Payments Bank was launched in January 2017.

Business

Airtel Business consists largely of six products: cloud and managed services, digital signage,
NLD/ILD connectivity (VSAT / MPLS / IPLC and Ethernet products), Wi-Fi dongles, voice
solutions (like toll-free numbers, TracMate, and automated media reading) and conferencing
solutions (VoIP, audio, video, and web conferencing), serving industry verticals like BFSI,
IT/ITeS, manufacturing, hospitality and government.

Airtel Business, the B2B arm of Bharti Airtel, has rolled out a first of its kind dedicated digital
platform to serve the growing connectivity, communication and collaboration requirements of
emerging businesses, including SMEs and startups. The digital platform will offer solutions [ to
emerging enterprises to enable ease of business and faster time to market.[81]

Android-based tablet[

Beetel Teletech Ltd., a unit of Bharti Enterprises Ltd., on 18 August 2011, launched
a ₹9,999 (US$130) 7-inch tablet in India based on Google Inc.'s Android operating system. The
offering is intended to capitalise on the expected demand for cheap computing devices in the
world's fastest-growing and second-largest mobile phone market.[82]
One Network

One Network is a mobile phone network that allows Airtel customers to use the service in a
number of countries at the same price as their home network. Customers can place outgoing calls
at the same rate as their local network, and incoming calls are free. [98] As of 2014, the service is
available in Bangladesh, Burkina Faso, Chad, Democratic Republic of Congo, Congo
Brazzaville, Gabon, Ghana, India, Kenya, Madagascar, Niger, Nigeria, Rwanda, Seychelles,
Sierra Leone, Sri Lanka, Tanzania, Uganda, and Zambia only for international roamers
from Airtel Africa[99]

Joint ventures and agreements

Airtel-Vodafone
Main article: Airtel-Vodafone

On 1 May 2007, Jersey Airtel and Guernsey Airtel, both wholly-owned subsidiaries of the Bharti
Group, announced they would launch mobile services in the British Crown Dependency islands
of Jersey and Guernsey under the brand name Airtel-Vodafone after signing an agreement
with Vodafone. Airtel-Vodafone operates a 4G network in Jersey and Guernsey.

Airtel-Ericsson

In July 2011, Bharti signed a five-year agreement with Ericsson, who will manage and optimize
Airtel's mobile networks in Africa. Ericsson will modernize and upgrade Airtel's mobile
networks in Africa with the latest technology including its multi-standard RBS 6000 base station.
As part of the modernization, Ericsson will also provide technology consulting, network
planning & design and network deployment. Ericsson has been the managed services and
network technology partner in Asian operations.

Sponsorship

On 9 May 2009, Airtel signed a major deal with Manchester United. As a result of the deal,
Airtel had the rights to broadcast the matches played by the team to its customers.

Bharti Airtel signed a five-year deal with ESPN Star Sports to become the title sponsor of
the Champions League Twenty20 cricket tournament.
Airtel also signed a deal to be the title sponsor of the Formula One Indian Grand Prix.

Airtel sponsored the 2018–21 FIA GT World Cup.

Airtel signed a deal to be the title sponsor of the I-League for 2013–14 I-League.

Airtel is also the main sponsor of Airtel Super Singer and Airtel Super Singer Junior since 2006,
which are currently broadcast on Vijay TV.

Signature tune

The signature tune of Airtel is composed by Indian musician A. R. Rahman. The tune became
hugely popular and is the world's most downloaded mobile music, with over 150 million
downloads. Rahman along with Anu Malik re-used the same tune in a 2004 Kannada
movie Love. A new version of the song was released on 18 November 2010, as part of the
rebranding of the company. This version was also composed by Rahman.

Controversies

Net neutrality debate

Further information: Net neutrality in India

In February 2014, Gopal Vittal, CEO of Airtel's India operations, said that companies offering
free messaging apps like Skype, Line and WhatsApp should be regulated similar to telecom
operators. In August 2014, TRAI rejected a proposal from telecom companies to make
messaging application firms share part of their revenue with the carriers or the government. In
November 2014, TRAI began investigating if Airtel was implementing preferential access by
offering special internet packs which allowed WhatsApp and Facebook data at rates that were
lower than its standard data rates. The statements of Chua Sock Koong, Group CEO
of Singtel and also a shareholder (32.15%) of Bharti Airtel share similar statements about the
Anti-Net Neutrality position.

In December 2014, Airtel changed its service terms for 2G and 3G data packs so that VoIP data
was excluded from the set amount of free data. A standard data charge of 4 paise (0.050¢ US)
per 10 KB for 3G service and 10 paise (0.13¢ US) per 10 KB (more than ₹10,000 (US$130) for
1 GB) for 2G service was levied on VoIP data. A few days later, Airtel announced a separate
internet pack for VoIP apps, it offered 75 MB for ₹75 (94¢ US) with a validity of 28 days. The
TRAI chief Rahul Khullar said that Airtel cannot be held responsible for violating net neutrality
because India has no regulation that demands net neutrality. Airtel's move faced criticism on
social networking sites like Facebook, Twitter and Reddit. Later on 29 December 2014, Airtel
announced that it would not be implementing the planned changes, pointing out that there were
reports that TRAI would be soon releasing a consultation paper on the issue.

In April 2015, Airtel announced the "Airtel Zero" scheme. Under the scheme, app firms will sign
a contract and Airtel will provide the apps for free to its customers. The reports of Flipkart, an e-
commerce firm, joining the "Airtel Zero" scheme drew negative response. People began to give
the one-star rating to its app on Google Play. Following the protest, Flipkart decided to pull out
of Airtel Zero. The e-commerce giant confirmed the news in an official statement, saying, "We
will be walking away from the ongoing discussions with Airtel for their platform Airtel Zero."

In October 2016, India's telecom regulator TRAI recommended imposing a combined penalty
of ₹3,050 crore (equivalent to ₹37 billion or US$470 million in 2020) on three mobile network
operators — Vodafone, Bharti Airtel and Idea Cellular — for denying interconnection to
Reliance Jio Infocomm (Jio), the latest entrant into India's telecom service.

User privacy

In June 2015, a code used by the company was accused of compromising subscribers' privacy.

eKYC licence suspension

The Unique Identification Authority of India (UIDAI) suspended Bharti Airtel and Airtel

Payments Bank Limited's licence for eKYC of Aadhar on 16 December 2017, following
complaints from customers that their accounts were being opened without their consent. Some
even received their LPG subsidies in their Airtel Payments Bank accounts.
 Chapter – 4
Review of Literature
Functions Of Finance:-
There are three major functions of finance:
a) Investment decision
b) Financing decision
c) Dividend decision.
a) Investment decision:
Investment decision relates to selection of asset in which funds will be inverted by a firm. The
assets that can be acquired by a firm may be long term asset and short term assets.
b) Financing decision:
Financing decision is concerned with financing mix or capital structure the mix of department
and equity is known as capital structure. Determination of the proportion of equity and debt is
the main issue in financing to share holders and also financial risk.
c) Dividend decision:
A firm may distribute its profits or retain the balance with it the decision depends upon the
preference of the shareholders and investment opportunities available to the firm. Dividend
decision has a strong influence on the market price of share.

Therefore, the dividend policy is too determined in terms of its impact on shareholders’ value.
The optimum dividend policy is one. Which maximize the value of shares and wealth of
shareholders the financial manager should determine the optimum payout ratio that is the
proportion of net profit to be paid out to shareholders? The financial manager should also
consider those factors. This determines the dividend policy in practice.
Financial Management:-
Financial management is a part of managerial activity, which is mainly concerned with the
planning, and controlling of financial resources of a firm. Prof Solomon defines “Financial
management is concerned with efficient use of an important economic resource is capital funds.

Importance Of Financial Management:-

Financial management is that managerial activity which is concerned with the planning
and control of firm’s financial resources. As a separate activity or discipline it is of
recent origin. It was a branch of economics till 1890 still today it has no unique body of
knowledge of its own and draws heavily on economics for its theoretical concepts. The
subject of financial management is of immense interest to both academicians and
practicing managers. It is of great interest to academicians, because the subject is still
developing and are still certain areas where controversies exist for which no enormous
solution have been reached as yet. The most crucial decision of the firm are those which
relate to finance and an understanding of the theory of financial management provides
than with conceptual and analytical insights to make those decisions skillfully.

Objectives Of Financial Management:-

The term objective reforms to a goal or decision criterion for taking financial decisions. There
are two objectives:
a) Profit maximization
b) Wealth maximization

a) PROFIT MAXIMIZATION:

The term profit maximization is deep rooted in the economic theory. It is needed that when
pursue the policy of maximizing profits society’s resources are efficiently utilized. The firms
should undertake those actions that would pursue profits and drop those actions that would
decrease profits. The financial decisions should be oriented to the maximization of profits.
Profits provides yardstick for measuring the economic performance of firms. It makes allocation
of resources to profitable and desirable areas. It also ensures maximum social welfare. On these
grounds profit maximization serves as criteria for financial decision.
b) WEALTH MAXIMISATION:

Wealth maximization or value maximization or net present Value maximization provides an

appropriate and operationally feasible decision criterion for financial management decisions. It
provides an unambiguous measure of what financial management should seek to maximize in
making investment and financing decisions. It satisfies the three requirements of a suitable
criterion namely precise, time value of money and quality of benefits.
In wealth maximization criterion the benefits associated with assets are measured in terms of
cash flows rather than accounting profits. The cash flows are a precise concept with definite
meaning. It overcomes the deficiencies associated with accounting profits.
 Financial Analysis:

Financial analysis is the analysis of financial statement of a Company to assess its financial
health and soundness of its management. ‘Financial Statement Analysis’ involves a study of the
financial statements of a company to ascertain its prevailing state of affairs and the reasons
thereof. Such a study would enable the public and the investors to ascertain whether one
company is more profitable than the other and also to state the causes and factors that are
probably responsible.

Ratio Analysis:-

Ratio analysis is a powerful tool of financial analysis. A ratio is defined as “the indicated
quotient of two mathematical expressions as relationship between two or more things”.
In financial analysis, a ratio is used as a bench mark for evaluating the financial position
and performance of a firm. The absolute accounting figures reported in the financial
statement do not provide a meaningful understanding of the performance and financial
position of a firm. An accounting figure conveys meaningful message when it is related
to some other relevant information. For example Rs 5 corer net profit may look
impressive but the firm’s performance can be said to be good or bad only when the net
profit figure is related to firm’s investments. The relationship between two accounting
figures expressed mathematically is known as financial ratio. A ratio quantitative
relationship, which can be in turn used to make a qualitative judgment.

Classification of Ratios :-

Ratios may be classified in a number of ways keeping in view the particular

purpose. Ratios indicating profitability are calculated on the basis of the profit and loss
account; those indicating financial position are computed on the basis of balance sheet.
This classification is rather crude and unsuitable to determine the profitability and
financial position of business. To achieve these purpose ratios may be classified as

1. Liquidity Ratios
2. Return On Investments Ratios
3. Solvency Ratios
4. Efficiency or Turnover Ratios
5. Profitability Ratios
6. Capital Market Ratios

Liquidity Ratios:-
i. Current Ratio
ii. Quick or Acid Test Ratio
iii. Debtors Ratio
iv. Debtors Turnover Ratio
v. Creditors Ratio
vi. Creditors Turnover Ratio
vii. Inventory Holding Period
viii. Inventory Turnover Ratio
 Chapter – 5
Data Analysis & Interpretation
4.1Current Ratio (Working Capital Ratio)
= Current Assets
Current Liabilities
Table: 4.1 Current Ratio (2017 to 2022) (Rs in CRS.)

YEAR CURRENT CURRENT RATIO

ASSETS LIABILITIES
2017-18 8439.39 14362.33 0.59
2018-19 10466.63 14466.89 0.73
2019-20 10021.39 13638.30 0.73
2020-21 13730.10 16732.40 0.82
2021-22 23957.90 17842.70 1.34
Analysis: The current ratio of the company for the year 2017-18 is 0.59, 2018-19 is 0.73,
2019-20 is 0.73, 2020-21 is 0.82 and 2021-22 is 1.34, the current ratio has increased by 23.73%
in the year 2018-19, and in 2019-20 it remains constant. There was increase positive value is
found by 12.33% in year 2020-21 and increased by 63.41% in the year 2021-22.
Interpretation: From the above table we can indicate that the current assets are very less
compared to current liability of the company. The company doesn’t have enough current assets
in meeting their liabilities. So, the company can’t meet immediate emergencies.
The company needs to increase current assets in order to meet its short-term obligation. We can
conclude that the ratio isn’t favorable as the current asset is less than the current liabilities.

Quick (Acid Test or Liquid) Ratio:

= Quick Assets
Current Liabilities

Table: 4.2 Quick Ratio (2017 to 2022) (Rs in CRS.)

YEAR QUICK CURRENT RATIO

ASSETS LIABILITIES
2017-18 8382.53 14362.33 0.58
2018-19 10404.48 14466.89 0.72
2019-20 9994.15 13638.30 0.73
2020-21 13695.70 16732.40 0.82
2021-22 22866.90 17842.70 1.28
Analysis: The quick ratio of the company for the year 2017-18 is 0.58, 2018-19 is 0.72, 2019-
20 is 0.72, 2020-21 is 0.82, and 2021-22 is 1.28. The quick ratio has increased by 24.14 % in the
year 2018-19 and the year 2019-20 is increased by 1.39% there is increased positive value is
found by 12.33% for the year 2020-21 and increased by 56.10% in the year 2021-22.
Interpretation: As per as quick ratio is concern whether a firm has enough short-term assets
to cover its immediate liabilities without selling inventory . Here, Bharti Airtel review that in
2018-19 increase their assets and then after very small percentage increase. That point of Time it
has not enough asset to cover its liabilities. Company ideal ratio is 1.5 so is below the ratio. This
is not good for company should be improving that point.

Debtors Turnover Ratio

= Credit Sales
Avg. Debtors
Table: 4.3 Debtors Turnover Ratio (2017 to 2022) (Rs in CRS.)

YEAR CREDIT SALES AVG. DEBTORS RATIO DAYs

2017-18 25761.11 2097.49 12.28 30
2018-19 34048.32 1515.76 22.46 16
2019-20 35609.54 2327.52 15.30 24
2020-21 38015.80 2240.39 16.97 23
2021-22 41,603.80 2134.50 18.45 18
Analysis: The debtors turnover ratio of the company for the year 2017-18 is 12.28 times, 2018-
19 is 22.46 times, 2019-20 is 15.30 times, 2020-21 is 16.97 times, and 2021-22 is 18.45 times
the debtors turnover ratio has increased by 82.90% in the year 2018-19, and in 2019-20 it
decreased by 31.88%. There was increase positive value is found by 10.92% in year 2020-21 and
increased by 8.72% in the year 2021-22.
Interpretation: Higher turnover signifies speedy and effective collection. Lower turnover
indicates sluggish and inefficient collection leading to the doubts that receivables might contain
significant doubtful debts. Receivables collection period is expressed in number of days. Here
the company in 1st year 1month to collection & after decline then after increase. Company does
not maintain lower collection period.
Return On Investments Ratios:-
i. Return On Net Worth
ii. Earnings Per Share (EPS)
iii. Cash Earnings Per Share (CEPS)
iv. Return On Capital Employed

Return on Net Worth

PAT – Preference Dividend x 100
Net Worth
Table: 4.4 Return On Net Worth (2017 to 2022) (RS IN CRS.)

YEAR PAT – PREFERENCE NET WORTH RATIO

DIVIDEND
2017-18 6244.19 20241.49 30.85
2018-19 7743.84 27643.97 28.01
2019-20 9426.15 36737.18 25.66
2020-21 7716.90 44111.60 17.49
2021-22 5266.00 49429.60 10.65

Analysis: The return on net worth of the company for the year 2017-18 is 30.85, 2018-19 is
28.01, and 2019-20 is 25.66, 2020-21 is 17.49, and 2021-22 is 10.65. The return on net worth
has decreased by 9.21% in the year 2018-19, and decreased by 8.39% in the year 2019-20 and
again decreased by 31.84% in the year 2020-21 and again decreased by 39.11% in the year.
Interpretation: As per as net worth ratio states the return that shareholders could receive on
their investment in a company. Here the company continuous declines year by year this not well
for company. But actually is right because bank rate is low like 12 % is good for investors.

4.5 .09
PAT
No. Equity Shares
Table: 4.5 Earnings Per Share (2017 to 2022) (RS IN CRS.)
 YEAR PAT NO. OF EQUITY RATIO
SHARES
2017-18 6244.19 189.79 32.90
2018-19 7743.84 189.82 40.79
2019-20 9426.15 379.75 24.82
2020-21 7716.90 379.75 20.32
2021-22 5266.00 379.75 13.87

Analysis: The earnings per share of the company for the year 2017-18 is 32.90, 2018-19 is
40.79, and 2019-20 is 24.82, 2020-21 is 20.32, and 2021-22 is 13.87. The earnings per share has
increased by 23.98% in the year 2018-19, and decreased by 39.15% in the year 2019-20 and
again decreased by 18.13% in the year 2020-21 and again decreased by 31.74% in the year 2021-
22.
Interpretation: As per as EPS ratio is concern the portion of a company's profit allocated to
each outstanding share of common stock. Earnings per share serve as an indicator of a
company’s profitability. Here the company shows high profitability so it is good for company
as well as investor.

4.6 Return on Capital Employed

PBIT
Capital Employed
Table: 4.6 Earnings Per Share (2017 to 2022) (RS IN CRS.)

YEAR PBIT CAPITAL EMPLOYED RATIO

2017-18 9450.20 56009.10 16.87
2018-19 11194.72 41776.10 26.80
2019-20 8747.65 35357.53 24.74
2020-21 7599.87 26811.63 28.35
2021-22 7514.80 11565.07 0.64

Analysis: The return on capital employed of the company for the year 2017-18 is 16.87, 2018-
19 is 26.80, and 2019-20 is 24.74, 2020-21 is 28.35 and 2021-22 is 0.64. The return on capital
employed has increased by 58.87% in the year 2018-19, and decreased by 7.69% in the year
2019-20 and increased by 14.59% in the year 2020-21 and again decreased by 97.74% in the
year.
Interpretation: It is expressed as a percentage and can be very revealing about the industry a
company operates in, the skills of the management and occasionally the general business climate.
Here, the company continuous increases efficiency. It is good for the company.

Solvency Ratios:-
i. Net Asset Value (NAV)
ii. Debt Equity Ratio
iii. Int. Coverage Ratio
iv. Debt Service Coverage Ratio
v. Proprietary Ratio
vi. Total Assets to Debt Ratio
vii. Liabilities to Equity Ratio

Net Asset Value

Net Worth
No. Equity Share
Table: 4.7 Net Asset Value (2017 to 2022) (RS IN CRS.)

YEAR NET WORTH NO. OF EQUITY RATIO

SHARES
2017-18 20241.49 189.79 106.65
2018-19 27643.97 189.82 145.63
2019-20 36737.18 379.75 96.74
2020-21 44111.60 379.75 116.16
2021-22 49429.60 379.75 130.16

Analysis: The return on net asset value of the company for the year 2017-18 is 106.65, 2018-
19 is 145.63, and 2019-20 is 96.74, 2020-21 is 116.16, and 2021-22 is 130.16. The net asset
value has increased by 36.55% in the year 2018-19, and decreased by 33.57% in the year 2019-
20 and again increased by 20.01% in the year 2020-21, and again increased by 12.05% in the
year 2021-22.
Interpretation: The net asset value in companies is the book value deducting liabilities and
intangible assets from the total assets. For companies, the net asset value is always used in
market book ratio or price book ratio to compare the net asset value of the company with its
market value. Here condition of company is good due to high profitability.
Debt Equity Ratio
Long Term Debt
Share Holder Fund
Table: 4.8 Debt Equity Ratio (2017 to 2022) (RS IN CRS.)

YEAR LONG TERM DEBT SHARE RATIO

HOLDER FUND
2017-18 6570.43 20241.49 0.32
2018-19 7713.65 27643.97 0.29
2019-20 5038.92 36737.18 0.14
2020-21 11897.50 44111.60 0.27
2021-22 14129.40 49429.60 0.28

Analysis: The debt equity ratio of the company for the year 2017-18 is 0.32, 2018-19 is 0.29,
and 2019-20 is 0.14, 2020-21 is 0.27, and 2021-22 is 0.28. The debt equity ratio has decreased
by 9.38% in the year 2018-19, and decreased by 51.72% in the year 2019-20, increased by
92.29% in the year 2020-21 and again increased by 3.70% in the year 2021-22.
Interpretation: A measure of a company's financial leverage calculated by dividing its total
liabilities by stockholders' equity. It indicates what proportion of equity and debt the company is
using to finance its assets. Here the company ratio so good in the current situation as to the
previous years. This is good for the company.

4.9 Proprietary Ratio

Proprietary Fund
Total Asset
Table: 4.9 Proprietary Ratio (2017 to 2022) (RS IN CRS.)

YEAR PROPRIETARY TOTAL ASSET RATIO

FUND
2017-18 20241.49 26811.84 0.75
2018-19 27643.97 35357.62 0.78
2019-20 36737.18 41776.12 0.88
2020-21 44111.60 56009.10 0.79
2021-22 49429.60 63559.00 0.78

Analysis: The proprietary ratio of the company for the year 2017-18 is 0.75, 2018-19 is 0.78,
and 2019-20 is 0.88, 2020-21 is 0.79, and 2021-22 is 0.78. The proprietary ratio has increased
by 4.00% in the year 2018-19, and increased by 11.54% in the year 2019-20 and decreased by
10.23% in the year 2020-21 and again decreased by 1.27% in the year 2021-22.
Interpretation: Proprietary Ratio refers to a ratio which helps the creditors of the company
in seeing that their capital or loans which the creditors have given to the company are safe. Ideal
ratio is <1 so Here company has all year is <1 so it is good for company.

4.10 Total Asset to Debt Ratio

Total Asset
Long Term Debt
Table: 4.10 Total Asset to Debt Ratio (2017 to 2022) (RS IN CRS.)

YEAR TOTAL ASSET LONG TERM RATIO

DEBT
2017-18 26811.84 6570.43 4.08
2018-19 35357.62 7713.65 4.58
2019-20 41776.12 5038.92 8.29
2020-21 56009.10 11897.50 4.71
2021-22 63559.00 14129.40 4.50

Analysis: The total assets to debt ratio of the company for the year 2017-18 is 4.08, 2018-19 is
4.58, and 2019-20 is 8.29, 2020-21 is 8.71, and 2021-22 is 4.50. The total asset ratio has
increased by 12.25% in the year 2018-19, and increased by 81.00% in the year 2019-20 and
decreased by 43.18% in the year 2020-21 and again decreased by 4.46% in the year 2021-22.
Interpretation: As per as the total asset to debt ratio to debt ratio is concern ratio
between asset & long term debt. In the ratio total asset more than long term debt. So here
company total asset is high in 2019-20 but company can’t maintain that so improve that
point is actually it is good.
4.11 Liabilities to Equity Ratio
Total Liabilities
Share Holders Equity
Table: 4.11 Liabilities to Equity Ratio (2017 to 2022) (RS IN CRS.)

YEAR TOTAL SHARE HOLDERS RATIO

LIABILITIES EQUITY
2017-18 26811.84 20241.49 1.32
2018-19 35357.62 27643.97 1.28
2019-20 41776.12 36737.18 1.14
2020-21 56009.10 44111.60 1.27
2021-22 63559.00 49429.60 1.28

Analysis: The liabilities to equity ratio of the company for the year 2017-18 is 4.08, 2018-19 is
4.58, and 2019-20 is 8.29, 2020-21 is 8.71, and 2021-22 is 1.28. The liabilities to equity ratio
has decreased by 3.03% in the year 2018-19, and decreased by 10.94% in the year 2019-20 and
increased by 11.40% in the year 2020-21 and again increased by 0.79% in the year 2021-22.
Interpretation: The liability to equity ratio is the relationship between the capital contributed
by creditors and the capital contributed by shareholders. It also shows the extent to which
shareholders' equity can fulfill a company's obligations to creditors in the event of liquidation.
Here the company increases their equity year by year. Ideal ratio is 1 here company is work on
more than 1 so it is good for the company.

Efficiency Ratios or Turnover Ratios:-

i. Fixed Assets Turnover Ratio
ii. Net Worth Turnover Ratio
iii. Working Capital Turnover Ratio

4.12 Fixed Assets Turnover Ratio

Net Sales
Net Block of Fixed Asset
 Table: 4.12 Fixed Assets Turnover Ratio (2017 to 2022) (RS IN CRS.)

YEAR NET SALES NET BLOCK OF RATIO

FIXED ASSET
2017-18 25761.11 19030.65 1.35
2018-19 34048.32 25013.36 1.36
2019-20 35609.54 28024.97 1.27
2020-21 38015.80 40700.80 0.93
2021-22 41603.80 43984.30 0.94

Analysis: The fixed asset turnover ratio of the company for the year 2017-18 is 1.35, 2018-19
is 1.36, and 2019-20 is 1.27, 2020-21 is 0.93, and 2021-22 is 0.94. The fixed asset turnover ratio
has increased by 0.70% in the year 2018-19, and decreased by 6.62% in the year 2019-20 and
again decreased by 26.77% in the year 2020-21 and increased by 1.07% in the year 2021-22.
Interpretation: Ratio measures a company's ability to generate net sales from fixed-asset
investments - specifically property, plant and equipment (PP&E) - net of depreciation. A higher
fixed-asset turnover ratio shows that the company has been more effective in using the
investment in fixed assets to generate revenues. Here the company’s decline the use of the asset
continues decline. This is not good for the company.

4.13 Net Worth Turnover Ratio

Net Sales
Net Worth
Table: 4.13 Net Worth Turnover Ratio (2017 to 2022) (RS IN CRS.)

YEAR NET SALES NET WORTH RATIO

2017-18 25761.11 20241.49 1.27
2018-19 34048.32 27643.97 1.23
2019-20 35609.54 36737.18 0.97
2020-21 38015.80 44111.60 0.86
2021-22 41603.80 49429.60 0.84

Analysis: The net worth turnover ratio of the company for the year 2017-18 is 4.08, 2018-19 is
4.58, and 2019-20 is 8.29, 2020-21 is 8.71, and 2021-22 is 0.84. The net worth turnover ratio
has decreased by 3.15% in the year 2018-19, and decreased by 21.14% in the year 2019-20 and
decreased by 11.34% in the year 2020-21 and again decreased by 2.32% in the year 2021-22.
Interpretation: As per as Net worth Turnover Ratio is concern it show the relationship
between the net worth & net sales. Ideal ratio is 1.5 but company is not performance
better in this case ratio is continues decline. It is not good for the company.

4.14 Working Capital Turnover Ratio

Net Sales
Working Capital
Table: 4.14 Working capital Turnover Ratio (2017 to 2022) (RS IN CRS.)

YEAR NET SALES WORKING RATIO

CAPITAL
2017-18 25761.11 (-)5922.94 (-)4.35
2018-19 34048.32 (-)4000.26 (-)8.51
2019-20 35609.54 (-)3616.91 (-)9.85
2020-21 38015.80 (-)3002.30 (-)12.66
2021-22 41603.80 6115.20 6.80

Analysis: The working capital turnover ratio of the company for the year 2017-18 is -4.35,
2018-19 is -8.51, and 2019-20 is -9.85, 2020-21 is -12.66, and 2021-22 is 6.80. The working
capital turnover ratio has decreased by 95.63% in the year 2018-19, and decreased by 15.75% in
the year 2019-20 and again decreased by 28.53% in the year 2020-21 and increased by 153.71%
in the year 2021-22.
Interpretation: The working capital turnover ratio concern to increasing ratio indicates that
working capital is more active; it is supporting, comparatively, higher level of production and
sales; it is being used more intensively. Here company is not performing well due to negative
working capital. This is not good for company.
Profitability Ratios:-
i. Gross Profit Ratio
ii. Profit Before Depreciation, Interest & Tax Ratio (PBDIT)
iii. Profit Before Interest & Tax Ratio (PBIT) or Operating Profit Ratio
iv. Profit Before Tax Ratio (PBT)
v. Net Profit or Profit After Tax Ratio (PAT)
vi. Defective Tax Rate
vii. Operating Ratio

4.14 PBDIT Ratio

PBDIT x 100
Net Sales
Table: 4.14 PBDIT Ratio (2017 to 2022) (RS IN CRS.)

YEAR PBDIT NET SALES RATIO

2017-18 10766.45 25761.11 41.79%
2018-19 11953.93 34048.32 35.11%
2019-20 15084.80 35609.54 42.36%
2020-21 13643.90 38015.80 35.89%
2021-22 13430.80 41603.80 32.28%

Analysis: The PBDIT ratio of the company for the year 2017-18 is 41.79%, 2018-19 is
35.11%, and 2019-20 is 42.36%, 2020-21 is 35.89%, and 2021-22 is 32.28%. The PBDIT ratio
has decreased by 15.98% in the year 2018-19, and increased by 20.65% in the year 2019-20 and
decreased by 15.27% in the year 2020-21 and again decreased by 10.05% in the year 2021-22.
Interpretation: Financial metric used to assess a company's profitability by comparing its
revenue with earnings. More specifically, since PBDIT is derived from revenue, this metric
would indicate the percentage of a company is remaining after operating expenses. Here high
ratio indicate good position in market this is good for company.
4.15 PBIT or Operating Profit Ratio
PBIT x 100
Net Sales
 Table: 4.15 PBIT Ratio (2017 to 2022) (RS IN CRS.)

YEAR PBIT NET SALES RATIO

2017-18 7333.80 25761.11 28.47%
2018-19 8568.83 34048.32 25.17%
2019-20 10986.88 35609.54 30.85%
2020-21 9032.30 38015.80 23.76%
2021-22 7514.80 41603.80 18.06%

Analysis: The PBIT ratio of the company for the year 2017-18 is 28.47%, 2018-19 is 25.17%,
and 2019-20 is 30.85%, 2020-21 is 23.76%, and 2021-22 is 18.06%. The PBIT ratio has
decreased by 11.59% in the year 2018-19, and increased by 22.57 in the year 2019-20, decreased
by 22.98% in the year 2020-21 and decreased by 23.98% in the year 2021-22.
Interpretation: As per as ratio is concern a higher operating margin means that the company
has less financial risk. Here company has average high ratio so the company is a good position.

4.16 PBT Ratio

PBT x 100
Net Sales
Table: 4.16 PBT Ratio (2017 to 2022) (RS IN CRS.)

YEAR PBT NET SALES RATIO

2017-18 6879.70 25761.11 26.71%
2018-19 8088.52 34048.32 23.75%
2019-20 10652.75 35609.54 29.92%
2020-21 8747.40 38015.80 23.00%
2021-22 6989.70 41603.80 16.80%

Analysis: The PBIT ratio of the company for the year 2017-18 is 26.71%, 2018-19 is 23.75%,
and 2019-20 is 29.92%, 2020-21 is 23.00% and 2021-22 is 16.80%. The PBT ratio has
decreased by 11.08% in the year 2018-19, and increased by 25.99% in the year 2019-20 and
again decreased by 23.12% in the year 2020-21 and decreased by 26.97% in the year 2021-22.
Interpretation: As per as ratio is concern a higher interest margin means that the company
has less financial risk. Here company has average high ratio so the company is a good position.
4.17 Net Profit Ratio
Net Profit x 100
Net Sales
Table: 4.17 Net Profit Ratio (2017 to 2022) (RS IN CRS.)

YEAR NET PROFIT NET SALES RATIO

2017-18 6244.19 25761.11 24.24%
2018-19 7743.84 34048.32 22.74%
2019-20 9426.15 35609.54 26.47%
2020-21 7716.90 38015.80 20.30%
2021-22 5266.00 41603.80 12.66%

Analysis: The net

profit ratio of the company for the year 2017-18 is 24.24%, 2018-19 is 22.74%, and 2019-20 is
26.47%, 2020-21 is 20.30% and 2021-22 is 12.66. The net profit ratio has decreased by 6.19%
in the year 2018-19, and decreased by 16.40% in the year 2019-20 and again decreased by
23.31% in the year 2020-21 and decreased by 37.63% in the year 2021-22.
Interpretation: This ratio is a measure of the overall profitability net profit is arrived at after
taking into accounts both the operating and non-operating items of incomes and expenses. The
ratio indicates what portion of the net sales is left for the owners after all expenses have been
met. Here the company high profit in year 2019-20 then decline. This is not good for company.
Company should be maintaining the NP ratio.
Capital Market Ratios:-
i. Price Earnings Ratio (PE Ratio)
ii. Market Price to NAV Ratio
iii. Market Capitalization Ratio
iv. Yield to Investor
v. Price to Book Ratio

4.18 Price Earnings Ratio

Market Price of a Share
Earnings per Share
Table: 4.18 Price Earnings Ratio (2017 to 2022) (RS IN CRS.)

YEAR MARKET PRICE EARNINGS PER RATIO

OF A SHARE SHARE
2017-18 420.00 32.90 12.77
2018-19 508.30 40.79 12.46
2019-20 174.60 24.82 7.03
2020-21 270.70 20.32 13.32
2021-22 273.30 15.09 18.11

Analysis: The net profit ratio of the company for the year 2017-18 is 12.77, 2018-19 is 12.46,
and 2019-20 is 7.03, 2020-21 is 13.32 and 2021-22 is 18.11. The net profit ratio has decreased
by 2.43% in the year 2018-19, and decreased by 43.57% in the year 2019-20 and increased by
89.47% in the year 2020-21 and again increased by 35.96%.
Interpretation: The P/E looks at the relationship between the stock price and the company’s
earnings. Here the company has a high P/E ratio in last year it suggests that stock is undervalued
and investor can earn from it.

4.19 Market Price to NAV Ratio

Market Price of a Share
NAV
 Table: 4.19 Market Price to NAV Ratio (2017 to 2022) (RS IN CRS.)

YEAR MARKET PRICE NAV RATIO

OF A SHARE
2017-18 420.00 106.65 3.94
2018-19 508.30 145.63 3.49
2019-20 174.60 96.74 1.80
2020-21 270.70 116.16 2.33
2021-22 273.30 130.16 2.10

Analysis: The market price to NAV ratio of the company for the year 2017-18 is 3.94, 2018-19
is 3.49, and 2019-20 is 1.80, 2020-21 is 2.33 and 2021-22 is 2.10. The market price to NVA ratio
has decreased by 11.42% in the year 2018-19, and decreased by 48.42% in the year 2019-20 and
increased by 29.44% in the year 2020-21 and decreased by 9.87% in the year.
Interpretation: As per as this ratio is concern the investment potential of a share. It also

offers opportunity to the company to buy back its own shares from the market. Hear the

company has higher ratio represent the ability to buy own shares in the market. Ideal ratio is 2 so

all year is above the 2.

4.20 Market Capitalization Ratio

Market Price of a Share x Total No. of Shares

Table: 4.20 Market Capitalization Ratio (2017 to 2022) (RS IN CRS.)

YEAR MARKET PRICE TOTAL NO. OF RATIO

OF A SHARE SHARES
2017-18 420.00 189.97 79787.40
2018-19 508.30 189.82 96485.15
2019-20 174.60 379.75 66304.35
2020-21 270.70 379.75 102798.33
2021-22 273.30 379.75 103785.67

Analysis: The market capitalization ratio of the company for the year 2017-18 is 79787.40,
2018-19 is 96485.15, and 2019-20 is 66304.35, 2020-21 is 102798.33 and 2021-22 is 103785.67.
The market capitalization ratio has increased by 20.93% in the year 2018-19, and decreased by
31.28% in the year 2019-20 and increased by 55.04% in the year 2020-21 and increased by
0.96% in the year 2021-22.
Interpretation: The ratio provides a base for total valuation of a company based on the

market price of its equity. It immensely helpful in negotiating mergers, takeover, acquisition ect.

Hear the company perfume well in market but decline way so company should be improve &

take expansion strategy.

Multi Step Profit & Loss Account (RS IN CRS.)

Particulars C.Y. P.Y.

(2021-22) (2020-21)
Gross Sales 41603.80 38015.80
Less: Excise duty - -
Net Sales 41603.80 38015.80
-Administrative, Selling and Other Expenses 27843.50 24590.10
+ other income (operating) 329.50 218.20
Profit Before Depreciation Interest and Tax - PBDIT 13430.80 13643.90

Profit Before Depreciation Interest and Tax - PBDIT 13430.80 13643.90

-Depreciation 5916.00 4193.70
-Amortisation - 417.90
-Impairment - -
Operating Profit – PBIT 7514.80 9032.30

Operating Profit – PBIT 7514.80 9032.30

-Interest & Finance Charges 1199.30 296.70
+Other Income (Non-Operating) - -
Profit Before Tax & Extra Ordinary Items - PBTEOT 6315.50 8735.60

Profit Before Tax & Extra Ordinary Items - PBTEOT 6315.50 8735.60

+/ - extra ordinary items 17.50 11.8

Profit Before Tax for the year – PBT-Y 6333.00 8747.40

+/ - Prior year adjustments - -

Profit Before Tax 6333.00 8747.40

Profit Before Tax 6333.00 8747.40
Provision for tax:
Current income tax 1226.20 1007.60
+/ - deferred income tax liability - -
+ fringe benefit tax - -
+/ - tax adjustments for previous year - -
Total Income Tax 1067.00 1030.50
Profit After Tax – NP/PAT 5266.00 7716.90

Analysis and Interpretation:

It equally, and probably, more to study analysis the profitability of the company at different step
or at intermediate levels, of business activities, in relation to net sales. It may be observed that in
case of Bharti Airtel profit has decline at every intermediate stage. However, since absolute
figures are not amenable to further analysis.

Horizontal Analysis:-

Horizontal Profit & Loss Acc of Bharti Airtel for the year 2020-21 & 2021-22:
(RS IN CRS.)

2021-22 2020-21 Increase/ Increase/

Particular (C. Y.) (P. Y.) Decrease Decrease
(%)
Sales 41603.80 38015.80 3588.00 9.44
(-) Administrative, Selling
and Other Expenses 27843.50 24590.10 3253.40 13.23
PBDIT 13760.30 13425.70 334.60 2.50
(-) Depreciation & Amortization 5916.00 4611.60 1304.40 28.28
PBIT
7844.30 8814.10 (-)969.80 (-)11.00
(-) Interest Expenses
545.90 308.50 237.40 76.95
PBT
7298.40 8505.60 (-)1207.20 (-)14.19
(-) Income Tax 1067.00 1030.50 (-)196.10 (-)15.99
PAT 6231.40 7475.10 (-)1243.70 (-)16.64
Horizontal Balance Sheet of Bharti Airtel for the year 2020-21 & 2021-22:
(RS IN CRS.)

2021-22 2020-21 Increase/ Increase/

Particular (C. Y.) (P. Y.) Decrease Decrease
(%)
Sources of Funds:-
Owned Funds:
Share Capital 1898.80 1898.80 0.00 0.00
Reserves & Surplus 47530.80 42212.80 5318.00 21.17
49429.60 44111.60 5318.00 12.05
Loan Funds:
Secured Loans 2.90 17.10 (-)14.20 (-)83.04
Unsecured Loans 14126.40 11880.40 2246.00 18.90
14129.30 11897.50 2231.80 18.76
Total 63558.90 56009.10 7549.80 13.48

Application of Funds:-
1.)Fixed Assets
 Gross Block 70450.30 61437.50 9012.80 14.67
 Less: depreciation (-)26466.0 (-)20736.7 5729.30 27.62
 Net Block 43984.30 40700.80 3283.50 8.07
 Capital work in progress 1072.50 6497.60 (-)5425.10 (-)83.45
2.)Investments 12337.80 11813.00 524.80 4.44
3.)Current Assets, Loans &
Advances
 Inventories 32.10 34.40 (-)2.3 26.28
 Sundry Debtors 2134.50 2375.80 (-)270.82 (-)6.69
 Cash & Bank Balance 159.20 126.60 32.60 25.75
 Fixed Deposit 322.60 7.20 315.4 43.80
 Loans & Advances 23957.90 11186.10 12771.80 114.17
 Less: Current Liabilities (-)17145.2 (-)16104.8 1040.4 6.46
Provisions (-)697.50 (-)627.60 69.90 11.13
Net Current Assets: 6115.20 (-)3002.30 614.61 (-)303.68
4.) Miscellaneous Exp. - -
Profit & Loss Account - -
Total 63559.00 56009.10 7549.90 13.48

Analysis and Interpretation of Bharti Airtel:-

Profit & loss account
1. Net sales growth by 9.44%
2. Increase in expenses like Administrative, Selling and Other Expenses by 13.23% this is
very high to camper to sales growth so it is not good for the company.
3. Depreciation & Amortization even increase by 28.28% that shows that company noncash
charges increase not well for the company.
4. Interest Expenses is decline by 76.95% this is good for the company.
5. Decline in income tax by 15.99% due to low profit margin. This is not good for company.
6. Decline in PAT by 16.64% is not good for company.

Balance Sheet
1. Total asset / liabilities up by 13.48%

2. Net worth up by 12.05%

3. Lone fund also decreased by 13.48% this shoe the company good will in the market to
give lone.
Vertical Analysis:-

Vertical Profit & Loss Acc of Bharti Airtel for the year 2020-21 & 2021-22:
(RS IN CRS.)
Particulars Sche Current Year Previous Year
dule (2021-22) (2020-21)
Inner Outer Inner Outer
Column Column Column Column
Income
Sales 41603.80 38015.80
Less: return
Other Income 329.50 218.20
41933.30 38234.00
Expenditure
Administrative, Selling and Other 27843.50 24585.50
Expenses
Interest & Finance Charges 1199.30 296.70
Depreciation 5916.00 4193.70
Impairment loss on fixed assets 417.90
Adjustment due to (increase) / Decrease (-)2.30 (-)7.20
in stock of finished goods & W.I.P
Provision for contingencies
34961.10 29510.20
Profit Before Taxation 6989.70 8747.40
Provision for Income Tax 1067.00 1030.50
Profit After Taxation 5730.00 7716.90
Vertical Balance Sheet of Bharti Airtel for the year 2020-21 & 2021-22:
(RS IN CRS.)
Schedule Current Year Previous Year
Particulars
No. (2021-22) (2020-21)
I Sources of funds
1.) Shareholder’s Funds:
a.) Capital 1898.80 1898.80
b.) Reserves & Surplus 47530.80 42212.80
2.) Loan Funds
a.) Secured Loans 2.90 17.10
b.) Unsecured Loans 14126.50 11880.40
Total 63559.00 56009.10
II Application of Funds
1.) Fixed Assets
a.) Gross Block 70450.30 61437.50
b.) less: depreciation (-)26466.00 (-)20736.70
c.) Net Block 43984.30 40700.80
d.) Capital work-in progress 1072.50 6497.60
2.) Investments 12337.80 11813.00
3.) Current Assets, Loans & Advances:
a.) Inventories 32.10 34.40
b.) Sundry Debtors 2134.50 2375.80
c.) Cash And Bank Balances 159.20 126.60
d.) Fixed Deposit 322.60 7.20
e.) Loans And Advances 23957.90 11186.10
Less:
Current Liabilities and Provisions
a.) Liabilities 17145.20 16104.80
b.) Provisions 697.50 627.60
Net Current Assets: 6115.20 (-)3002.30
4.) a.) Miscellaneous Expenditure - -
b.) Profit and Loss Account - -
Total 63559.00 56009.10

Analysis and Interpretation:

1. Income is increase as camper to previous year due to sales increase.

2. Expenditure more than the previous year this bed for company that’s way decline in
profits margin.

3. Share holders fund is increase as camper to previous year this good for the company.
 4. In application of fund is not proper managed by the company because net working capital
is in negative but we show the some improvement in this. So, this not good for the
company.

5. As all aspect of the vertical analysis part over all company tries to increase his
performance by increases of his efficiency.

Vertical Analysis:-

Common size Profit & Loss Acc of Bharti Airtel for the year 2020-21 & 2021-22:
(RS IN CRS.)
Particulars Current Year Previous Year
(2021-22) (2020-21)
Amount % Amount %
Sales 41603.80 100 38015.80 100
(-)Selling, Administrating & Other 27843.50 66.92 24371.90 64.11
Expenses
PDBIT 13760.30 33.07 13643.90 35.89
(-)Depreciation & Amortization 5916.00 14.22 4599.80 12.10
PBIT 7844.30 18.85 9044.10 23.71
(-)Interest 545.90 1.31 296.70 0.78

PBT 7298.40 17.54 8747.40 23.01

(-)Income Tax 1067.00 2.56 1030.50 2.71
PAT 6231.40 14.98 7716.90 20.30
Common size Profit & Loss Acc of Bharti Airtel for the year 2020-21 & 2021-22:
(RS IN CRS.)
Current Previous
Particulars Year % Year %
(2021-22) (2020-21)
Sources of funds
1.) Shareholder’s Funds:
a.) Capital 1898.80 2.99 1898.80 3.39
b.) Reserves & Surplus 47530.80 74.78 42212.80 75.37
2.) Loan Funds
a.) Secured Loans 2.90 0.00 17.10 0.03
b.) Unsecured Loans 14126.50 22.22 11880.40 21.21
Total 63559.00 100 56009.10 100
Application of Funds
1.) Fixed Assets
a.) Gross Block 70450.30 110.84 61437.50 109.69
b.) less: depreciation (-)26466.00 (-)41.64 (-)20736.70 (-)37.02
c.) Net Block 43984.30 69.21 40700.80 72.67
d.) Capital work-in progress 1072.50 1.69 6497.60 11.60
2.) Investments 12337.80 19.41 11813.00 21.09
3.) Current Assets, Loans & Advances:
a.) Inventories 32.10 0.05 34.40 0.06
b.) Sundry Debtors 2134.50 3.36 2375.80 4.24
c.) Cash And Bank Balances 159.20 0.25 126.60 0.23
d.) Fixed Deposit 322.60 0.51 7.20 0.01
e.) Loans And Advances 23957.90 37.69 11186.10 19.97
Less:
Current Liabilities and Provisions
a.) Liabilities 17145.20 26.97 16104.80 28.75
b.) Provisions 697.50 1.10 627.60 1.12
Net Current Assets: 6115.20 9.62 (-)3002.30 (-)5.36
4.) a.) Miscellaneous Expenditure - -
b.) Profit and Loss Account - -
Total 63559.00 100 56009.10 100
Analysis and Interpretation:
1. As camper to sales to other selling and administrative & other expense cover 64.11% &
66.92% respectively for 2020-21 & 2021-22. cover the large amount of revenue so that’s
not good for the company and mostly affected the company performance.

2. Hear that profitability of company ‘s performance that sows as per profit before tax is as
camper to sale is 23.01 & 17.54 respectively 2020-21 & 2021-22.that shows that
company profit margin is low than capitalization rate that is 23.77% but is not good for
the company as well as investor.

3. According to reserve & surplus is 75.37% & 74.78% respectably to 2020-21 & 2021-22.
That’s show hat company is not maximize use of their funds in implication is not proper
meaner.

4. Company fixed asset is very high i.e. 72.67% & 69.21 % respectively 2020-21 & 2021-
22. it shows that company bare low fix cost during operation that is good for the
company.

5. As camper the total asset to investment that 21.09 % & 19.41 % respectively in 2020-21
& 2021-22 hear the company sales there in current year by same proportion this not good
for the company.

6. Overall performance of the company that better could in next year by that increasing
performance by sale and low cost that should be improving that.
Trend Analysis:- (RS IN CRS.)

Particulars 2021-22 2020-21 2019-20 2018-19 2017-18

Sales 41603.80 38015.80 35609.54 34048.32 25761.11
Index 1.61 1.48 1.38 1.32 1

PBDIT 13760.30 13643.90 15084.80 11953.93 10766.45

Index 1.28 1.27 1.40 1.11 1

PBIT 7844.30 9032.30 10986.88 8568.83 7333.80

Index 1.07 1.23 1.50 1.17 1

PBT 7298.40 8747.40 10652.75 8088.52 6879.70

Index 1.06 1.27 1.55 1.18 1

PAT 6231.40 7716.90 9426.15 7743.84 6244.19

Index 1.00 1.24 1.51 1.24 1

Share Holders Fund 49429.60 44111.60 36737.18 27643.97 20241.49

Index 2.44 2.18 1.81 1.37 1

Total Debt 14129.40 11897.50 5038.92 7713.65 6570.34

Index 2.14 1.81 0.77 1.17 1

Net Block 43984.30 40700.80 28024.97 25013.36 19030.65

Index 2.31 2.14 1.47 1.35 1

Net Current Assets 6115.20 (-)3002.30 (-)3616.91 (-)4000.26 (-)5922.94

Index 1.02 0.50 0.61 0.67 1

Total Assets/Total Liability 63559.00 56009.10 41776.12 35357.62 26811.80

Index 2.37 2.09 1.56 1.32 1
Trend Analysis and Interpretation:
1. In sale continuously increase. This is good performance of the company that is currently
company is market leader in telecom industry.

2. As per as profit after tax is concern high profit sow the high performance of the company
hear the company 2019-20 is very high but company should be maintain that profitability.

3. Share holders fund continuous up by creating the good image in the market that’s shows
the goodwill of the company.

4. Total debt of the company is in year 2019-20 is very low as camper the base year of
2017-18 this is good for company but in year 2021-22 is very high so that not maintain
by the company.

5. net current asset of the company is in negative that not good for the company

6. Total asset/ total liability of the company is continues increasing that shows that turnover
year by year that’s good for the company.
 Chapter – 6
Recommendations & Conclusion
CONCLUSIONS:-

The company has been doing their activity effectively and efficiently. The company has a sound
long term solvency. The company can rise from the financial crush it is in right now by taking
proper steps to increase its sales of production and to minimize cost by maximize utilization of
resources. A already known there is a thin line between profitability and liquidity and the
company lost two years made a profit has very low and another two making better profit. This
shows the company in a good position and the management of the company has much as better
so that does way maintain the market leadership.

RECOMMENDATIONS:-

1. The company should maintain an adequate cash and bank balance in order to meet the
emergency requirements.
2. The current ratio of the company has decreasing year to year. The company must utilize
their current asset accurately.
3. The sales of the company go on increasing better to increase sales for more profit in future.
4. Net profit of the company has decreased when compare to last year. Better to decrease the
unnecessary expenses of the company to increase the profit.
5. The Net working capital of the company has negative. Shows excess of current liabilities
over current assets. It must positive for future years.
6. Loans of the company increasing in year 2010 compare to previous year, it shows that the
profit was distributed to the interest, better it should not the same for next year.
7. Better to maintain the same amount of fixed assets in future for full utilize fixed assets.
8. Allowing debt for long period by company shows it is not strict in its debt collection. Better
it should collect its debt as early.
9. Better to maintain high return on share holder’s investments.
10. Better to curtail the debenture interest to avoid paying interest.
11. For the smooth operation of the company if must make sure that it is made liquid in the
coming year, because right now a lot rests on the operation of the business.
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