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PART B Ratio

Taj GVK has a low ROE of 5.86%, indicating low returns for equity investors and less ability to generate cash internally. Hero MotoCorp has the highest ROCE of 21%, showing more efficient use of capital than ACC Ltd (ROCE of 8%). While ROCE is favorable for Hero, its performance should be compared to competitors in the same industry rather than across industries. Hero also has high inventory turnover of 23.24 days, converting inventory to sales efficiently. ACC Ltd has higher credit than debtor turnover, giving it strong bargaining power and credit access. Kitex Garments' current ratio of 7.11 shows inefficient use of current assets. Dr. Reddy's interest coverage of -46.9%

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49 views2 pages

PART B Ratio

Taj GVK has a low ROE of 5.86%, indicating low returns for equity investors and less ability to generate cash internally. Hero MotoCorp has the highest ROCE of 21%, showing more efficient use of capital than ACC Ltd (ROCE of 8%). While ROCE is favorable for Hero, its performance should be compared to competitors in the same industry rather than across industries. Hero also has high inventory turnover of 23.24 days, converting inventory to sales efficiently. ACC Ltd has higher credit than debtor turnover, giving it strong bargaining power and credit access. Kitex Garments' current ratio of 7.11 shows inefficient use of current assets. Dr. Reddy's interest coverage of -46.9%

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ShivamKhare
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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PROFITABILITY RATIOS:

ROE of Taj GVK is 5.86% which is very low in comparison to other industries
 investors and stock analysts will not be interested in purchasing the company’s stock
and investing since the rate of return on the money that equity investors have put is on
the lower side.
 Company is not capable of generating the cash and therefore more dependent on debt
financing.
ROCE of Hero MotoCorp is highest at 21% & Taj GVK , ACC Ltd lowest ROCE of 8%
 higher return on capital employed is favorable, as it indicates a more efficient use of
capital employed.
 indicates that Hero MotoCorp is able to generate more profits per Rupee of capital
employed in comparison to other industries
 ROCE of 21% in 2020 means that for every rupee invested in capital, the company
generated 21 paisa in operating income.
However please note to determine whether Hero motor corp ROCE is good or ACC Ltd , it is
important to compare it against its competitors and not across different industries.
TURN OVER:
 Inventory Turnover- Hero motor corp has an Inventory turnover of 23.24
 This indicates that they are able to convert their inventory into sales at a very efficient
rate.

CREDIT TURNOVER: ACC ltd have a credit Turnover higher than Debtor turnover
 They are at a good bargaining power and hence they enjoy a greater credit facility

LIQUIDITY RATIOS:

 Current Ratio of KItex Garments is 7.11 which indicates not efficiently using their
current assets or short term financing facilities
COVERAGE:
Interest Coverage (From Cashflow) for Dr. Reddy is -46.9% which indicates that company is not
in a good position to pay their interest payments

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