Assignment:
Financial Ratio Analysis for Investment Decisions in
Indian Companies
Instructions for the Assignment:
You are required to analyze the financial performance of two Indian companies to assess their
financial health and make an informed investment recommendation. The companies have
already been allotted to you. Use the instructions below to complete the assignment.
Steps to Follow:
1. Data Collection
o Gather financial data for the last three financial years for your allotted
companies.
o Use reliable sources such as Bloomberg or the companies' annual reports.
o Key data points to collect include Revenue, Net Profit, Assets, Liabilities,
Equity, EPS, and Market Capitalization.
2. Calculate Financial Ratios
Compute the following financial ratios for both companies:
o Profitability Ratios: Net Profit Margin, Return on Equity (ROE), Return on
Assets (ROA).
o Liquidity Ratios: Current Ratio, Quick Ratio.
o Leverage Ratios: Debt-to-Equity Ratio, Interest Coverage Ratio.
o Market Ratios: Earnings Per Share (EPS), Price-to-Earnings (P/E) Ratio.
3. Analyze Trends
o Examine the trends in these ratios over the three-year period.
o Highlight significant changes or patterns.
4. Perform Comparative Analysis
o Compare the financial ratios of the two companies to identify:
Strengths and weaknesses.
How each company performs relative to industry benchmarks (if
available).
Their investment potential.
5. Make an Investment Recommendation
o Based on your analysis, recommend which company would be a better
investment opportunity.
o Provide a clear rationale for your recommendation.
o Discuss any risks associated with your suggested investment.
Deliverables:
1. Written Report:
Your report should include the following:
o An introduction to the sector and the allotted companies.
o The methodology and sources used for data collection.
o Calculations and interpretation of financial ratios.
o Comparative and trend analysis.
o Investment recommendation with justifications.
Evaluation Criteria:
Your assignment will be assessed based on the following:
Accuracy and depth of data analysis.
Clarity in financial ratio calculations and trend identification.
Quality of comparative analysis and investment rationale.
Learning Outcomes:
By completing this assignment, you will:
Learn to collect and analyze financial data from credible sources.
Apply financial ratio analysis to real-world scenarios.
Develop critical thinking and decision-making skills related to investment.
Gain proficiency in interpreting financial health and industry performance.
This task is designed to enhance your understanding of corporate finance while developing
practical skills for investment decision-making.
