GROUP 5 PROJECT

Company 1 Company 2
Group Members-
NILESH DWIVEDI -23RM962
PRAYANSHU PARHI – 23RM936
AMMAR AHMAD KHIZRAI- 23RM906
Submitted To SHRIYA AGRAWAL- 23RM945
Dr. Ferojuddin Khan KUMARI PRIYA – 23RM926
MANAV MEHRA- 23RM928
 Abstract
This report delves into the comparison of two companies ITC & Britannia
with the help of financial data which are used for analysing the financial
statements of companies.
Effective tool to understand the profitability, strength and financial status of
companies. Financial Data used for Analysis are mentioned below:
Liquidity, Capital structure, Activity or Turnover and Profitability Ratio’s
  ITC is one of India's foremost private sector companies with a Gross Revenue of ₹

About
69,481 crores and Net Profit of ₹ 18,753.31 crores (as on 31.03.2023).
 ITC has a diversified presence in FMCG, Hotels, Packaging, Paperboards & Specialty
Papers and Agri-Business. ITC's aspiration to be an exemplar in sustainability
practices is manifest in its status as the only company in the world, of its size and
diversity, to be carbon, water and solid waste recycling positive.
 ITC's businesses and value chains create sustainable livelihoods for more than 6
million people, a majority of whom represent the poorest in rural India
 A company with a 120-year legacy Britannia serves a billion people across India,
on various consumption occasions catering to different tastes. With a gross

About revenue of ₹3,892 crore and net profit of ₹ 455 crore.

Through it’s various CSR initiatives(Corporate social responsibility), Britannia have
been able to make a positive impact on the lives of thousands of people across
India. O Britannia‘s initiatives include programs for education, health, and
nutrition, and work closely with local communities to understand their needs and
provide support where it is most needed.
 Main Liquidity Ratio
Current Ratio: It is calculated by dividing the company's current assets by its current liabilities. A current
Liquidity ratio ratio of 2 is considered to be good.

Quick ratio: This ratio is similar to the current ratio, but it excludes inventory from current assets. This is
A liquidity ratio is a financial ratio because inventory can be difficult to sell quickly. A quick ratio of 1 is considered to be good.
that measures a company's ability to  . A company with a low liquidity ratio may be considered to be a risky investment because it may not be
pay its short-term debts. It is able to meet its debt obligations.
calculated by
company's current assets /current
liabilities. A high liquidity ratio signifies that a company has a lot of liquid assets relative to its current liabilities. This
can be a positive sign, as it suggests that the company has enough liquidity to meet its short-term
obligations. However, a high liquidity ratio can also be a sign that the company is not using its assets
efficiently.
Liquidity ratios are important for
creditors and investors because they
provide a measure of a company's A low liquidity ratio indicates that a company has a small amount of liquid assets relative to its current
ability to pay its debts liabilities. This can be a negative sign, as it suggests that the company may have difficulty meeting its
short-term obligations. However, a low liquidity ratio can also be a sign that the company is using its assets
efficiently.
 Liquidity ratio (cash LIQUIDITY RATIO

ratio & quick ratio) of

Mar'19 Mar'20 Mar'21 Mar'22 Mar'23

ITC & Britannia Current Ratio(ITC)

3.07 4.02 3.13 2.70 2.84
Current Ratio(BRIT)
1.94 1.45 1.21 0.93 1.15
Quick Ratio (ITC) 2.28 3.13 2.20 1.82 1.98
Quick Ratio (BRIT) 1.49 1.16 0.91 0.61 0.87

The decline in the current ratio of ITC could be a sign that the company is having difficulty meeting its short-term
obligations. This could be due to a number of factors, such as increased competition, rising costs, or a slowdown in sales.
However A current ratio of 2 is still considered to be good.

The current ratio of BRIT is also declining, but not as much as ITC.


The relatively stable quick ratio of ITC suggests that the company still has enough liquid assets to meet its short-term
obligations, even though its current ratio is declining
  Gross profit margin: This ratio measures the percentage of revenue that remains
Profitability ratio after the company has paid for the cost of goods sold. It is calculated by dividing
gross profit by revenue.

A profitability ratio is a financial ratio ROI(return on investment) is a profitability ratio that measures the amount of profit
that measures a company's ability to an investment generates as a percentage of its cost. It is calculated by dividing the
generate profits. It is calculated by net profit of an investment by its cost.
dividing the company's profits by one
of its financial metrics, such as
revenue, assets, or equity. A high profitability ratio signifies that a company is generating a lot of profits relative
to its sales, assets, or equity. This can be a positive sign, as it suggests that the
company is efficient and well-managed. However, a high profitability ratio can also be
Profitability ratios are a useful tool for a sign that the company is charging high prices or that it is not investing enough in its
investors and creditors to assess a operations.
company's financial health
A low profitability ratio indicates that a company is not generating as much profit as it
could be. This can be a negative sign, as it suggests that the company is inefficient or
poorly managed. However, a low profitability ratio can also be a sign that the company
is operating in a competitive industry or that it is investing heavily in its operations.
 ProfitabilityRatio
Profitability ratio (Gross Profit Profitability Ratio
Mar'19 Mar'20 Mar'21 Mar'22 Mar'23

margin& ROI) of ITC & Britannia 250.00

200.00 36.81
20.50 16.12 GPR(ITC) 70.33 70.93 69.84 71.16 69.65
50.47 16.97 17.37 40.89
150.00 35.97 32.86 34.85
GPR(BRIT) 52.41 53.30 54.52 51.66 53.65
52.41 53.30 54.52 51.66 53.65
100.00
70.33 70.93 69.84 71.16 69.65
50.00
0.00 ROI(ITC) 50.47 35.97 32.86 34.85 40.89
Mar'19 Mar'20 Mar'21 Mar'22 Mar'23
ProfitabilityRatio ROI(BRIT) 36.81 16.97 20.50 17.37 16.12

GPR(ITC) GPR(BRIT)
ROI(ITC) ROI(BRIT)

The gross profit margin of both ITC and BRIT has remained relatively stable over the past five years

some factors that could affect the profitability ratios:

The industry the company operates in: Some industries, such as retail, have higher operating costs
than other industries, such as technology. This can affect the profitability ratios.
The company's policies: Some companies have policies that restrict the amount of debt they can
take on. This can also affect the profitability ratios.
  Debt-to-equity ratio (D/E ratio): This is the most common capital structure ratio. It is
Capital structure calculated by dividing total debt by total equity.
 Total debt to capitalization ratio : Total debt to capitalization ratio: This ratio measures
Ratio the total amount of debt a company has relative to its capitalization. Capitalization is the
total amount of money that a company has raised from debt and equity.

A financial ratio that measures the

mix of debt and equity used by a
The higher the capital structure ratio, the more debt the company has relative to its
company to finance its operations. It
equity. A company with a high capital structure ratio is said to be more leveraged, which
is calculated by dividing the means that it is more reliant on debt to finance its operations.
company's total debt by its total
equity.
A low capital structure ratio indicates that a company has a small amount of debt relative
to its equity. This can be a positive sign, as it means that the company is less reliant on
debt to finance its operations. A low debt load can make a company more resilient to
financial difficulties.
 capital structure ratio
Mar'19 Mar'20 Mar'21 Mar'22 Mar'23 Capital Structure Ratio
Capital structure Ratio DE(ITC) 0.23 0.20 0.25 0.26 0.25
2
1
0

Mar'19

0.23

1.14

1.28
0.65
DE(BRIT) 0.65 0.75 1.37 2.084 1.62
DE(ITC) DE(BRIT) DAR(ITC) DAS(BRIT)
DAR(ITC) 1.14 1.12 1.14 1.15 1.15
DAS(BRIT) 1.28 1.31 1.45 1.55 1.45 capital structure ratio Series2
Series3 Series4

the debt-to-equity ratio of ITC has declined from 0.23 in 2019 to 0.25 in 2023. The debt-to-assets ratio
of ITC has also declined from 1.14 in 2019 to 1.15 in 2023.

The debt-to-equity ratio of BRIT has increased from 0.65 in 2019 to 2.084 in 2023. The debt-to-
capitalization ratio of BRIT has increased from 1.45 in 2019 to 1.62 in 2023.

The increasing debt levels of BRIT could be a sign that the company is taking on more risk. This could
be due to a number of factors, such as expanding its operations or investing in new projects.
The declining debt levels of ITC could be a sign that the company is becoming more conservative with
its finances. This could be due to a number of factors, such as repaying debt or reducing its operations.

Overall, the capital structure ratios of ITC and BRIT suggest that ITC is taking on less risk than BRIT
  Fixed asset turnover ratio: This ratio measures how efficiently a company uses its
fixed assets to generate sales. It is calculated by dividing sales by net fixed assets.
Activity Ratio  Working capital Ratio :The working capital ratio measures how much working capital
a company has relative to its current liabilities.
An activity ratio is a financial ratio
that measures how efficiently a
company uses its assets to generate A high activity ratio indicates that a company is using its assets efficiently. This can
revenues and cash. Commonly be a positive sign for investors and creditors, as it suggests that the company is
referred to as efficiency ratios, generating a lot of sales and cash flow with its assets. However, a high activity ratio
activity ratios help analysts gauge can also be a sign that a company is overtrading, which can lead to financial
how a company handles inventory problems
management, which is key to its
operational fluidity and overall fiscal
health. A low activity ratio signifies that a company is not using its assets efficiently. This can
be a negative sign, as it suggests that the company is not generating enough sales or
cash flow with its assets. However, a low activity ratio can also be a sign that a
company is conservatively managed, which can be a positive sign.
 Activity ratio
Activity Ratio
ACTIVITY RATIO
Mar'19 Mar'20 Mar'21 Mar'22 Mar'23
8
4
FATR(ITC) 2.03 1.94 1.77 2.17 2.52 0

Mar'19

7.46

1.94
2.03

3.07
FATR(BRIT) 7.46 7.22 7.99 6.89 6.37
FATR(ITC) FATR(BRI WCR(ITC) WCR(BRIT
T) )
WCR(ITC) 3.07 4.02 3.13 2.70 2.84
ACTIVITY RATIO Series2
WCR(BRIT) 1.94 1.45 1.21 0.93 1.15 Series3 Series4

The FATR of ITC is higher than the FATR of BRITANNIA. This means that ITC is using its
fixed assets more efficiently to generate sales than BRITANNIA.
The WCR of ITC is also higher than the WCR of BRITANNIA. This means that ITC has
more liquid assets to cover its short-term debts than BRITANNIA.
Overall, the fixed asset turnover ratio and working capital ratio suggest that ITC is
more efficient and liquid than BRITANNIA.
Conclusion ITC has a higher current ratio, quick ratio, and than BRITANNIA. This means that ITC has more liquid
assets to cover its short-term debts, and it is turning its inventory into sales more efficiently.

ITC also has a lower debt-to-equity ratio, debt-to-assets ratio, and debt-to-capitalization ratio than
BRITANNIA. This means that ITC is taking on less risk by using less debt to finance its operations.

ITC also has a higher gross profit margin, than BRITANNIA. This means that ITC is more profitable than
BRITANNIA.

Overall, the liquidity ratios, capital structure ratios, activity ratios, and profitability ratios suggest that
ITC is doing better than BRITANNIA.