Financial Ratios(West Coast Paper Ltd.) : 2013 vs 2012

1. Financial Ratios
(West Coast Paper Ltd.)
Group-12
Harshit Garg, Pawan Kumar,
Pratik Mukherjee, Rahul Sah,
Sayantan Ghosh, Shrikant Gupta

2. Company’s Overview

One of the oldest and largest producers of paper for
business stationary

Recent results : : 71% increase in revenues and a 65%
increase in their PAT

Target industries in India:

Printing,

Writing, and

Packaging

3. Liquidity Ratios
•
Quick Ratio
The quick ratio measures a company’s
ability to meet its short-term obligations with its
most liquid assets.
Quick ratio = (current assets – inventories) /
current liabilities
= (Cash & Cash Equivalents + Trade
Receivables)/Current Liabilities
= (577.72 + 8236.26)/67124.28
= 0.131

4. Liquidity Ratios (cont.)
 Cash
Ratio
The cash ratio is most commonly used as
a measure of company liquidity.
Cash Ratio = Total Cash & Cash Equivalents/
Current Liabilities
= 577.72/ 67124.28
= 0.0086

5. Profitability Ratios
Gross Profit Ratio
A financial metric used to assess a firm's financial
health by revealing the proportion of money left over
from revenues after accounting for the cost of goods
sold.
Gross Profit Ratio = (Revenue – COGS)/Revenue
= (Revenue-(Total Expense-other expensefinance cost-Depreciation/Ammortization))/Revenue
o
= 0.359

6. Profitability Ratios (cont.)
 Return
On Asset
An indicator of how profitable a
company is relative to its total assets. ROA
gives an idea as to how efficient
management is at using its assets to
generate earnings.
ROA = Net Income/Total Assets
= 0.0093

7. Efficiency Ratios
 Fixed
Asset Turnover
The
fixed-asset
turnover
ratio
measures a company's ability to generate
net sales from fixed-asset investments.
Fixed Asset Turnover = Net Sales/Fixed
Assets
= 1.10

8. Efficiency Ratios (cont.)
 Inventory
Turnover
A ratio showing how many times a
company's inventory is sold and replaced
over a period.
Inventory Turnover = COGS/Avg.
Inventory
= 93597.44/30070.33
= 3.113

9. Capital Structure Ratio
 Debt/Equity
Ratio
A measure of a company's financial
leverage calculated by dividing its total
liabilities by stockholders' equity.
Debt/Equity Ratio = Total Liabilities/
Shareholder’s Equity
= 135981.19/59775.58
= 2.275

10. Capital Structure Ratio (cont.)
 Debt
Ratio
A measure of a company's leverage.
The higher this ratio the greater financial risk the
company suffers.
Debt Ratio = Total Debt/Total Assets
= (Current+non Current Liabilities)/Total
Assets
= 0.456

11. Cash Flow Ratios
 Operating
Cash Flow Ratio
A measure of how well current
liabilities are covered by the cash flow
generated from a company's operations.
OCF Ratio = Cash Flow From
Operations/ Current Liabilities
= 0.391

12. Cash Flow Ratios (cont.)
 Operating
Cash Flow to Sales Ratio
A comparison of a company's cash
flow to its sales. Lower ratios are more
favorable and are indicative of positive
financial strength within a company.
OCF to Sales Ratio = Total Operating Cash
Flow/ Total Sales
= 0.18

13. Earning Per Share(EPS)
Earnings per share serves as
indicator of a company's profitability.
an
EPS = (Net Income- Dividends On Preferred
Stock-Divident Distribution Tax)/
Average Outstanding Shares
= (1811.29*105-0)/66048908
= 2.742

14. Price/Earning Ratio
A valuation ratio of a company's
current share price compared to its pershare earnings.
Price/Earning Ratio = Market Value
Per Share/EPS
= 63.8/2.74
= 23.28

15. 2013 vs. 2012
Ratios
2013
2012
Quick Ratio
0.132
0.125
Cash Ratio
0.009
0.019
Gross Profit Ratio
0.359
0.376
Return On Asset
0.009
- 0.016
1.101
0.897
Inventory Turnover Ratio
3.115
2.612
Capital
Structure Ratios
Debt to Equity Ratio
2.283
2.715
Debt Ratio
0.456
0.480
Cash Flow
Ratios
OCF Ratio
0.392
0.253
OCF to Sales Ratio
0.181
0.148
Earning Per Share (EPS)
2.746
- 5.491
Price/ Earning Ratio
23.282
-11.626
Liquidity Ratios
Profitability
Ratios
Efficiency Ratios Fixed Asset Turnover

16. West Coast Paper
vs. JK Paper (FY 12-13)
Ratios
West Coast Paper
JK Paper
Liquidity
Ratios
Quick Ratio
0.132
0.279
Cash Ratio
0.009
0.064
Profitability
Ratios
Gross Profit Ratio
0.359
0.288
Return On Asset
0.009
0.012
Efficiency
Ratios
Fixed Asset Turnover
1.101
1.908
Inventory Turnover Ratio
3.115
4.846
Capital
Structure
Ratios
Debt to Equity Ratio
2.283
2.500
Debt Ratio
0.456
0.522
Cash Flow
Ratios
OCF Ratio
0.392
0.221
OCF to Sales Ratio
0.181
0.084
2.746
2.759
23.282
10.185
Earning Per Share (EPS)
Price/ Earning Ratio

17. Inference

Company has performed better than last financial year.

Return on Assets has been improved.
EPS
and P/E ratios have been improved significantly. These
encourage investors to be bullish on this stock.

But the investors have to be cautious about the overvaluation of this
stock and should keep in mind of future correction.

Fixed Assets and inventory turnover improvement indicates better
utilization of resources.

Debt figures has also been meliorated.

Net cash flow figures has also been satisfactory this year and
substantial investment in R&D explores future opportunities, that makes
top executive position of this company really really lucrative.