Adani Power Ratio Analysis

Decent Essays
Show More
A. LIQUIDITY RATIOS
1. CURRENT RATIO
The current ratio measures a company’s ability to pay its short term obligations. The current ratio of Adani Power Ltd. has increased over the past three years.
The Current ratio of Adani Power is constantly below 1, meaning that the current liabilities are more than the current assets. This suggests that the company would be unable to pay off its obligations if they came due at that point.
This indicates that the company is not in good financial health.

2. ACID – TEST RATIO
The acid-test ratio is a strong indicator of whether a firm has sufficient short-term assets to cover its immediate liabilities. Just as the current ratio the acid test ratio of Adani Power has increased over the past 3 years.
The …show more content…
LEVERAGE RATIOS
3. DEBT TO EQUITY RATIO
The debt to equity ratio is used to measure a company’s financial leverage. Over the past 3 years the debt to equity ratio of Adani Power has decreased. This indicates that Adani has decreased its reliance on external borrowings and has relied more on the shareholders’ funds.

4. DEBT TO ASSET RATIO
The debt to asset ratio is measures the proportion of debt with respect to the total assets of a company. The debt to asset ratio of Adani has decreased over the 3 years.
The total asset base of Adani Power has increased from 38779.10 Crore to 42045.11 Crore whereas the Long term debt has been reduced from 17603.16 Crore to 14801.12 this has led to decrease in the debt to asset ratio of Adani.

INTEREST COVERAGE RATIO
The Interest Coverage ratio measures the ability of the company to pay the interest on its current obligations. It shows whether the company shall be able to meet its interest dues. The ICR of Adani has increased by a very small margin in 2015-16 as compared to 2014-15.
The EBIT has increased as well as the interest expenses / finance costs have increased. This is the reason for the rise in ICR.

C. TURNOVER RATIOS
The turnover ratios are the ratios wherein an amount of income statement is divided by an asset or a group of

Related Documents

  • Improved Essays

    Red Soda Company Vs Blue Soda Case Study
    • 1164 Words
    • 5 Pages

    Red Soda Company Vs Blue Soda Case Study

    Solvency ratios is used to measure the ability of a company to meet its long-term debts. More importantly it is used to determine whether a company’s cash flow is sufficient to meet short and long-term liabilities. The financial ratios that we used for Red soda vs Blue soda was debt to asset ratio, times interest earned, cash debt coverage and free cash flow. First, debt to asset ratio is an indicator of financial leverage. The ratio is calculated by dividing total liabilities by its total assets.…

    • 1164 Words
    • 5 Pages
    Improved Essays
    Read More
  • Superior Essays

    Kroger's Financial Ratios
    • 819 Words
    • 4 Pages

    Kroger's Financial Ratios

    In essence, higher gross profit margins are preferable. Neither Kroger or its competitors had an advantage in this category as both had virtually identical 2% margins. The following ratio discussed is the inventory turnover ratio. This ratio is an efficiency tool used to represent how effectively a company is managing their inventory. The ratio compares the cost of goods sold with average inventory for a period.…

    • 819 Words
    • 4 Pages
    Superior Essays
    Read More
  • Improved Essays

    Moserk Company Ratio Analysis
    • 709 Words
    • 3 Pages

    Moserk Company Ratio Analysis

    Moserk Company Ratio Analysis When it comes to a business’s financial records, it is extremely important for them to be properly documented. Without keeping track of financial history, it is virtually impossible to see why or how a business is failing or succeeding. When looking at these statements, it is very important to understand their relationship to one another.…

    • 709 Words
    • 3 Pages
    Improved Essays
    Read More
  • Improved Essays

    Dynashears Case Analysis
    • 1281 Words
    • 5 Pages

    Dynashears Case Analysis

    The excess inventories they have been unable to sell make up a significant proportion of Dynashears assets. Their current quick ratio, which is a measure of a businesses ability to meet current obligation through the use of its liquid assets, is at decent, but less strong 1.95 (appendix 5). Also, their quick ratio is not exhibiting the same consistent positive trend the current ratio is (excel sheet). This suggests that the current ratio is overestimating the company’s ability to meet their obligations, because it counts inventories as assets. If the firm is not able to sell the inventories, then the existence of those inventories does not illustrate their ability to pay their debts.…

    • 1281 Words
    • 5 Pages
    Improved Essays
    Read More
  • Improved Essays

    Motorola Liability
    • 1849 Words
    • 8 Pages

    Motorola Liability

    2.1.2 Liquidity Google Inc. has minimal liabilities mainly related to payables, short-term debt, accrued expenses, and securities payables. It was able to cover its current liabilities obligations using current assets at a rate of 5.90 times in 2014. The measurement reduced to 4.22 times coverage in 2012 as the level of short-term debt and accrued expenses/liabilities rose substantially. The most liquid measurement of quick ratio was also above 1:1 at 5.90 times coverage in 2011 and 4.18 times coverage in 2012.…

    • 1849 Words
    • 8 Pages
    Improved Essays
    Read More
  • Improved Essays

    Walt Disney Financial Statement Analysis
    • 729 Words
    • 3 Pages

    Walt Disney Financial Statement Analysis

    The Walt Disney Company Financial Statement Analysis My cull of the company to base on in my financial statement analysis is the Walt Disney Company. This is a company that mainly deals with the regalement industry by animation. Its aim is to become one of the leading providers of entertainment and information to their audiences. This is done by their efforts to invest in creativity so that they are able to pull more audiences towards their oeuvres.…

    • 729 Words
    • 3 Pages
    Improved Essays
    Read More
  • Great Essays

    Berkshire Hathaway Pacificorp Case
    • 1048 Words
    • 5 Pages

    Berkshire Hathaway Pacificorp Case

    The debt-to-equity ratio of the comparable firms on Exhibit 1 range from 1.95 to 3.80. PacifiCorp had a debt-to-equity ratio of 2.52 and 2.71 in 2004 and 2005 respectively. While they are not the highest of the energy firms referenced in the case and are close to the average a debt-to-equity ratio above 1 indicates the company is highly leveraged and may be a reason for creditors and investors to shy away from investing in the…

    • 1048 Words
    • 5 Pages
    Great Essays
    Read More
  • Improved Essays

    Summary: Long-Term Debt Of Rite Aid
    • 336 Words
    • 2 Pages

    Summary: Long-Term Debt Of Rite Aid

    To properly analyze the long-term debt of Rite Aid, we must calculate various debt-related ratios. These ratios help find Rite Aid’s leverage and solvency. They also allow us to be able to compare Rite Aid to the industry average. Rite Aid’s ratios and the industry averages are shown on the next page in Figure 12. Looking at these ratios, the biggest concerns lie in the common-size debt, debt to assets, as well as long-term debt to equity.…

    • 336 Words
    • 2 Pages
    Improved Essays
    Read More
  • Improved Essays

    Under Armour And Nike: Financial Analysis
    • 1147 Words
    • 5 Pages

    Under Armour And Nike: Financial Analysis

    On the attached Excel workbook, a look at Under Armour and Nike can be found. These two companies will be looked at in order to determine which would be a better company to invest in. In the below document, a more in depth financial performance can be found. Three-Year Returns The first look at these two companies is in regards to their three-year returns.…

    • 1147 Words
    • 5 Pages
    Improved Essays
    Read More
  • Superior Essays

    Oracle Company Capital Structure Essay
    • 865 Words
    • 4 Pages

    Oracle Company Capital Structure Essay

    Capital Structure I will discuss the stock and capital structure of Oracle Corporation used to grow the corporation worldwide and strengthen research and development efforts. Corporations raise capital by issuing common and preferred stock, by exchanging an ownership stake and sharing profits with investors. The corporation experienced significant growth since the inception growing to over a $30B in recent years. Publicly traded corporations have risk associated with the stock price in relation to the market and investors use the beta in the capital asset pricing model to understand the risk of corporations. Stock Structure Public corporations organize shares under the stock structure that consists of common shares, preferred stocks, and restricted stocks.…

    • 865 Words
    • 4 Pages
    Superior Essays
    Read More
  • Great Essays

    Case Study: The Warehouse Company
    • 2423 Words
    • 10 Pages

    Case Study: The Warehouse Company

    For this company, The Warehouse Group, the current ratio; the ability to pay short term debt, for 2014, it was 1.38 and in 2015, it was 1.60, so this means they have more ‘spare’ money to pay for their short term debts, and if not used it can be saved and invested. Liquid ratio has increased from 0.43:1 to 0.23:1, this allows the company to pay back any immediate debt (4-6 months). The interest cover is profit before interest and tax over interest expense, which is 5.9 times for 2015 and 7.2 times for 2014, which is a decrease so means…

    • 2423 Words
    • 10 Pages
    Great Essays
    Read More
  • Improved Essays

    California Pizza Kitchen Case Study
    • 976 Words
    • 4 Pages

    California Pizza Kitchen Case Study

    Case study analysis: 33 California Pizza Kitchen Managing for Corporate Value Creation FIN3CSFS2 2015 \ Abstract: This case analysis studies the financial performance and position of California Pizza Kitchen (KPC) including available sources of finance with optimal weightage to cost of capital minimal by share repurchase and their effect on share price and return. Question No. 1 As the history of California Pizza Kitchen (KPC) is concerned, it was incorporated in 1985 In Baverlly Hills, California.…

    • 976 Words
    • 4 Pages
    Improved Essays
    Read More
  • Great Essays

    Ford Motor Company Case Study
    • 2346 Words
    • 10 Pages

    Ford Motor Company Case Study

    The company’s total assets are 190,554,000,000. Ford’s debt to equity ratio is 10.95 which is due to the capital intensive nature of the automotive industry. For 2012, Ford’s net income was 5,665,000,000 which indicates the company is currently 75% less than the over $20 billion profit in 2011. Additionally, the cash flow from investing activities has decreased from $6.9 billion in 2010 to -$14 billion in 2012. Short-term debt has increased in the last couple of years, it is still nearly 50% of the over $60 billion in 2009.…

    • 2346 Words
    • 10 Pages
    Great Essays
    Read More
  • Great Essays

    Arvind Motor Case Study
    • 1778 Words
    • 8 Pages

    Arvind Motor Case Study

    Threats:  Affected by recent economics showdown  Spare parts spoilage of TATA brand FINANCIAL STATEMENT ANALYSIS According to Myer’s “Financial Statement analysis is a study of relationship among the various financial factor in a business as disclosed by a single set of statements and a study of the trend of these factors as shown in a series of statements” (myer) 1.CURRENT ASSET RATIO Current ratio is a relationship between current assets and current liabilities. It is widely used as a broad indicator of a company’s liquidity or short term solvency, that is, its ability to meet short-term obligations. The current ratio is dividing current and current…

    • 1778 Words
    • 8 Pages
    Great Essays
    Read More

Related Topics

Ready To Get Started?
Discover
Company
Follow
©2024 Cram.com
Privacy Policy |  About Ads |  Site Map |  Advertise  | 
  • Cookie Settings