Financial Accounting

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- Operating Profit Margin

= ( Operating Profit/ Net Sales) X 100

Positive or Negative trends in this ratio are for the most part directly attribute to Management decisions.

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- Net Profit Margin

= (Net Profit/ Net Sales) X 100

It is one of the best measures of the overall results of a firm.

Apart from the dip in 2012 the Net Profit Margin is steadily increasing and in 2015 it was 14%.

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- Return On Investment (ROI)

= (Operating Profit/Capital employed) X 100

ROI analysis compares the magnitude and timing of investment gains directly with the magnitude and timing of investment costs. A high ROI means the investment gains compare favorably to investment costs.

From 2007 to 2010 the ROI was the highest as compared to other years since in these years total increase in assets was more as compared to total increase in profits.

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- Return On Equity (ROE)

= (Net Income/Share Holders Funds) X 100

How much the shareholders earned for their investment in the company.

From the graph it is clear that ROI was highest in years 2007, 2008 and 2010 i.e in these years the amount earned by company for the shareholders is highest.

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- Earnings Per Share (EPS)

= Current Year PAT/ Number of Equity Shares

EPS is an indicator of firms profitability.

From the graph it can be derived that the company has been growing steadily from 2006 and the company’s EPS in 2015 was above 4.

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Conclusions

Overall analysis of Dabur India Ltd.:

- The Company has very strong financial position to pay off its current Liabilities.

- Company is relying more on equity share capital rather than debts since it’s debt equity ratio is 0.05. A company should have a fair mix of debt and equity both.

- It is observed that company’s profit margin has been increasing steadily for years. It is important from the viewpoint of creditors and shareholders that company have sufficient funds to pay them.

- Also it has been found that the company is very efficient in its working capital management since it has a negative (–ve) operating cycle.

- The company’s current Ratio (1.0) is below satisfactory level i.e. 2:1 which shows company is high on Current Liabilities. However it can be a strategy of the company if financing is cheap, so to reduce its operating cycle.

- The Inventory Turnover Ratio has increased from previous year 2014 which shows inventory is being sold much faster.

- Since 2006 the company has been growing very strong and steadily which is depicted by the growth of its Gross Profit, Net Profit and Revenue.[pic 18]