Assignment 1: Financial Management
Part 1. Five ratios with their interpretation
Avenue Supermarts' Financial Ratio Analysis (2019-2023)
Avenue Supermarts Previous Years »
Consolidated Balance Sheet ------------------- in Rs. Cr. -------------------
Mar 23 Mar 22 Mar 21 Mar 20 Mar 19
12months 12 months 12 months 12 months 12 months
EQUITIES AND LIABILITIES
SHAREHOLDER'S FUNDS
Equity Share Capital 648.26 647.77 647.77 647.77 624.08
Total Share Capital 648.26 647.77 647.77 647.77 624.08
Reserves and Surplus 15,383.60 12,990.43 11,535.94 10,431.97 4,963.37
Total Reserves and Surplus 15,383.60 12,990.43 11,535.94 10,431.97 4,963.37
Employees Stock Options 45.93 39.44 0.00 0.00 0.00
Total Shareholders Funds 16,077.79 13,677.64 12,183.71 11,079.74 5,587.45
Equity Share Application Money 0.91 0.00 0.00 0.00 0.00
Minority Interest 0.08 0.25 0.40 0.46 0.56
NON-CURRENT LIABILITIES
Long Term Borrowings 0.00 0.00 0.00 0.00 125.67
Deferred Tax Liabilities [Net] 76.96 64.03 51.19 47.39 63.29
Other Long Term Liabilities 477.13 507.56 312.45 221.58 0.78
Long Term Provisions 6.41 4.87 2.45 1.48 1.05
Total Non-Current Liabilities 560.50 576.46 366.09 270.45 190.79
CURRENT LIABILITIES
Short Term Borrowings 0.00 0.00 0.00 3.73 304.15
Trade Payables 753.79 589.20 578.13 433.45 463.27
Other Current Liabilities 662.35 592.65 503.87 273.44 446.66
Short Term Provisions 50.87 36.44 23.77 15.18 12.84
Total Current Liabilities 1,467.01 1,218.29 1,105.77 725.80 1,226.92
Total Capital And Liabilities 18,106.29 15,472.64 13,655.97 12,076.45 7,005.72
ASSETS
NON-CURRENT ASSETS
Tangible Assets 11,239.03 9,168.14 6,908.31 5,841.22 4,292.13
Intangible Assets 23.18 13.61 22.22 28.54 29.97
Capital Work-In-Progress 829.16 1,129.34 1,109.94 364.40 376.84
Fixed Assets 12,091.37 10,311.09 8,040.47 6,234.16 4,698.94
Non-Current Investments 0.01 0.01 0.00 0.00 0.00
, Deferred Tax Assets [Net] 1.77 1.66 0.92 0.29 0.22
Other Non-Current Assets 486.48 1,638.76 1,475.18 3,416.06 145.71
Total Non-Current Assets 12,657.90 12,029.79 9,594.84 9,728.78 4,923.14
CURRENT ASSETS
Current Investments 202.19 5.93 2.95 14.68 16.53
Inventories 3,243.48 2,742.66 2,248.28 1,947.40 1,608.65
Trade Receivables 62.16 66.89 43.58 19.55 64.37
Cash And Cash Equivalents 1,408.33 298.58 1,445.58 107.88 219.07
OtherCurrentAssets 532.23 328.79 320.74 258.16 173.96
Total Current Assets 5,448.39 3,442.85 4,061.13 2,347.67 2,082.58
Total Assets 18,106.29 15,472.64 13,655.97 12,076.45 7,005.72
OTHER ADDITIONAL INFORMATION
CONTINGENT LIABILITIES, COMMITMENTS
Contingent Liabilities 2,125.49 2,732.23 2,827.97 2,164.84 1,812.03
BONUS DETAILS
NON-CURRENT INVESTMENTS
Non-Current Investments Unquoted Book
0.01 0.00 0.00 0.00 0.00
Value
CURRENT INVESTMENTS
Current Investments Unquoted Book Value 202.19 5.93 2.95 14.68 16.53
Source : Dion Global Solutions Limited
1. Current Ratio
Current Ratio Formula = Total Current Assets / Total Current Liabilities
It helps us to know whether the current assets are sufficient to repay the current
liabilities.
Year Total Current Assets (₹ Cr.) Total Current Liabilities (₹ Cr.) Current Ratio
2019 2082.58 1,226.92 1.70
2020 2,347.67 725.80 3.23
2021 4,061.13 1,105.77 3.67
2022 3,442.85 1,218.29 2.83
2023 5,448.39 1,467.01 3.71
,Ideal Current Ratio: 2:1
Interpretation: The Current Ratio has consistently stayed above 1.7, well within
the ideal range, suggesting that Avenue Supermarts has more than enough
current assets to cover its current liabilities. This indicates good short-term
financial stability.
2. Quick Ratio:
Quick Ratio Formula = Current Assets – Inventories
Current Liabilities
The Quick Ratio helps us determine whether a company can cover its short-term liabilities
with its most liquid assets, excluding inventories.
Calculations:
2019 Quick Ratio:
2,082.58 − 1,608.65 = 473.93 = 0.38
1,226.92 1,226.92
2020 Quick Ratio:
2,347.67 − 1,947.40 = 400.27 = 0.55
725.80 725.80
2021 Quick Ratio:
4,061.13−2,248.28 = 1812.85 = 1.63
1,105.77 1,105.77
2022 Quick Ratio:
3,442.85−2,742.66 = 700.19 = 0.57
1,218.29 1,218.29
2023 Quick Ratio:
5,448.39−3,243.48= 2,204.91 = 1.50
1,467.01 1,467.01
, Year Current Assets (₹ Cr) Inventories (₹ Cr) Current Liabilities (₹ Cr) Quick Ratio
2019 2,082.58 1,608.65 1,226.92 0.38
2020 2,347.67 1,947.40 725.80 0.55
2021 4,061.13 2,248.28 1,105.77 1.63
2022 3,442.85 2,742.66 1,218.29 0.57
2023 5,448.39 3,243.48 1,467.01 1.50
Ideal Quick Ratio: 1:1
Interpretation:
A Quick Ratio less than 1 suggests that a company might not be able to fully
cover its short-term liabilities without selling inventory, which might be a liquidity
risk.
In 2019 and 2022, the ratios were below 1, indicating tighter liquidity conditions.
In contrast, 2021 and 2023 showed a much healthier liquidity position, with ratios
significantly above 1, suggesting better immediate financial stability.
3. Long-term Debt to Equity Ratio:
Long-term Debt to Equity Ratio Formula = Long Term Debt
Total Shareholders Equity
The Long-term Debt to Equity Ratio measures a company's financial leverage by comparing
its long-term debt to its shareholder's equity. It gives an indication of the extent to which a
company is using long-term debt as a means of financing its operations.
Calculations:
For March 2023:
Long-term Debt to Equity Ratio = 0.00 = 0.00
16,077.79
For March 2022:
Long-term Debt to Equity Ratio = 0.00 = 0.00
13,677.64
Part 1. Five ratios with their interpretation
Avenue Supermarts' Financial Ratio Analysis (2019-2023)
Avenue Supermarts Previous Years »
Consolidated Balance Sheet ------------------- in Rs. Cr. -------------------
Mar 23 Mar 22 Mar 21 Mar 20 Mar 19
12months 12 months 12 months 12 months 12 months
EQUITIES AND LIABILITIES
SHAREHOLDER'S FUNDS
Equity Share Capital 648.26 647.77 647.77 647.77 624.08
Total Share Capital 648.26 647.77 647.77 647.77 624.08
Reserves and Surplus 15,383.60 12,990.43 11,535.94 10,431.97 4,963.37
Total Reserves and Surplus 15,383.60 12,990.43 11,535.94 10,431.97 4,963.37
Employees Stock Options 45.93 39.44 0.00 0.00 0.00
Total Shareholders Funds 16,077.79 13,677.64 12,183.71 11,079.74 5,587.45
Equity Share Application Money 0.91 0.00 0.00 0.00 0.00
Minority Interest 0.08 0.25 0.40 0.46 0.56
NON-CURRENT LIABILITIES
Long Term Borrowings 0.00 0.00 0.00 0.00 125.67
Deferred Tax Liabilities [Net] 76.96 64.03 51.19 47.39 63.29
Other Long Term Liabilities 477.13 507.56 312.45 221.58 0.78
Long Term Provisions 6.41 4.87 2.45 1.48 1.05
Total Non-Current Liabilities 560.50 576.46 366.09 270.45 190.79
CURRENT LIABILITIES
Short Term Borrowings 0.00 0.00 0.00 3.73 304.15
Trade Payables 753.79 589.20 578.13 433.45 463.27
Other Current Liabilities 662.35 592.65 503.87 273.44 446.66
Short Term Provisions 50.87 36.44 23.77 15.18 12.84
Total Current Liabilities 1,467.01 1,218.29 1,105.77 725.80 1,226.92
Total Capital And Liabilities 18,106.29 15,472.64 13,655.97 12,076.45 7,005.72
ASSETS
NON-CURRENT ASSETS
Tangible Assets 11,239.03 9,168.14 6,908.31 5,841.22 4,292.13
Intangible Assets 23.18 13.61 22.22 28.54 29.97
Capital Work-In-Progress 829.16 1,129.34 1,109.94 364.40 376.84
Fixed Assets 12,091.37 10,311.09 8,040.47 6,234.16 4,698.94
Non-Current Investments 0.01 0.01 0.00 0.00 0.00
, Deferred Tax Assets [Net] 1.77 1.66 0.92 0.29 0.22
Other Non-Current Assets 486.48 1,638.76 1,475.18 3,416.06 145.71
Total Non-Current Assets 12,657.90 12,029.79 9,594.84 9,728.78 4,923.14
CURRENT ASSETS
Current Investments 202.19 5.93 2.95 14.68 16.53
Inventories 3,243.48 2,742.66 2,248.28 1,947.40 1,608.65
Trade Receivables 62.16 66.89 43.58 19.55 64.37
Cash And Cash Equivalents 1,408.33 298.58 1,445.58 107.88 219.07
OtherCurrentAssets 532.23 328.79 320.74 258.16 173.96
Total Current Assets 5,448.39 3,442.85 4,061.13 2,347.67 2,082.58
Total Assets 18,106.29 15,472.64 13,655.97 12,076.45 7,005.72
OTHER ADDITIONAL INFORMATION
CONTINGENT LIABILITIES, COMMITMENTS
Contingent Liabilities 2,125.49 2,732.23 2,827.97 2,164.84 1,812.03
BONUS DETAILS
NON-CURRENT INVESTMENTS
Non-Current Investments Unquoted Book
0.01 0.00 0.00 0.00 0.00
Value
CURRENT INVESTMENTS
Current Investments Unquoted Book Value 202.19 5.93 2.95 14.68 16.53
Source : Dion Global Solutions Limited
1. Current Ratio
Current Ratio Formula = Total Current Assets / Total Current Liabilities
It helps us to know whether the current assets are sufficient to repay the current
liabilities.
Year Total Current Assets (₹ Cr.) Total Current Liabilities (₹ Cr.) Current Ratio
2019 2082.58 1,226.92 1.70
2020 2,347.67 725.80 3.23
2021 4,061.13 1,105.77 3.67
2022 3,442.85 1,218.29 2.83
2023 5,448.39 1,467.01 3.71
,Ideal Current Ratio: 2:1
Interpretation: The Current Ratio has consistently stayed above 1.7, well within
the ideal range, suggesting that Avenue Supermarts has more than enough
current assets to cover its current liabilities. This indicates good short-term
financial stability.
2. Quick Ratio:
Quick Ratio Formula = Current Assets – Inventories
Current Liabilities
The Quick Ratio helps us determine whether a company can cover its short-term liabilities
with its most liquid assets, excluding inventories.
Calculations:
2019 Quick Ratio:
2,082.58 − 1,608.65 = 473.93 = 0.38
1,226.92 1,226.92
2020 Quick Ratio:
2,347.67 − 1,947.40 = 400.27 = 0.55
725.80 725.80
2021 Quick Ratio:
4,061.13−2,248.28 = 1812.85 = 1.63
1,105.77 1,105.77
2022 Quick Ratio:
3,442.85−2,742.66 = 700.19 = 0.57
1,218.29 1,218.29
2023 Quick Ratio:
5,448.39−3,243.48= 2,204.91 = 1.50
1,467.01 1,467.01
, Year Current Assets (₹ Cr) Inventories (₹ Cr) Current Liabilities (₹ Cr) Quick Ratio
2019 2,082.58 1,608.65 1,226.92 0.38
2020 2,347.67 1,947.40 725.80 0.55
2021 4,061.13 2,248.28 1,105.77 1.63
2022 3,442.85 2,742.66 1,218.29 0.57
2023 5,448.39 3,243.48 1,467.01 1.50
Ideal Quick Ratio: 1:1
Interpretation:
A Quick Ratio less than 1 suggests that a company might not be able to fully
cover its short-term liabilities without selling inventory, which might be a liquidity
risk.
In 2019 and 2022, the ratios were below 1, indicating tighter liquidity conditions.
In contrast, 2021 and 2023 showed a much healthier liquidity position, with ratios
significantly above 1, suggesting better immediate financial stability.
3. Long-term Debt to Equity Ratio:
Long-term Debt to Equity Ratio Formula = Long Term Debt
Total Shareholders Equity
The Long-term Debt to Equity Ratio measures a company's financial leverage by comparing
its long-term debt to its shareholder's equity. It gives an indication of the extent to which a
company is using long-term debt as a means of financing its operations.
Calculations:
For March 2023:
Long-term Debt to Equity Ratio = 0.00 = 0.00
16,077.79
For March 2022:
Long-term Debt to Equity Ratio = 0.00 = 0.00
13,677.64
