Horizontal Analysis

Grace Corporation

Comparative profit and loss Statement

For the years ended March 31, 19X2 and 19X1

19X2 19X1 Change Amount

/Percentage

Net Sales Rs 9,73,000 Rs 8,84,000 Rs 89,000 +10

Cost of Goods Sold 6,85,000 5,76,000 1,09,000 +18

Gross Profit 2,88,000 3,08,000 (20,000) -6

Selling and Administrative 53,000 45,000 8,000 +18

Expenses

Profit Before Interest and Tax 2,35,000 2,63,000 (28,000) -11

Interest Expense 18,000 14,000 4,000 +29

Profit before Income Tax 2,17,000 2,49,000 (32,000) -13

Income Tax 1,05,000 1,20,000 (15,000) -13

Profit after Tax 1,12,000 1,29,000 (17,000) -13

 Grace Corporation

Comparative Balance Sheets as at March 31, 19X2 and 19X1

19X2 19X1 Change

Amount %

Shareholders' Funds

Share Capital Rs 2,50,000 Rs 2,50,000 Rs 0 +0

Reserves and Surplus 1,18,000 86,000 32,000 + 37

3,68,000 3,36,000 32,000 + 10

Liabilities

Secured Loans 90,000 80,000 10,000 + 13

Unsecured Loans 30,000 10,000 20,000 + 200

Current Liabilities 2,33,000 1,71,000 62,000 + 36

3,53,000 2,61,000 92,000 +35

7,21,000 5,97,000 1,24,000 +21

Assets

Fixed Assets (net) Rs 3,22,000 Rs 2,65,000 Rs 57,000 + 22

Investments 28,000 43,000 (15,000) - 35

Current Assets:

Inventories 1,06,000 49,000 57,000 + 116

Debtors 2,09,000 1,56,000 53,000 + 34

Cash 44,000 70,000 (26,000) - 37

Other Current Assets 12,000 14,000 (2,000) - 14

7,21,000 5,97,000 1,24,000 + 21

 Common-size Financial Statements

Grace Corporation

Common-size Profit and Loss Accounts

For the years ended March 31, 19X2 and 19X1

19X2 19X1 19X2 19X1

Net Sales Rs 9,73,000 Rs 8,84,000 100% 100%

Cost of Goods Sold 6,85,000 5,76,000 70 65

Gross Profit 2,88,000 3,08,000 30 35

Selling and Administrative 53,000 45,000 5 5

Expenses

Profit before Interest and Tax 2,35,000 2,63,000 25 30

Interest Expense 18,000 14,000 2 1

Profit before Income Tax 2,17,000 2,49,000 23 29

Income Tax 1,05,000 1,20,000 11 14

Profit after Tax 1,12,000 1,29,000 12 15

 Grace Corporation

Common-size Balance Sheets

For the years ended March 31, 19X2 and 19X1

19X2 19X1 19X2 19X1

Rs. Rs. % %
Shareholders' Funds

Share Capital 2,50,000 2,50,000 35 42

Reserves and Surplus 1,18,000 86,000 16 14

3,68,000 3,36,000 51 56

Liabilities

Secured Loans 90,000 80,000 13 13

Unsecured Loans 30,000 10,000 4 2

Current Liabilities 2,33,000 1,71,000 32 29

3,53,000 2,61,000 49 44

7,21,000 5,97,000 100 100

Assets

Fixed Assets (net) 3,22,000 2,65,000 44 44

Investments 28,000 43,000 4 7

Current Assets:

Inventories 1,06,000 49,000 15 8

Debtors 2,09,000 1,56,000 29 26

Cash 44,000 70,000 6 12

Other Current Assets 12,000 14,000 2 3

3,71,000 2,89,000 52 49

Total Assets 7,21,000 5,97,000 100 100

 Ratio Analysis

Grace Corporation

Profitability Ratios
19X2 19X1

Profit Profit after Tax Rs 1,12,000 x100 = 11.5% Rs 1,29,000 x 100 = 14.5%
Margin Net Sales Rs 9,73,000 Rs 8,84,000

Asset Net Sales Rs 9,73,000 x 100 = 1.48 times Rs 8,84,000 x 100 = 1.76 times
Turnover Average Total Rs 6,59,000 Rs 5,03,500
Assets

Return on Profit after Tax Rs 1,12,000 x 100 = 17% Rs 1,29,000 x 100 = 25.6%
Assets Average Total Rs 6,59,000 Rs 5,03,500
Assets

Return on Profit after Tax Rs 1,12,000 x 100 = 31.8% Rs 1,29,000 x 100 = 45.8%
Equity Average Rs 3,52,000 Rs 2,81,500
Shareholders'
Equity

Liquidity Ratios

19X2 19X1

Current Ratio Current Assets Rs 3,71,000 = 1.59 Rs 2,89,000 x 100 = 1.69

Current Rs 2,33,000 Rs 1,71,000
Liabilities

Quick Ratio Quick Assets Rs 2,65,000 = 1.14 Rs 2,40,000 = 1.40

Current Rs 2,33,000 Rs 1,71,000
Liabilities

Average Debt Average Debtors Rs 1,82,500 = 67.5 days Rs 1,38,000 = 56.2 days
Collection Period Net Sales/360 Rs 2,702 Rs 2,456
days

Inventory Turnover Cost of Goods Sold Rs 6,85,000 = 8.84 times Rs 5,76,000 = 13.4 times
Average Rs 77,500 Rs 43,000
Inventory
Solvency Ratios

19X2 19X1

Debt to Equity Total Liabilities Rs 3,53,000 = 0.96 Rs 2,61,000 =0.7

Shareholders' Equity Rs 3,68,000 Rs 3,36,000

Interest Profit before Interest and Rs 2,35,000 = 13.0 times Rs 2,63,000 = 18.8 times
Coverage Tax Rs 18,000 Rs 14,000
Interest Expense

Capital Market Ratios

19X2 19X1

Price-Earnings Market Price per Share Rs 30 = 6.67 times Rs 40 = 7.75 times

Earnings per Share Rs 4.48 Rs 5.16

Dividend Yield Dividend per Share Rs 3.20 = 10.7% Rs 2.80 = 7%

Market Price per Share Rs 30 Rs 40