Question

Choose two companies in the same industry whose financial statements are available online. Complete several financial ratios for each company and compare them. What did your analysis tell you about these companies? What sorts of decisions would this analysis help you make; such as buying stocks, considering accepting an employment offer, etc.?

Answer 1

Reliance Industries ltd			Hindustan Petroleum Corporation
Investment Valuation Ratios	Mar-19		Investment Valuation Ratios	Mar-19
Face Value	10		Face Value	10
Dividend Per Share	6.5		Dividend Per Share	15.9
Operating Profit Per Share (Rs)	91.91		Operating Profit Per Share (Rs)	75.09
Net Operating Profit Per Share (Rs)	585.32		Net Operating Profit Per Share (Rs)	1,805.97
Free Reserves Per Share (Rs)	--		Free Reserves Per Share (Rs)	--
Bonus in Equity Capital	81.85		Bonus in Equity Capital	95.1
Profitability Ratios			Profitability Ratios
Operating Profit Margin(%)	15.7		Operating Profit Margin(%)	4.15
Profit Before Interest And Tax Margin(%)	12.53		Profit Before Interest And Tax Margin(%)	3.04
Gross Profit Margin(%)	12.85		Gross Profit Margin(%)	3.06
Cash Profit Margin(%)	12.01		Cash Profit Margin(%)	3.26
Adjusted Cash Margin(%)	12.01		Adjusted Cash Margin(%)	3.26
Net Profit Margin(%)	9.47		Net Profit Margin(%)	2.19
Adjusted Net Profit Margin(%)	9.24		Adjusted Net Profit Margin(%)	2.17
Return On Capital Employed(%)	10.15		Return On Capital Employed(%)	18.88
Return On Net Worth(%)	8.67		Return On Net Worth(%)	21.39
Adjusted Return on Net Worth(%)	8.67		Adjusted Return on Net Worth(%)	21.39
Return on Assets Excluding Revaluations	639.44		Return on Assets Excluding Revaluations	184.9
Return on Assets Including Revaluations	639.44		Return on Assets Including Revaluations	184.9
Return on Long Term Funds(%)	10.91		Return on Long Term Funds(%)	25.48
Liquidity And Solvency Ratios			Liquidity And Solvency Ratios
Current Ratio	0.44		Current Ratio	0.53
Quick Ratio	0.4		Quick Ratio	0.42
Debt Equity Ratio	0.39		Debt Equity Ratio	0.89
Long Term Debt Equity Ratio	0.29		Long Term Debt Equity Ratio	0.4
Debt Coverage Ratios			Debt Coverage Ratios
Interest Cover	5.86		Interest Cover	13.86
Total Debt to Owners Fund	0.39		Total Debt to Owners Fund	0.89
Financial Charges Coverage Ratio	6.94		Financial Charges Coverage Ratio	18.01
Financial Charges Coverage Ratio Post Tax	5.69		Financial Charges Coverage Ratio Post Tax	13.45
Management Efficiency Ratios			Management Efficiency Ratios
Inventory Turnover Ratio	9.08		Inventory Turnover Ratio	14.7
Debtors Turnover Ratio	32.88		Debtors Turnover Ratio	49.03
Investments Turnover Ratio	9.08		Investments Turnover Ratio	14.7
Fixed Assets Turnover Ratio	1.9		Fixed Assets Turnover Ratio	5.4
Total Assets Turnover Ratio	0.67		Total Assets Turnover Ratio	5.21
Asset Turnover Ratio	0.76		Asset Turnover Ratio	5.68
Average Raw Material Holding	--		Average Raw Material Holding	--
Average Finished Goods Held	--		Average Finished Goods Held	--
Number of Days In Working Capital	-68.07		Number of Days In Working Capital	-20.22
Profit & Loss Account Ratios			Profit & Loss Account Ratios
Material Cost Composition	75.44		Material Cost Composition	90.97
Imported Composition of Raw Materials Consumed	--		Imported Composition of Raw Materials Consumed	--
Selling Distribution Cost Composition	--		Selling Distribution Cost Composition	0.07
Expenses as Composition of Total Sales	57.76		Expenses as Composition of Total Sales	1.92
Cash Flow Indicator Ratios			Cash Flow Indicator Ratios
Dividend Payout Ratio Net Profit	10.1		Dividend Payout Ratio Net Profit	22.74
Dividend Payout Ratio Cash Profit	7.77		Dividend Payout Ratio Cash Profit	15.16
Earning Retention Ratio	89.9		Earning Retention Ratio	77.26
Cash Earning Retention Ratio	92.23		Cash Earning Retention Ratio	84.84
AdjustedCash Flow Times	3.44		AdjustedCash Flow Times	2.78

eliance Industries Limited (RIL) operates in multiple business segments namely petrochemicals, refining and marketing, textiles, exploration and production etc. The petrochemicals segment includes production and marketing operations of petrochemical products.

Hindustan Petroleum Corporation Limited (HPCL) is the third largest oil refining and marketing company in India. Apart from the 14 MMTPA (million tonnes per annum) of refining capacity, it has strong retail presence with over 9,127 retail outlets spread across the country. Further, the company has nearly 29 m customers in the fast growing LPG business. The company has stakes in HPCL-Mittal Energy (49%), MRPL (17%), Bhagyanagar Gas (25%) and Aavantika Gas (25%).

Short decision

Buying - reliance

Accepting an job offer - Hindustan petro