75 A STUDY ON FINANCIAL PERFORMANCE USING RATIO ANALYSIS DAINIK BHASKAR
Dr. Indira Dixit
HOD & Associate Professor Commerce and Management Department, Choithram college of Professional studies
Abstract - This paper is regarding analysis of financial performance of dainik bhaskar.
Accounting ratios supportive to analyse the financial locus of a company. Financial analysis aids to evaluate the financial health of a firm. Accounting ratios are intended for a number of years which demonstrates the changes. Ratios are useful tool for various stakeholders like management, financiers, shareholders and creditors etc. In order to analyse the financial performance of dainik bhaskar, the accounting ratios are used. Secondary data is used from the Published Annual Reports of the company for time period.
Keywords: Accounting Ratios, Annual Reports, Visa Steel Limited, Financial Performance, Steel Industry.
1 INTRODUCTION
Now a day’s financial decisions are one of the crucial decisions for managers. Right from the inception of the company, manger has to take decisions which balance the goals of wealth maximization along with profit maximization.
Accounting ratios are one of the important tool for financial analysis and decision making. It expresses relationship between two variables. It helps to assess the financial health, operational proficiency of managers and earning capacity of the firm by using financial statement analysis. It is useful for inter firm, intra firm and industry comparison over a period of time.
The present study measures the performance and profitability of Dainik Bhaskar with the help of accounting ratios. The financial performance was evaluated with the help of ratios. In the present study, the variables comprise of items derived from the balance sheet and income statement of Dainik Bhaskar. The ultimate objective of the firm is assumed to be maximization of the value of the investment of the owner in the firm and in the pursuit of meeting this objective the firm should aim at generating revenues that exceed the expenditures.
1.1 Profile of Dainik Bhaskar
Dainik Bhaskar Group is India's largest news-paper group major newspapers published by the group are Dainik Bhaskar (Hindi), Divya Bhaskar (Gujarati) (a financial newspaper in Hindi) and DNA (English) with 67 editions and more than 58.5 lakh copies the group every day reaches to 1.98 cr. readers across 14
states. Dainik Bhaskar group has a strong presence in radio business too. My FM, the radio division of the group is the 5th largest radio network in India present in 17 cities, across 7 states. Dainik Bhaskar also published 3 magazines; Aha Zindagi (A monthly family magazine in Hindi) for the kids Young Bhaskar (English) and Bal Bhaskar (Hindi &
Gujarati).
In 1983, The launch of Dainik Bhaskar Indore edition was the first and biggest move outside home town of Bhopal. It also emerged as a challenge to old established newspaper of Indore city by 1987. It became No. 1 newspaper of Indore, replacing the old established player of Indore Naiduniya. It further increased its presence in M.P., launched various editions like, Raipur, Bilaspur, Ujjain, Sagar, Ratlam. By 1995 Dainik Bhaskar emerged as the No. 1 News Paper in Madhya Pradesh and was declared the fastest growing daily in India, by readership survey.
The brand “Bhaskar” is today synonymous with success, quality, dynamism and ethics in millions of households across India and the corporate world alike.
2 LITERATURE REVIEW
1. Kumar Arvind (2014), in his study reveals that circulation of Indian newspaper is increasing and adopting new Trends to survive news media technology in India of newspapers.
News-paper are adopting new styles, news of geographically remote areas, English words has increased social
76 campaigns in writing the headlines. In
this study it was revealed that study can be done in different elements of newspaper, in the field of design and layout newspaper.
2. Vijay Kumari (1999), in her study depicted that effectiveness of advertising with reference to television and print media, analysed the effectiveness of print and television and their impact on people. In their buying decision because it has the audio and visual medium and it attracted viewers easily.
3. Andre Lucena (2011) Depicted that in India there is rise in Internet adoption, newspaper circulations have been increasing. It has been found that new generation is a backbone of the adoption of new technology. In a developing country like India there continues to be increase in the use of an Internet. Penetration and globalized behaviour seen in the world economy.
4. K.S. Suitet.al (2003) in their article, concluded that the Indian Public Companies bring competitiveness to the market. Communication has a considerable influence in deterring in print media own people.
5. Maheshwari,Seth, Gupta (2015) – In the study allocated that an effort has been made to understand advertisement effectiveness in print media context. It is believed that the advertisers are beneficial in leveraging
advertising efficacy to provide Academicians in Media.
2.1 Objectives
• To identify the variability in profitability, liquidity, Solvency position in the Dainik Bhaskar
• To examine the operational competence of Dainik Bhaskar.
• To offer suggestions based on findings of the study.
2.2 Data Collection
In the study the secondary data was collected from Internal and external resources of DB Corp and Balance sheets, Income statements, Cash flow Statements were used to extract and analyse Ratios in the study. The data was collected from a period of 2011 to 2015
3 TO STUDY FINANCIAL
PERFORMANCE OF DAINIK BHASKAR USING LIQUIDITY & SOLVENCY RATIOS
3.1 Introduction: Liquidity Ratios Liquidity is the Firm’s Ability to meet its’
current Financial Obligations. Liquidity Ratio analysis is the Study of Short Term Solvency & ability to pay liabilities. They are also Known as Balance Sheet Ratios.
The types of liquidity ratios are:
a) Current Ratio: Ratio of Current Assets to Current Liabilities
Current Assets: Assets convertible into cash in a year
Current Liabilities: Liabilities to be paid within a year
Components
Current Liabilities Current Assets
Bills Payable Cash in hand
Creditors Cash at Bank
Short term Loans Bills Receivables
Bank Overdraft Debtors
Outstanding Expenses Stock
Tax Provisions & Tax Payable Short term Investment or marketable securities
Un-claimed dividend Prepaid Expenses
Advances from customers Advance Payments
Deposits from dealers Accrued income
Provision for bad & doubtful debt Deposits kept with public bodies for business Installment payable on Long term Loans Other amounts receivable within a year
Higher the value of Current Ratio Less is the short term solvency risk
More amount of Rs. Available to repay short term liabilities
Ideal Ratio is 2:1
Very High Values indicate Funds are locked either in inventory thereby increasing the carrying cost or at bank thereby increasing the Opportunity Cost or the Debtors are high thereby increasing the doubtful debts
77
Value less than 2 means inability to meet current obligations
b) Quick Ratio/Acid Test Ratio/ Liquid Ratio
• Ratio of Current Assets – (Stock + Prepaid Expenses)/ Current Liabilities
• Asset which are Less Liquid have to be deducted from Current Assets
• Bank Overdraft can be deducted from Current Liabilities if it is for more than a year
• Ideal ratio is 1:1
• Firms having less than 1:1 Quick Ratio may not be able to meet their short term obligations in timec c) Absolute Liquidity/Super Quick Ratio
• Ratio of Cash in hand & bank + Marketable securities /Total Current Liabilities – Bank O.D.
• Measures absolute liquidity available
• Ideal Vale is 1:1
• Indicates that the firm avoids use of Short term Loans from Bank
4 RATIO ANALYSIS
Table 1: Ratio Analysis, Debt Coverage Current
Ratio
% Chang
e
Quick Ratio %
Change
Debt Equity
Ratio
%
Change Long Term Debt Equity Ratio %
Change Current Ratio
1.48 1.56 0.20 0.16 1.48
1.23 -16.89 1.34 -14.10 0.19 -5.00 0.11 -31.25 1.23
1.33 8.13 1.28 -4.48 0.13 -31.58 0.08 -27.27 1.33
1.44 8.27 1.35 5.47 0.11 -15.38 0.06 -25.00 1.44
1.65 14.58 1.69 25.19 0.08 -27.27 0.04 -33.33 1.65
The current ratio and Quick ratios were found slightly higher than the ideal level of 1:1 over a period from 2011 to 2015, which indicates that the working capital management could be improved so as to degrade the current levels of current ratio. However, the solvency of the firm is not questionable as it’s in a better position owing to lower levels of Debt to equity ratios.
4.1 Normality Test Using One Sample
Table 2: Kolmogorov-Smirnov Test Current
Ratio Quick
Ratio Debt Equity
Ratio Long Term Debt Equity Ratio
N 5 5 5 5
Normal
Parametersa Mean 1.63 1.60 0.06 0.02
Std. Deviation 0.26 0.22 0.10 0.08 Most Extreme
Differences
Absolute 0.11 0.17 0.11 0.11
Positive 0.11 0.17 0.10 0.11
Negative -0.11 -0.13 -0.11 -0.09
Kolmogorov-
Smirnov Z 0.36 0.53 0.34 0.33
Asymp. Sig. (2-
tailed) 1.00 0.94 1.00 1.00
4.2 Descriptive Statistics
Table 3: Liquidity & Solvency
Year Current
Ratio Quick
Ratio Debt Equity
Ratio Long Term Debt Equity Ratio
Sum 16.30 15.96 0.62 0.23
Mean 1.43 1.44 0.14 0.09
Variance 0.03 0.03 0.00 0.00
Standard Deviation 0.16 0.17 0.05 0.05
Skewness 0.31 0.80 0.10 0.80
Kurtosis 0.03 -1.44 -2.31 0.07
Minimum 1.23 1.28 0.08 0.04
Maximum 1.65 1.69 0.20 0.16
78 The Average Long Term Debt Equity
Ratio was found to be 0.09 for DB Corp.
Over a period from 2011 to 2015. The variance was 0.00 which indicates fluctuations were less. Standard deviation was found to be 0.05. Skewness was in the range of -2 to +2 and was found to be merely 0.80, which indicates normality.
Kurtosis was in the normal range of -3 to +3 and was found to be 0.07, indicating normality again. The Minimum was 0.04 and Maximum was 0.16.
The Average Debt Equity Ratio was found to be 0.14 for DB Corp. Over a period from 2011 to 2015. The variance was 0.00 which indicates fluctuations were less. Standard deviation was found to be 00.05. Skewness was in the range of -2 to +2 and was found to be merely 0.10, which indicates normality. Kurtosis was in the normal range of -3 to +3 and was found to be -2.31, indicating normality again. The Minimum was 0.08 and Maximum was 0.20.
The Average Quick ratio was found to be 1.44 for DB Corp. Over a period from 2011 to 2015. The variance was 0.03 which indicates consistency. Standard deviation was found to be 0.17 only.
Skewness was in the range of -2 to +2 and was found to be merely 0.80, which indicates normality. Kurtosis was in the normal range of -3 to +3 and was found to be -1.44, indicating normality again. The Minimum was 1.28 and Maximum was 1.69.
The Average Current Ratio was found to be 1.43 for DB Corp. Over a period from 2011 to 2015. The variance was 0.03 which indicates fluctuations were less. Standard deviation was found to be 0.16. Skewness was in the range of - 2 to +2 and was found to be merely 0.31, which indicates normality. Kurtosis was in the normal range of -3 to +3 and was found to be -0.03, indicating normality again. The Minimum was 1.23 and Maximum was 1.65.
4.3 Testing Autocorrelation
To implement an appropriate Ratio Forecasting Model Autocorrelation was also tested for Liquidity and Solvency Ratios and it was found that no ratio exhibited autocorrelation and the application of Trend Analysis Model using Least Square Method was then confirmed.
To Test the autocorrelation Box-Ljung Test statistics were used and their P- Values were found to be insignificant at 5% level of significance at all lags. Thus, Trend analysis using LSM would be suitable to forecast the Liquidity and Solvency Ratios.
4.4ACF
Table 4: Case Processing Summary CR QR DER LTDER
Series Length 5 5 5 5
Number of Missing Values
User-
Missing 0 0 0 0
System-
Missing 0 0 0 0
Number of Valid
Values 5 5 5 5
Number of Computable
First Lags 4 4 4 4
4.5 LTDER
Table 5: LTDER Autocorrelations Series: LTDER
Lag Autocorrelation Std. Error
Box-Lung Statistic
Value df Sig.b
1 .341 .338 1.017 1 .313
2 -.091 .293 1.113 2 .573
3 -.352 .239 3.285 3 .350
a. The underlying process assumed is independence (white noise).
b. Based on the asymptotic chi- square approximation
4.6 LTDER Autocorrelations Value
4.7 LTDER Partial Autocorrelations Series: LTDER
Lag Partial Autocorrelation Std. Error
1 .341 .447
2 -.234 .447
3 -.280 .447
ACF, 1, 0.341
ACF, 2, -0.091
ACF, 3, -0.352
LTDER
1 2 3
79 4.8 LTDER Partial Autocorrelations
Value
4.9 DER
DER Autocorrelations Series:DER
La g
Autoc orrela tion
Std.
Errora
Box-Ljung Statistic Value df Sig.b 1 .428 .338 1.606 1 .205 2 -.139 .293 1.833 2 .400 3 -.452 .239 5.415 3 .144
a. The underlying process assumed is independence (white noise).
b. Based on the asymptotic chi- square approximation.
4.10 DER Autocorrelations Value
4.11 DER Partial Autocorrelations Series : DER
Lag
Partial
Autocorrelation
Std.
Error
1 .428 .447
2 -.396 .447
3 -.290 .447
4.12 DER Partial Autocorrelations Value
QR
4.13 QR Autocorrelations Series: QR
La
g Autocorr elation Std.
Errora
Box-Ljung Statistic Value df Sig.b
1 -.023 .338 .004 1 .947
2 -.411 .293 1.980 2 .372
3 -.303 .239 3.584 3 .310
a. The underlying process assumed is independence (white noise).
b. Based on the asymptotic chi- square approximation.
4.14 QR Autocorrelations Value
4.15 QR Partial Autocorrelations Series: QR
Lag Partial Autocorrelation Std. Error
1 -.023 .447
2 -.412 .447
3 -.392 .447
ACF, 1, 0.34 1
ACF, 2, -
0.234 ACF, 3, -0.28
LTDER
1 2 3
ACF, 1, 0.428
ACF, 2, -0.139
ACF, 3, -0.452
DER
1 2 3
ACF, 1, 0.428
ACF, 2, -0.396
ACF, 3, -0.29
DER
1 2 3
ACF, 1, -0.023
ACF, 2, -0.411
ACF, 3, -0.303
QR
1 2 3
80 4.16 QR Partial Autocorrelations Value
4.17 CR
Table 4.9: CR Autocorrelations Series: CR
La
g Autocorre lation Std.
Errora Box-Ljung Statistic Value df Sig.b
1 .099 .338 .086 1 .769
2 -.292 .293 1.079 2 .583
3 -.428 .239 4.278 3 .233
a. The underlying process assumed is independence (white noise).
b. Based on the asymptotic chi- square approximation.
Figure 4.10: CR Autocorrelations Value
4.18 CR Partial Autocorrelations Series: CR
Lag Partial
Autocorrelation Std.
Error
1 .099 .447
2 -.305 .447
3 -.400 .447
4.19 CR Partial Autocorrelations Value
5 CONCLUSION
The current ratio and Quick ratios were found slightly higher than the ideal level of 1:1 over a period from 2011 to 2015, which indicates that the working capital management could be improved so as to degrade the current levels of current ratio.
However, the solvency of the firm is not questionable as it’s in a better position owing to lower levels of Debt to equity ratios.
In the study it was found that Current ratio is normally distributed, Quick Ratio is normally distributed, Debt Equity Ratio is normally distributed, Long Term Debt Equity Ratio is normally distributed.
In the present study liquidity ratios including current ratios & quick ratio were found to be satisfactory in the range of 1059 to 2002. It suggests that they were able to manage their current liabilities at par with their current assets therefore it is concluded that DB Corp it efficient enough to manage its working capital.
It was also found that its solvency ratios were not exhibiting the company bank corrupted of the firm as debt to equity ratio were found to be normal with less proportion of debt in the long term capital. It is therefore concluded that the firm is not going to be bank corrupted in the near future.
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ACF, 1, -0.023
ACF, 2, -0.412
ACF, 3, -0.392
QR
1 2 3
ACF, 1, 0.099
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CR
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