Capital goods manufacturing industry serves as a strong base for its engagement across sectors such as engineering, construction, infrastructure, and consumer goods. The capital goods industry in FY 20182019 had an overall production figure amounting to $13.6 billion.

Key sectors, such as heavy industries, play an important role in terms of the significant contribution to India's GDP, which is expected to reach a value of $5 trillion by FY 2025.

The following are the major industries in the capital goods space:

1. Larsen and Toubro Limited (L&T)
2. Bharat Heavy Electricals Limited (BHEL)
3. NBCC (India) Limited
4. Siemens India Limited

You can find their financial statements

You are looking to invest in the capital goods industry and want to identify which is the best company to invest in. In order to do this, you need to perform ratio analysis for these companies. The following are the key ratios that you are supposed to calculate.

Question 1

• Profitability
  • Return on equity
  • Return on capital employed (For PBIT use profit before tax and not profit before tax and exceptional items)

Profitability Ratios

	Return on equity
Particulars	FY'19	FY'18	FY'17	weighted average
L&T	-	-	-	-
BHEL	-	-	-	-
NBCC	-	-	-	-
Siemens	-	-	-	-

	Return on capital employed
Particulars	FY'19	FY'18	FY'17	weighted average
L&T	-	-	-	-
BHEL	-	-	-	-
NBCC	-	-	-	-
Siemens	-	-	-	-

Question 2

• Liquidity
  • Current ratio
  • Quick ratio

You are also to count the average of these weights for all three years.

Please note that you are to assign weights of 3, 2 and 1 to the financial ratios for FY 2019, FY 2018 and FY 2017 and then compute the weighted average.

Liquidity Ratios

	Quick Ratio
Particulars	FY'19	FY'18	FY'17	weighted average
L&T	-	-	-	-
BHEL	-	-	-	-
NBCC	-	-	-	-
Siemens	-	-	-	-

	Current Ratio
Particulars	FY'19	FY'18	FY'17	weighted average
L&T	-	-	-	-
BHEL	-	-	-	-
NBCC	-	-	-	-
Siemens	-	-	-	-

Question 3

Based on the data, which company do you recommend for investment?

Excel files

Concise+Data.xlsx - OpenOffice Calc File Edit View Insert Format Iools Data Window Help Arial Concise+Data.xlsx - OpenOffice Calc File Edit View Insert Format Iools Data Window Help Arial Concise+Data.xlsx - OpenOffice Calc File Edit View Insert Format Iools Data Window Help Arial Concise+Data.xlsx - OpenOffice Calc File Edit View Insert Format Iools Data Whindow Help Calibri A1 fx= Larsen \&\& Toubro Ltd. Profit And Loss - Standalone - Actual - Abridged- [INR-Crore] \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|c|c|} \hline & A & B & C & D & E & F & G & H & I & J & K & LA \\ \hline 1 & Larsen \&\& Toubro Ltd. Profit And Loss - Standalone - Actual - Abridged- [INR-Crore] & & & & & & & & & & & \\ \hline 2 & DESCRIPTION & 03/19 & 03/18 & 03/17 & & & & & & & & \\ \hline 3 & & & & & & & & & & & & \\ \hline 4 & Total Income & 90378.09 & 79224.14 & 67904.12 & & & & & & & & \\ \hline 5 & Revenue from Operations & 86987.86 & 74462.55 & 65723.86 & & & & & & & & \\ \hline 6 & Other Income & 3390.23 & 4761.59 & 2180.26 & & & & & & & & \\ \hline 7 & Expenses & 81634.85 & 72392.29 & 62040.25 & & & & & & & & \\ \hline 8 & COGS & 65715.44 & 54884.36 & 48927.64 & & & & & & & & \\ \hline 9 & Employee benefits expense & 6082.49 & 5614.74 & 5147.38 & & & & & & & & \\ \hline 10 & Finance costs & 1928.43 & 1697.70 & 1525.41 & & & & & & & & \\ \hline 11 & Depreciation and amortisation expense & 1067.95 & 1049.46 & 1215.19 & & & & & & & & \\ \hline 12 & Other expenses & 6840.54 & 9146.03 & 5224.63 & & & & & & & & \\ \hline 13 & Profit before exceptional items and tax & 8743.24 & 6831.85 & 5863.87 & & & & & & & & \\ \hline 14 & Exceptional items net & 474.93 & 430.53 & 893.97 & & & & & & & & \\ \hline 15 & Profit before tax & 9218.17 & 7262.38 & 6757.84 & & & & & & & & \\ \hline 16 & Tax expense & 2540.47 & 1875.08 & 1304.10 & & & & & & & & \\ \hline 17 & PAT & 6677.70 & 5387.30 & 5453.74 & & & & & & & & \\ \hline 18 & & & & & & & & & & & & \\ \hline 19 & & & & & & & & & & & & \\ \hline 20 & & & & & & & & & & & & \\ \hline 21 & & & & & & & & & & & & \\ \hline 22 & & & & & & & & & & & & \\ \hline 23 & & & & & & & & & & & & \\ \hline 24 & & & & & & & & & & & & \\ \hline 25 & & & & & & & & & & & & \\ \hline 26 & & & & & & & & & & & & \\ \hline 27 & & & & & & & & & & & & \\ \hline 28 & & & & & & & & & & & & \\ \hline 29 & & & & & & & & & & & & \\ \hline 30 & & & & & & & & & & & & \\ \hline 31 & & & & & & & & & & & & \\ \hline 32 & & & & & & & & & & & & \\ \hline & 1) BS-L\&T PnL-L\&T BS-BHEL /PnL-BHEL/BS-NBCC/PnL-NBCC/BS-Siemens /PnL-Siemens & & >1 \\ \hline Sheet & PageStyle_PnL-L\&T & & STD |* & & & & m=0 & & & & & \\ \hline & Type here to search & W=0 & & & & & & 0 & affic & & ENG & \begin{tabular}{c} 17:56 \\ 19122023 \end{tabular} \\ \hline \end{tabular} Concise+Data.xlsx - OpenOffice Calc File Edit View Insert Format Iools Data Window Help Arial Concise+Data.xlsx - OpenOffice Calc File Edit View Insert Format Iools Data Window Help Calibri Concise+Data.xlsx - OpenOffice Calc File Edit View Insert Format Iools Data Window Help Calibri Concise+Data.xlsx - OpenOffice Calc File Edit View Insert Format Iools Data Window Help Arial