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INTERNSHIP PROJECT
ON
Analysis of Mid-Cap Equity Stocks for stock pitch presentation

Company- Vardhan Consulting Engineers

BACHELORS OF BUSINESS MANAGEMENT

(Batch 2020-23)

Under the Supervision of-

Mr. Ashish Kumar (Mentor)
Neha Kumari (HR)

Submitted By-
Tushar Gupta
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ACKNOWLEDGEMENT

I am grateful to Vardhan Consulting Engineers for giving me

this opportunity to work under them. I want to express my
sincere thanks to Mr. Ashish Kumar, for his guidance and
mentorship during the period of internship. He has helped in
understanding the business model and encouraged me at every
phase of submission of reports. Without his persistent aid and
valuable guidance, completing the assigned project would
have become very cumbersome.

The HR working with AIM India Pvt. Ltd. have also been a
helping hand in completing this internship. They have been
cooperative throughout my internship tenure.

Executive Summary

The financial analysis helps in knowing the financial

performance of the company. It also helps the company to
predict the future profits and to take corrective measures to
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achieve them. The study is to analyse the financial

performance of Reliance Industries Limited (RIL) for a period
of five years. The objective of the study is to determine the
liquidity, profitability and turnover rate of RIL. The tool used
to analyse the financial position of the company is Ratio
analysis. The tool helps in comparing the financial status of
the current year with past years and also in providing few
suggestions with which the company can improve to do
better in the future. The data are collected from the
secondary sources like annual reports, company websites
and other reliable sites. From the analysis, we find that the
company is lagging in various areas. Improving which will
help the company to achieve its ideal ratios. The profitability
and turnover ratios are better when compared to liquidity
ratios. The company was able to achieve the ideal ratios of
profitability in few years but couldn’t achieve the liquidity
ratios even for a single year. Also the working capital
turnover has been negative for all the five years. The
company must improve to bring the working capital to a
positive rate by decreasing its current liabilities. The current
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liabilities have always been more than the current assets

which is not good for the company.
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Table of Content
1 Executive Summary
2 Introduction
3 Analysis
4 Results
5 Conclusion
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Introduction

India's largest private sector company, Reliance Industries

has evolved from being a textiles and polyester company to
an integrated player across energy petrochemicals, textiles,
natural resources, retails and telecommunications and
operates world-class manufacturing facilities across the
country. Reliance's products and services portfolio touches
almost all needs of people on a daily basis, across economic
and social spectrums.
Reliance Industries Limited is headquartered in Mumbai and
is growing under the leadership of Mukesh Ambani, the son
of late Dhirubhai Ambani and elder brother of Anil Ambani
after the division of the family business among the two
brothers.
Reliance Group is a conglomerate holding company in India
that has a wide portfolio of business and is the highest
taxpayer in the Indian Private Sector. It accounts for over 5%
of the Indian Government's revenues and almost 8% of the
total merchandise exports from India. RIL was the first Indian
company to breach $100 billion market capitalization in 2007
and 2019 it has become the first Indian firm to cross Rs 9 lakh
crore market valuation marks. The company has
ranked 106th on the Fortune Global 500 list of the world's
biggest corporations as of 2019.
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Today, Reliance Group is touching the sky of success under

the excellent guidance of Mukesh D. Ambani. He has been
the part of Reliance Board since 1977. He has begun the
backward integration journey of Reliance – from textiles to
polyester fibers and further into petrochemicals and
petroleum refining and going upstream into oil and gas
exploration and production. Mukesh Ambani has introduced
numerous top -class manufacturing facilities backed by
modern technologies; these have raised Reliance's
petrochemicals manufacturing capacities. Mukesh is armed
with a graduation degree in Chemical Engineering from
the Institute of Chemical Technology and an MBA from
Stanford University in the US.
BUSINESS INSIGHT’S
A step towards Net Carbon Zero
Reliance also took an important step towards our goal to
achieve net carbon zero status by year 2035. We initiated the
process to separate the petcoke gasification complex into a
Wholly-Owned Subsidiary, with an aim to repurpose the unit
and unlock value through future collaborations. Presently,
the syngas produced at the complex is used as fuel at the
Jamnagar complex and is a major source of carbon emission.
With Reliance switching to green and renewable energy for
its energy needs, syngas will become available for
upgradation to high value petrochemicals and hydrogen fuel.
The highly concentrated stream of CO2 in syngas can be
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easily captured and sequestered. All these steps will greatly

reduce the carbon footprint of the Jamnagar complex.
Financial and operational performance FY 2021-22
Let me now elaborate on Reliance’s operating and financial
performance during FY 2021-22. During the year, Reliance
was able to overcome all the pandemic-led difficulties to post
another record performance operationally as well as
financially with strong contribution from all our businesses.
Both the consumer businesses, Retail and Digital Services,
recorded highest ever revenues and EBITDA. The E&P
business also posted significantly improved numbers with
strong volume growth and improved realisations. The largest
contributor to our earnings – the O2C business too delivered
robust earnings with strong fuel margins. Reliance posted a
record high EBITDA of `1,25,687 crore on a consolidated basis
for FY 2021-22, which was 28.8% up from the previous year.
The consolidated net profit for the year stood at `67,845
crore – again a new record. The Company had achieved a net
debt-free status last year, thanks to the largest ever capital
raise we had carried out in India Inc.'s history in the previous
year. During FY 2021-22, the Company’s capex increased in
all businesses, due to which the year closed with marginal
net debt. The Company continues to manage its treasury
operations actively and efficiently to reduce interest burden
and lengthen maturities. At the very beginning of FY 2021-22,
Reliance Industries made history by raising a jumbo loan of
$4 billion on better terms than any corporate in the Asian
region with similar credit profile. It was the largest-ever
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foreign currency bond issuance from India, with the lowest

coupon rate achieved for benchmark 30-year and 40-year
issuances by a private sector BBB corporate from Asia
exJapan. Similarly, the Company paid `30,791 crore to the
Government of India towards its 15 years of future spectrum
dues to save on annual interest cost burden.

RETAIL
Braving the intermittent COVID restrictions, the Retail
business continued to expand offline, as well as online. It
added nearly 8 million sq ft of retail space taking its total
retail space to over 41.6 million sq ft. Besides, the business
added 11.1 million sq ft of warehousing space during the
year. Importantly, the business created over 1,50,000 jobs
through the year. The business posted all time high revenues
and EBITDA with steady improvement in profit margins.
Growth was seen across all product categories from
Consumer Electronics to Grocery to Apparel & Footwear.
Even the relatively smaller segments of jewellery, pharma
and furniture & home décor, and new businesses like
Freshpik and Milkbasket, witnessed rapid growth. In our New
Commerce initiative, the focus remained on on-boarding
merchants during the year. FY 2021-22 witnessed over 3-fold
jump in the number of merchants onboarded as compared to
the previous year. The Retail business continued to forge
partnerships across the value chain to enhance customer
experience and product offerings. Throughout the year, the
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Retail business invested over `9,700 crore in these

partnerships.

DIGITAL SERVICES

Jio maintained its market leadership for a third year in a row

through FY 2021-22. Jio’s consumer offering, including
service quality and value, continued to remain best-in-class,
which helped addition of over 130 million new customers
during the year. Subscriber churn at the lowerend has
resulted in Jio improving its user engagement matrix, like
data and voice consumption per user, to a record high level.
Jio has the largest single-country subscriber base and carries
the highest volume of data traffic globally, excluding China. In
line with the industry, Jio raised tariffs by ~20% across all
prepaid plans effective December 2021, while ensuring that
Jio continues to provide the best value for money to all
consumers across every price point. The year also saw Jio
emerge as the leader in fiber based wireline broadband
connectivity with over 5 million connected homes. The
devices powering Jio Fiber in Indian homes, are working on
the Jio operating system – Jio OS – which has a rich set of
capabilities and customisation options. The Jio Set Top Box
has by far the most compelling set of apps – both from Jio
and leading third party apps – for streaming content like
movies, music, live news to video calling. Jio’s pan-India optic
fiber cable network has already reached the doorstep of
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almost 20 million households, which underlines its rapid

growth potential

OIL TO CHEMICAL

The rapid growth in vaccinations and reopening of economies

helped a strong economic recovery globally in FY 2021-22. As
a result, the global demand for oil and transport fuels grew
rapidly and recovered by 6.8 mb/d to 98.5 mb/d in FY 2021-
22, up 7.4% Y-o-Y. The rapid growth in fuel demand
supported the refining margins. Reliance maintained high
level of capacity utilisation across sites throughout the year.
The demand growth in downstream chemicals, polymers and
polyesters was comparatively subdued, due to the volatility
in feedstock prices. There was also a constraint on global
logistics and higher ocean freights that weighed on the
business environment. The availability of domestic gas as
well as internal fuels meant that we could eliminate our
dependence on high-cost LNG. All the while, we continued to
innovate and improve operationally. We commissioned and
stabilised the Petroleum Naphtha quality upgrade, capturing
higher premium. Likewise, Reliance won the ‘Innovator of the
Year’ award for our proprietary catalyst RELCAT A for
manufacturing LLDPE.
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ANALYSIS

The crude price improvement continues to prop up strong

growth momentum in FY23. We expect consolidated revenue
and EBITDA to clock 15% CAGR each over FY22-FY24, which
do not factor in any incremental growth from 5G capex, new
energy and other segments. These could create the next
engine of growth over the next two-to-three years as each of
retail, telecom and new energy is seeing notable
technological advancement with ambitious growth targets.
However, this has the potential to dent the existing single-
digit return ratios. 0
RJio is valued at 19x Mar’24E EV/EBITDA, to arrive at a
valuation of INR1,027/share (adjusted for its 66% stake). The
higher multiple captures the revenue growth opportunity in
Digital, potential tariff hikes, and steady market share gains.

Retail: I value Reliance Retail’s core business at 41x FY24E

EV/EBITDA and assign 5x to Connectivity, to arrive at a
valuation of INR1,202/share – after excluding the 10% stake
sale. Our premium valuation multiples capture the
accelerated growth in new store openings, aggressive
acquisition programs to improve product portfolio and its
focus on improving the digital segment.
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O2C: I value the Refining and Petrochemical segment at 7.5x

FY24E EV/EBITDA for standalone business to arrive at a
valuation of INR721/share. RIL believes that a recovery in
aviation demand, waning pandemic woes and lower exports
from China will support product margins going forward.
Although, PX, PTA and MEG margins are likely to be
rangebound due to capacity overhang, Polyester/Polymer
demand is expected to improve. Strong GRMs with better
throughput in the coming month would further support the
refining segment. 
Using SOTP, I value the Refining and Petrochemical segment
at an FY24 EV/EBITDA of 7.5x, arriving at a valuation of
INR721/share for the standalone business. We ascribe an
equity valuation of INR1,027/share to RJio and
INR1,202/share to Reliance Retail, factoring in the recent
stake sale. Our higher EV/EBITDA multiple of 41x for Retail
and 19x for Digital Services, underscore new growth
opportunities in the Digital space and steady market share
gains. I reiterate my BUY rating on RIL with a TP of INR2,880.
7.5x FY24 EBITDA Equity value Standalone debt
137
1,027

1,202 2,880

68
721

O2C E&P Reliance Retail RJio Net debt / Target price

INR/share (cash)
Source: MOFSL

Current Ratio Formula:

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Current Ratio = Current Assets/Current Liabilities

0.7

0.6

0.5

0.4
CURRENTRATIO
0.3 X-AXIS:YEARS

0.2

0.1

0
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020

INTERPRETATION

The above table and chart depicts the current ratio of

Reliance Industries Limited. Current ratio is ratio that
measures the ability of the company to pay off the short
term liabilities. Current ratio is a ratio that compared current
assets and current liabilities. It is calculated by dividing
current assets by current liabilities. Current assets are those
assets which are expected to be sold within the same
financial year or within one operating cycle. Current assets
include cash and cash equivalents, accounts receivable,
inventory, prepaid liabilities, marketable securities and other
liquid assets. Current liabilities are those debts and
obligations of a company that are expected to be dealt with
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within the one year. Current liabilities include accounts

payable, short term loans, accrued expenses and notes
payable. In the above table and chart, current ratio has been
calculated for the past five financial years, i.e., from2015-
2016 to2019-2020. In the above chart,
‘x’ axis denotes the financial years and ‘y’ axis
denotes the current ratio (in times) for the respective
financial years. The current ratio for the year2015-
2016is0.54times;2016-2017is 0.43 times; 20172018 is 0.45
times; 2018-2019 is 0.61 times; 2019-2020 is 0.46 times.
Thus, from the above table it is clear that the current ratio of
Reliance Industries ranges minimum of 0.43 during the year
2016-2017 and maximum of 0.61 during the year 2018-2019.
An ideal current ratio is 2:1, which means that the company
must have2 times more current assets than the current
liabilities to covers its debts. The current ratio below 1 means
that the company is not efficient and doesn't have enough
liquid assets to cover its short-term liabilities. Here, in none
of the above years currents assets are more than the current
liabilities. Hence, in order to achieve ideal current ratio the
company has to improve current assets so that it will have a
strong financial position.
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Quick Ratio Formula:

Quick Ratio=Liquid Assets/Current Liabilities

0.09

0.08

QUICKRATIOX
-AXIS:YEARSY
-
AXIS:RATIOS

0.07

INTERPRETATION

The above table and chart depicts the quick ratio of Reliance
Industries Limited. Quick ratio is another liquidity ratio that
measures how a company meets its short term obligations
with its most liquid assets. It is also called as acid test ratio.
Quick ratio is calculated by dividing liquid assets by current
liabilities. Liquid assets are those assets which are converted
into cash easily and quickly. Liquid assets include cash in
hand, cash at bank, cash equivalents, accrued income,
promissory notes, etc. Liquid assets are calculated by current
assets minus inventory and prepaid expenses. Current
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liabilities are those debts and obligations of a company that

are expected to be dealt with within a year. Current liabilities
include accounts payable, short term loans, accrued
expenses and notes payable. In the above table and chart,
quick ratio has been calculated for the past five financial
years, i.e., from 2015-2016 to 2019-2020. In the above chart,
‘x’ axis denotes the financial years and ‘y’ axis denotes the
quick ratio (in times) for the respective financial years. The
quick ratio for the year2015-2016is0.08times;2016-2017
is0.05times;2017-

2018 is 0.06 times; 2018-2019 is 0.07 times; 2019-2020 is

0.05 times. From the above table it is clear that the quick
ratio ofRelianceIndustriesrangesminimumof0.05
duringtheyears2016-

2017 and 2019-2020 and maximum of 0.08 during the year

2015-2016. Ratio of 1:1is held to be the ideal quick ratio
indicating that the company has enough liquid assets to pay
off its current obligations. But it is clear that in none of the
above years liquid assets and current liabilities are in 1:1
ratio. Hence the company is inefficient to payoff its current
liabilities from its immediate liquid assets. RIL has to work on
its liquid assets to achieve ideal quick ratio.

Absolute Liquid Ratio Formula:

Absolute Liquid Ratio=Liquid Assets/Liquid Liabilities
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0.07

0.06

0.05

0.04
ABSOLUTELIQUIDRATIO
0.03 X-AXIS:YEARS

0.02

0.01

0
2015-20162016
-2017 2017-2018 2018-2019 2019-2020

INTERPRETATION

The above table and chart depicts the absolute liquid ratio of
Reliance Industries Limited. Absolute liquid ratio is also a
liquidity ratio that measures the total liquidity which will be
available for the company. This ratio tests short term liquidity
in terms of cash, marketable securities and current
investment. Absolute liquid ratio is calculated by liquid assets
divided by liquid liabilities. Liquid assets are those assets that
are converted into cash easily. Liquid assets include cash in
hand, cash at bank, cash equivalents, accrued income,
promissory notes, marketable securities, etc. Liquid assets
are calculated by adding cash in hand, cash at bank and
marketable securities. Liquid liabilities are those debt
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obligations of a company that must to be paid off within a

year. Liquid liabilities are calculated by current liabilities
minus bank overdraft and cash credit facilities. In the above
table and chart, absolute liquid ratio has been calculated for
the past five financial years, i.e., from2015-2016to2019-2020.
In the above chart, ‘x’ axis denotes the financial years and ‘y’
axis denotes the absolute liquid ratio (in times) for the
respective financial years. The absolute liquid ratio for the
year 2015-2016 is 0.06 times; 2016-2017 is 0.01 times; 2017-
2018 is 0.01 times; 2018-2019 is 0.02 times; 20192020 is 0.03
times. From the above table it is clear that the absolute
liquidity ratio of Reliance Industries ranges minimum of 0.01
during the years 2016-2017and 2017-2018 and maximum of
0.06during the year 2015-2016. The most favourable and
optimum value for this ratio should be 1: 2. It indicates
that50% of liquid assets is enough to pay off 100% liquid
liabilities. If the ratio is less than 1, it means that the
company is not able to manage its daily cash requirements. If
the ratio is more than 1, it means that the company has
enough liquid assets to meet its short term obligations. The
absolute liquid assets and current liabilities doesn't satisfy
the above condition. Thus, RIL has to improve its absolute
liquid assets in order to achieve ideal absolute liquid ratio.

ProfitabilityRatios4.NetProfit Ratio Formula:

NET PROFIT RATIO=NETPROFIT/NET SALES*100
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14

12

10

8
NETPROFITRATIO
6 X-AXIS:YEARS

0
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020

INTERPRETATION

The above table and chart shows the net profit ratio of
reliance industries limited. Net profit ratio illustrates how
much of revenue generated is in the form of profit. The ratio
is expressed in terms of percentage. It is key factor that
indicates the financial status of the company. The variations
in the ratios help in assessing the current practices and
forecasting the future profits. Net profit ratio is calculated by
dividing the net profit by net sales and then multiplying it by
100. Net profit is arrived by deducting all non-operating
expenses from the operating profit made by the company. In
the above chart, X-Axis denotes the financial years and the Y-
Axis denotes the ratios calculated (in %). The analysis is for
the period of five years 2015-2016 to 2019- 2020. The net
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profit ratio for the year 2015-2016 is11.75% even though the
net profit and sales for the respective year is at its least when
compared to all other financial years. In the year 20162017,
the net profit ratio is 12.98% which is the highest of all. The
net profit ratios for the years 2017-2018 and 20182019 are
11.58% and 9.46% respectively. The year with the highest
sales and net profit is 2018-2019 but it didn’t achieve the
highest net profit ratio. In the year 2019-2020 the net profit
ratio is9.19%which is the least ratio. From the above analysis,
We understand that as the sales increases, the net profit
ratio tends to decrease and increase when the net profit
increases. The ideal net profit ratio is 25%. But the company
failed to achieve it in any of the five years. In order to raise its
net profit ratio to the idea ratio, the company must try to
increase its net profits.

Return on Equity Formula:

Return on Equity=NET INCOME/NET WORTH*100
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12

10

6 RETURNONEQUITY

0
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020

INTERPRETATION

The above chart and table shows the return on equity ratio of
reliance industries limited. It is the ratio that measures how
much of profits can be earned with the available equity. The
ratio is expressed in terms of percentage. Net worth is
arrived by subtracting the debt from the total assets of the
company. In the above chart, X-Axis denotes the financial
years and Y-Axis denotes the ratios (in %). The study is for a
period of five years i.e 2015-2016 to 2019-2020. The return
on equity for the year 2015-2016 is 11.41% which is the
highest ratio in these five years. Though the net income and
net worth is low, the company is able to achieve the
maximum ratio. In the year 2016-2017,
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thecompanyearned10.89%return on equity.The net income

and the net worth continued to increase over the years, yet
the ratios keep on decreasing. The ratio for the year 2017-
2018 is 10.68% and for the year 2018-2019 is 8.67%.The
highest net income and net worth is achieved but the return
on equity ratio is only 7.27% for the year 2019-2020. It is very
clear from the analysis that as the net income and net worth
keeps on increasing, the return on equity ratio keeps on
falling.

Return On Capital Employed Formula:

Return On Capital Employed=Earnings Before Profit And TAX
(EBIT)/CAPITALEMPLOYED
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14

12

10

8
RETURNONCAPITAL
EMPLOYED
6

0
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020

INTERPRETATION

The above table and chart depicts the return on capital

employed ratio of Reliance Industries Limited. Return on
capital employed (ROCE) is a ratio that measures the
company's profit- earning ability and capital efficiency. This
ratio helps in assessing how much profit can be earned out of
the capital. It is calculated by dividing earnings before
interest and tax (EBIT) by capital employed. Earnings before
interest and taxes (EBIT) indicate the company's profit
learning capacity. EBIT includes all incomes and expenses
except for interest and income tax. Capital employed is the
total capital used for the acquiring profits by the company.
Capital employed is derived by subtracting current liabilities
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from total assets. In the above table and chart, return on

capital employed ratio is calculated for the past five financial
years, i.e., from 20152016 to 2019-2020. In the above chart,
X-Axis denotes the financial years and the Y-Axis denotes the
ratios calculated
(in %). The return on capital employed ratio for the year
2015- 2016 is11.47%; 2016-2017is11.16%; 2017-2018 is
12.24% ;2018-2019 is10.15%; 2019-2020 is 8.66% Thus ,from
the Above table it is clear that the return on capital
employed ratio of Reliance Industries ranges minimum of
8.66%during the year 2019-2020 and maximum of 12.24%
during the year 2017-2018. A good ROCE varies around
10%.Hence, return on capital employed is completely
satisfactory during the financial year 2018-2019; whereas it is
partially satisfactory during the financial years 2015-2016 and
2016-2017; while ROCE is not satisfactory during the financial
years 2017-2018 and 2019-2020. So the company has to
concentrate on its earnings to gain better return on capital
employed.

Return On Assets Formula:

Return On Asset=Profit After Tax(Pat) /Total Assets
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4
RETURNONASSETSRATIO
3 X-AXIS:YEARS

0
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020

INTERPRETATION

The above table and chart depicts the return on assets ratio
of Reliance Industry Limited. Return on asset indicate show
well a company is generating profits from its total assets. It
can be calculated by dividing the profit after tax by total
assets of the company. Profit after tax is the amount arrived
after deducting tax and interest from the earnings of the
company. The return on asset is indicated in terms of
percentage. In the above table and chart the return on asset
is calculated for the past five financial years, i.e., from 2015-
2016 to 2019-2020.In the above chart, X-Axis denotes the
financial years and the Y-Axis denotes the ratios calculated
(in %). The return on assets ratio for the year2015-2016 is
5.98% ;2016-2017 is5.74% ;2017-2018 is5.44% ;2018-2019 is
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4.53% ;2019-2020 is 3.18%.Thus, From the above table it is

clear that the return on assets ratio of Reliance Industries
ranges minimum of 3.18% during the year 2019- 2020 and
maximum of 5.98% during the year 2015-2016. Return on
assets over 5% are said to be good. Hence, the return on
assets is completely satisfactory during the financial years
2015- 2016, 2016-2017 and2017-2018. The company has to
improve its total assets to achieve an ideal ratio of 5% on the
financial years 2018-2019 and20192020

Turnover
Ratios Inventory Turnover Ratio Formula:
Inventory Turnover Ratio =Net Sales/Average Inventory
10

8
INVENTORYTURNOVERRATIO

4 X-AXIS:YEARS

2015-20162016
-20172017
-20182018
-20192019
-2020

INTERPRETATION
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The above chart and table represents the inventory turnover

ratio of reliance industry limited. It indicates the number of
times the company is able to sell off its inventory. It also
helps to identify if there are any excessive inventory when
compared with its sales level The ratio is expressed in terms
of times. The inventory ratio is calculated by dividing the net
sales by average inventory of the company. In the above
chart X-axis denotes years and Y- axis denotes ratios in times.
The analysis is for the period of five years i.e 2015-2016 to
2019-2020 financial year. In the year 2015-2016 the
inventory is sold for 8.32 times even though the net sales and
the average inventory is at its least. In the year 2016-2017
the inventory sold is 7.11 times which is the least of all. The
net sales and average inventory increased hereby the
inventory ratio is also increased by 7.33 times in the year
2017-2018. The inventory turnover ratio for the year 2018-
2019 is 8.42 times though it has the highest net sales and
average inventory. The inventory turnover ratio for the year
20192020 is 8.66 times which is the highest of all the years.
From the above table we have analysed that when the net
sales increases inventory ratio will also increases and the
ratio will decrease when the average inventory increases

Working Capital Turnover Ratio Formula:

Working Capital Turnover Ratio=Net Sales/Working Capital
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2015-2016 2016-2017 2017-2018 2018-2019 2019-2020

-0.5

-1
WORKING
CAPITALTURNOVE
RRATIO

-3

INTERPRETATION

The above table and chart shows the working capital

turnover ratio of Reliance industries limited. Working capital
turnover is a ratio shows how efficiently the working capital
is utilized and how it helps in sales and growth. A higher
working capital turnover ratio indicates higher amount of
sales. The ratio is expressed in times. The working capital
ratio can be calculated by dividing the net sales by working
capital of the company. The X-axis denotes years and the Y-
axis denotes ratios. The analysis is for the period of five years
i.e 2015-2016 to 2019-2020 financial year. In the financial
year 2015 to 2016 the working capital turnover ratio is (4.03).
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The working capital turnover ratio is(2.68) for the year 2016
to 2017 which is better than the previous year. For the year
2017 to 2018 the working capital ratio is (2.54). In the
financial year 2018 to 2019 the working capital is (4.43)
which is the least of all the given years. The working capital
turnover ratio for the year 2019 to 2020 is (1.99) which is the
best of all. The working capital turnover ratio for the
company in all the five years shows a negative impact. This is
mainly because the current assets of the company are not
sufficient to meet all the current liabilities incurred. The
company must invest much more on current assets to bring
the working capital of the company to a positive rate.

Fixed Asset Turnover Ratio Formula:

Fixed Asset Turnover Ratio=Net Sales/Fixed Assets
2

1.8

1.6
FIXEDASSET

TURNOVERRATIO

1.4
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INTERPRETATION

The above chart and table shows the fixed asset turnover
ratio of the Reliance industries limited. Fixed Asset Turnover
(FAT) is a ratio that tells how efficiently the fixed assets of the
company are used to generate more sales . The ratio is
expressed in times . Fixed asset turnover ratio can be
calculated by dividing the net sales by fixed asset of the
company. The X-axis denotes years and the Y-axis denotes
ratio. The analysis is for the period of five years i.e2015-
2016to20192020financial years. The fixed asset turnover
ratio for the year 2015to2016is 1.77 (in times) even though
the net sales is less when compared to the other years. In the
financial year 2016 to 2017 fixed asset turnover ratio is 1.57
times. Though net sales and inventory increased over the
year, the ratio decreased. The year 2017 to 2018 shows a
fixed asset turnover ratio of 1.44 times. The fixed asset
turnover ratio is highest for the year 2018 to 2019 which is
1.83 times. This year also has the highest net sales of all
times. In the financial year2019 to 2020 the fixed asset ratio
is 1.10 times which is the least ratio of all the five years even
though the fixed assets have been the highest in this year.

FINDINGS OF THIS EQUITY REPORT

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r
t

Either of the liquidity ratios didn’t satisfy the ideal ratios.

Hence, it is clear that RIL has poor current assets and liquid
assets.
The ideal ratio for return on assets ratio is 5%. The total
assets of the company have been steadily increasing and
hence the company was able to achieve the ideal ratio in
2015- 2016, 2016-2017 and 2017-2018. But it failed to do so
intheyears2018-2019and 2019-2020.
ByanalyzingallthefinancialyearsRILdidabetterperformanceoft
urnoverratiointheyear2018

CONCLUSION

This company is in good position but has to improve in some

areas to satisfy the ideal ratios. The company would've
improved a lot if it had reduced its borrowings. One of the
major drawbacks is that the company was not able to achieve
its ideal liquidity ratios and the reason for it is also the excess
borrowings. Thus, if the company takes into account the
suggestions made in this study, it has a very good chance of
improvement.