Calculation of ROA for HLL:
|
|
1997
|
1998
|
1999
|
2000
|
2001
|
|
PAT/Average total assets * 100
|
567.1/3208.9
|
806.2/3965.85
|
1074.1/4763.8
|
1327.8/5465.9
|
1640.31/ 6280.78
|
|
ROA
|
17.67
|
20.32
|
22.55
|
24.29
|
26.12
|
The above calculations show an upward trend in the return
on total assets. However, these calculations do not include the interest payable
to the creditors of the firm in the net profits. To calculate the actual returns
on total assets, interest should be included in net profits, because assets are
financed by owners as well as creditors. The following formula is used to find
out the real return on total assets.
|
|
1997
|
1998
|
1999
|
2000
|
2001
|
|
PAT + Interest/Average total assets * 100
|
600.9/ 3208.9
|
835.4/3965.85
|
1096.4/4763.8
|
1340.43/5465.9
|
1648.05/6280.78
|
|
ROA
|
18.73
|
21.06
|
23.01
|
24.52
|
26.24
|
Return on Capital Employed (ROCE)
|
|
1997
|
1998
|
1999
|
2000
|
2001
|
|
PBIT/Average total capital employed * 100
|
870.9/ 1447.6
|
1128.4/ 1977.34
|
1414.4/2279.7
|
1695.9/2599.4
|
2050.47/3230.55
|
|
ROCE
|
60.16
|
57.07
|
62.04
|
65.22
|
63.47
|
This ratio measures how well the long-term funds of
owners and creditors are used. The higher the ratio, the more efficient the
utilization of capital employed.
Return on Total Shareholder's Equity
Calculation of return on total shareholders' equity:
|
|
1997
|
1998
|
1999
|
2000
|
2001
|
|
Net profit after taxes
|
567.1
|
806.2
|
1074.1
|
1327.8
|
1640.31
|
|
Average total shareholders'equity
|
172.45
|
209.33
|
219.5
|
219.75
|
220.06
|
|
Return on total shareholders'equity
|
3.29
|
3.85
|
4.89
|
6.04
|
7.45
|
The return on total shareholders' equity has been
increasing since 1997. This increase is due to the three-fold increase in net
profits available to equity shareholders.
Dividend per Share
Calculation of dividend per share for HLL:
|
|
1997
|
1998
|
1999
|
2000
|
2001
|
|
Dividend to ordinary shareholders
|
338.5
|
463.4
|
638.1
|
770.2
|
1100.62
|
|
Number of shares outstanding
|
1.99
|
2.19
|
2.19
|
2.2
|
2.2
|
|
Dividend per share
|
170.14
|
211.62
|
291.37
|
350.1
|
500.28
|
The dividend pay-out to ordinary
shareholders has been increasing year after year, resulting in an increase in
DPS. Higher dividends may have been declared because of stagnation in the
business, as a result of which earnings were not retained. However, the
increase in dividends also indicates that the company is generating profits
consistently.
More>>
Page7
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