 So, dear students, we are looking at how to use the ratios for making the projections. Those who are listening it for the first time for their benefit, I am just taking a relook at what we have done. First, we have studied the ratios, then we have calculated the ratios for various companies using their real data. In the last session, we were discussing how the ratios can be used for projecting the financial statements and calculating the future value of the company. As you all know, the current shareholders, prospective shareholders, lenders, employees, everybody is very keenly interested in projecting the future. It is almost impossible to project the future, only God knows it. But we will use the tools and the data, which is available with us to get a reasonable estimate, that is what we were learning at. In the last session, we had started the discussion on Dabbar India. As I told you last time also, please take a printout of all this, so that you can actually see how the calculations are done, the sheets are shared with you. So, you can take it on your own computer and look at the formulas. First, we started with discussion on Dabbar India, wherein lot of information is available with about the company. From this information, you can see that it is one of the highly successful FMCG companies quite stable now. It is there for a reasonably long time. So we can take the data for last 10 years and reasonably assume that the same trends can continue in next few years. So we also looked at industry and economy data. Usually CMI or other associations do give projections about the growth rate of the industry. So, such projection was used. It was made available and it was used. We also collected the data about stock market. So we have looked at the prices of the company for last 4 years. We also looked at the movement of Sensex for last 4 years. This is some information about FMCG industry, then about the performance of Dabbar. Now let us go at the projections, which we have done in the last session. We were given PNL account for last 10 years. First we have used this data to look at the expected growth. Since CMI predicted industry growth of 11.8, we have taken the same growth rate. Because the company is stable, highly successful. So we know that the growth rate would not be less. It might be even more, but on a conservative basis we have taken it at 11.8 percent. A long term growth rate post 2016 is usually taken more on a conservative basis. So it is taken at 4 percent. The depreciation has been assumed to grow at 5.87 percent. The rate of depreciation has been assumed at 5.8 percent based on the past data. Now with this, we have projected the figures. So we have sales turnover with us for March 11. Same turnover will be used and we go for the projected growth rate of 11.8 percent. So we get projected turnover for 12, 13, 14, 15, 16 and so on. So we have estimated turnover, net sales, total income. The expenditures like raw material, power and fuel, etcetera are closely related to sales. So they also have been estimated to grow at the same rate. So we come up to profit. So we have assumed that gross profit will also grow at the same rate. Then the depreciation for calculating of depreciation we have to use a special mechanism because depreciation depends on the gross block of the company. So we will go to balance sheet sheet, but whatever is a projected gross block we have to charge the depreciation at the given rate that is 5.87 estimated rate and the depreciation has been calculated. This gives us PBT. Then we have also estimated the tax rate. So we have looked at tax rate for March 11 and same tax rate is assumed to continue. So with this data we come to estimated profit after tax. Now let us go to balance sheet. Again in the last session we have done it, but I am taking a brief recap. In balance sheet, we only need some data because we are going to use this data for projecting the value of the company using DCF method, the discounted cash flow method. So we have not projected all the items, we have only projected a few items. So we basically need gross block. We have looked at the gross block growth for the last 10 years. This gives us a CAGR of 8.23. So this is a cumulative annualized growth rate. Same growth rate is assumed to continue because it is a stable company. So we expect a reasonably consistent growth of 8.23. So gross block is taken at that rate. Accumulated depreciation, we know the depreciation of 11. We have estimated the depreciation of 12. So that has been added. So we get the accumulated depreciation for all these years. This can help us to estimate the net block. We also need to estimate inventory and debtors. These two assets are closely linked to level of sales. So whatever is a sale growth, same sale growth rate has been applied for inventories and debtors. So we can estimate the inventories and debtors for all these years. So we do not look at loans etc or other current assets. Basically these three are the important figures. We must know gross block, we must know inventory and debtors. And this information now we will use for making a DCF calculation. Before going for DCF calculation which also we will discuss, we also need to estimate the cost of capital of the company. Now what is meant by cost of capital? Now the company is using the finances either by way of equity or by way of debt. So it will have to pay its cost and we will incorporate this cost to estimate the value of the company. Now the cost of capital estimation depends on the risk associated with the company. To estimate the risk, we need to calculate beta factor. So first let us look at beta calculation. Now what is meant by beta factor? Some of you, many of you will know but I will just repeat for. So by beta we are looking at the relative movement of the company stock, we service the movement of the market. So we want to know how much risky the company is, whether the returns of the dubbers, shares are in tune with the returns on BSE. If the returns follow exactly the same path, the beta will be 1. Now here we will look at the beta of Dabber. So we have taken the prices of Dabber for last 4 years, you can see here. On 30th June to July 11, the price data for Dabber as well as BSE sensex is estimated is taken, it is already available. Then the return is calculated on both Dabber and BSE based on this the data beta is calculated. Beta is nothing but the slope. So we have used the slope function, please have a look at the function formula which is used. So we get a data beta of 0.31, what does this convey to you? Beta of 1 means the company is as risky as the market, beta of 0.31 means relatively the company is less risky. So the returns on the Dabber stock are more stable than the returns on BSE, we will not go much into depth of concepts of beta etcetera. Please look at portfolio management books or corporate finance books for the same. But here you can look at how the beta has been estimated and it has come to 0.31. Now let us go to calculation of cost of capital, many of you will be aware of CAPM model which is known as capital asset pricing model. Now here for CAPM model we need risk free rate of return. So we have got 10 year government bond return, this you can get from RBI site or some other site. So it is 8.26, market rate of return. So we have considered BSE sensex as a proxy for the market. So which is 18.60 percent. Now once you know these two, we can estimate the cost of equity. So you can look at the formula, it is B3, B3 is the risk free rate of return which any way any investment has to earn plus, so it is B3 plus the risk premium. Now to calculate the risk premium you can look at the formula it is B2 into B4 minus B3. So B4 is a market return, B3 is a risk free rate of return. So usually this is the premium required for any stock market investment 18 minus 8, so around 10 percent. And we multiply this by beta, beta is a riskiness of this particular company. Now this particular company the beta is less than 1, so it is perceived as less risky than the market. So the cost of equity comes to 11.46, you can look it is less than the market rate. If the beta would be 1, the cost of expected cost of equity will be same as market or 18.6, if the beta is more than 1 it will be more than the market. So in this case it is 11.46, the cost of debt is taken as 9.7, now here we have not gone by the actual cost of debt by the company because we are looking at future projection. So we have taken yield on 10 year triple A rated corporate bonds, we know that Dabbar is a well established company, it has triple A that is it has highest rating. So the yield for triple A rated corporate bond, this again you can get it from Bloomberg or RBI or various sites. So it is 9.70, so that has been taken as a proper estimate for Dabbar. Then we have to take a post tax cost of debt because you know that interest is a deductible expenditure for tax calculations. So we save on tax when we calculated interest, so we have calculated post tax cost of debt which comes to 7.76, we have used the tax rate of 20 percent which is there in which was estimated from that PNL sheet. So now we know both, we know cost of equity and we also know cost of debt, with this we can calculate weighted average cost of capital. You can look at the equity and debt calculation, these are the actuals for March 12, so the same mix is assumed to continue. Now it may also happen that company repays the debt in future, then that will affect the cost of debt, but for the sake of simplicity we have assumed that company will continue with the same weightages. So now the weighted average cost of capital is calculated, so equity and debt is assumed to have remain in the same proportion. We know that the cost of equity is 11.46, the cost of debt is 9.7, so we get 11.13 as the weighted average cost of capital. Up to this is it clear? Now before going for DCF calculations, let us also look at the financial ratios. Since we have already estimated the figures for all these years, we can calculate the estimated ratios, you can look at the ratios which are calculated for the company. We have current ratio of 1.26, 1.05, 1.12 and so on. I hope you know the formulas now, I do not have to repeat. So what is the formula of current ratio? Do you remember? Yeah, I think all of you know it, it is C A upon C L. So C A, C L figures are estimated, so the same figures are used for this thing, right now in this sheet we are not giving estimates, we are taking the past that is from 7 to 11. These are exactly not useful for estimate, not all the ratios are useful for estimating, but it gives you some idea about the company, is it stable, how are the trends. So you can see that current ratio is reasonably good, it is more than 1. It has remained reasonably constant in a range, in 2008 it had gone down to 0.98. Now it is quite healthy, it is 1.26, same way quick ratio is also quite good, inventory turnover, data turnover, various ratios have been calculated, including R O I, R O E. In our earlier sessions, we have done number of cases, so I am not repeating the same. I hope you can calculate the figures, but please calculate and check with whether they are matching with these figures. Now let us go to calculation of DCF, the discounted cash flow method as it is called. So the idea of DCF is, we will look at the free cash flows with the company. Now what is free cash flow? So we know that EBDITA earning before interest depreciation and tax is taken as cash flow, from that we will reduce the taxes etcetera. We will also look at how much money gets blocked in non cash working capital items, particularly debtors and inventory, because they are business related. Here we are not looking at current liabilities, because anyway they need to be paid. So what is actually getting blocked in debtors and inventory is calculated and that is reduced, so because we want to look at the free cash flow. Then that available amount will be, we will use the growth rate to calculate the present value of the cash flow. We also calculate the terminal value at the end of 5 years. We can estimate for 5 years, future projections will be too much of an estimates. So we stop at 5 years and calculate the terminal value. So based on the value for this 5 years plus the terminal value we can get the DCF value. This is a very simplified model, we can even have more sophisticated models, but I have tried to make it a very simple and I request you to take real data and do it. So since this sheet is also shared with you, please put in your data and try to do it for your own company. Now we start with EBITDA, this EBITDA as you know was calculated from PNL, just we will go back. This is L23 from the PNL sheet. So PNL sheet we had this operating profit. For calculating the operating profit we had taken total income minus the expenditures like raw material, power that is without considering interest and depreciation. So we had this EBITDA figures of 717, 802 etcetera, they will be now useful. So for DCF calculation we start with EBITDA, we have also estimated the depreciation. So EBITDA minus depreciation gives me EBITDA. Now this is estimated EBITDA and depreciation also has been taken from the estimated figures. We have assumed a tax rate of 20 percent, about it is some 20.2. So whatever is the tax rate of March 11 has been continued. If you have some information about changes in tax rate you can incorporate, but right now we do not have any information. So we will assume that the rate will continue to be about 20 percent. So we get EBITDA estimated profit before interest and tax, which comes to 5.35. So I am sorry this is not before tax, this is after tax, but this is before interest. So we get EBITDA into 1 minus t, that is after tax EBITDA, of course it is hypothetical. Actually tax is to be paid only after payment of interest. But for calculating the DCF value we take EBITDA and reduce the tax. So we get EBITDA into 1 minus t, then we have taken the debtors figures. So you can see how it is calculated, it is L27 minus B27. So let us go to balance sheet. So this L27 is nothing but the projected figure of debtors for March 12 minus the projected figure of debtors for March 11. So we essentially look at increase in debtors, because when there is an increase in debtors to that tune the money gets blocked. So we are looking at how much is the incremental cash, which is blocked in debtors. Same thing is repeated in all these years. So increase in debtors is taken for every year. So for DCF we have taken this 23.89, 26.71 and so on, for inventory also same method. So we look at non-cash current assets, mainly debtors and inventory which are required for business and how much more cash is getting blocked up in these assets. Now we calculate the free cash flow to the firm FCFF as it is popularly known as. So free cash flow to the firm is C9 minus C12. So C9 was our EBIT into 1 minus T minus the total change in non-cash working capital items. So we get to have this 456.83. Now what does this FCFF convey to you? What do you get from this? So we have started with EBITDA, this 7.17. This is our estimated profit before depreciation. We have reduced depreciation to get profit before interest and tax. We have reduced tax rate, tax at a given rate. So it is estimated that firm will have 535 of EBIT available. We also deduct debtors and inventories. So we get free cash flow from the firm which is 456. I have reduced depreciation, it is assumed that that much amount of cash is to be set aside to replenish fixed assets. So that has been taken aside. So 456 becomes March 12 FCFF, same way the calculation is done for future years. For terminal value, the calculation is slightly different. So let us look at that. Now once the growth of 5 years is taken, we go for the stable growth rate. So we can see that for 2017, we look at EBITDA, the calculation up to EBIT, change of debtors and all is same. So we also get free cash flow for 2017 onwards. It is assumed that 2017 and all the years coming, it is going to remain constant. So only difference here is when this 1166 that is sales was estimated, we will go to P&L figures for more clarity. So this particular sale was estimated and up to 2017. Only difference is we are going to apply a different growth rate for 2017 figures. So up to FCFF it is same. So the calculation is done for 1 to 5 years and for the sixth year, assuming that it is going to continue. Now the cost of capital, we had worked it out in the WACC calculation. So 11.13 is a weighted average cost of capital, keep in mind. This is not just for equity or debt, this is the weighted average cost for the company. Growth rate, you know that we estimated CMI growth rate of 11.8 for first 5 years and perpetual growth rate is taken at 4%. Why only 4%? We cannot take a very high weight at that time. We go by a little modest calculation. So normally a perpetual growth rate is taken only at 4 to 5% which is much less than the current growth rate of 11.8%. Now we have calculated the present value of FCFF. So you can look at the formula. It is C16. This C16 is nothing but free cash flow to the firm which we had calculated divided by 1 plus C19. So we have discounted it at the cost of capital. I hope you know the concept of present value. Therein again if you do not know it, please look at the financial management textbooks. So the idea is to know the current value of the cash flow. So the cash flow at the end of year 1 is going to be 456. We discount it. So in the first year, we are getting the same figure. In the second year, you can see we will get lesser figure. So we have got 460. In the next year, it is 464 and so on. Why it is reduced? Because we are going to receive money after one year. The cost of capital for us is 11.13. So we discount the cash flow at our cost of capital. That is why it is divided by 1 plus D19 that is cost of capital. And then raise to D18, D18 is a period. So it is for 0, 1, 2, 3 and 4. So no discounting applies to period 0. Period 0 is the first year of estimate and in the respect coming years, the discounting has been done up to 472. Now look at the value, current value calculation which is slightly different. In the last year, 7.7132 is calculated. So this is not for 2017, it is for all the remaining years. So look at the formula, it is H16 that is FCFF is the base multiplied by 1 plus H20. Now what is H20? That is a perpetual growth rate which is assumed at 4 percent. So we assume that this cash flow of 8 to 8 is going to now perpetually grow at 4 percent. So H16 into 1 plus H20, this is divided by into bracket H19 minus H20. So what is H19? So cost of capital is 11.13 and perpetual growth rate is assumed to be 4 percent. So H19 minus H20 into 1 plus H19, so it is at raise to H18. So since this is in period 5, whatever the value is will be discounted as if it is received at the end of 50 year. Have a look at how perpetual growth value is calculated, it is H16 into 1 plus H20 divided by H19 minus 20. So 19 is the cost of capital minus 4 percent, otherwise in all earlier years we only divided it by G19, C19 whatever that is we divided it by 11.18, here it is a difference between cost of capital minus growth rate, so our cost of capital is 11.13 minus 4. So this 8.28 divided by 11 minus 4 that is divided by 7 about that will be the present value, the value terminal value and then of course it is discounted because it is at the end of 5 years, so its present value is calculated. So it comes to 7137, please look at the download this sheet and try to study it more carefully. So we get the total now which is 9456 from this, this is the value for the whole firm, this is not the value of equity, we are basically interested in knowing the value of equity. So we have calculated the value for the whole firm which is 4596 minus the outstanding debt, if you look to at the balance sheet you will realize that the total outstanding debt as of today is 257. So now from 9456 257 is deducted, so we get 9199 which is the equity value, so this is the value to the owners of the firm. So 9199 almost 9200 is the in crores of course is the value of the firm, the total of all cash flows discounted. So this is the future value, we have divided it by the number of shares, so if you look at the balance sheet you will get the outstanding number of shares which is 178. So 9199 upon 174 we get 52.82 which is the future value of this share. So this is the DCF value as it is popularly known as discounted cash flow value of share comes to 52 rupees. This can be compared with the market value. So let us look at the market values, we had done the beta calculation. So we know that estimated the market value at that time was around 111. So now we look at our DCF values and decide whether the company is overvalued or undervalued and based on that take our investment decisions. So now the value is to 52.82, I hope it is clear to you how DCF is calculated. So we will stop here and go to next some. Now let us discuss our last case, this is a very interesting case wherein we are going to compare two big multinationals, Pfizer and Merck. You must have heard that both these companies are very big pharma companies, both are US based. We have studied various ratios for what the ratios are used, I hope you know that one of the very important advantage of ratios is they can be used for comparison. So if you are given the data of two companies, you can calculate the ratios and compare the performance of the two companies. Now here one thing you should keep in mind that there could be differences in the accounting policies of the company. So before we compare, we need to look at the accounting policies, if there are any differences we need to adjust for the differences and then do the comparison. In this case study, we have tried to look at the differences, adjusted the figures and then done the comparison, which is very difficult to explain everything in the form of a lecture, but I will again request you to download the necessary sheets. So they have been provided in the web course, so you can download and actually look at what were the differences and how they have been adjusted. Let us try to discuss it now. So this is a case study on comparison, but wherein accounting policies are also considered. So if you do not consider this, then it becomes not very meaningful comparison, because they might have used different assumptions, they might have used different methods of depreciation, they might have used different methods of inventory valuation. So we need to equate the methods, make the necessary adjustments in one of the companies, so that same policies are there for both the companies and then the data becomes comparable. So this is some basic information about Pfizer, so you might be knowing that Pfizer INC is the largest American multinational pharma company based in New York, some information about their date basis, manufacturing basis, research and so on. Then Merck is also an American company, one of the largest pharma companies in the world. Their headquarters are in White House station in New Jersey, it is established in 1891. So one thing we should look at is, we should look at compare the peers which are of reasonably the same size. You cannot compare, take a very big company and compare a very small company. Then that ratio, comparison of ratios would not be that much useful. So we have taken companies of reasonable sizes. So if you want to analyze a particular company, please look at its peer in the same industry and of reasonably same size. Then calculate the ratios, then we will know that our target company how it has fared with its peers. Now let us look at the accounting analysis. This is a process of evaluating to what extent companies accounting reflects the economic reality. So you can read this, I would not go into its detail right now. So what was done was, if there are any differences in the accounting policy, they were identified. I hope you know that if you look, take annual report of the company, they give a detailed list of accounting policies. So we need to read both the accounting policies carefully and find out what are the differences. So here these differences were found. So you can look Pfizer, the first item is given as expensing versus capitalizing. So by expensing what we mean is, if certain expenditure, particularly R&D expenditure is incurred, is it written up to P&L account or is it capitalized and so on. So you can look first IP, R&D because R&D is a very big expenditure in pharma sector. So we need to look at it very carefully. So the differences are given as to what policies are followed by Pfizer and by Mer. So first was expenditure versus capitalizing, next was acquisition related because during the last few years they have acquired new companies, next is foreign currency translation, revenue recognition, depreciation and amortization, inventories, investments, pension and post retirement benefits. So this is not an exhaustive list, an attempt has been made to look at the important items. So as I said capitalizing or expensing of R&D becomes a very important item, revenue recognition, investment. So important items have been identified so that the policies in those items can be compared. So certain differences were noted which you can read carefully. So capitalizing versus expensing, you can see Mer capitalizes the cost related to development of software intended for internal use whereas Pfizer does not capitalize so they write off to P&L. So you can visualize that what will happen is Pfizer's profit will get reduced, Merck's profits will be higher in the first year in which the expenditure are incurred. Suppose both the companies incur the same amount on development of some internal software, that particular year Pfizer's profit will go down, Merck's profit will be higher. In the subsequent year when it is written off, the Merck's profit will be lower, the Pfizer's profit will be higher. So like this you can identify the differences and try to make the adjustments. Next is on inventory, you can see Merck uses LIFO that is last in first out method, Pfizer on the other hand uses average cost method. So there is a difference in inventory calculation. Like that various differences can be identified. If you know in India LIFO is not allowed. Company can either use FIFO or weighted average as per the Indian gap. In US they can use LIFO. So Merck is using LIFO whereas Pfizer is using average cost. So we have to identify the differences because of this and adjust for it. So like this the adjustments have been noted and based on this now let us go into calculation of ratios. Currently the intention is not to teach you the ratios. So I will not teach you exactly how the ratios are calculated, I hope you know it now. But more particularly look at how the adjustments are made and then the ratios are calculated. So now what we have done is, we have both Merck data and Pfizer data. We have decided to adjust the Merck data. So you can take any one company's data and adjust it so that both the company's policies are on par. So this is the balance sheet of Merck. So it is taken for last 10 years. Then balance sheet for income statement for Merck. Look at it carefully because adjustments have been made there. So this is the gross sales and so on. Now what has been done is because the R&D expenditure is adjusted there is some difference in the calculations. We have turned EBITDA, EBDITA as per Merck was 11650. It has been adjusted to account for those differences. So similarly various adjustments were made and here we have got the adjusted income statement for Merck. So please have a look at it carefully. You will have to go into each individual item to know exactly how the adjustments are made but I think it will be self-evident. So the philosophy is whatever are the Merck's policies which are not in tune with Pfizer, then the Merck's financial statements are adjusted so that they are comparable with Pfizer. So you can see there is some difference in un-amortized software cost which has been adjusted. Now here are the important ratios for the Merck. So ratios has been calculated for all these years. We will just look at 2010 the latest year for which it is done. Now I hope all of you know that current ratio is current assets upon current laboratories. So that calculation is simple but look at how the calculation is done before adjustment and after adjustment. So what is done in the table below is the adjusted ratios. So there were some changes in their current assets. After incorporating the changes the balance sheet figures have changed. So you can see it is B14 upon B77. So if you go to balance sheet, so if you are trying to look at current ratio it is B14 upon B77. So B14 was the adjusted current assets. So old current assets was 209064 before adjustment. Second one becomes 29128 divided by B74 which is the adjusted liabilities. So B77 sorry current liabilities. Current liabilities there were no adjustments so same figure can be taken. So here are the ratios. Now I am not looking at the Pfizer data though we can look at it. So we have not done any adjustment to Pfizer. You can do adjustment to any one of them. A few items in Pfizer have also been adjusted like inventory you can see is 8.07. Here the inventory turnover after adjustment is 8.16 and so on. So this is the data for Pfizer. This is the original balance sheet. This is the adjusted balance sheet. This is the adjusted income statement. Inflation rates were considered U.S. inflation rates. This you can download from the website and look at them for making the stock related adjustments. So we got the adjusted balance sheet and the ratios. Here in again I am not explaining you the calculation of ratio. They have been dealt with in the earlier sessions. We are just looking at ratios before adjustment and after adjustment is it fine. Now the purpose of this particular case study is to acquaint you with the fact that accounting policies are different. It is necessary to adjust the financial statements for such policies and then the comparison is possible. Now let us look at how does the charts look like. So here are the few charts. So you can look at gross profit margin before adjustment after adjustment for Merck. We have done adjustment in Merck to match its policies with Pfizer. So Pfizer has not been changed. So here is how the graph will look like for Merck before adjustment is nullified now. We are only looking at this before adjustment you can see in red but we need to compare the one which is in green. So we are comparing with the blue and green which is the after adjusted figures. It is not a significant very big difference but there are some differences in the ratios. Same way here ROE has been calculated and compared for Merck before and after adjustment. Inventory turnover ratio has been calculated where you can see there is some difference. What is the formula for inventory turnover ratio? I think you are right it is a ratio of turnover to inventory. So sales upon inventory is tries to measure how effectively inventory is managed. So here you can see the ratio is similar in 2010 but there were differences in 2001. Actually the Pfizer turnover ratio was much better earlier whereas in Merck it was very low then the Merck improved it went above Pfizer it went almost to 12 in 2005. But post 2008 that is after the recession the ratio has fallen for both the companies you can see the fall is severe and now the ratio for both the companies is almost the same. So Pfizer has actually improved from 6 to 8 both have fallen and after 2009 there is some recovery they are almost having a similar ratio. So fairly similar type of ratio now for ROI you can have some this is about the gross margin before tax I think we will start with current ratio. So these are the current ratios you can see it was always higher for Pfizer and it has remained pretty similar it came down in 2008 now it has again increased it has usually remain lower for Merck it slightly increased in 2009 now it is more or less stable. This is about their GP margin you can look at the GP margins there were pretty high margins in 2001 about 0.9 percent was the margin at that time and the margin was Pfizer was higher initially the margin of Merck increased Pfizer went down then they were almost similar then again Pfizer went down post 2008 both have gone down. So it is about 0.7 minutes almost similar now in 2010 for both the companies. Next is return on equity this is fair very interesting it was almost same about 2001 when it was about 0.4 so 40 percent very healthy return then it went down for Pfizer again improved it also went down for Merck it nearly matched in 2006 post 2007 it improved significantly for Merck but after 2008 recession it has gone down Pfizer has remained almost same. So now it is actually slight much lesser for Merck in 2010. We also looked at inventory turnover ratio which we have already discussed we can look at the comparative figures if you want to look at the numbers here are the graphs before adjustment we have already looked at graphs after adjustment which are more important and this is some key statistics for the company. So we stop here about this case so the point which you should take home is look at the accounting policies if there are any major differences now in this case both the companies were operating in the same gap regime so both are American companies so there were not two big differences but I have taken it as a case study because you can understand how the differences need to be analyzed adjusted and then comparisons be made. If you take one Indian company and one American company there will be fast differences those differences will have to be adjusted and then ratios calculated and compared. So now so whenever you compare the two companies keep in mind about accounting adjustment keeping in mind their sizes and they should be also from the almost similar type of industry. So with this we will stop our discussion on ratios we have seen that ratio is a relationship between the two figures one from P and L one from income statement or from the same figures and so on and calculation of ratio really gives us much better insight into the financial statement the data from the financial statement can be far better understood if you calculate the relevant ratios and today we have seen that we also need to make adjustments before the ratio calculation these ratios are also useful for calculating the value of the company. We have not gone too much detail into the value that is a area of corporate finance but we have seen one case wherein we can we have calculated DCF that is discounted cash flow valuation of the company. Thank you so much. So we will stop here.