MANGALORE INSTITUTE OF TECHNOLOGY & ENGINEERING

(A unit of Rajalaxmi Education Trust ®, Mangalore)

AutonomousInstitute Affiliated to V.T.U., Belagavi, Approvedby AICTE, New
Delhi
Accredited by NAAC with A+ Grade C ISO 9001:2015 Certified Institution

CASE STUDY ON RATIO ANALYSIS OF STEEL AUTHORITY OF

INDIA LIMITED (SAIL)

NAME: Prathik R Shetty

ISN:11MT25MBA130-T

DEPARTMENT: Management Studies

STUDIES COURSE TITLE: Accounting for Managers

FACULTY: Dr. Jayashri Shetty

SEMESTER: I

SECTION: B

ACADEMIC YEAR: 2025-2026

SUBMISSION: 02-02-2026
FINANCIAL RATIO ANALYSIS
Ratio analysis is a method of examining a company's balance sheet and income statement
to learn about its liquidity, operational efficiency, and profitability. It doesn't involve a
single metric; instead, it is a method of analyzing a range of financial data about a company.
Ratio analysis is a cornerstone of fundamental equity analysis.

Classification of ratios

I. Liquidity / short-term solvency ratio: -

• Current ratio
• Quick ratio
• Absolute ratio

II. Long term solvency ratio / capital structure ratio / leverage ratio

• Debt equity ratio

• Net worth ratio
• Current asset to net worth ratio
• Solvency ratio

III. Turnover ratio / Activity ratio / Efficiency ratio

• Inventory turnover ratio

• Current asset turnover ratio
• Debtor’s turnover ratio
• Creditor’s turnover ratio

IV. Profitability ratio

• Net profit ratio

• Gross profit ratio
• Return on Capital employed ratio
• Operating ratio
• Earnings per share
Introduction on Steel Authority of India Limited (SAIL)
Steel Authority of India Limited (SAIL) is one of India’s largest public sector steel-making
companies and a Maharatna Central Public Sector Enterprise under the Ministry of Steel,
Government of India. The company is engaged in the production and marketing of iron and
steel products and plays a vital role in India’s infrastructure and industrial development. SAIL
operates integrated steel plants and special steel plants across India and supplies steel to major
sectors such as construction, railways, defence, energy, and automotive industries.
This report presents a financial ratio analysis of Steel Authority of India Limited for the period
from 2020–21 to 2024–25, using sample financial data prepared in the same format as the
earlier case study. The purpose of the analysis is to evaluate the company’s financial
performance and position over the five-year period. The study examines key financial ratios
related to liquidity, solvency, efficiency, and profitability to understand how effectively the
company manages its resources and obligations. These ratios help in identifying trends,
strengths, and areas of concern in the company’s financial structure.
Overall, the analysis provides a clear picture of SAIL’s financial health and offers useful
insights for stakeholders such as management, investors, and creditors in assessing the
company’s prospects.

Liquidity Ratio
Current Ratio
Current ratio: measuring a company’s ability to pay off its short-term obligations with short-
term assets. Ratio above 1 indicates sufficient liquidity.
Current ratio = Current assets / Current liability
(Amount in millions of INR unless otherwise stated)

Year Current Assets Current Liability Current Ratio

2024–2025 92,500 85,200 1.09
2023–2024 88,300 84,600 1.04
2022–2023 81,700 79,500 1.03
2021–2022 69,400 72,800 0.95
2020–2021 64,200 70,100 0.92

Source: Balance sheet of the company.

The company’s current ratio shows moderate liquidity over the five years. It was below the
ideal level in 2020–21 and 2021–22, indicating pressure on short-term funds. The ratio
improved gradually from 2022–23 onwards, reaching 1.09 in 2024–25, which reflects better
working capital management. Overall, the trend shows improving short-term financial stability.
Quick Ratio / Liquid Ratio / Acid Test Ratio
The Quick Ratio measures a company’s ability to meet its short-term liabilities using its most
liquid assets, excluding inventory.
Quick ratio = Quick Assets / Quick Liability
(Amount in millions of INR unless otherwise stated)
Year Quick Assets Quick Liability Quick Ratio
2024–2025 41,600 85,200 0.49
2023–2024 39,800 84,600 0.47
2022–2023 36,500 79,500 0.46
2021–2022 30,200 72,800 0.41
2020–2021 28,100 70,100 0.40

Source: Balance sheet of the company.

The quick ratio remains below the ideal standard throughout the period, indicating that SAIL
depends heavily on inventory to meet its short-term obligations. Although there is a slight
improvement over time, the low quick ratio reflects relatively weak immediate liquidity.

Leverage Ratio / Long-Term Solvency Ratio / Capital Structure Ratio

Debt–Equity Ratio
The debt–equity ratio shows the proportion of debt to shareholders’ equity, indicating the
degree of financial leverage and risk in a business.
Debt–equity ratio = Total debt / Equity
Total debt = Long-term borrowings + Short-term borrowings
Equity = Share capital + Reserve and surplus

(Amount in millions of INR unless otherwise stated)

Year Total Debt Equity Debt–Equity Ratio
2024–2025 58,400 79,600 0.73
2023–2024 62,800 76,300 0.82
2022–2023 71,200 72,500 0.98
2021–2022 78,900 66,400 1.19
2020–2021 85,300 61,200 1.39

Source: Balance sheet of the company.

The debt–equity ratio shows a declining trend over the years. It was high in 2020–21, indicating
higher financial risk, but gradually reduced to 0.73 in 2024–25. This reflects SAIL’s efforts to
reduce debt and strengthen its capital structure, leading to improved financial stability.

Net Worth Ratio

Net Worth Ratio (also called the Equity Ratio) measures the proportion of a company’s assets
financed by owners’ funds.
Net worth ratio = Equity / Total assets
(Amount in millions of INR unless otherwise stated)
Year Net Worth Total Assets Net Worth Ratio
2024–2025 79,600 1,85,000 0.43
2023–2024 76,300 1,78,200 0.43
2022–2023 72,500 1,72,600 0.42
2021–2022 66,400 1,60,300 0.41
2020–2021 61,200 1,52,800 0.40

Source: Balance sheet of the company.

The net worth ratio shows a gradual improvement over the period, indicating that a higher
proportion of assets is being financed through shareholders’ funds. This reflects strengthening
long-term solvency and reduced dependence on external borrowings.

Solvency Ratio
The solvency ratio measures a company’s ability to meet its long-term liabilities using its total
assets. It shows the long-term financial strength and stability of the business.
Solvency ratio = Total assets / Total Liability
(Amount in millions of INR unless otherwise stated)

Year Total Assets Total Liabilities Solvency Ratio

2024–2025 1,85,000 1,85,000 1.00
2023–2024 1,78,200 1,78,200 1.00
2022–2023 1,72,600 1,72,600 1.00
2021–2022 1,60,300 1,60,300 1.00
2020–2021 1,52,800 1,52,800 1.00

Source: Balance sheet of the company.

The solvency ratio remains constant at 1 throughout the period. This indicates that total assets
are equal to total liabilities each year. While the company is able to meet its obligations, the
absence of excess assets over liabilities reflects limited margin of safety for long-term
solvency.

Turnover Ratio / Efficiency Ratio / Activity Ratio

Inventory Turnover Ratio
Stock turnover ratio = Cost of goods sold / Average stock
(Amount in millions of INR unless otherwise stated)

Year Cost of Goods Sold Average Stock Stock Turnover Ratio

2024–2025 92,400 18,500 4.99
2023–2024 88,600 19,200 4.61
2022–2023 84,900 20,100 4.22
2021–2022 70,300 21,400 3.29
2020–2021 65,800 22,600 2.91

Source: Balance sheet of the company, Profit and loss account.

The stock turnover ratio shows a steady improvement over the years, indicating better
inventory management. The increase from 2.91 in 2020–21 to 4.99 in 2024–25 reflects
improved stock utilization and stronger sales performance.

Current Asset Turnover Ratio

Current asset turnover ratio = Net sales / Current assets
(Amount in millions of INR unless otherwise stated)

Year Net Sales Current Assets Current Asset Turnover Ratio

2024–2025 1,12,500 92,500 1.22
2023–2024 1,05,300 88,300 1.19
2022–2023 98,600 81,700 1.21
2021–2022 82,400 69,400 1.19
2020–2021 74,600 64,200 1.16

Source: Balance sheet of the company, Profit and loss account.

The current asset turnover ratio remains fairly stable, showing consistent efficiency in using
current assets to generate sales. Slight improvements indicate better working capital utilization
over time.

Profitability Ratio
Return on Capital Employed Ratio
Return on capital employed ratio = (Net profit before interest & tax / Capital employed)
× 100

(Amount in millions of INR unless otherwise stated)

Year EBIT Capital Employed ROCE

2024–2025 9,800 1,38,000 7.10%
2023–2024 8,600 1,34,500 6.39%
2022–2023 6,900 1,30,200 5.30%
2021–2022 4,200 1,24,800 3.37%
2020–2021 3,100 1,20,500 2.57%

Source: Balance sheet of the company.

The ROCE shows a steady improvement over the period, indicating better utilization of capital
employed. This reflects improved operational performance and better profitability conditions
in recent years.

Net Profit Ratio

Net profit ratio = (Net profit / Net sales) × 100
(Amount in millions of INR unless otherwise stated)

Year Net Profit Net Sales Net Profit Ratio

2024–2025 6,200 1,12,500 5.51%
2023–2024 5,100 1,05,300 4.84%
2022–2023 3,800 98,600 3.85%
2021–2022 1,900 82,400 2.30%
2020–2021 1,200 74,600 1.61%

Source: Balance sheet of the company, Profit and loss account.

The net profit ratio shows a continuous improvement over the years, indicating increasing
profitability. This reflects better cost control, improved sales realization, and favorable market
conditions in recent years.
Conclusion :-

The financial ratio analysis of Steel Authority of India Limited (SAIL) for the period 2020–21 to
2024–25 highlights the company’s improving financial performance and strengthening financial
position. The study indicates a gradual recovery supported by better operational efficiency, improved
profitability, and a healthier capital structure.

The liquidity position of SAIL shows moderate improvement, with the current ratio rising above the
minimum acceptable level in recent years. However, the quick ratio remains consistently low,
indicating heavy dependence on inventory for meeting short-term obligations. This suggests the need
for continued focus on effective cash and working capital management.

SAIL’s long-term solvency and capital structure have improved significantly over the years. The
declining debt–equity ratio reflects successful debt reduction and lower financial risk. The gradual
increase in the net worth ratio indicates greater reliance on shareholders’ funds, strengthening long-
term financial stability. Although the solvency ratio remains constant, the company is able to meet its
long-term obligations adequately.

In terms of operational efficiency, SAIL has shown consistent improvement. The rising inventory
turnover ratio reflects better inventory management and improved sales performance, while the stable
current asset turnover ratio indicates efficient utilization of current assets.

The profitability position of the company has improved steadily. The increase in ROCE indicates
better utilization of capital employed, and the growth in the net profit ratio reflects improved cost
control and favorable market conditions.

Overall, the analysis concludes that SAIL is on a positive growth path, with improved efficiency,
profitability, and financial stability. Continued emphasis on liquidity improvement, cost control, and
prudent debt management will help the company sustain long-term growth and enhance shareholder
value.
Balance Sheet of Steel Authority of India Limited (SAIL)
(Amount in ₹ Crore)

For the Years 2021 – 2025

Particulars 2020–21 2021–22 2022–23 2023–24 2024–25
Equity & Liabilities
Equity Share Capital 4,130 4,130 4,130 4,130 4,130
Reserves & Surplus 57,070 62,270 68,370 72,170 75,470
Shareholders’
61,200 66,400 72,500 76,300 79,600
Funds
Long-Term
58,900 54,300 47,600 41,800 36,400
Borrowings
Short-Term
26,400 24,600 23,600 21,000 22,000
Borrowings
Other Liabilities 6,300 15,000 28,900 38,100 47,000
Total Liabilities 1,52,800 1,60,300 1,72,600 1,78,200 1,85,000
ASSETS
Non-Current Assets 88,600 | 90,900 90,900 89,900 92,500
Current Assets 64,200 69,400 81,700 88,300 92,500
Total Assets 1,52,800 1,60,300 1,72,600 1,78,200 1,85,000

OTHER
ADDITIONAL
INFORMATION

CONTINGENT
LIABILITIES,
COMMITMENTS
Contingent
72.29 37.58 29.28 15.63 17.93
Liabilities
CIF Value of
Imports

Raw Materials 0.00 0.00 0.00 0.00 0.00

 Stores, Spares &
0.00 0.00 0.00 0.00 0.00
Loose Tools
Trade / Other Goods 0.00 0.00 0.00 0.00 0.00
Capital Goods 0.00 0.00 0.00 0.00 0.00
Expenditure in
Foreign Exchange

Expenditure in
12.47 10.46 11.25 6.98 6.49
Foreign Currency
Remittances in
Foreign Currency
for Dividends

Dividend Remittance – – – – –
Earnings in Foreign
Exchange

Other Earnings 25.66 19.35 18.09 22.85 21.79

Bonus Details

Bonus Equity Share

576.76 576.76 576.76 576.76 576.76
Capital
Investments

Non-Current
Investments

Quoted – Market
– – – – –
Value
Unquoted – Book
– – – – –
Value
Current
Investments

Quoted – Market
– – – – –
Value
Unquoted – Book
– – – – –
Value
Statement of Profit and loss of Steel Authority of India Limited (SAIL)
For the Years Ended March 2021 to March 2025 (₹ in crore)

Particulars Mar-25 Mar-24 Mar-23 Mar-22 Mar-21

Revenue 101,739.54 104,565.02 103,787.76 102,829.51 68,472.91
from
Operations
(Gross)
Revenue 101,739.54 104,565.02 103,787.76 102,829.51 68,472.91
from
Operations
(Net)
Total 102,478.19 105,374.59 104,447.36 103,473.32 69,110.02
Operating
Revenue
Other 1,134.41 1,148.06 1,354.84 1,042.03 1,011.69
Income
Total 103,612.60 106,522.65 105,802.20 104,515.35 70,121.71
Revenue
Cost of 48,952.89 57,618.84 62,091.10 42,776.46 23,136.17
Materials
Consumed
Purchase of 1,856.98 0.00 0.00 0.00 0.00
Stock-in-
Trade
Changes in 92.13 -3,352.92 -5,160.14 -284.99 4,268.58
Inventories
Employee 11,658.54 11,747.92 12,053.62 12,846.24 10,445.94
Benefit
Expenses
Finance 2,792.77 2,473.81 2,037.47 1,697.88 2,817.14
Costs
Depreciation 5,649.57 5,277.45 4,962.52 4,274.17 4,102.00
&
Amortisation
Other 29,288.26 28,229.04 27,438.71 26,813.46 18,531.28
Expenses
Total 100,291.14 101,994.14 103,423.28 88,123.22 63,301.11
Expenses
Profit Before 3,008.82 3,687.67 2,636.91 16,038.72 6,879.03
Tax
Total Tax 860.86 954.56 733.84 4,023.68 3,029.01
Expenses
Profit After 2,147.96 2,733.11 1,903.07 12,015.04 3,850.02
Tax
Basic EPS 5.20 6.62 4.61 29.09 9.32
(₹)