Capital Structure Ratios
1. Equity Ratio
Formula:
Equity Ratio = Shareholders’ Equity / Total Assets
Calculations:
2022: 1,17,098.46 / 2,85,445.6 = 0.41
2023: 1,03,082.1 / 2,88,021.74 = 0.36
2024: 1,37,693.65 / 2,45,634.06 = 0.56
2. Debt Ratio
Formula:
Debt Ratio = Total Debt / Total Assets
Calculations:
2022: 65,698.01 / 2,85,445.6 = 0.23
2023: 84,893.05 / 2,88,021.74 = 0.29
2024: 40,557.43 / 2,45,634.06 = 0.16
3. Debt to Equity Ratio
Formula:
Debt to Equity Ratio = Total Debt / Shareholders’ Equity
Calculations:
2022: 65,698.01 / 1,17,098.46 = 0.56
2023: 84,893.05 / 1,03,082.1 = 0.82
2024: 40,557.43 / 1,37,693.65 = 0.29
4. Debt to Total Assets Ratio
Formula:
Debt to Total Assets Ratio = Total Debt / Total Assets
Calculations:
2022: 65,698.01 / 2,85,445.6 = 0.23
2023: 84,893.05 / 2,88,021.74 = 0.29
2024: 40,557.43 / 2,45,634.06 = 0.16
5. Proprietary Ratio
Formula:
Proprietary Ratio = Shareholders’ Equity / Total Assets
Calculations:
2022: 1,17,098.46 / 2,85,445.6 = 0.41
2023: 1,03,082.1 / 2,88,021.74 = 0.36
2024: 1,37,693.65 / 2,45,634.06 = 0.56
Interpretation :
The Equity Ratio declined from 0.41 in 2022 to 0.36 in 2023, before increasing to 0.56 in
2024. This indicates that while reliance on debt increased in 2023, the company strengthened
its equity position in 2024.
The Debt Ratio followed an opposite trend, rising from 0.23 in 2022 to 0.29 in 2023, then
falling significantly to 0.16 in 2024. This suggests that Tata Steel initially increased its debt
financing but later reduced it, improving financial stability.
The Debt to Equity Ratio surged from 0.56 in 2022 to 0.82 in 2023, reflecting higher financial
risk, before dropping sharply to 0.29 in 2024, indicating a shift toward a more conservative
financing structure.
The Proprietary Ratio, which measures shareholders’ funds relative to total assets, mirrored
the equity ratio trend, declining in 2023 but rising to 0.56 in 2024, reinforcing the improved
financial position.
Coverage Ratios
6. Debt Service Coverage Ratio
Formula:
Debt Service Coverage Ratio = EBIT / Interest Payable
Calculations:
2022: 50,360 / 5,462.2 = 9.22
2023: 19,165 / 6,298.7 = 3.04
2024: 4,313 / 8,144.58 = 0.53
7. Interest Coverage Ratio
Formula:
Interest Coverage Ratio = EBIT / Interest Payable
Calculations:
2022: 50,360 / 5,462.2 = 9.22
2023: 19,165 / 6,298.7 = 3.04
2024: 4,313 / 8,144.58 = 0.53
8. Fixed Charges Coverage Ratio
Formula:
Fixed Charges Coverage Ratio = (EBIT + Fixed Charges) / Fixed Charges
Calculations:
2022: (50,360 + 5,462.2) / 5,462.2 = 10.22
2023: (19,165 + 6,880.51) / 6,880.51 = 3.79
2024: (4,313 + 8,644.58) / 8,644.58 = 1.50
Interpretation :
The Debt Service Coverage Ratio (DSCR) significantly weakened over the years, falling from
9.22 in 2022 to 3.04 in 2023, and further to 0.53 in 2024. This indicates increasing difficulty in
covering debt obligations.
A similar trend was observed in the Interest Coverage Ratio, which declined from 9.22 in 2022
to 3.04 in 2023, and dropped critically to 0.53 in 2024, suggesting reduced profitability and
potential liquidity concerns.
The Fixed Charges Coverage Ratio, which includes fixed financial obligations, followed the
same pattern, falling from 10.22 in 2022 to 3.79 in 2023, and further to 1.50 in 2024,
highlighting growing financial strain.
Activity Ratios
9. Total Asset Turnover Ratio
Formula:
Total Asset Turnover Ratio = Net Sales / Total Assets
Calculations:
2022: 2,43,959 / 2,85,445.6 = 0.85
2023: 2,43,353 / 2,88,021.74 = 0.84
2024: 2,29,171 / 2,45,634.06 = 0.93
10. Fixed Assets Turnover Ratio
Formula:
Fixed Assets Turnover Ratio = Net Sales / Fixed Assets
Calculations:
2022: 2,43,959 / 1,18,696.74 = 2.06
2023: 2,43,353 / 1,18,696.74 = 2.05
2024: 2,29,171 / 2,08,868.92 = 1.10
11. Capital Turnover Ratio
Formula:
Capital Turnover Ratio = Net Sales / Capital Employed
Calculations:
2022: 2,43,959 / 1,94,556.17 = 1.25
2023: 2,43,353 / 1,90,068.26 = 1.28
2024: 2,29,171 / 1,47,230.58 = 1.56
12. Working Capital Turnover Ratio
Formula:
Working Capital Turnover Ratio = Net Sales / Working Capital
Calculations:
2022: 2,43,959 / 1,859.18 = 131.22
2023: 2,43,353 / -10,689 = -22.77
2024: 2,29,171 / -61,638.34 = -3.72
13. Inventory Turnover Ratio
Formula:
Inventory Turnover Ratio = COGS / Inventory
Calculations:
2022: 75,763.7 / 48,824.39 = 1.55
2023: 54,012 / 54,415.33 = 0.99
2024: 10,80,580.15 / 24,547.2 = 44.02
14. Debtors Turnover Ratio
Formula:
Debtors Turnover Ratio = Net Sales / Trade Receivables
Calculations:
2022: 2,43,959 / 9,539.84 = 25.57
2023: 2,43,353 / 8,257.24 = 29.47
2024: 2,29,171 / 1,606.14 = 142.68
Interpretation :
The Total Asset Turnover Ratio remained stable between 0.85 in 2022 and 0.84 in 2023,
before improving slightly to 0.93 in 2024, indicating better asset utilization.
However, the Fixed Assets Turnover Ratio dropped sharply from 2.06 in 2022 to 2.05 in
2023, and further to 1.10 in 2024, signaling underutilization of fixed assets.
The Capital Turnover Ratio, which measures efficiency in capital usage, showed a steady
increase from 1.25 in 2022 to 1.28 in 2023, reaching 1.56 in 2024, suggesting improved
efficiency in revenue generation.
The Inventory Turnover Ratio saw a massive surge from 1.55 in 2022 to 0.99 in 2023,
skyrocketing to 44.02 in 2024. This suggests significantly improved inventory management,
possibly due to higher sales or lower stock levels.
A notable improvement was seen in the Debtors Turnover Ratio, which increased from 25.57
in 2022 to 29.47 in 2023, before spiking to 142.68 in 2024. This indicates a significant
improvement in credit collection and receivables management.
Profitability Ratios (Sales Based)
15. Gross Profit Ratio
Formula:
Gross Profit Ratio = (Gross Profit / Net Sales) × 100
Calculations:
2022: (1,68,195.3 / 2,43,959) × 100 = 68.94%
2023: (1,89,314 / 2,43,353) × 100 = 77.79%
2024: (1,82,522 / 2,29,171) × 100 = 79.64%
16. Net Profit Ratio
Formula:
Net Profit Ratio = (Net Profit / Net Sales) × 100
Calculations:
2022: (41,749.32 / 2,43,959) × 100 = 17.11%
2023: (8,075 / 2,43,353) × 100 = 3.32%
2024: (-4,910 / 2,29,171) × 100 = -2.14%
17. Operating Profit Ratio
Formula:
Operating Profit Ratio = (Operating Profit / Net Sales) × 100
Calculations:
2022: (40,479.46 / 2,43,959) × 100 = 16.59%
2023: (12,043 / 2,43,353) × 100 = 4.95%
2024: (-8,219 / 2,29,171) × 100 = -3.59%
Interpretation :
The Gross Profit Ratio showed an increasing trend, rising from 68.94% in 2022 to 77.79% in
2023, and further to 79.64% in 2024. This suggests that Tata Steel has improved cost control
and profitability at the gross margin level.
However, the Net Profit Ratio dropped drastically from 17.11% in 2022 to 3.32% in 2023,
turning negative at -2.14% in 2024. This indicates that rising expenses or declining revenues
have severely impacted overall profitability.
A similar pattern was seen in the Operating Profit Ratio, which fell from 16.59% in 2022 to
4.95% in 2023, and turned negative at -3.59% in 2024, highlighting operational inefficiencies.
Profitability Ratios (Returns Based)
18. Return on Investment (ROI)
Formula:
Return on Investment = Net Income / Total Investments
Calculations:
2022: 41,749.32 / 14,234.05 = 2.93
2023: 8,075 / 5,176.98 = 1.56
2024: -4,910 / 65,498.27 = -0.07
19. Return on Assets (ROA)
Formula:
Return on Assets = Net Income / Total Assets
Calculations:
2022: 41,749.32 / 2,85,445.6 = 0.15
2023: 8,075 / 2,88,021.74 = 0.03
2024: -4,910 / 2,45,634.06 = -0.02
20. Return on Equity (ROE)
Formula:
Return on Equity = Net Income / Shareholders’ Equity
Calculations:
2022: 41,749.32 / 1,17,098.46 = 0.36
2023: 8,075 / 1,03,082.1 = 0.08
2024: -4,910 / 1,37,693.65 = -0.04
21. Return on Capital Employed (ROCE)
Formula:
Return on Capital Employed = EBIT / Capital Employed
Calculations:
2022: 50,360 / 1,94,556.17 = 0.26
2023: 19,165 / 1,90,068.26 = 0.10
2024: 4,313 / 1,47,230.58 = 0.03
Interpretation :
The Return on Investment (ROI) dropped significantly from 2.93 in 2022 to 1.56 in 2023,
reaching -0.07 in 2024, indicating that investments are not generating adequate returns.
The Return on Assets (ROA) also followed a declining trend, falling from 0.15 in 2022 to 0.03
in 2023, and turning negative at -0.02 in 2024, showing inefficient asset utilization.
Similarly, the Return on Equity (ROE) declined sharply from 0.36 in 2022 to 0.08 in 2023, and
further to -0.04 in 2024, reflecting poor earnings performance and lower returns for
shareholders.
The Return on Capital Employed (ROCE) also decreased from 0.26 in 2022 to 0.10 in 2023,
and fell further to 0.03 in 2024, suggesting declining efficiency in capital utilization.
Profitability Ratios (share Based)
22. Earnings per Share (EPS)
Formula:
Earnings per Share = Net Income / Outstanding Shares
Calculations:
2022: 41,749.32 / 12,48,35,31,541 = 33.44
2023: 8,075 / 12,48,35,31,541 = 6.5
2024: -4,910 / 12,48,35,31,541 = -3.9
23. Dividend Payout Ratio
Formula:
Dividend Payout Ratio = (Dividend per Share / Earnings per Share) × 100
Calculations:
2022: (51 / 33.44) × 100 = 152.5%
2023: (3.6 / 6.5) × 100 = 55.38%
2024: (3.6 / -3.9) × 100 = -92.30%
24. Price-Earnings Ratio (P/E)
Formula:
Price-Earnings Ratio = Market Price Per Share / Earnings per Share
Calculations:
2022: 130.72 / 33.44 = 3.9
2023: 104.5 / 6.5 = 16.07
2024: 155.85 / -3.9 = -39.96
25. Price to Book Ratio (P/B)
Formula:
Price to Book Ratio = Market Price Per Share / Book Value Per Share
Calculations:
2022: 130.72 / 95.88 = 1.36
2023: 104.5 / 84.42 = 1.24
2024: 155.85 / 110.26 = 1.41
Interpretation :
The Earnings per Share (EPS) fell drastically from 33.44 in 2022 to 6.5 in 2023, and turned
negative at -3.9 in 2024, indicating losses for shareholders.
The Dividend Payout Ratio, which was excessively high at 152.5% in 2022, dropped to
55.38% in 2023, before turning negative at -92.30% in 2024, suggesting financial stress and
possible non-payment of dividends.
The Price-Earnings Ratio (P/E) followed a similar trend, increasing from 3.9 in 2022 to 16.07
in 2023, but turning negative at -39.96 in 2024, reflecting negative earnings and a declining
market perception.
Despite the losses, the Price to Book Ratio (P/B) improved from 1.36 in 2022 to 1.24 in 2023,
and further to 1.41 in 2024, suggesting improved market valuation of the company’s book value.
