ICICI not good for the company and for

ICICI BANK LIMITED

 

ANALYSIS OF
EARNING PER SHARE

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Earning per share is proportion of company profit allocated
to each outstanding share of respected company, it is the indicator of company
profitability.  EPS of ICICI BANK is
calculated here by dividing banks net Income with its total number of
outstanding shares.

Here I have chosen ICICI BANK LIMITED as my company and
figured out the EPS of the company for last 10 year that is 2005-06 to
2015-016.

                                                    

YEAR

EPS

2015-16

16.75

2014-15

19.32

2013-14

84.99

2012-13

72.2

2011-12

56.11

2010-11

45.27

2009-10

36.14

2008-09

33.76

2007-08

32.19

2006-07

30.92

2005-06

32.49

 

 

 In 205-06 company EPS
proportion of profit was 32.49 which deceased in 20006-07 to 30.92 and again in
2007-08 the EPS increased to 32.19 and after that company eps is increasing
till 2013-14 but after 2013-14 the company eps falls down dramatically to 19.32
in 2014-15 and again to 16.75 in 2015-16. That means that company net income
firstly decreased in 2006-07 after that company boost its income and grows in a
positive way for further few years but again in2014-15 the company net income
starts falling which is not good for the company and for the shareholders of
ICICI banks .if company earn less than prior period shareholder of the company
starts selling its shares in market with lower prices to get his/her investment
back before they start losing that investment.

 

 

 

 

 

 

 

INTEREST COVERAGE
RATIO

 

YEAR                           INTEREST COVERAGE RATIO

2015-16                                                               1.84

2014-15                                                               1.78

2013-14                                                               1.68

2012-13                                                               1.62

2011-12                                                               1.52

2010-11                                                               1.46

2009-10                                                               1.48

2008-09                                                               1.36

2007-08                                                               1.38

2006-07                                                               1.31

2005-06                                                               1.28

 

Interest coverage ratio
of a company is used to measure the company earnings relative to the amounts of
interest that company pay on its short term and long-term borrowings. Here Interest
coverage ratio of ICICI bank is calculated by dividing its EBIT to interest
paid by the bank to in a financial year. The interest coverage ratio shows the
bank financial leverage to analyzes the financial viability of the bank towards
its debts.

ICICI BANK interest coverage ratio is good from 2005 to
2016, the bank earning related to its interest paid in a financial year is
good. In 2005-06 company interest coverage ratio is 1.28, however in 2010-11
its interest coverage ratio is 1.46 and in2015-16 its coverage ratio is 1.84
which is increasing year on year which is very good for the company growth as
well as for the its shareholders. As ICICI BANK interest coverage ratio is
positive that shoes that bank is able to pay its all types of borrowings bank
has taken to raise its capital.

If a company has lower interest coverage ratio that means
that company has higher in debts, its has more debt financed and low equity financed
that mat lead that organization to bankruptcy and in future company assets can
be liquidized for the payments of its debt.

Here in 2005-06 ICICI BANK has lower interest coverage ratio
that is 1.28 percent but it is not that bad that it can’t pay its financial
cost. ICR lower than 1.0 is a questionable for the company payment of its debts
interest that company would pay the interest or not or company increased its
debts year by year. But ICICI BANK ICR ratio is enough to make the payments of
its borrowing interest (financial cost).by this we can analyze that ICICI bank
is on good track and has a positive growth rate.

 

                                          

YEAR                                       DEBT
EQUITY RATIOS

2015-16                                                               
2.01

2014-15                                                               
2.14

2013-14                                                               
2.11

2012-13                                                               
2.18

2011-12                                                               
2.32

2010-11                                                                1.99

2009-10                                                               
1.83

2008-09                                                               
1.35

2007-08                                                               
1.40

2006-07                                                               
2.08

2005-06                                                               
1.71

                                                                    DEBT
EQUITY RATIO

 

                          

 

 

 

 

      

 

 

 

 

DEBT EQUITY RATIO of a company can be  calculated by dividing its  total liabilities by its shareholder equity,
is a debt ratio used to measure a company’s financial leverage. The debt equity
ratio of the specific firm shows that the company is using how much money to finance
its assets with debt regarding its equity shareholder’s value.

Debt Equity ratio can be obtained by dividing total
liabilities to total shareholders’ equity

Here in ICICI BANK the debt equity ratio of company in
2005-06 was 1.71% which increased in 2006-07 to 2.08% and decreased by.68% to
1.40 in 2007-08, in2008-09 it was 1.35, in 2009-10 it was1.83 and in 2015-16 it
was 2.01 %.which indicates that company is using 2.01% of debts relatively
double than its equity shareholder’s of company.

ICICI BANK is using more debt to finance (raise) the capital
of the bank than its shareholders.it is often use to extend which company uses
to raise more capital as means of leveraging. a high debt equity ratio
generally means that a company has been hostile in financing its growth with
debts.

However if the cost of debt financing  come with a cost that’s is interest on the
borrowings ,the outside investor charge heavy rate of interest on debt , if the
earning of company is good related to its debt finance then the debt finance is
good for growth of the company and if its ends up with outweighing the returns
that the company generates on debt through investment ,share value may take a
hit.and if cost of debt  becomes too much
for the company to handle it can be lead to bankruptcy and liquidity in that
case company has to sale its assets to pay its debts.