ICICI BANK LIMITED ANALYSIS OFEARNING PER SHARE Earning per share is proportion of company profit allocatedto each outstanding share of respected company, it is the indicator of companyprofitability. EPS of ICICI BANK iscalculated here by dividing banks net Income with its total number ofoutstanding shares.
Here I have chosen ICICI BANK LIMITED as my company andfigured out the EPS of the company for last 10 year that is 2005-06 to2015-016. 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 EPSproportion of profit was 32.49 which deceased in 20006-07 to 30.92 and again in2007-08 the EPS increased to 32.19 and after that company eps is increasingtill 2013-14 but after 2013-14 the company eps falls down dramatically to 19.32in 2014-15 and again to 16.75 in 2015-16. That means that company net incomefirstly decreased in 2006-07 after that company boost its income and grows in apositive way for further few years but again in2014-15 the company net incomestarts falling which is not good for the company and for the shareholders ofICICI banks .if company earn less than prior period shareholder of the companystarts selling its shares in market with lower prices to get his/her investmentback before they start losing that investment.
INTEREST COVERAGERATIO 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 ratioof a company is used to measure the company earnings relative to the amounts ofinterest that company pay on its short term and long-term borrowings. Here Interestcoverage ratio of ICICI bank is calculated by dividing its EBIT to interestpaid by the bank to in a financial year. The interest coverage ratio shows thebank financial leverage to analyzes the financial viability of the bank towardsits debts.ICICI BANK interest coverage ratio is good from 2005 to2016, the bank earning related to its interest paid in a financial year isgood.
In 2005-06 company interest coverage ratio is 1.28, however in 2010-11its interest coverage ratio is 1.46 and in2015-16 its coverage ratio is 1.84which is increasing year on year which is very good for the company growth aswell as for the its shareholders. As ICICI BANK interest coverage ratio ispositive that shoes that bank is able to pay its all types of borrowings bankhas taken to raise its capital.If a company has lower interest coverage ratio that meansthat company has higher in debts, its has more debt financed and low equity financedthat mat lead that organization to bankruptcy and in future company assets canbe liquidized for the payments of its debt.
Here in 2005-06 ICICI BANK has lower interest coverage ratiothat is 1.28 percent but it is not that bad that it can’t pay its financialcost. ICR lower than 1.0 is a questionable for the company payment of its debtsinterest that company would pay the interest or not or company increased itsdebts year by year. But ICICI BANK ICR ratio is enough to make the payments ofits borrowing interest (financial cost).by this we can analyze that ICICI bankis 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 DEBTEQUITY 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 equityratio of the specific firm shows that the company is using how much money to financeits assets with debt regarding its equity shareholder’s value. Debt Equity ratio can be obtained by dividing totalliabilities to total shareholders’ equity Here in ICICI BANK the debt equity ratio of company in2005-06 was 1.71% which increased in 2006-07 to 2.08% and decreased by.68% to1.
40 in 2007-08, in2008-09 it was 1.35, in 2009-10 it was1.83 and in 2015-16 itwas 2.01 %.
which indicates that company is using 2.01% of debts relativelydouble than its equity shareholder’s of company.ICICI BANK is using more debt to finance (raise) the capitalof the bank than its shareholders.it is often use to extend which company usesto raise more capital as means of leveraging. a high debt equity ratiogenerally means that a company has been hostile in financing its growth withdebts. However if the cost of debt financing come with a cost that’s is interest on theborrowings ,the outside investor charge heavy rate of interest on debt , if theearning of company is good related to its debt finance then the debt finance isgood for growth of the company and if its ends up with outweighing the returnsthat the company generates on debt through investment ,share value may take ahit.
and if cost of debt becomes too muchfor the company to handle it can be lead to bankruptcy and liquidity in thatcase company has to sale its assets to pay its debts.