shows a tax amount of Rs. 1011081 in 2013 and Rs. 982012 in 2014. It may have happened toshow a higher net earning value so that the EPS could be higher as it is Rs 132.10 this year whileit was just Rs. 104.85 in 2013 and Rs. 101.84 in 2014. The company may be doing this to show astrong financial position and win the interest of the investors (Basu, 2009).3.RETURN ON EQUITYPARTICULARS201320142015NET INCOME235919022913622972183SHAREHOLDER'S EQUITY91500001078365012250491RETURN ON EQUITY (NETINCOME/TOTALEQUITY)*10025.78%21.25%24.26%While it shows a manipulation in income tax liability to show higher net earnings, it even showsan unusual increase in retained earnings, so as to show higher total equity capital because thecompany is under an obligation of maintaining its debt equity ratio less than 1 otherwise the loangiver would recall the loan (Blank, 2014). Also, in this way, it would be able to maintain its returnon equity % as the investors needs to know the % return they are receiving on their investment.4. INTEREST COVERAGE RATIOPARTICULARS201320142015NET EARNINGS 235919022913622972183INCOME TAX EXPENSE101108198201287116INTEREST EXPENSE8437983663808038EBIT ( EARNINGS BEFOREINTEREST AND TAX)345465033570373867337INTEREST COVERAGE RATIO (EBIT/INTEREST EXPENSE)40.9440.134.79The books shows an unusual decrease in the interest coverage ratio, that is, from 40.94 and 40.13to 4.79,which shows a drastic decrease in the interest paying capability of the company and ahuge burden of interest on it (Louwers, Blay, Sinason, Strawser & Thibodeau, n.d.).

+13062052269

info@desklib.com