Continuing the discussion from here as it is digressing from original topic
@dineshssairam , can’t thank you enough for taking the time out to help with our queries.
I have almost zero knowledge when it comes to corporate finance. Trying to learn a few things from fellow boarders.
I tried calculating the ROCE for LTTS, as that is one of the companies, Im tracking currently. I had some questions on the same. Would be very helpful if you can clarify
Other income was significantly high this year. It includes forex gain, dividend income from mutual fund investments and income from some export licences. Should this be excluded from EBIT? Screener includes it though and ROCE according to Screener is 38% .
Working capital calculation:
WC = Non cash current assets - non debt current liabilities
Here is a screenshot of the current assets:
Other financial assets and other current assets have multiple components and depending on what is included and what is excluded, the ROCE varies a lot.
I think that ‘financial assets- others’ must be included entirely and ‘other current assets’ except the service tax and GST components must be included in working capital calculation. Am I correct?
Coming to the current liabilities,
Among other financial liabilities and other current liabilities, I think except unclaimed dividend which is not much ,everything else should be included. Is this the right way to go about it?
- Coming to the liquid cash in denominator - this must include all the cash and liquid investments(like FD, MF etc) both current and non current. correct?
Sorry for the long post…