IntroductionKansai Nerolac Paints Ltd(Bse:500165,Nse:Kansainer) (Formerly Known As Goodlass Nerolac Paints Ltd) Is The Largest Industrial Paint And Second Largest Decorative Paint Company Of India Based InMumbai.It Is A Subsidiary OfKansai PaintOf Japan. It Is Engaged In The Industrial, Automotive And Powder Coating Business. It Develops And Supplies Paint Systems Used On The Finishing Lines Of Electrical Components, Cycle, Material Handling Equipment, Bus Bodies, Containers And Furniture Industries.History[ 1920: It Started As Gahagan Paints & Varnish Co. Ltd. AtLower ParelInMumbai. 1957: Goodlass Wall Pvt. Ltd. Grew Popular As Goodlass Nerolac Paints (Pvt.) Ltd. Also, It Went Public In The Same Year And Established Itself As Goodlass Nerolac Paints Ltd. . 1976: Goodlass Nerolac Paints Ltd. Became A Part OfTataForbesGroup On Acquisition Of A Part Of The Foreign Shareholdings ByforbesGokak. 1983: Goodlass Nerolac Paints Ltd. Strengthened Itself By Entering In Technical Collaboration Agreement By Kansai Paint Co. Ltd., Japan And Nihon Tokushu Tokyo Co. Ltd., Japan. 1999: Kansai Paint Co. Ltd. , Japan Took Over The Entire Stake Of Tata Forbes Group And Thus Goodlass Nerolac Paints Became Wholly Owned Subsidiary Of Kansai Paint Company Ltd. 2006: On 11 July, Goodlass Paint Ltd. Name Has Been Changed To Kansai Nerolac Paints Ltd.Company OverviewKansai Nerolac Paints Has 5 Paint Manufacturing Plants And About 67 Contract Manufacturers. The Nerolac Owned Plants Are At 1. Jainpur (Uttarpradesh) 2.Bawal(Haryana) 3.Lote, Chiplun (Maharastra) 4.Hosur(Tamil Nadu)Kansai Nerolac Paints Ltd. Has Entered Into Many Technical Collaborations With Other Industry Leaders Such As E.I. Du-Products.TheMumbai-Based Company Is The Leader In The Industrial Paints Segment With A Market Share Of Over 40%.It Is The Third-Largest Player In The Decorative Paints Segment With A Modest Market Share Of 13%. Nearly 75% Of The Indian Paints Industry Consists Of The Decorative Segment.Parent CompanyKansai Paint Was Founded By Katsujiro Iwai InAmagasakiCity, Japan In May 1918.[15]Kansai Paint Is A Comprehensive Manufacturer Of Paints And Coatings. The Products Include- Automotive Coatings, Industrial Coatings, Decorative Coatings, Protective Coatings And Marine Coatings.]They Are Also Present InU.K.,Turkey,U.S.A,Canada,Mexico,Uae.Products And Services[Technologically Innovative Products Are The Company's Hallmark. Kansai Nerolac Paint Offers Differentiated Products With A Focus On Being Eco-Friendly And Healthy .Kansai Nerolac Paints Key Products And Brands Includes The Following: Decorative Paints: Interior Wall Paints, Exterior Wall Paints, Wood Surface Paints And Metals Surface Paints.[ Automotive Coatings:Pre-Treatment Chemicals, Electrodepostition. Intermediate Coats/Primer Surfacers, Topcoats, Clear Coats, Touch Up Paints, Auto Refinishing Products, Heat Resistant Paints, Underbody Paints & Pvc Sealants & Rapgard Transit Protection Films. Performance Coatings: Performance Coating Are Available For Wide Range Of Products. For Household Appliances And Metal Fittings In Factories, There Is A Comprehensive Range Of General Industrial Coating Systems Like P.T. Chemicals,PrimersAndLacquers, Coil Coat, Heat Resistant Paints & Metal Decoration Coatings. Powder Coating Is Now Increasing In Popularity Because Of Its High Quality, Resistance To Corrosion, The Apparent Ease Of Application And The Environmental Friendliness Of The Technology.[ Awards And Achievements Golden Peacock Environment Management Award, 2000. Short Listed For The Best Managed Company Award FromBusiness Today&A.T. Kearney2005.Best Vendor Award From Customers Like Toyota Kirloskar Motors Ltd.(Tkml) For Cost And FromMaruti Udyog Ltd.(Mul) On Overall Commendation .Awards For Marketing Initiatives LikeCannes2007 Bronze For Press. Reader's DigestTrusted Brands Gold Awards, 2008 .Product Of The Year Award 2010 For Nerolac Excel April 2010. Product Of The Year Award 2011 For Nerolac Excel Total With Heat-Guard Technology April 2011. Sustainability Award For Outstanding Contribution ByMahindra & Mahindra October 2011. Best Vendor Performance Award In Paint Supplier's Category ByHondaMotors Cycles & Scooters At Their Annual Conference 2012. Asapp Media Information Group Construction World Magazine Ranked Kansai Nerolac Paints First.

Balance Sheet 14-15 13-14Sources Of Funds

Total Share Capital53.8953.89

Equity Share Capital53.8953.89

Share Application Money0.000.00

Preference Share Capital0.000.00

Reserves1,542.931,369.30

Networth1,596.821,423.19

Secured Loans0.900.90

Unsecured Loans40.6050.81

Total Debt41.5051.71

Total Liabilities1,638.321,474.90

Application Of Funds

Gross Block1,389.001,328.34

Less: Revaluation Reserves0.000.00

Less: Accum. Depreciation484.00418.76

Net Block905.00909.58

Capital Work in Progress43.9448.16

Investments215.5856.47

Inventories541.67645.66

Sundry Debtors496.34454.84

Cash and Bank Balance34.0554.87

Total Current Assets1,072.061,155.37

Loans and Advances106.7885.55

Fixed Deposits0.000.00

Total CA, Loans & Advances1,178.841,240.92

Deferred Credit0.000.00

Current Liabilities582.95672.92

Provisions122.09107.30

Total CL & Provisions705.04780.22

Net Current Assets473.80460.70

Miscellaneous Expenses0.000.00

Total Assets1,638.321,474.91

Contingent Liabilities8.316.32

Book Value (Rs)29.63264.08

Profit And Loss14-15 13-14

Income

Sales Turnover4,006.563,154.35

Excise Duty457.500.00

Net Sales3,549.063,154.35

Other Income21.7910.33

Stock Adjustments-62.0380.70

Total Income3,508.823,245.38

Expenditure

Raw Materials2,320.052,231.61

Power & Fuel Cost65.2266.68

Employee Cost143.30135.88

Other Manufacturing Expenses0.000.00

Selling and Admin Expenses0.000.00

Miscellaneous Expenses513.64438.79

Preoperative Exp Capitalised0.000.00

Total Expenses3,042.212,872.96

Operating Profit444.82362.09

PBDIT466.61372.42

Interest0.020.45

PBDT466.59371.97

Depreciation67.6964.98

Other Written Off0.000.00

Profit Before Tax398.90306.99

Extra-ordinary items0.000.00

PBT (Post Extra-ord Items)398.90306.99

Tax127.23100.42

Reported Net Profit271.67206.57

Total Value Addition722.16641.35

Preference Dividend0.000.00

Equity Dividend75.4559.28

Corporate Dividend Tax15.7810.08

Per share data (annualised)

Shares in issue (lakhs)5,389.20538.92

Earning Per Share (Rs)5.0438.33

Equity Dividend (%)140.00110.00

Book Value (Rs)29.63264.08

Calculation Of RatiosCurrent RatiosCurrent Assets/ Current Liabilities=1.67

Quick RatiosCurrent Assets-Inventory/Current Laibilities=0.90

Inventory RatioCost Of Goods Sold/Inventory=7.40

Fixed Assets TurnoverSales/Total Assets=2.56

Total Debt RatioTotal Debt /Toatal Assets=0.03

Debt Equity RatioTotal Debt/Shareholders Equity=0.03

Gross Profit MarginGross Income/Sales=10.62

Operating Profit MarginOperating Income /Sales=12.53

Net Profit MarginNet Income/Sales=7.65

Dividend Per ShareDividend Paid To Shareholders/No Of Shares Outstanding=1.40

Dividend Payout Ratios Dividends/Earning=27.7

Capital Structure RatioBasically, Capital Structure Can Be Defined As In What Proportion Company Holds Debt And Equity For Their Smooth And Effective Operation And To Support Their All Asset Maintenance And Further Expansion. Equity Includes Common Equity And Preferred Equity Plus Retained Earnings Or Net Loss And In Debt, Company Considers The Borrowed Fund, Usually The Long Term Liability Company Borrows From Other Party Or Lenders.The Eutiy Share Capital Has Remained Same And The Reserves Has Incressed From 1369 In 2013-14 To1542 In 2014-15.And The Debt Haves Decreased From 50 To 40 In 14-15.Hence The Capital Structure Of The Company Is Good.

Profitability RatiosAProfitability RatioIs A Measure Of Profitability, Which Is A Way To Measure A Company's Performance. Profitability Is Simply The Capacity To Make A Profit, And A Profit Is What Is Left Over From Income Earned After You Have Deducted All Costs And Expenses Related To Earning The Income. Gross Margin =10.62 And And Operating Profit Margin =12 Which Has Increased From 9% In 13-14And 11 % .So Overall The Profitability Is Good.The Company Has Shown The Better Performance By Increasing The Sales And Curtailing The Expenses.

Liquidity RatiosLiquidity Ratios Are The Ratios That Measure The Ability Of A Company To Meet Its Short Term Debt Obligations. These Ratios Measure The Ability Of A Company To Pay Off Its Short-Term Liabilities When They Fall Due.The Liquidity Ratios Are A Result Of Dividing Cash And Other Liquid Assets By The Short Term Borrowings And Current Liabilities. They Show The Number Of Times The Short Term Debt Obligations Are Covered By The Cash And Liquid Assets. If The Value Is Greater Than 1, It Means The Short Term Obligations Are Fully Covered.Generally, The Higher The Liquidity Ratios Are, The Higher The Margin Of Safety That The Company Posses To Meet Its Current Liabilities. Liquidity Ratios Greater Than 1 Indicate That The Company Is In Good Financial Health And It Is Less Likely Fall Into Financial Difficulties.The Ccurrent Ratio Is 1.67 But Still The Compant Must Be Able To Raise It By Paying Some Debts. Increasing Your Current Assets From Loans Or Other Borrowings With A Maturity Of More Than One Year. Converting Non-Current Assets Into Current Assets. Increasing Your Current Assets From New Equity Contributions. Putting Profits Back Into The BusinessDifference Between Operating And Financial LeverageLeverage In Its Most General Sense Means The Ability To Magnify Results At A Relatively Low Cost. In Business, You Make Decisions About Leverage That Affect Your Profitability. When You Evaluate Whether You Can Increase Production Profitably, You Are Addressing Operating Leverage. If You Are Contemplating Taking On Additional Debt, You Have Entered The Realm Of Financial Leverage. Both Types Are Crucial To Business Success And Have Different, Though Related, Meanings.

Operating LeverageOperating Leverage Compares Sales To The Costs Of Production. Fixed Costs Involve The Property, Plant And Equipment You Use To Create Products. These Costs Are Independent Of The Number Of Units You Produce. Variable Costs Are The Additional Costs Required To Produce A Unit Of Marketable Inventory, Such As The Costs Of Raw Materials, Electricity, Packaging And Transportation. You Can Measure Operating Leverage As The Ratio Of Fixed Costs To Variable Costs Or Fixed Costs To Total Costs. Higher Values Of This Ratio Indicate High Operating Leverage.Effects Of Operating LeverageA High Operating Leverage Means You Are In A Position To Increase Production Without Investing In Additional Fixed Costs. As Production Rises, You Are In Effect Spreading Fixed Costs Across A Greater Number Of Units, So The Additional Units Have A Lower Ratio Of Fixed Costs To Total Costs. The Degree Of Operating Leverage -- The Percent Change In Earnings Before Interest And Taxes, Or Ebit, Divided By The Percentage Change In Sales -- Gives You A Means To Gauge How Earnings Will Respond To Sales Activity. When Demand For Your Product Increases, You Can Easily Ramp Up Production By Increasing Variable Costs; Your Fixed Assets Allow You To Magnify Production. You Can Increase Production As Long As Your Higher Variable Costs Dont Cause Total Costs To Exceed Your Sales Revenues. However, In A Recession, High Operating Leverage Is Risky, As It Saddles You With High Fixed Costs Even When You Cut Production.Financial LeverageFinancial Leverage Is A Measure Of Debt, Usually Defined As Total Debt Divided By The Owners Equity, Which Is Assets Minus Liabilities. By Increasing Financial Leverage Instead Of Issuing Stock, You Can Use The Additional Funds To Increase Production Without Diluting Earnings Among A Greater Number Of Shareholders. In This Sense, It Magnifies Your Profits Per Share. You Can Measure This Effect With The Formula For Degree Of Financial Leverage: Ebit Divided By Earnings Before Taxes. However, Additional Leverage Increases Your Interest Expense, Which Cuts Into Net Income, Even Though Interest Is Tax Deductible. If You Are Overleveraged And Sales Fall, You Might Find Yourself Short Of Cash And Face Default On Your Debt.Combined LeverageThe Degree Of Combined, Or Total, Leverage Is Defined As The Percentage Change In Earnings Per Share Divided By The Percentage Change In Sales. It Is The Product Of The Degree Of Financial Leverage And The Degree Of Operating Leverage. As Such, It Is A Measure Of The Overall Riskiness Of Your Business. A High Combined Leverage Indicates High Fixed Costs And Heavy Debt. In Good Times, These Factors Can Increase Profits As You Increase Sales. Should Business Falter, These Same Factors Mean You Cannot Cut Total Costs Substantially By Decreasing Production, Putting A Strain On Cash Flow And Your Ability To Pay Interest And Repay Debt.

How To Compute Operating LeverageAs Mentioned On The Preface, Operating Leverage Is A Measure Of Operating Risk And Arises From Fixed Operating Costs. A Simple Indication Of Operating Leverage Is The Effect That A Change In Sales Has On Earnings.The Formula Is:Operating Leverage At A Given Level Of Sales (X)= Percentage Change In Ebit/Percentage Change In Sales = (P-V)X/(P-V)(X- Fc)Where:Ebit = Earnings Before Interest And Taxes = (P-V)X FcCase ExampleFrom The First Example, Assume That The Lie Dharma Company Is Currently Selling 6,000 Doors Per Year.Its Operating Leverage Is:= [(P V)X]/ (P V) (X Fc)= [($25 $15)(6,000)]/ [($25- $15) (6,000)- $50,000]= $60,000 / 10,000 = 6Which MeanIf Sales Increase By 10 Percent, The Company Can Expect Its Net Income To Increase By Six Times That Amount, Or 60 Percent.How To Calculate Financial LeverageFinancial Leverage Is A Measure Of Financial Risk And Arises From Fixed Financial Costs. One Way To Measure Financial Leverage Is To Determine How Earnings Per Share [Eps] Are Affected By A Change In Ebit (Or Operating Income).The Formula Is:Financial Leverage At A Given Level Of Sales (X)= Percentage Change In Eps / Percentage Change In Ebit= [(P V)X Fc] / [(P V)X Fc Ic]Where Eps IsEarnings Per Share, And Ic Is Fixed Finance Charges, I.E., InterestExpense Or Preferred Stockdividends. [Note: Preferred Stock Dividend Must Be Adjusted For Taxes I.E., Preferred Stock Dividend/(1-T).]Case ExampleUsing The Data In The Operating Leverage, The Lie Dharma Company Has Total Financial Charges Of $2,000, Half In Interest Expense And Half In Preferred Stock Dividend. The Corporate Tax Rate Is 40 Percent. What Is Their Financial Leverage?First, Calculate The Fixed Finance Charge [Ic]:Ic = $1,000 + ($1,000/1- 0.4) = $1,000 + $1,667 = $2,667Therefore, Lie Dharmas Financial Leverage Is Computed As Follows:= [(P-V)X Fc] / [(P-V)X-Fc-Ic]= [($25 $15) 6,000- $50,000] / [($25-$15)6,000 $50,000 -$2,667]= $10,000 / $7,333= 1.36Which Mean ThatIf Ebit Increases By 10 Percent, Lie Dharma Can Expect Its Eps To Increase By 1.36 Times, Or By 13.6 Percent.

Impact Of Financial Leverage On Shareholders EarningsFinancial Leverage Reflects The Debt Amount Used In The Capital Structure Of The Firm. Financial Leverage Is An Impact On Returns Of A Change In The Extent To Which The Firms Assets Are Financed With Borrowed Money. Other Things Remaining Same, Lower The Amount Borrowed, Lower The Interest, Lower Will Be The Profit, Where As Greater The Amount Borrowed, Lower The Interest, Greater Will Be The Profit. Debt Carries A Fixed Service Obligation Of Payments Of Interest. There Is An Opportunity To Greatly Magnify The Results At Various Levels Of Business Operations By Using Financial Leverage Financial Leverage Measures Firms Exposure To The Financial Risk. So, Degree Of Financial Leverage Indicates The Percentage Change In Eps Resulting From A Unit Percentage Change In Ebit. Financial Leverage Can Accelerate Eps Under Favourable Economic Conditions But Depresses Eps When The Economic Goings Is Not Good At Economy And For The Firm. The Unfavourable Effect Of Financial Leverage On Eps Is More Severe With More Debt In The Capital Structure When Ebit Is Negative. Similarly, Financial Leverage Can Increase Shareholders Return And As Well Can Increase The Firms Risk Also. The Financial Leverage Employed By A Firm Is Intended To Earn More On The Fixed Charges Funds Than Their Relative Costs . Financial Leverage Is The Final Component Of Return On Equity. Financial Leverage Is A Measure Of How Much Firm Uses Equity And Debt To Finance Its Assets. As Debt Increases, Financial Leverage Increases. Management Tends To Prefer Equity Financing Over Debt Since It Carries Less Risk. The Financial Leverage Ratio Is Calculated By Dividing Assets By Shareholder Equity (Matt, 2000). When The Surplus Increases And Deficit Decreases, The Return On The Owners Equity, Referred To As A Double-Edged Sword, Financial Leverage Provides The Potentials Of Increasing The Shareholders Wealth As Well As Creating The Risks Of Loss To Them. The Financial Leverage Is A Prerequisite For Achieving Optimal Capital Structure. An Optimal Capital Structure Can Influence The Value Of Firm And Wealth Of Shareholders Through Reduced Cost Of Capital. Hence, Determination Of Optimal Debt Level And Its Impact On The Firms Over All Capital Structure Is Regarded As An Integral Part Of A Firms Financial Decision (Franklin And Muthusamy, 2011). Financial Leverage, Or An Increase In Financial Efficiency, Called The Variation Of Return On Equity, Depends On The Return On Assets And The Cost Of Credit I.E., Interest Rate. Financial Lever Also Expresses The Impact Of Financial Expenses Due To Loans On The Return On Equity Of An Enterprise (Brezeanu, 1999).B. Share Holders ReturnThe Return On Equity Is A Result Of The Efficiency Of All Commercial, Operational And Financial Activity Of The Enterprise (Niculescu, 1997). Shareholders Return (Sr) Is A Concept Used To Compare The Performance Of Different Companies Stocks And Shares Over Time. The Absolute Size Of The Total Share Holders Return Will Vary With Stock Markets, But The Relative Position Reflects The Market Perception Of Overall Performance Relative To A Reference Group. It Can Be Expressed As Follows:With Pricebegin = Share Price At Beginning Of Period, Priceend = Share Price At End Of Period, And Sr = Shareholders Return, Sr Is Computed As Follows:Sr = (Priceend - Pricebegin) X No. Of Shares. Whereas Total Shareholders Return (Tsr) Combines Share Price Appreciation And Dividends Paid To Show The Total Return To The Shareholder

Difference Between Buisness And Financial Risk The Two Primary Risks That Every Company Has To Face On A Daily Basis Are Business Risk And Financial Risk, And Contrary To Common Belief, They Are Not One In The Same. Understanding These Two Types Of Risk Is Critical For Keeping Your Company Profitable And Manageable, Especially During Times Of Economic Uncertainty.Knowing The Difference Between Financial Risk And Business Risk Is Also Important When It Comes To Speaking With Investors, Financial Institutions, And Other People Or Organizations That May Have A Financial Interest In Your Company.What Is Business Risk?Business Risk Usually Involves All Of The Risks Attributed To The Businesss Strategic Decisions, With The Exception Of The Companys Financial Decisions. Such Risks Could Include The Decision To Introduce A New Product Or Service Into The Market, Or A Potential Partnership With Another Company. In Estimations Of Business Risk, Internal Efficiency And Production Quotas Are Commonly Measured To Determine Whether Or Not A Key Business Decision Is Worth The Risk. Business Risk Is The Probability To Earn Comparatively Low Profit Or Even Suffer Losses Because Of Changes In The Market Conditions, Customer Demands, Government Regulations And Economic Environment Of Business. Due To Such Risk The Firm Will Not Generate Enough Profit To Meet Out Its Day To Day Expenses. The Risk Is Unavoidable In Nature.Every Business Organization Operates In An Economic Environment. The Economic Environment Includes Both Micro And Macro Environment. The Changes In The Factors Of The Two Environments Directly Influence The Business And The Risk Arises. Some Of Those Factors Are Change In Customer Tastes And Preferences, Inflation, Change In The Policies Of Government, Natural Calamities, Strikes Etc. The Business Risk Is Divided Into Various Categories: Compliance Risk: The Risk Arising Due To The Change In Government Laws. Operational Risk: The Risk Originating Due To The Machinery Break Down, Process Failure, Lockouts By Workers Etc. Reputation Risk: The Risk Emerging As A Result Of Any Misleading Advertisement, Lawsuit, Criticism Of Bad Products Or Services Etc. Financial Risk: The Risk Arising Due To The Use Of Debt Capital. Strategic Risk: Every Business Organization Works On A Strategy, But Due To The Failure Of Strategy The Risk Arises.

What Is Financial Risk?A Companys Financial Risk Is Predominantly Targeted At Its Shareholders And Those Who Own Or Buy The Companys Stocks As This Type Of Risk Is Based On How A Companys Finances Are Structured, And Traditionally Focuses On Corporate Debt. Companies That Rely Heavily On Business Financing Are Often Considered Risky. Financial Risk Is The Uncertainty Arising Due To The Use Of Debt Finance In The Capital Structure Of The Company. The Capital Structure Of The Company Can Be Made Up Of Equity Capital Or Preference Capital Or Debt Capital Or The Combination Of Any. The Firm, Whose Capital Structure Contains Debt Finance Are Known As Levered Firms Whereas Unlevered Firms Are The Firms Whose Capital Structure Is Debt Free.Now, You May Wonder That Debt Capital Is One Of The Cheapest Sources Of Funds, Then How Will It Become A Risk For Shareholders? Because At The Time Of Winding Up Of The Company The Creditors Are Given Priority Over The Shareholders And They Will Be Repaid First. So In This Way The Risk Arises That The Company Will Not Be Able To Fulfill The Financial Obligations Of The Shareholders Due To Debt Financing. Moreover, Financial Risk Does Not End Up Here As It Is A Myriad Of Risks Which Are Given As Under: Market Risk: Risk Arising Due To The Fluctuations In The Financial Assets. Exchange Rate Risk: The Risk Arising Out Of The Variations In The Currency Rates. Credit Risk: The Risk Emerging Because Of Non-Payment Of Debt By A Borrower. Liquidity Risk: The Risk Originating As A Result Of A Financial Instrument Is Not Traded Quickly In The Market.

What Affects A Companys Business Risk?There Are Several Factors That Can Affect The Business Risk Level Of A Company. The Fluctuations In Demand For A Certain Product Or Service Can Certainly Affect Business Risk As This Will Have A Direct Impact On A Companys Profits. In Addition, Every Time A Competing Company Introduces A Similar Product To The Market, It Has The Potential To Drive Down Costs And Sales, Both Of Which Can Affect A Companys Earnings. Changes In Business Risk Can Also Be Attributed To External Factors Like Government Actions And Changes In Consumer Preferences As Well As Internal Factors Like The Companys Ratio Of Fixed To Variable Expenditures.What Affects A Companys Financial Risk?One Of The Most Common Things That Can Affect A Companys Financial Risk Is The Quality Of The Financial System Within Its Country Of Operation. If A Company Is Based In A Country That Has A Poorly Functioning Financial System Or Devalued Currency, Its Financial Risk Will Usually Be Relatively High As The Companys Holdings Could Easily Be Eliminated. For Most American-Based Companies, However, Their Financial Leverage Is Usually Used To Determine Their Risk Level. Financial Leverage Is A Companys Debt To Equity Ratio. The More A Company Relies On Debt To Finance The Business, The Higher Their Financial Leverage Is And Therefore, The Company Is A Higher Financial Risk.Key Differences Between Business Risk And Financial RiskThe Following Are The Major Differences Between Business Risk And Financial Risk:1. The Uncertainty Caused Due To Insufficient Profits In The Business Due To Which The Firm Is Not Able To Pay Out Expenses In Time Is Known As Business Risk. Financial Risk Is The Risk Originating Due To Use Of Debt Funds By The Entity.2. Business Risk Can Be Evaluated By Fluctuations In Earning Before Interest And Tax. On The Other Hand, Financial Risk Can Be Checked With The Help Of Leverage Multiplier And Debt To Asset Ratio.3. Business Risk Is Linked With The Economic Environment Of Business. Conversely, Financial Risk Associated With The Use Of Debt Financing.4. Business Risk Cannot Be Reduced While Financial Risk Can Be Avoided If The Debt Capital Is Not Used At All.5. Business Risk Can Be Disclosed By The Difference In Net Operating Income And Net Cash Flows. In Contrast To Financial Risk, Which Can Be Disclosed By The Difference In The Return Of Equity Shareholders.

Bibliography https://en.wikipedia.org/wiki/Kansai_Nerolac_Paints www.moneycontrol.com PAINTS & VARNISHES www.investopedia.com/.../what-difference-between-operating-leverage www.yourarticlelibrary.com/financial...operating-leverage...financial-lev...

INDEXSr NoTopicPage NoSign

1INTRODUCTION

2Balance Sheet

3P&L

4Calculation Of Ratios

5Capital Structure,Profitability & Liquidity Ratio

6 Difference Between Operating And Financial Leverage

7 Impact Of Financial Leverage On Shareholders Earnings

8Difference Between Buisness And Financial Risk

9Bibliography