Comparison-and-Forecasting-of-Principal-Business-Activities-of-different-States-of-India Dataset Link: https://data.gov.in/catalog/company-master-data?filters%5Bfield_catalog_reference%5D=354261&format=json&offset=0&limit=6&sort%5Bcreated%5D=desc
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Authorized Capital: Authorized capital, also known as authorized share capital, authorized stock, or authorized capital stock, refers to the maximum amount of share capital that a company is legally allowed to issue as stated in its memorandum of association or its articles of incorporation.
- “Allowed to issue” in terms of authorized capital means that a company has the legal permission to issue a certain number of shares up to the maximum limit set by its authorized capital. This limit is specified in the company’s constitutional documents, such as the memorandum of association1. The company can issue shares up to this limit to raise funds from shareholders.
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Issued Capital: However, the actual number of shares issued, known as issued capital, may be less than the authorized limit to provide flexibility for future financing needs or to maintain control over the company’s ownership. This is the total value of shares that a company has actually issued to shareholders. It represents the portion of the authorized capital that has been allocated to shareholders and may include both fully paid and partially paid shares
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Paid-Up Capital: This is the amount of issued capital that shareholders have fully paid for. It does not include any portion of the issued capital that remains unpaid.
(Partially paid shares are shares that have been issued by a company to shareholders who have paid only a portion of the issue price upfront. The remaining amount can be paid in installments when the company makes a call for further payment123.
This arrangement is useful for both the company and the investor:
For the company, it allows them to secure capital immediately while giving them the flexibility to call for the remaining funds as needed for growth or operations. For the investor, it provides the opportunity to invest without committing the full amount upfront, which can be beneficial if the investor does not have all the funds available immediately or prefers to spread out the financial commitment. The rights of partially paid shareholders are generally the same as those of fully paid shareholders, including the right to receive dividends, vote at shareholders’ meetings, and participate in the winding up of the company. However, the rights to dividends and voting may be proportional to the amount paid in.)
PRINCIPAL_BUSINESS_ACTIVITY_AS_PER_CIN: This column lists various business activities as categorized by their respective Classification of Industrial Nomenclature (CIN) codes. These activities range from agriculture to manufacturing and services.
CAPITAL_CHANGE: This column shows the average percentage change in authorized capital for each listed business activity. The values represent the mean percentage change, indicating how much the authorized capital has increased or decreased on average during the analyzed period.
For example
A value of 0.10 for 'Activities of private households as employers...' means there was an average increase of 0.10% in authorized capital for this activity. A value of 5.99 for 'Agriculture, hunting and related service activities' indicates an average increase of 5.99% in authorized capital for businesses in this sector. A high value like 561.86 for 'Electricity, gas, steam and hot water supply' suggests a significant average increase of 561.86% in authorized capital, which could imply substantial growth or investment in this sector. These figures are useful for understanding which sectors are expanding or contracting in terms of financial capacity and investment. High positive values indicate growth, while low or negative values could suggest stagnation or decline. It's important to note that these are average changes and individual companies within each sector may experience different levels of capital change.
The trend analysis of authorized capital changes across different principal business activities is helpful in several ways:
Investment Decisions: Investors can use this data to identify which sectors are growing and may offer better investment opportunities. For instance, sectors with high average percentage increases in authorized capital might be expanding and could present potential for higher returns.
Economic Analysis: Economists and policymakers can assess the health and direction of various sectors of the economy. A sector showing a significant increase in authorized capital might be receiving more investment, indicating a healthy and growing industry.
Business Strategy: Companies can benchmark their performance against the average trends in their sector. If a company's authorized capital is not keeping pace with the average for its sector, it might need to reevaluate its business strategies.
Forecasting: The data can help forecast future trends in different industries. Sectors with consistently high growth in authorized capital might continue to grow, while those with low or negative growth might continue to struggle.
Resource Allocation: Governments and financial institutions can use this information to allocate resources, such as grants or loans, to sectors that are growing or need support.
Overall, trend analysis provides valuable insights into the financial dynamics of industries, helping various stakeholders make informed decisions.
Comparison Score: The comparison score in this context is the ratio of the average paid-up capital of one business activity to another. It’s a measure of relative size or financial strength between the two business activities.
If the comparison score is greater than 1, it means that the first business activity (Activity_1) has a higher average paid-up capital than the second one (Activity_2). This could indicate that Activity_1 is financially larger or stronger than Activity_2, assuming that a higher paid-up capital is a sign of financial strength.
Conversely, if the comparison score is less than 1, it means that Activity_1 has a lower average paid-up capital than Activity_2. This could indicate that Activity_1 is financially smaller or weaker than Activity_2.
If the comparison score is exactly 1, it means that both business activities have the same average paid-up capital.
Liquidity Ratios: Liquidity ratios are financial metrics that assess a company’s ability to meet its short-term debt obligations without needing to secure additional capital. They are crucial for evaluating a company’s short-term financial health and its ability to quickly convert assets into cash.
These ratios are particularly useful in comparative analysis, either internally over multiple periods or externally against other companies or industry benchmarks. A higher liquidity ratio indicates better coverage of outstanding debts and a more robust liquidity position.
The liquidity ratios in your table are useful for evaluating the financial flexibility of the companies listed. Here’s how they can be interpreted: i.e.:
REAL TOUCH FINANCE LIMITED: A liquidity ratio of 1.276325 suggests that for every unit of paid-up capital, the company has around 1.28 units of authorized capital. This indicates a reasonable buffer above its paid-up capital, which could be beneficial in covering short-term obligations. EASTERN INDUSTRIAL WORKS & SERVICESLIMITED: With a liquidity ratio of 1.019004, this company’s authorized capital is just slightly above its paid-up capital, suggesting tighter financial flexibility. ACKNIT INDUSTRIES LIMITED: A higher liquidity ratio of 3.947368 implies that the company has a significant amount of authorized capital in comparison to its paid-up capital, indicating a strong liquidity position. SKG CONSOLIDATED LTD: Similarly, a liquidity ratio of 3.333333 shows that the company has more than three times its paid-up capital in authorized capital, which is a strong liquidity position. SCINTIFIC AGRO HERBAL & PLANTATION LTD.: The highest liquidity ratio of 12.500000 in the table suggests that the company has a very high level of authorized capital relative to its paid-up capital, indicating a very strong liquidity position. These ratios are particularly useful for stakeholders to assess how well a company can meet its short-term liabilities with its most liquid assets. A higher ratio generally indicates a better ability to pay off debts as they come due without needing to liquidate other assets or seek additional financing. However, extremely high ratios might also suggest that a company is not utilizing its capital efficiently. It’s important to consider these ratios in the context of the industry average and the specific circumstances of each company.