Liquidity Ratio
Working Capital
Working Capital = Current Asserts – Current
liabilities
|
Year
|
2012
|
2013
|
2014
|
2015
|
2016
|
|
|
10,068,585
-6,646,945
|
6,604,977- 4,160,270
|
8,445,978- 6,052,747
|
8,996,546 - 6,681,315
|
11,232,904 - 8,402,873
|
|
Working Capital
|
3421640
|
2444707
|
2393231
|
2315231
|
2830031
|
Working
capital is indicates that the company’s efficiency and short-term financial
health of the company by considering the difference between current asserts and
current liabilities. Which means it is indicate whether this company has consisted
with the short-term assert to cover their short-term debt. When considering
above calculations it seems that the efficiency and short-term financial health
is decreasing after 2012 to 2016.
Current
assert Ratio
Current Ratio = Current
Asserts / Current liabilities
|
Year
|
2012
|
2013
|
2014
|
2015
|
2016
|
|
Current
Assets-Current liabilities
|
10,068,585
/6,646,945
|
6,604,977 /4,160,270
|
8,445,978 /6,052,747
|
8,996,546 /6,681,315
|
11,232,904
/8,402,873
|
|
Current
Ratio
|
1.5147688
|
1.5876318
|
1.3953958
|
1.3465233
|
1.3367933
|
Above
ratioanalysis,indicate the relationship between the current asserts and current
liability of the company and it will elaborate the company’s ability to payback
its current liabilities by utilizing the current assert maximally. Current
ratio under “1” then it means that particular company does not have ability to
pay its liabilities and which reflect good financial health. Considering above
calculations, it is clear that the company health is good and it can payback
current liabilities, since Current Ratio is more than “1”. However, from 2012
to 2016 calculations indicate that the Current ratio is decreasing.
Acid Test Ratio
Acid Test Ratio = (Current Asserts – Inventory) /
Current liabilities
|
Year
|
2012
|
2013
|
2014
|
2015
|
2016
|
|
|
(10,068,585
- 1,813,722) / 6,646,945
|
(6,604,977- 4,055,558) / 4,160,270
|
(8,445,978- 4,755,944) / 6,052,747
|
(8,996,546 - 4,596,100) / 6,681,315
|
(11,232,904- 7,326,211)
/ 8,402,873
|
|
Acid Test Ratio
|
1.24190331
|
0.612801333
|
0.609646166
|
0.658619748
|
0.464923485
|
Above
ratio,identifythe ability of payback current liabilities within the short
period using short term assert for a company. If this ratio is less than “1” it
means this company does not have liquid asserts to payback its current
liabilities and should lead to arise a risk within that company. If this acid
test ratio is lower than the current ratio of the same year, it indicates that
the company is highly depending on their inventory. When analyzing the acid
test ratio of this company, the company had an Acid Test Ratio more than 1 in
2012 and it is less than 1 in 2013 to 2016. Therefore, the company had some
ability payback current liabilities using quick assets in 2012 and after 2012;
the company has no ability for quick payback. Since Acid Test Ratio is less
than Current Ratio, the company is highly depending on its inventory
Account Receivable Turn Over
Account Receivable Turn Over = Net Credit sales /
Average Account Receivable
|
Year
|
2012
|
2013
|
2014
|
2015
|
2016
|
|
Account Receivable Turn Over
|
38,877,422/
((1,813,722 + 3,255,689) /
2)
|
26,496,949/ ((1,654,001 + 1,585,934) / 2)
|
19,185,246/ ((2,099,995 + 1,654,001) / 2)
|
26,179,115/
((3,451,804 + 2,099,995) / 2)
|
35,403,232/ ((3,092,234 + 3,451,804) / 2)
|
|
15.33804302
|
16.3564695
|
10.22123945
|
9.430858358
|
10.81999585
|
This
measures how many times company has converted its account receivable into cash
during the year. Further, it shows the efficiency to collect company’s credit
sales from their credit customers. Considering above calculations, it seems
that the company had “Account Receivable Turnover” stable during last 5 years
of average 12 times per year.However, it indicates significant drop in 2014 and
2015 years.
Stock Turnover
Stock Turnover = Cost of Goods Sold / Average
Inventory
|
Year
|
2012
|
2013
|
2014
|
2015
|
2016
|
|
Stock Turnover
|
31,790,017 / ((8,075,867
+ 2,419,515)/2)
|
22,519,305/ ((4,055,558 + 8,075,867)/2)
|
15,226,149/ ((4,755,944 + 4,055,558)/2)
|
21,103,811/ ((4,596,100 + 4,755,944)/2)
|
29,408,729/ ((7,326,211 + 4,596,100)/2)
|
|
6.057905658
|
3.712557263
|
3.455971298
|
4.513197543
|
4.933394037
|
Stock turnover ratio measures how many times a
company’s inventory has sold and replaced during the year. This ratio is vital
to company because it depends on the two components such as stock purchasing and
sales. Therefore, company take large stock during particular period and
afterwards company focused to sale team to improve the stock turnover ratio. In
the other hand if they are unable to achieve sale target, it may lead to
acquire storage cost. According to above calculations, the company continuously
decreased their stock turnover ratio in year 2012 to 2014 and from 2015 to 2016,
it significantly increased. It means this company does not turn their stock
efficiently from 2012 to 2014 and after 2014 they have turn their stock
efficiently.
Day Sale Uncollected
Day Sale Uncollected = (Account Receivable / Net
Sales) * 365
|
Year
|
2012
|
2013
|
2014
|
2015
|
2016
|
|
Day Sale Uncollected
|
(1,813,722/ 38,631,625)*365
|
(1,654,001/ 26,280,160)*365
|
(2,099,995/ 19,004,374)*365
|
(3,451,804/ 25,960,703)*365
|
(3,092,234/
35,194,854)*365
|
|
17.13644016
|
22.97209625
|
40.33272419
|
48.53136912
|
32.06904651
|
This
ratio measures the number of days that it would need to collect their money
from their credit sales. When this ratio is low, company has better customers
and immediate they can collect their money and able to use for another operation.According
above calculations, the company has increased the day sales uncollected ratio from
year 2012 to 2015. From 2015 to 2016, it decreases in 30 days. Therefore, the
company takes above calculated days to collect their money. Since it closed to
a month, the company has a poor collection of money from their creditors.
Day Sales Inventory
Day Sales Inventory = Ending Inventory / Cost of
Sales
|
Year
|
2012
|
2013
|
2014
|
2015
|
2016
|
|
Day Sales Inventory
|
8,075,867/ 31,790,017
|
4,055,558/
22,519,305
|
4,755,944/
15,226,149
|
4,596,100/ 21,417,468
|
7,326,211/ 29,408,729
|
|
0.254037832
|
0.180092503
|
0.312353702
|
0.214595862
|
0.249116886
|
Day
sales inventory indicates how may days this company will take to sell their
inventory. As well as it shows the freshness of the inventory and this ratio is
important to their creditors and investors.
Considering
above calculations, above figure display that it drops its inventories in 2013
and 2015, and significant increased on 2014. However considering last 5 years
company is marinating same amount of inventory, which the company has in 2012
in 2015.
Solvency Ratio
Debit to Equity Ratio
Debt to Equity Ratio = Total Liabilities / Shareholders’
Equity
|
Year
|
2012
|
2013
|
2014
|
2015
|
2016
|
|
Debt to Equity Ratio
|
7,666,010 /7,465,332
|
5,143,974
/7,631,167
|
8,087,410
/7,917,493
|
8,495,753 /9,237,938
|
10,118,902 /9,989,679
|
|
1.026881323
|
0.674074358
|
1.02146096
|
0.919659019
|
1.012935651
|
Above
ratio will indicates how much this company debt to finance its assets
comparatively represents the shareholders’ equity amount. When high company
debit to equity ratio means that,the company should have critical situation in
financing its growth with their debt and high risk may arise. It may lead to
unpredictable earnings as an extra interest expenses.
According
to above,Calculations Company has maintain average of Debt to Equity Ratio as
“1” for previous 5 years, but there is a 0.2 present drop in 2013 and it has
been raised back “1” in 2014. Therefore, the company has invested one rupees
against one rupee of the capital investment for last 5 years.
Debit to Assets Ratio
Debit
to Assets Ratio = Total Liabilities / Total Assets
|
Year
|
2012
|
2013
|
2014
|
2015
|
2016
|
|
Debit to
Assets Ratio
|
7,666,010 /14,740,119
|
5,143,974
/12,285,246
|
8,087,410
/15,402,774
|
8,495,753 /17,083,766
|
10,118,902 /19,253,328
|
|
0.520077891
|
0.418711518
|
0.525061914
|
0.497299776
|
0.525566385
|
Debit to assets ratio indicate the percentage of total amount of debit relative to assets. This will measure ratio by using company’s long-term and short-term debt considering all assets. If this ratio value is high, the company degree of advantage will be high and financial risk will be high.
Considering
above calculations for last 5 years, company has average of 0.5% Debt to Assets
Ratio and it means that the company’s degree of advantage is low and financial
risk is low
Time Interest Earned
Time Interest Earned = Earnings before interest
expenses and Income Taxes / Interest Expenses
|
Year
|
2012
|
2013
|
2014
|
2015
|
2016
|
|
Time Interest Earned
|
(3,516,177-447,553)/ 447,553
|
(331,581-630,798)/ 630,798
|
(329,989-423,990)/423,990
|
(750,318-415,462)/ 415,462
|
(1,092,042-468,036)/
468,036
|
|
6.856448287
|
-0.47434678
|
-0.221705701
|
0.805984663
|
1.333243597
|
This
ratio indicates the companyability to provide protection for their long-term
creditors. In addition,it will indicate how far the company stable to pay the
interest to their creditors.
Considering
above calculations it indicates that it was “7“in 2012 and it has drop to “0”
from 2013 to 2016. Therefore, the company is not in a stable position to pay
the interest to their creditors.
Equity Ratio
Equity Ratio = Total Equity / Total Assets
|
Year
|
2012
|
2013
|
2014
|
2015
|
2016
|
|
Equity Ratio
|
7,465,332/ 14,740,119
|
7,631,167/
12,285,246
|
7,917,493/
15,402,774
|
9,237,938/ 17,083,766
|
9,989,679/ 19,253,328
|
|
0.506463482
|
0.621165177
|
0.51403033
|
0.540743651
|
0.518854662
|
This ratio indicates the amount of assets,
whichwere fund by the owners that associated to the total equity to the total
assets.
Above calculations indicates that the
company stakeholders have owned average 50% of company assets over the last
five years. Therefore, the company should increase this ratio during next few
years to maintain more company assets by the company stakeholders.
Profitability Ratio
Profit Margin
Profit Margin = (Net income / Net sales) * 100
|
Year
|
2012
|
2013
|
2014
|
2015
|
2016
|
|
Profit Margin
|
(2,697,325/ 38,631,625)*100
|
(344,895/ 26,280,160)*100
|
(279,919/ 19,004,374)*100
|
(546,561/ 25,960,703)*100
|
(739,723/ 35,194,854)*100
|
|
6.982168107%
|
1.312377855%
|
1.472918813%
|
2.105339751%
|
2.101793063%
|
The
profit margin will elaborate as a percentage of how much the company is earning
for every rupees of sales. For example, if the company has 20% profit margin it
means company has net income of 0.20 rupees for each rupees of total net sales.
Therefore, this ratio will help the company to understand the company financial
performance and to take some decisions to improve the company financial
performance.If the company profit margin is low that means the company
profitability is not protected. If the company profit margin is, high it means
that company has more profit by keeping the better control on the cost than
their competitors keep and increase the market position of the company. Above
calculations indicate that the company profit margin is 7% at 2012 and after
2012, it has significantly dropped in to 1%. Therefore, it indicates that the
company is less profitable from 2013 to 2016.
Gross
Profit Margin
Gross Profit Margin = ((Net Sales – Cost of Goods
Sold) / Net Sales) * 100
|
Year
|
2012
|
2013
|
2014
|
2015
|
2016
|
|
Gross Profit Margin
|
((38,631,625 - 31,790,017)/ 38,631,625) *100
|
((26,280,160-22,519,305)/ 26,280,160) *100
|
((19,004,374-15,226,149)/ 19,004,374) *100
|
((25,960,703-21,417,468))/ 25,960,703) *100
|
((35,194,854-29,408,729)/
35,194,854) *100
|
|
17.70986336%
|
14.31062444%
|
19.88081796%
|
17.50043132%
|
16.44025857%
|
Gross
profit ratio indicate the gross profit as percentage of the company net
sales. It measures the amount remaining
from 1 rupees in sales that is left to cover operating expenses and profit
after considering cost sales.
Looking
at above calculations, it indicates that the profit margin is stable during
2012 to 2016 as of 18%. Therefore, its productivity of sales are stable during
this period.
Return on Total Assets
Return on Total Assets = (Net Income / Average Total
Assets) * 100
|
Year
|
2012
|
2013
|
2014
|
2015
|
2016
|
|
Return on Total Assets
|
(2,697,325/ ((14,740,119 +10,550,414)/2)) *100
|
(344,895/
((12,285,246 +14,806,463)/2)) *100
|
(279,919/ ((15,402,774 +12,285,246)/2)) *100
|
(546,561/ ((17,083,766
+15,287,018)/2)) *100
|
(739,723/ ((19,253,328+ 17,083,766)/2)) *100
|
|
21.330709%
|
2.546129519%
|
2.021950288%
|
3.37687836%
|
4.071448311%
|
Return
on total assets will indicate the relationship between the net income and
average total asserts. Since,in all business the main objective is to increase
their return on assets, every business should consider to increase the ratio.
According
to above calculations, the company has a significant dropin its income compared
to its assets in 2013 and remain stable in 3% from 2013 to 2016. Which
indicates that the company is not profitable compared to its total assets.
Total Assets Turn Over
Total Assets Turn Over = Revenue / Average Total
Assets
|
Year
|
2012
|
2013
|
2014
|
2015
|
2016
|
|
Total Assets Turnover
|
38,877,422/ ((14,740,119 +10,550,414)/2)
|
26,496,949/ ((12,285,246 +14,806,463)/2)
|
19,185,246/ ((15,402,774 +12,285,246)/2)
|
26,179,115/ ((17,083,766 +15,287,018)/2)
|
35,403,232/ ((19,253,328+
17,083,766)/2)
|
|
3.074464425
|
1.95609284
|
1.38581567
|
1.617453257
|
1.948600072
|
Total assets turnover is use to
measure the company capabilities to generate sales in efficient manner using
their assets. It indicate net sales as percentage of assets and it indicates
how many sales are generate from each rupees from assets. If this ratio is high
it is positive point for that company and it means that company efficiently use
their assets to generate more sales, if not it indicates that that company does
not use their assets in efficient manner and there may be a product.
Considered to above calculations, it
indicate that Total Assets Turnover has dropped in 2014 to “1.5” and increased
up to “2” in 2016. Since, Total Assets Turnover is positive during last 5 years
company has not use their assets inefficient way to generate more sales, but it
can be more efficiently use to generate more sales to the company.
Return on Equity
Return on Equity = (Net Income – Preferred Dividend)
/ Average Shareholders’ Equity
|
Year
|
2012
|
2013
|
2014
|
2015
|
2016
|
|
Return on Equity
|
(2,697,325-0)/ ((7,465,332 +4,200,847)/2)
|
(344,895-0)/ ((7,631,167 +7,440,615)/2)
|
(279,919-0)/ ((7,917,493
+7,631,167)/2)
|
(546,561-0)/ ((9,237,938 +7,917,493)/2)
|
(739,723-0)/ ((9,989,679
+9,237,938)/2)
|
|
0.4624179
|
0.045766984
|
0.036005546
|
0.063718714
|
0.076943804
|
This ratioindicates the company
capability to generate profit in secure manner using their shareholders
investment. In addition, it indicates how much profit earned for each rupees of
common shareholder equity.
Considering above calculations it
indicates that the company had a 0.45 return on equity in 2012, but from 2013
it has significantly dropped to “0.05” and it has continue to last 4 years.
Therefore, the company has not use their money in efficient way to generate
revenues.
Market Ratio
Book value per common share
Book value per common share = Shareholder’s Equity /
Outstanding Common Share
|
Year
|
2012
|
2013
|
2014
|
2015
|
2016
|
|
Book value per common share
|
7,465,332 /8,876,437
|
7,631,167
/8,876,437
|
7,917,493
/8,876,437
|
9,237,938 /8,876,437
|
9,989,679 /8,876,437
|
|
0.841027994
|
0.859710602
|
0.891967464
|
1.040725913
|
1.125415412
|
This
ratio indicates the amount of net equity that each share represent in common
stock.
Based
on above calculations, this company has less than “1” book value per common
share. However, the book value per common share is gradually increasing from
2012 to 2016. Therefore, the amount of new equity per each share has increased
up to 1.12 in 2016.
Basic Earnings per share
Basic Earnings per share = Net Income / Weighted
Average Common Share Outstanding
|
Year
|
2012
|
2013
|
2014
|
2015
|
2016
|
|
Basic Earnings per share
|
2,697,325/ 8,876,437
|
344,895/
8,876,437
|
279,919/
8,876,437
|
546,561/ 8,876,437
|
739,723/ 8,876,437
|
|
0.303874742
|
0.038855117
|
0.031535063
|
0.061574368
|
0.083335577
|
This
ratio indicates how much the company income has earned for each share of common
stock. In addition, it will indicate how this company is profitable according
to the shareholder basis. If the company maintain higher rates as basic
earnings per share, it indicate that particular company is more profitable and
they share the more profit among the shareholder. If not it may lead to
increase their share value as well. According to the analysis, basic earning
has dropped in to average of 0.5 after 2012 to 2016. Therefore, the company
profitability according to the shareholder basis is low from 2013 to 2016.
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