Sarwat Khan

ERP: 05014
Business Finance
Assignment No. 1

RATIO ANALYSIS
SEIMENS (PAKISTAN) ENGINEERING LIMITED

Ratios as given in the Annual Report 2011

Ratios

2011

2010

2009

14.05

14.79

11.02

EBITDA Margin to sales

(%)

3.06

7.28

6.75

Return on Equity

1.02

14.38

19.75

Inventory Turn Over

Ratio

3.67

5.52

7.18

Current Ratio

1.19

1.19

1.19

Quick Ratio

0.96

0.98

0.93

Price Earnings Ratio

130.91

9.46

8.55

Total Asset Turnover

0.66

1.07

1.47

Fixed Asset Turnover

9.10

15.71

22.2

Days Outstanding

212

121

240

Breakup Value per

Share

801.35

852.87

838.03

Gross Profit Ratio (%)

Ratio Analysis
Liquidity Measurement

The companys ability to liquidate its current asset of Siemens is obvious to

be constant over three year period time. Whereas the quick ratio improves
from 2009 to 2010 significantly, yet decreases from 2010 to 2011 but rather
insignificantly, which shows that companys ability to liquidate its assets
without liquidating its inventory is quite satisfactory over three year period
time.

Sarwat Khan
ERP: 05014
Business Finance
Assignment No. 1
Asset Management

The inventory turnover ratio decreases significantly from 2009 to 2010, and
then from 2010 to 2011, which means that Siemens is holding its inventory
very efficiently and is productive.
The DSO are however unsatisfactory, for 2011 especially. The average
collection period goes up to 212 days which are way too high, and Siemens
need to revise its credit policy and should take steps to expedite the
collection of accounts and trades receivable.
The fixed turnover ratio is again declining over three period times. The
company is using its fixed assets less intensively and efficiently from 2009 to
2010 and then towards 2011. Total asset turnover again shows a declining
figure, which concludes that company is ultimately not generating sufficient
volume of business given its total investment.
Debt Management

Debts are not mentioned anywhere in the annual report, hence it is assumed
that Siemens are not under any Debts.
Profitability

The gross profit margin increases from 2010 to 2011, which shows that
company is efficiently utilizing effects of liquidity, managing assets, and debt
on operating results, to achieve increased profit.
The return on equity declines over three year period which means company
is not efficiently managing in utilizing its equity base and lesser return is to
investors.