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# [All ratios {written in red} taken from summit power, if want more inf0.

See ’’summit power’’ [Interpretation not done of all {red}in bellow} [see in bellow ]{send me final report ..tonmoy }
FINANCIAL PERFORMANCE ANALYSIS:

1] Liquidity Ratios:
Liquidity ratios attempt to measure a company's ability to pay off its short-term debt obligations. The analysis of these ratios is done by comparing a company's most liquid assets (those easily convertible to cash) to its short-term liabilities. So the liquidity ratios show the relationships between the firm s current assets to it s current liabilities. a. Current Ratio: !urrent ratio measures the number of dollars of current assets for each dollar of current liabilities. "t helps to estimate the capacity of the firm to meet its maturing obligations#

Current Ratio=(Current Assets/Current Liabilities) Current Ratio
Square Prime 2007 1.27 1.0 2008 1.21 1.0! 2009 1.35 1.07

/n an average over the last three years# current ratio for Square Te%tiles is &.)( times than whereas current ratio for \$rime Te%tiles on an average is &. "n case of Square Te%tiles# current ratio increases from &. Qui k Ratio: The quic2 ratio or the acid-test ratio is a liquidity indicator that further refines the current ratio by measuring the amount of the most liquid current assets there are to cover current liabilities. This may have happened due the reduction of the number of 1ebtor s and due to an increase in the number of creditors of Square Te%tiles# which has helped it to be in a better position# though \$rime Te%tiles is not very far behind.Interpretation: "t is seen that for \$rime Te%tiles Ltd. The decrease in current ratio tells us that the \$rime Te%tiles is degrading year by year but in comparison to them# Square Te%tiles is in a better financial position. 0ut since \$rime Te%tile s ration is gradually decreasing# it needs to overcome it# whereas Square Te%tiles is in the upward position.in the year )''+ with a downfall in the year )''( with a current ratio of &.&. The standard deviation for current ratio is ). The quic2 ratio e%cludes inventory and other current assets# which are more difficult to turn into cash."2 0.#" 2009 0..7! 0.The !urrent ratio decreases because current asset over the last three years decreases gradually followed by gradual increases in current liabilities.'* in the year )''+.# there is a gradual decrease in current ratio from &. C!rrent A""et # In\$entorie"% & C!rrent Liabilitie" 2007 0.3" Square Prime ."! 0.'*. b.)*..'( in year )''* to &.)* in the year )''* to &.!! 2008 0. So both the company s are standing at the same line and needs to better off their position.

"n comparison to \$rime Te%tiles# 6uic2 ratio is better for Square Te%tiles# which is on average '. The increase in quic2 ratio is quite favorable for the company. !et "orkin# Capital: 7or2ing !apital measures the percentage of total assets that is invested in current assets. This tells that Square Te%tiles is able to meet its financial obligations out of current liquid assets.Interpretation: "n case of Square Te%tiles# there is a gradual increase in quic2 ratio from '. The benchmar2 for quic2 ratio is &. The increase in quic2 ratio is because the company s current asset e%cluding the inventories are increasing gradually even though there is a gradual decrease in liabilities from year )''* to year )''+.*3 in the year )''(. "t helps to analy8e capital intensity as well as corporate liquidity.+3 times in the year )''+# with a downfall of '.&. . 47! 9C!rrent A""et& 'otal A""et 7or2ing !apital :atio Square Prime 2007 ##!\$"23\$#12 55\$7!3\$1#0 2008 5"3\$7" \$ 5# !1\$"22\$2" 2009 35\$ 51\$#21 57\$501\$ 53 ..5+ in the year )''( and to '.(((a little less than the benchmar2) whereas \$rime Te%tiles has a quic2 ratio of about '.+) times in year )''* to '. 4ote that# even if the inventory level is highest in )''( compared to )''* and )''+# the difference between current asset and inventory is increasing gradually along with decrease in current liabilities for which quic2 ratio shows a gradual increase.33 in the year )''* to '. This tells us that \$rime Te%tiles has lots of wor2 in progress# or unsold products which have caused its inventory to be high.+ in )''+. "n case of \$rime Te%tiles# quic2 ratio decreases from '.-& over the last three years.

This might have occurred because a larger amount of the total assets is used to cover the current assets."! 2008 1. Square Prime 2007 1.2" 1.70 0. Fixed Asset Turnover% &i'e( Assets )urno*er=Sales/+et &i'e( Assets The fi%ed asset turnover means how much of sales have been generated by using the fi%ed assets.rom the analysis done# Square Te%tiles is in a much better position to pay off it short time liabilities in comparison to \$rime Te%tiles which is falling much behind.00 2009 1.Interpretation: . 2] Productivity Ratios/ asset management ratio: a.50 . Sufficient wor2ing capital provides assurance to short-term creditors that they will be paid by the company as soon as possible.!2 0.

This may have happened because of the rapid decrease in sales in lac2 of generating net fi%ed assets.i%ed =sset Turnover ratio decreased from )''* to )''( due to the rapid decrease in sales in lac2 of generating net fi%ed asset but from )''( to )''+ fi%ed asset turnover ratio increased due to the rapid increase in sales for generating net fi%ed asset.70 0. . The data analysis hence indicates that Square te%tiles has a better position in terms of .-'.3) in the year )''* to &. Total =sset Turnover evaluates the efficiency of managing all of the company's assets.i%ed =sset Turnover :atio for Square Te%tiles shows an increase from &. There has been an increase from '. "n the year )''+ T< & worth of fi%ed asset of \$rime Te%tiles can generate a sale of T< '.i%ed =sset Turnover.37 Square Prime .\$nterpretation: "n the year )''+# T< & worth of fi%ed asset of Square Te%tiles can generate a sale of T< &.'' from )''* to )''( but a downfall of '. b.!" 0.)+ in )''(. The .!7 2008 0.*' in the year )''+ with a downfall of &. 'otal A""et t!rno\$er: Sale" & 'otal A""et 2007 0.!0 2009 0.+3 to &.-' in )''+.53 0.*'. %otal Asset %urno&er: The total asset turnover(T=T/) illustrates how much of sales have been generated from the total assets used.

. \$n&entor' %urno&er Ratio : The ratio is regarded as a test of ?fficiency and indicates the rapidity with which company can move its merchandise.3+ in year )''* to '.-. "n the year )''+# every T< & worth of asset is generating T< '.*' in the year )''+ but falls slightly to '.73 1# . The decrease in total sales followed by decrease in total asset has caused negligible change in turnover.!0 Square Prime ."nterpretation. This is because> sales were high in the year )''+ in comparison to )''* and )''(# the increase in sales accompanied by a upgrade in total asset has caused the total asset turnover to improve drastically in )''+ from )''(. in the year )''(.30 2009 102. In\$entor( '!rno\$er: Co"t of )ood" "old& In\$entor( 2007 107.3' in the year )''( and falls drastically .*' worth of sales in case of Square Te%tiles.73 177. The Total =sset Turnover increases from '.55 71.3* in year )''* to '." 2008 17 . 7hereas# \$rime Te%tile s Total asset turnover decreases from '. The data analysis shows that Square Te%tiles has a better total asset turnover than \$rime Te%tiles.

e.2! 57. \$rime Te%tile s inventory turnover increases from *&. *a(" Sale" O!t"tandin): Re+ei\$able"& Ann!al Sale"&.0! 7 . The data analysis shows that \$rime Te%tiles has a better inventory turnover than Square Te%tiles. (a's’ Sales )utstandin# The 1ays Sales /utstanding ratio shows both the average time it ta2es to turn the receivables into cash i.-. This ratio is of particular importance to credit and collection associates. The reason behind this is increase in cost of goods sold from )''* to )''+.3' times in the year )''* to )''+. This indicates that cost of goods sold has decreased gradually and number of inventory in the warehouse has increased in )''+.!7 72. Square Te%tiles has not sold and stoc2ed its inventory more which is unfavorable. times in the year )''+ in case of Square Te%tiles. how much time it ta2es to collect money from collectors and the age# in terms of days# of a company's accounts receivable.57 Square Prime .+( times to &**.Interpretation: There is a gradual decrease in inventory turnover from &'*.3 2008 202.% 2007 117.*.03 2009 15 .times in the year )''* to &'). d.-.

e debt-to-asset ratio tells us how much of the total assets are financed by the overall liability of the company.3* days in the year )''* to &-(. A&era#e Colle tion *eriod f.Interpretation: The days sale outstanding for Square Te%tiles increases gradually from &&*. A&era#e *a'ment *eriod {missin#} {missin#} { not essential } 3] Leverage/ (ebt +ana#ement Ratios a.-* days in )''+# which is favorable for \$rime Te%tiles. "t shows that \$rime Te%tiles is able to collect its receivables more effectively than that of Square Te%tiles.. e. %otal (ebt to %otal Asset: %. *ebt to A""et Ratio: 'otal Liabilit(& 'otal A""et .( days in the year )''* to -*.)3 days in the year )''+ which is a very bad sign. This tells us that Square Te%tiles has worsen its credit sales collection over the last three years. @owever# \$rime Te%tile s 1ays Sales /utstanding shows a steady decrease from *).

53. ./uit' Ratio ..)-A in the year )''* to .. "n the year )''+# Square Te%tile s 5."5. @ence# \$rime Te%tiles with lower debt to asset ratio is in a favorable position than Square Te%tiles from the view point of creditors# because lower the debt ratio# the greater the cushion against creditor s losses in the event of ban2ruptcy. This is a measurement of how much suppliers# lenders# creditors and obligors have committed to the company versus what the shareholders have committed.. /n the other hand# in the year )''+# \$rime Te%tile s . were financed by debt."1..25.Square Prime 2007 ##..3".7". for every T< & of asset# T< '.+&A in the year )''+. (ebt-. b.*A in the year )''+. 2008 # . The debt-to-equity ratio is a leverage ratio that compares a company's total liabilities to its total shareholders' equity. /n the other hand# in case of \$rime Te%tiles# debt to asset ratio falls gradually from -.were financed by debt.5.e...5.+&A of total asset were financed by debt i. 5!.*A of total asset were financed by debt i.5. for every T< & of asset# T< '.e.37. 3#. 2009 #3. "nterpretation.*+A in the year )''* to 5. The debt to asset ratio for Square Te%tiles shows a slight decrease from 55.

2009 7!."2. \$rime Te%tile s debt to equity ratio decreases gradually from &&.ar#es .. C.11. 53.!3. "nterpretation.&&A in the year )''* to *3. 12". 2008 "5.. This is because debt is decreasing gradually year by year and lower debts are financed by increasing equity.3. 113. This is because increasing debts are financed by increasing equity.5 . 'i2e" Intere"t Earned: .32. "n case of Square Te%tiles# 1ebt to ?quity ratio decreases from (&."1.*ebt to E/!it(: 'otal *ebt & S0are0older1" E/!it( Square Prime 2007 1.arnin#s before \$nterest and \$n ome %a0es 1 \$nterest C.A in the year )''+.-(A in the year )''+.+)A in the year )''* to -. The data analysis suggests that \$rime Te%tiles has a lower debt to equity ratio compared to Square Te%tiles which is quite favorable for \$rime Te%tiles.

. 2007 22.71.!2.75. 2.12. 2008 15."5. !et *rofit +ar#in Net Profit Mar)in: Net in+o2e & Sale" Square Prime 2007 13.22. #.35.72. 11.23 *rofitabilit' Ratios a 3ro"" Profit Mar)in: 3ro"" Profit Mar)in: Gross Profit Mar in Square Prime 2005 22. 3."3.13. 200 22. 12. 2009 13. 7.Cost of 5oods sold6 1sales b. ".1 .50. 2008 7. 10. 2. 10. 2.7#. 2009 !. 4Sales .

Return on Asset Ret!rn on A""et: Net In+o2e & 'otal A""et !eturn on Asset Square Prime 2007 ".0".07.2#. 2.!3. 1. .73. 2008 #. 2009 #. 2.c.70.

73 Sto k +arket Ratios a. Return on .7". 2008 7." ./uit' Ret!rn On E/!it(: Net In+o2e & 'otal Co22on E/!it( !eturn on "#uity Square Prime 2007 17.!7.d.3!.##. #.20. 1. 4oo5 \$al!e per S0are: S0are 0older1" e/!it( & N!2ber of "0are" . 2009 . !. 0oo2 Balue per Share.

are 1 8ook 9alue per S.23 1 . *i\$idend Pa(o!t Ratio Yield: Pa(o!t Ratio" 6 *i\$idend per "0are & Earnin) per S0are C . ! 2008 2#. # !. +arket to 8ook 9alue +arket *ri e per S.10 3.5 . .b.5" 2009 30.arnin#s Ratio Pri+e Earnin)" Ratio: Mar5et Pri+e per S0are & Earnin)" per S0are Pri\$e% "arnin s !atio Square Prime 2007 17.are Earnin)" per S0are: Net In+o2e & Co22on S0are O!t"tandin) d.are Mar5et to 4oo5 7al!e Ratio: e. *ri e to .arnin#s *er S.

Pri\$e to &as' Flow !atio Pri\$e to &as' Flow !atio Square Prime 2007 12.#3 !.:."! .7# 2008 15.2" 17.#5 2009 17.33 3.

/uation *.quit0 ." 0.1 2008 1. Pri\$e%+ales !atio ." 0.../uation R-.#1 2009 2. Pri\$e to &as' Flow !atio i. (u-*ont . Square Prime Mar(et to )oo( !atio 2007 2. = (+//Sales) ' (Sales/)A) ' ()A/.52 0.0tended (u-*ont ..31 . market &alue ratio .#.

missin } APPENDIX Finan+ial Anal("i" of (ear 899: .03 0.37 0.55 {.Square Prime 2007 2."2 0.30 2009 2.13 2008 1..

:=T"/ .3-) SaleDnet fi%ed asset E E \$oorDgood \$oorDgood SaleD Total =sset E E \$oorDgood SaleD=ccount :eceivable Total debtDTotal =sset E E \$oorDgood A A Low ris2 payout Times"nterest?arned (T"?) ratio 1ebt-?quity :atio ?0"TD"nterest charge E E @igh(Food)D Low(less ris2y) Total debtDTotal equity A !ash flow from operationD Total debt E E Low(less ris2y) !ash .low to 1ebt :atio A \$oorDgood .ormula for calculation .i%ed asset turnover ratio Total asset turnover ratio :eceivable Turnover (ebt +ana#emen t 1ebt ratio :eceivablesD(=nnual 1ays salesD.i/uidit' !urrent ratio Sqrure (Target prime(!ompetin !ompany) g !ompany) !/CC?4T \$oorDgood !urrent =ssetsD!urrent Liabilities (!urrent =ssets"nventories)D!urrent Liabilities !urrent =ssetD Total =sset !ost of goods sold D "nventories 6uic2 ratio \$oorDgood 7or2ing !apital ratio Asset +ana#ement \$oorDgood \$oorDgood "nventory turnover ratio The days sales outstanding .

+ee 00summit power00} .[All ratios {written in red} ta(en from summit power. if want more inf/.