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The current ratio is a liquidity and efficiency ratio that that measures a company's capacity to pay off its short-term liabilities with its current assets. The current ratio is an important measure of liquidity because short-term liabilities are due within the next year.
This means that a company has a limited amount of time in order to raise the funds to pay for these liabilities. Current assets like cash, cash equivalents, and marketable securities can easily be converted into cash in the short term. This means that companies with larger amounts of current assets will more easily be able to pay off current liabilities when they become due without having to sell off long-term, revenue generating assets.

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Current Ratio

The current ratio is a liquidity and efficiency ratio that that measures a company's capacity to pay

off its short-term liabilities with its current assets. The current ratio is an important measure of

liquidity because short-term liabilities are due within the next year.

This means that a company has a limited amount of time in order to raise the funds to pay for

these liabilities. Current assets like cash, cash equivalents, and marketable securities can easily

be converted into cash in the short term. This means that companies with larger amounts of

current assets will more easily be able to pay off current liabilities when they become due

without having to sell off long-term, revenue generating assets.

Equation (Current Asset / Current Liabilities)

The current ratio is calculated by dividing current assets by current liabilities.

Current Ratio of Aftab Automobile

Ratio

2008

Company

Average

Industry

Average

Current

Ratio

1.20

1.33

2.73

1.86

4.73

3.37

2.96

2.81

Interpretation

In 2013, the company's current ratio was 2.8. Current ratio helps investors and creditors

understand the liquidity of a company and how easily that company will be able to pay off

its current liabilities. This ratio expresses a firm's current debt in terms of current assets. So

a current ratio of 2.8 would mean that the company has 2.8 times more current assets than

current liabilities. Current Ratio has dropped very slightly from the last year. But the

company avarage remains above Industry Average,which is highly satisfactory. Current

ratio in 2010 was way higher than industry standards suggesting inefficient use of the

resources tied up in working capital of the organization that may instead be put into more

profitable uses elsewhere,now its staying in a preferable position. Percentage changes in

Current Asset were higher than in Current Liabilities. That's why the ratio increased.

Acid test is a liquidity ratio that measures the ability of a company to pay its current liabilities

when they come due with only quick assets. Quick assets are current assets that can be converted

to cash within 90 days or in the short-term. Cash, cash equivalents, short-term investments or

marketable securities, and current accounts receivable are considered quick assets.

The acid test of finance shows how well a company can quickly convert its assets into cash in

order to pay off its current liabilities. It also shows the level of quick assets to current liabilities.

Equation (Current Asset - Inventory / Current Liabilities)

The quick ratio is calculated by current assets subtract inventory then dividing them by current

liabilities.

Acid test Ratio of Aftab Automobile

Ratio

2008

Acid Test

Ratio

0.144

2009

0.178

2010

2.666

2011

2.035

2012

2013

0.392

1.837

Company

Average

1.207

Industry

Average

1.1

Interpretation

In 2013, the company's Acid Test Ratio was 1.84. The acid test ratio measures the liquidity

of a company by showing its ability to pay off its current liabilities with quick assets. An

acid ratio of 1.84 shows that the company has 1.84 times quick assets than current liabilities.

This also shows that the company could pay off its current liabilities without selling any

long-term asset. Current Ratio has increased signaficantly from last year. The company Acid

test ratio is above Industry average, which is Very good. This is a good sign for investors,

but an even better sign to creditors because creditors want to know they will be paid back on

time. Percentage changes in Current Asset (excluding Inventory) still higher than the

Current Liabilities. That's why the ratio increased. Company's overall situation is very good.

The inventory turnover ratio is an efficiency ratio that shows how effectively inventory is

managed by comparing cost of goods sold with average inventory for a period. This measures

how many times average inventory is "turned" or sold during a period. In other words, it

measures how many times a company sold its total average inventory during the year.

Equation (Sales / Inventory)

The inventory turnover ratio is calculated by dividing the total sells for a period by the inventory

for that period.

Aftab Automobile

Ratio

2008

2009

2010

2011

2012

2013

Inventory

Turnover

Ratio

1.172

1.226

1.229

1.292

1.212

1.273

Company

Average

1.234

Industry

Average

5.2

Interpretation

In 2013, the company had "Sold out and Restocked" Inventory 1.27 times than the last year.

Aftab Auto Mobiles inventory turnover shows how efficiently this company can control its

merchandise, so it is important to have a high turn. It was a very little high. It's increased

from the last year but the company was below Industry Average. Very Bad. A percentage

change in inventory was higher than the percentage changes in Sales. That's why the ratio

has dropped.

The asset turnover ratio is an efficiency ratio that measures a company's ability to generate sales

from its assets by comparing net sales with average total assets. In other words, this ratio shows

how efficiently a company can use its assets to generate sales.

Equation (Sales / Total Asset)

The asset turnover ratio is calculated by dividing net sales by average total assets.

Aftab Automobile

Ratio

Total Asset Turnover

Ratio

2008

1.03

Average Average

0.87 0.37 0.34 0.43 0.30

0.56

1.41

Interpretation

In 2013, Aftab automobiles every taka worth of total Asset generated tk 0.30 worth of sales.

Like with most ratios, the asset turnover ratio is based on industry standards. So, to get a

true sense of how well a company's assets are being used, it must be compared to other

companies in its industry. From 2008 its dropping in s signaficant rate and company average

is below the industry average. The total asset turnover ratio is a general efficiency ratio that

measures how efficiently a company uses all of its assets. So, this industry below average is

giving investors and creditors an negative idea about Aftab automobiles way that they

managed and uses its assets to produce products and sales. A percentage change in total

asset is higher that perchantage change is sales, thats why Total asset turnover ratio had

dropped.

A financial ratio of net sales to fixed assets. The fixed-asset turnover ratio measures a company's

ability to generate net sales from fixed-asset investments - specifically property, plant and

equipment (PP&E) - net of depreciation. A higher fixed-asset turnover ratio shows that the

company has been more effective in using the investment in fixed assets to generate revenues.

Equation (Sales / Fixed Asset)

Aftab Automobile

Ratio

Fixed

Asset

Turnover

Ratio

2008

2009

2010

2011

2012

2013

Company Industry

Average Average

5.0325 5.2635 14.6073 4.6726 6.6055 4.7485 6.8216

3.42

Interpretation

In 2013, Aftab automobiles every taka worth of total Fixed Asset generated tk 4.75 worth of

sales.It is higher than industry average. Percentage change in total Fixed asset is higher that

perchantage change is sales, thats why the perchentage had dropped from previous year.

The days sales outstanding calculation, also called the average collection period or days' sales in

receivables, measures the number of days it takes a company to collect cash from its credit sales.

This calculation shows the liquidity and efficiency of a company's collections department.

In other words, it shows how well a company can collect cash from its customers. The sooner

cash can be collected, the sooner this cash can be used for other operations. Both liquidity and

cash flows increase with a lower days sales outstanding measurement.

Equation (Accounts Receivable / Sales / 360)

Aftab Automobile

Ratio

Days Sales

Outstanding

(DSO)

2008

2009

2010

2011

2012

2013

140

47

229

266

207

322

Company

Average

202

Industry

Average

34

Interpretation

In 2013, Aftab automobile takes on average 322 days to collect reveivables from the

customers. So It means that Aftab automobile takes 322 days to convert its sales into cash. A

lower ratio is more favorable because it means companies collect cash earlier from

customers and can use this cash for other operations. But Aftab automobiles having a higher

ratio indicates that this company currently deals with poor collection procedures and

customers who are unable or unwilling to pay for their purchases.

Average payment period means the average period taken by the company in making payments to

its creditors. It is computed by dividing the number of working days in a year by creditors

turnover ratio.

A shorter payment period indicates prompt payments to creditors. Like accounts payable

turnover ratio, average payment period also indicates the credit worthiness of the company. But a

very short payment period may be an indication that the company is not taking full advantage of

the credit terms allowed by suppliers.

Equation (Accounts Payable / (Cost of Goods Sold/Purchase) / 360)

Aftab Automobile

Ratio

Average Payment

Period

2008

2009

35

147

69

142

71

2013

228

Company

Average

115

Industry

Average

60

Interpretation

In 2013, he average payment period of Aftab automobile is 228 days. It means, on average,

the company takes 228 days to pay its creditors. But industry average 60 days, which is very

poor. Managers try to make payments promptly to avail the discount offered by suppliers.

Where the discount is available for early payment, so get that discounts they have to pay

earlier.

So Afab automobiles have to pay the suppliers before they got paid from their customers.

They have to increase the Average Payment Period or have switch the suppliers.

Debt-to-Asset Ratio

Debt -to-Asset ratio is a solvency ratio that measures a firm's total liabilities as a percentage of

its total assets. In a sense, the debt ratio shows a company's ability to pay off its liabilities with

its assets. In other words, this shows how many assets the company must sell in order to pay off

all of its liabilities.

This ratio measures the financial leverage of a company. Companies with higher levels of

liabilities compared with assets are considered highly leveraged and more risky for lenders.

Equation (Total Debt / Total Asset * 100)

Aftab Automobile

Ratio

2008

2009

2010

2011

2012

2013

Debt-toAsset

Ratio

89.881

4.456

15.146

21.549

23.432

26.117

Company

Average

30.097

Industry

Average

146%

Interpretation

In 2013, The debt to equity ratio of Aftab automobile is 26.117 or 26.117: 1. It means the

creditors of Aftab automobile provide 26.117 cents of assets for each $1 of assets provided

by stockholders. The debt ratio is shown in decimal format because it calculates total

liabilities as a percentage of total assets. As with many solvency ratios, a lower ratio is more

favorable than a higher ratio.

The times interest earned ratio, sometimes called the interest coverage ratio, is a coverage ratio

that measures the proportionate amount of income that can be used to cover interest expenses in

the future.

Equation EBIT / Interest Expense

Aftab Automobile

Ratio

Time

Interest

Earns

(TIE)

2008

2009

2010

2011

2012

2013

Company Industry

Average Average

1.4569 3.6227 21.1832 21.5305 69.5358 2.2741 19.9339

15

Interpretation

In 2013, Aftab Automobiles EBIT was 2.2741 times higher than interest expense. TIE had

dropped significantly . The industry average is higher, which is disatisfactory. Perchentage

change in Interest expense is higher than perchentage change in EBIT, thats why percentage

dropped.

Profitability Ratio

Gross margin ratio is a profitability ratio that compares the gross margin of a business to the net

sales. This ratio measures how profitable a company sells its inventory or merchandise. In other

words, the gross profit ratio is essentially the percentage markup on merchandise from its cost.

This is the pure profit from the sale of inventory that can go to paying operating expenses.

Equation Gross Profit / Sales * 100

Aftab Automobile

Ratio

Gross Profit

Margin

2008

2009

2010

2011

2012

2013

Company Industry

Average Average

14.6402 18.4185 18.6119 22.6097 17.4761 21.4751 18.8719

17%

Interpretation

In 2013, Aftab Automobile had earned Gross Profit of 21.4751 taka for every 100 taka sales.

It had Increased from previous year. Company Gross Profit Margin is higher than industry

average,which is satisfactry. Perchentage change in Net profit is higher than perchentage

change in sales.

The Net profit margin ratio, also called the return on sales ratio or gross profit ratio, is a profitability ratio

that measures the amount of net income earned with each dollar of sales generated by comparing the net

income and net sales of a company. In other words, the profit margin ratio shows what percentage of sales

are left over after all expenses are paid by the business.

Aftab Automobile

Ratio

Net Profit

Margin

2008

2009

2010

2011

2012

2013

Company Industry

Average Average

13.6327

12.73%

Interpretation

In 2013, Aftab Automobile had earned Net profit of 13. 5887 taka for every 100 taka sales.

It had sightly increased from previous year. It is higher than industry average,which is

satisfactry. Perchentage change in Net profit is higher than perchentage change in sales.

The operating margin ratio, also known as the operating profit margin, is a profitability ratio that

measures what percentage of total revenues is made up by operating income. In other words, the

operating margin ratio demonstrates how much revenues are left over after all the variable or

operating costs have been paid. Conversely, this ratio shows what proportion of revenues is

available to cover non-operating costs like interest expense.

Equation EBIT / Sales

Aftab Automobile

Ratio

Operating

Profit

Margin

2008

2009

2010

2011

2012

2013

Company Industry

Average Average

4.2773 0.1549 0.4796 0.4977 0.1528 0.1806 0.9571

6.20%

Interpretation

In 2013, Aftab Automobile had earned operating profit of 0.1806 taka for every 100 taka

sales. Though it had increased from previous year its still lower than industry average,

which means this is highly unsatisfactory. Perchentage change in EBIT was higher than

percentage change in sales, thats why it had increased from previous year.

The return on equity ratio or ROE is a profitability ratio that measures the ability of a firm to

generate profits from its shareholders investments in the company. In other words, the return on

equity ratio shows how much profit each dollar of common stockholders' equity generates.

So a return on 1 means that every dollar of common stockholders' equity generates 1 dollar of net

income. This is an important measurement for potential investors because they want to see how

efficiently a company will use their money to generate net income.

Equation (Net Profit / Total Common Equity * 100)

Aftab Automobile

Ratio

Return on

Equity

(ROE)

2008

2009

2010

2011

2012

2013

Company Industry

Average Average

9.2462 8.1778 2.3091 18.5773 6.4853 5.5571 8.3921

34.29%

Interpretation

In 2013, the common shareholders of Aftab automobiles have earned 5.5571 taka for every

100 taka investment. The ROI has decreased and below industry avarage, which is very poor

. This ratio calculates the money made based on the investors' investment in the company,

not the company's investment in assets or something else. Which is very low comparing to

related industry avarage. Percentage change in net profit was lower than perchentage change

in total common equity.

Earnings per share, also called net income per share, is a market prospect ratio that measures the

amount of net income earned per share of stock outstanding. In other words, this is the amount of

money each share of stock would receive if all of the profits were distributed to the outstanding

shares at the end of the year.

Equation Net Profit after Tax / Total No. of Common Share

Aftab Automobile

Ratio

Earnings Per

Share (EPS)

2008

2009

2010

2011

2012

2013

Company Industry

Average Average

30.9451 31.9248 1.6894 13.8473 15.9059 3.1625 16.2458

4.00

Interpretation

In 2013, the common shareholders of Aftab automobiles have earned 3.1625 taka per share.

EPS has decreased from recent years. EPS is below industry average, which is poor. Net

profit has gone down thats why the ratio decreased.

The price earnings ratio, often called the P/E ratio or price to earnings ratio, is a market prospect

ratio that calculates the market value of a stock relative to its earnings by comparing the market

price per share by the earnings per share. In other words, the price earnings ratio shows what the

market is willing to pay for a stock based on its current earnings.

Equation Market Price per Share / Earning Per Share

Aftab Automobile

Ratio

Price To

Earnings

(P/E)

2008

2009

2010

2011

2012

2013

Company Industry

Average Average

4.0388 12.2549 0.8217 0.6494 2.9240 3.1646 3.9755

4.5800

Interpretation

In 2013, the common shareholders of Aftab autimobiles were willing to pay 3.1646 taka fot

every taka of reported earnings.Compare to 4.58 industry avarage Aftab automobiles P/E

ratio is low . Lower ratio will give shareholders a lack of confidance with this share, is

usually an indication of poor current and future performance. This could prove to be a poor

investment.

But from recent years it is going up and expected it will catch up with industry avarage.

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