We have made ratio analysis of GHP Ispat Limited.

We have checked every parameter, so we

could discuss about this company’s financial data. Company ratio analysis can explain its
financial condition. At first, let interpret about liquidity management of the company. Liquidity
measurement helps us to know about company’s ability to pay of its immediate dues. The
current ratio between 1.5- 3 means the company run well after pays their loan or dues. from
analysis we got about PHP Ispat that its ratio stand on around 1. In 2014 the total current assets
were near to 40 million but next and current liabilities were near to 36 million so the current
ratio 1.10 and the quick ratio 0.42 and 2015 it was same. But in 2016 we have noticed the
current assets and liabilities both were increase, it was 104% and 38% respectively. That’s why
the ratio also increase little bit. Next 2 years its current assets were nearly same so, no major
changes. The company’s current assets and current liabilities both were increased it mean
company made its financing by short term loan. Company’s liquidity ratios cannot make an
investor happy because after paying its liability it has very few cash on its hand. Now let discuss
about debt management ratio, In asset management ratios it describes about how effectively
the company using its asset and product sales. GHP Ispat make good sales in the first three
year. 2014 to 2015 sales increase 27% but the fixed assets decreased 4% and for the reason
fixed assets turnover ratio increase. Next years, net sales increase 48%,66%,108% respectively.
That’s a positive site for the company and may attract the investor and creditors but the ratio
didn’t increase because of the fixed assets also increase. If they make increase the sales and
assets remains the same their assets management ratio would increase.

Debt management ratio refers how much the company made its assets by borrowing or loans.
The less the debt to assets ratio is better for a company. When the ratio is getter than 1 it
means the company will face a risky situation. GPH Ispat’s every ratio is less than 1. This is a
positive message for the company. Non currents liability of the company is a very zigzag
pattern. In 2014 it is very small number but in 2018 it increases 2966%. Total assets aren’t
increase like that way. It only increases 288%. We can say the company borrow so much money
for financing in the last year. Interest coverage ratio not satisfactory. Its always higher than one,
the mean reason for that they borrowed a lot money and they failed to provide the interest.
Profitability ratio is a major part in ratio analysis. Now we discuss about its profit and value for
shareholders we can know if by profitability ratios. Every company’s main purpose is to
generates more profit by using its assets. By return on sales ratio it measures what percentage
of total company revenues are actually converted into company profit. GPH company make a
good sale every year and we see it increase year to year. From 2014 to 2015 the net revenue
increased 27% and in increase 48%, 66% and 108% next years. But no gain because the
company falling down because of it failed to generated profit as its sales increase year to year.
They have to minimize COGS and others operating so that profit will be generate. Return on
assets, equity and capital all of this ratio is very low. Investors and creditors don’t want o invest
in this company. Equity raise from 2014-2018 rate is 6%,150%,161% and 186% respectively.
Company must generate more profit otherwise they couldn’t run the business anymore.

We discussed earning based ratio above. Now going to interpret about cash flow based ratios.
The cash to short term ratio means how much the ability of the company to cover short term
obligation by only cash. The higher the ratio is better for the company. GHP Ispat’s in 2014 cash
to debt ratio is 0.10, next year it increase to 0.18(44%) and in 2016 it is decrease at a alarming
rate which is 0.01(94%). The company mayn’t pay its liability by only cash. next 2 years in2017
and 2018 the result is same condition. Company should make much cash by sales or by others
sources. Cash to fixed assets ratio like the previous one. The company has very low cash in
their hand. Cash to debt ratio in 2014 it was 1.38 and they have near 391 million liability. Next
year it increases only 1% so no major impact on the ratio analysis. In 2016 it increases 40%
which cause a great impact on the ratio. And the ratio decreases 1.32 to 0.92(30%) 2017 it
decreases 0.92 to 0.12(86%) from 2016, in 2018 it drop 66% prom 2017.

Cash interest ratio we used to determine how easily a company can pay its interest on outgoing
debt. It also higher the ratio refers about business solvency. Cash to sales ratio important to run
a business. Cash to sales ratio is important for that. Cash to sales ratio reveals hoe much a firm
generate cash by sales its product. Higher the ratio also refers company making good cash by
selling. GPH ISPAT’s cash to sales ratio is less than standard. Their net sales increases every year
but they failed to convert it into cash. Cash to assets ratio demonstrate that firm ability to cover
it liability by assets. It should be always greater than 1. GPH ISPAT’s every year it belongs less
than 0.20. The company failing to cover it liability by its assets every year. In 2015 the current
liabilities decrease 8.56% and in contrary to the ratio increases 0.06 to 0.10(40%). Next 3 years
liability increase 38.03%, 61.80% and135.92% so, against the ratio decreases 83%, 50%,66%
respectively.