ACTIVITY RATIOS:

“Activity ratios are the indicators to measure the organization’s performance towards the usage
and management of the resources”

“Ratios for measuresing the effectiveness of management to use its resources to generate sales”

ACTIVITY RATIO:

TURNOVER ANALYSIS PERIOD ANALYSIS

TURNOVER ANALYSIS:
 Total asset turnover ratio
 Fixed asst turnover ratio
 Current asst turnover ratio
 Working capital turnover ratio
 Receivable turnover ratio
 Inventory turnover ratio

PERIOD ANALYSIS:
 collection period
 operating cycle
 age of inventory
 payment period

YEARS INVOLVED:
Current year 2010
Base year 2009
ANALYTICAL TABLE:
Turn Over Analysis

Ratio name Current Base year Result Reason for

year 2010 2009 change
Total asset 1.73 times 1.26 times Favourable Sales 34%
turnover T.A 2.59%
ratio
Fixed asset 4.06 times 2.71 times Favourable Sales 34%
turnover F.A 10.64
ratio
Current 3.02 times 2.35 times Favourable Sales 34%
asset C.A 4.3%
turnover
ratio
Working 14.51 times 14.77 times Unfavourabl Sales 34%
capital e W.C 36%
turnover
ratio
Receivable 9.9 times 6.40 times Favourable Sales 34%
turnover Receivables
ratio 13.56
Inventory 4.96 times 3.91 times Favourable Cgs 36.33%
turnover Inventory7.33%
ratio

Period Analysis

Ratio name Current year Base year Result

2010 2009
Collection 36 days 56 days Favourable
period
Payment 4 days 5 days Unfavourab
period le
Age of 73 days 92 days Favourable
inventort
Operating 109 days 148 days Favourable
cycle
CRITICAL ANALYSIS:

Most of the activity ratios of Tri Pack Films Limited are favourable in 2010 as
compared to base year2009, whish shows the the efficiency and effectiveness of the management
towards the utilization of resources for generating sales.

Trun Over:
 Total asset turnover ratio/capital turnover ratio is getting better as compared to base year.
The reason is increase in sales 34.% and usage of assets is decreasing 2.59%.
Management is performing a good job and managing its total asset effectively.

 Fixed asset turnover ratio is showing favourable trend due to sales increment 34% and
less usage of fixed asset 10.64% .it means management is utilizing its fixed asset
properly.

 Current asset turnover ratio is favourable due to increase in sales and more use of current
assets. curent assets are increased 4.36%.

 Working capital ratio is unfavourable. sales are increasing while working capital also
increasing more.

 Receivable turnover is favourable due to increasing sales and less generation of account
receivable. managemnt is efficient for collecting receivable and collecting money from
customer as soon as possible.

 Inventory turnover is favourable because our inventory is converting into cost of goods
sold more times as compared to base year. Its will increase the overall profitability of the
business.

Collection system:
Collection of receivables is favourable while company making payments earlier as compared to
collections. As compared to base year collection system is getting better but management should
focus on collection earlier and payment later.

Ratio name Tri pack Seimens Result

Total asset 1.73 times 1.06 times Favourable
turnover
ratio
Fixed asset 4.06 times 15.6 times Unfavourabl
turnover e
ratio
Current 3.02 times 1.26 times Favourable
asset
turnover
ratio
Working 14.51 times 7.40 times Favourable
capital
turnover
ratio
Receivable 9.9 times 1.79 times Favourable
turnover
ratio
Inventory 4.96 times 23.41 times Unfavourabl
turnover e
ratio

Operating cycle:
Operating cycle means the how much time is utilized for procurement of inventory and then
converting into sales and collection money. Company’s operating cycle is getting favourable, it
has been reduced upto 109 days as compared to base year 148 days.

COMPARATIVE ANALYSIS:

Turn Over Analysis

 Period Analysis

Ratio name Tri pack Seimens Result

Collection 36 days 201 days Favourable
period
Payment 4 days 103 days Unfavourab
period le
Age of 73 days 15 days Unfavourab
inventort le
Operating 109 days 216 days Favourable
cycle