Assignment 6 Financial Ratios ( APM Industries ) By Anil Verma ( EPGP-13D-

010)

Solvency
S.No Short Term Solvency FY 2020 FY 2019

1 Net marking Capital In Crores 21.2 15.55

2 Current Ratio 1.37 1.23

3 Quick Ratio 0.5 0.53
4 Average Daily Exp ( in Cr) 0.5922 0.5962

5 Cash cover for daily exp. 9.49 10.96

6 Quick asset cover for daily exp. (days) 7.83 10.02

7 Current asset cover foe dailyt exp.(days) 21.52 23.07

Current liabilities cover for daily exp.

8 15.7 18.81
(days)
9 Account receivable T/O 11.29 9.23

10 Average collection period 31.47 39.53

11 Inventory turnover 5.54 5.7

12 Inventory conversion period 66.06 64.04

13 Average payable (days) 8.73 9.14
Long term solvency
1 Total debt to total capital Paid 0.62 0.73
2 Long term debt to total capital 0.41 0.45
3 Times Interest covered 1.54 1.83
Profitability
Margin On Sales
1 Gross Profit marginal (%) 23.31% 21.30%
2 Operating Profit marginal (%) 6% 6.60%
3 Net Profit marginal (%) 2.66% 2.68%
Return on Investment
1 Operating asset to operating sales (%) 12.45% 12.84%
2 net income to total asset (%) 2.97% 3.01%
3 Return on equity (%) 5.46% 6.01%
Efficiency of use of asset
1 Total asset T/O 1.12 1.123
2 operating asset 2.08 2.27
3 marking capital 12.67 17.6

1: Short Term solvency:

A: APM industries is in an average condition in terms of fulfilling their short term
commitment in supporting better short term solvency status.
B: In APM industries current ratios is slightly better in comparison to FY 2019 due to slight
increase in inventory.
C: Liquid ratio / Quick ratio is slightly lesser than FY 2019, this is the tougher test of short
term solvency
D: In comparison to FY-20 and FY 19 , in most of the ratios fluctuation can be seen, avg.
collection is lesser in FY 20 & inventory conversion is slightly higher in FY 20.

2: Long Term solvency:

A: The ratio is lesser in FY 20 1.54 crores FY 19 it was 1.83 crores , interest covered ratio is
not improved in 2020 , due to which company is burdened by debt expenses.
B: Total debt to total capital paid & Long term debt to total capital ratio has decreased in
2020 .

3: Margin on sales :

A : Margin of sales has gone up in FY 20 , due to cost of goods sold .

B: Operating profit margin has slightly decreased due to less operating efficiency , financial
insufficiency .

4: Return on investment :

A: Return on operating asset has slightly decreased in FY 20 compared to FY 19 mainly due

to slight decrease in sales & changes in inventory & WIP.
B: return on total asset & equity both has slightly decreased in FY 20 , due to less income
earned the whole year .

5: Efficiency of use of asset :

A: Total asset T/O remained same in both the years .

B: The operating asset to turnover ratio has decreased probably due to size of capital
invested, but below avg. return can be seen.
C: The working capital turnover has decreased to 12.67 in FY 20 compared to 17.6 in FY 19,
this is due to decrease in efficiency of the use to net working capital i.e revenues earned to
working capital investment has decreased .

The End