Inventory Turnover Ratio:

Inventory Turnover Ratio = Cost of goods sold / Average Inventory (times)

2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

HR Textiles 3.45 4.82 5.40 5.57 3.85

Limited
ENVOY
Textiles 3.84 2.99 3.01 2.75 2.87
Limited
Shaiham 1.46 1.32 1.15 0.11 0.87
Textile
Limited

Inventory Turnover Ratio

HR textile ENVOY textile SAIHAM textile

5.57
5.4

4.82

3.84 3.85
3.45
2.99 3.01 2.87
2.75

1.46 1.32
1.15
0.87

0.11
2014 2015 2016 2017 2018

Interpretation: This ratio indicates, how many times a company has sold and replaced its
inventory in a given time period and shows how efficiently a firm is managing its inventory. So,
higher inventory turnover ratio will imply either a strong sales or insufficient inventory of these
companies.
HR Textiles Limited: From 2014-2015 to 2017-2018 the ratio gradually increased because the
inventory are decreasing each year which caused the increasing number of inventory turnover till
2017-2018 but in 2018-2019 the inventory increased a bit that’s why the inventory turnover
decreased to 3.85.

Envoy Textiles Limited: From 2014-2015 to 2015-2016 the ratio has decreased because the
inventory has increased at a greater rate than it increased in COGS. However, the very next year
the increase in inventory dropped which caused a higher turnover. Then over the next years, the
company had lower turnovers which indicate that they were inefficient in managing their
production process and either weak sales or there may be excess of inventory which are still idle.
It implies the inventories are not being converted into finished goods for production efficiently.

Shaiham Textiles Limited: From the year of 2014-2015 to 2017-2018 the ratio was decreased.
And after that it was increased. Though it was higher than 2017-2018, it was lower than the
previous years. We know that higher the ratio better it is. So we can say that in the year of 2014-
2015 company was in better position.

Average No of day’s inventory in stock:

Average no. of days inventory in stock = 365/ Inventory turnover (days)

201

HR Textiles
Limited
ENVOY
Average No. of Days Inventory in Stock Textiles
Limited
HR textile ENVOY textile SAIHAM textile Shaiham
317.39 Textile
Limited
276.51
250

132.73124 127.18
122.07 121.26 114
106
95.05 95
76 68 66

2014 2015 2016 2017 2017

Interpretation: It indicates the days needed by organizations to convert its raw material to
finished goods. So, lower ratio is better for the organization because all company wants to
complete its production quickly.

HR Textiles Limited: In 2014-2015 the days of inventory stock was most but after that the
company worked and maintained it properly even though in 2017-2018 it increased a bit
but the company did not need to tensed a lot as the have experience of maintain it properly
in the past.

Envoy Textiles Limited: In the equation inventory turnover is the denominator, as

inventory turnover is the highest in 2014-2015, the number of days required to complete the
production process decreases which is very good for the company. However, as the turnover
decreases over the next years, the no. of days inventories are kept seems higher and it takes
more time to covert production.

Shaiham Textiles Limited: Here, we can see that the ratio was increased from the year of
2014-2015 to 2016-2017. After that it was decreased. We know that lower the ratio better it
is. So in 2018 the company was in better position as the ratio was lower than other years.

Receivable Turnover:

Receivable turnover = Sales / Average receivable turnover (times)

Company 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

Name
HR Textiles 2.92 4.37 5.95 4.92 3.74
Limited
ENVOY
Textiles 3.70 2.91 3.27 3.38 3.56
Limited
Shaiham 6.55 7.34 2.73 3.47 3.67
Textiles
Limited
 Receivable Turnover Ratio
HR textile ENVOY textile SAIHAM textile

7.34
6.55
5.95

4.92
4.37
3.7 3.74 3.56 3.67
3.27 3.38 3.47
2.92 2.91 2.73

2014 2015 2016 2017 2018

Interpretation: This ratio indicates the number of times the company sells and collects the
average receivables and how effective a company is in extending credit as well as collecting
debts. Higher ratio indicates well for the organization, because it shows the ability of a company
to sell more frequently, as well as collecting cash frequently.

HR Textiles Limited: We know that higher ratio is better for the company so we can say HR
textiles was in best position 2016-2017 and their worst position 2014-2015. Rest of the rest we
can say they we in average same position.

Envoy Textiles Limited: In the five years the turnover ratio was almost the same except
for the year 2015-2016 because turnover was lower as the accounts receivable was much
greater than the sales of that year. It means that the company is not collecting cash more
frequently nor has a good quality of debtors and not efficient in managing its debtors.

Shaiham Textiles Limited: Here we can see that, the ratio was increased in 2014-2015 and
2015-2016. Then it was decreased in 2016-2017. Then again it started to increase in 2017-2018
and 2018-2019.We knows that higher ratio is better. So it can be said that the company was in
better in 2014-2015 & 2015-2016.

Average No. of day’s receivable outstanding:

Average no. of days receivable outstanding = 365 / Receivable turnover (days)

Company 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

Name
HR Textiles 125 84 61 74 98
Limited
ENVOY
Textiles 98.65 125.43 111.62 107.99 102.52
Limited
Shaiham 55.72 49.72 133.69 105.18 99.45
Textiles
Limited
 Chart Title
HR textile ENVOY textile SAIHAM textile

133.69
125 125.43
111.62 107.99
105.18
98.65 98 102.5299.45
84
74
61
55.72
49.72

2014 2015 2016 2017 2018

Interpretation: It indicates from the sales on an average how many days later a company
can collect that receivable amount. So here, lower the ratio better it is for the company,
because every company wants to collect that receivable amount as soon as possible.

HR Textiles Limited: The receivable turnover was highest in 2014-2015 but after in keep
decreasing till 2016-2017. The 2016-2017 was lowest so we can say that the firm was best
position 2016-2017 after that the ratio started to increase again.
Envoy Textiles Limited: Here, as receivable turnover keeps decreasing, it being the
denominator, the number of day’s receivable outstanding keeps increasing in the first three
years. For 2017-2018 and 2018-2019 it slightly decreased as the turnover increased which
indicates company is being able to collect the receivable amount as soon as possible.

Shaiham Textiles Limited: From the year of 2014-2015 to 2015-2016 the ratio was
decreased. But in 2016-2017 it was increased. Then from 2017-2018 to 2018-2019 it was
decreased again. We know that lower ratio is better for company. So in 2015-2016 the
company was in better position as the ratio was lower.
Payable Turnover:

Payable turnover = Purchase / Average accounts payable (times)

Company 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

Name
HR Textiles 1.33 1.19 3.15 3.55 2.67
Limited
ENVOY
TEXTILES 4.68 4.49 8.66 8.53 3.29
LIMITED
Shaiham 7.40 5.74 1.38 19.93 27.60
Textiles
Limited

Interpretation: It indicates in a year how many times raw material is purchased and
accounts payable is created. So, lower ratio is better for the organization because all the
companies have the intention to pay less frequently.
HR Textiles Limited: We know that the lower the ratio the more efficient the company is.
According to ratio the company was most efficient in 2015-2016. After that it got increased
for two years and in 2018-2019 in decreased again a bit.
Envoy Textiles Limited: Here, from 2014-2015 to 2016-2017 the purchase increased at a
greater amount which caused the ratio to increase but for the next three years it started to
decline as there was increase in accounts payable. So, it as lowers the turnover it is better for
the company.

Shaiham Textiles Limited: Here we can see that from the year 2014-2015 to 2016-2017 the
ratio was decreased. From 2017-2018 to 2018-2019 it was higher than previous years. We know
that the lower the ratio the more efficient the company is. So here in 2016-2017 the company
was in better position.
Average No. of days payable outstanding:

Average no. of days payable outstanding = 365 / Payable turnover (days)

Company 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

Name
HR Textiles 274 306 115 102 137
Limited
ENVOY
Textiles 77.99 81.29 42.15 42.79 110.94
Limited
Shaiham 49.32 63.58 264.49 18.31 13.22
Textiles
Limited

Interpretation: It indicates that from the purchase of raw material how many days a
company can delay for payment. So, higher the number of days, better it is for the
organization because organizations want to delay for payment.

HR Textiles Limited: In 2014-2015 the payable outstanding was highest after that in next two
years in decreased and increased again in 2018-2019. We know that in this case higher ratio is
better. So it can be said that the company was in better position in 2015-2016.

Envoy Textiles Limited: As payable turnover is the denominator in the equation, thus as
payable turnover was high in 2014-2015; it led to a lower number of days payable
outstanding compared to the next year. In the next year it was 81.29 days which indicates the
company will have more days to make the payment. However, in the third and fourth year it
declined again which indicates inefficiency of the organization. In the last year, the number
of days was the highest which means company can delay for payment for 110.94 days.
Shaiham Textiles Limited: From 2014-2015 to 2016-2017 the ratio was increased. After that
from 2017-2018 to 2018-2019 it was decreased. We know that in this case higher ratio is better.
So it can be said that the company was in better position in 2016-2017.

Fixed Asset turnover:

Fixed asset turnover = Sales / Fixed assets (times)

Company 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

Name
HR Textiles 1.80 2.50 2.72 1.40 1.42
Limited
ENVOY
Textiles 0.86 0.66 0.76 0.81 0.88
Limited
Shaiham 0.85 0.84 0.61 1.12 0.68
Textiles
Limited
Interpretation: It is an efficiency ratio which indicates how much sales is generated by
utilizing the fixed assets of the company. So, here the higher is the ratio, the higher is the
efficiency for the organization.

HR Textiles Limited: We know that higher the ratio better it is for the company. In 2014-
2015 it was less than in 2015-2016 and 2016-2017 in increased. As in 2016-2017 the ratio
was highest we can say that the company was in best position at that time. After that it
again started to decrease.
Envoy Textiles Limited: Here, in 2014-2015 the turnover was 0.86 times but it started to
decrease up until 2016-2017 because of the decrease in sales compared to the increase in
fixed assets of those years. This indicates inefficiency of the company in utilizing the fixed
assets to generate its sales. From the next year the turnover started to increase for the
increase in sales. So, the company is utilizing its fixed assets efficiently to generate sales.

Shaiham Textiles Limited: Here we can see that, from the year of 2014-2015 to 2016-2017 the
ratio was decreased. And then in 2017-2018 it was increased. But after that in 2018-2019 it was
decreased again. We know that higher the ratio better it is. So in the year of 2017-2018 the
company was in better position as the ratio was higher than the other years.

Total Asset Turnover:

Total asset turnover = Sales / Total asset (times)

Company 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

Name
HR Textiles 0.72 1.08 1.24 1.84 0.62
Limited
ENVOY
Textiles 0.50 0.37 0.44 0.45 0.88
Limited
Shaiham 0.39 0.40 0.35 0.43 0.44
Textiles
Limited

Interpretation: It indicates by utilizing the total assets how much sales is generated. So
here higher is the ratio higher is the efficiency for the organization.
HR Textiles Limited: Here, from 2014-2015 to 2017-2018 their total asset increased at a
slower rate than the rate of increase in sales but in 2018-2019 it decreased.
Envoy Textiles Limited: The total asset increased at a slower rate in the second year than
the rate of increase in sales, so the ratio decreased slowly in that year. In the next three
years, by utilizing all the assets, the company generated .44, .45 and .88 times sales at an
increasing rate by utilizing their total asset.
Shaiham Textiles Limited: Here, in the year of 2015-2016 the ratio was higher than the
previous year. After that in 2016-2017 it was decreased. Then from 2017-2018 to 2018-2019 it
was increased again. We know that higher the ratio better it is. So in the year of 2018-2019 the
company was in better position
Operating Cycle:
Operating cycle = (365/Inventory Turnover) + (365/Receivable Turnover) (days)

Company 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

Name
HR Textiles 231 160 129 140 193
Limited
ENVOY 193.7 247.5 232.88 240.72 229.7
TEXTILES
LIMITED
Shaiham 305.72 326.23 451 229.18 213.45
Textiles
Limited

Interpretation: Operating cycle measures the performance of working capital. Shorter the
cycle better the management performance. Longer cycle indicates lack of liquidity and for
that a company may need short term loan.
HR Textiles Limited: At the first year 2016-2017, it has less value to convert in cash, which
was showing higher liquidity. However, in 2014-2015, it shows longer days because the
receivable turnover is more in number, which indicates the company is in more risk in that
particular time.
Envoy Textiles Limited: Operating cycle of this company sometimes increase and
sometimes decrease. The reason behind this they took longer time to take money from
receivers.
Shaiham Textiles Limited: Here from 2014-2015 to 2016-2017 operating cycle was increased.
After that in 2017-2018 it was lower than previous years. Then the next year it was increased
again. We know that the lower operating cycle is better for a company. So here in 2014-2015 the
company was in better position.
Cash Cycle:
Cash Cycle= Operating Cycle – No. of days payable outstanding

Company 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

Name
HR Textiles 106 146 14 38 56
Limited
ENVOY 115.71 166.21 190.73 197.93 118.76
Textiles
Limited
Shaiham 256.04 262.65 186.51 210.87 200.23
Textiles
Limited

Interpretation: Cash cycle or cash conversation cycle (CCC) is the time between the raw
materials purchase to make a product. Shorter the cycle better it is. If the cycle time is
longer than the company may need to borrow loan to fulfill their daily operations.

HR Textiles Limited: As we know, the lower the cash cycle the more better the liquidity
condition is. So, the mentioning years shows shorted cash cycle from 2016-2017 to 2018-
2019.So that times company was in better position.

Envoy Textiles Limited: The company cash ratio sometimes increase and sometimes
decrease. The reason behind their outflow is fast but cannot collect the cash timely.

Shaiham Textiles Limited: In 2016-2017 the cash cycle was lower than previous two years.
After that in 2017-2018 and 2018-2019 it was increased again. We know that lower cash cycle is
better. So in 2016-2017 the company was in better position as the cash cycle was lower than
other years.
Current Ratio:

Current Ratio= Current Asset / Current Liabilities

Company 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

Name
HR Textiles 0.99 0.95 0.84 1.24 1.21
Limited
ENVOY 0.99 0.89 0.85 0.86 1.08
TEXTILES
LIMITED
Shaiham 1.51 1.57 1.42 1.34 1.48
Textiles
Limited

Interpretation: Current ratio means the ability of a company to cover its short-term liabilities by
using its current assets. Higher the ratio is better for the company. It indicates that the company
has more money to pay its current liabilities. But having too much liquidity means less
profitability. On the other hand, less liquidity creates liquidity crises in the company. So, there is
a rule of thumb which is - the current assets should be double than current liabilities. Current
Ratio = 2:1

HR Textiles Limited: From 2016 to 2018 because of the company current assets were lower
than current liabilities that why the current ratio was very less. But It increased in 2017-2018 and
again a bit decreased in 2018-2019.

Envoy Textiles Limited: The company current ratio was decreased from 2016 to 2018
because of the company current assets were lower than current liabilities. But in 2019 the
ratio was higher than previous years because the current assets were more than current
liabilities. Overall, the company is maintaining enough current assets to pay their current
liabilities from last two years as a result the ratio are increasing.

Shaiham Textiles Limited: From the table we can see that, in the year of 2015-2016 the
ratio was higher than the previous year. Then from 2016-2017 to 2017-2018 it started
decreasing again. After that in 2018-2019 it was increased again. As we know that higher
the ratio better it is, so it can be said that in 2015-2016 the company was in better position.

Quick Ratio:

Quick Ratio= Cash + Marketable Securities + Accounts Receivables / Current Liabilities

Company 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

Name
HR Textiles 0.52 0.43 0.40 0.66 0.56
Limited
ENVOY 0.55 0.52 0.44 0.44 0.55
TEXTILES
LIMITED
Shaiham 0.68 0.73 0.33 0.36 0.57
Textiles
Limited

Interpretation: Quick ratio means the ability of a company to pay its short-term liabilities
by using its quick assets. Higher the ratio better it is. Cash, cash receive, market security
and accounts receivable are considered as quick assets. There is a rule of thumb which is
quick assets should be 1.2 times than current liabilities.

HR Textiles Limited: They overall companies ratio has been 0.40 to 0.66 that it didn’t
changed a lot over the year. Regarding the situation the company was best position in 2017-
2018 as the quick ratio was 0.66 at that time.

Envoy Textiles Limited: The company quick ratio was decreased from 2015-2018 because
of the company quick assets were lower than current liabilities. But in 2019 the ratio was
higher than previous years. Overall, the company is maintaining poor quick assets to pay
their current liabilities because they do not match the standard value which is 1.2 of quick
 ratio.
Shaiham Textiles Limited: In 2014-2015 and 2015-2016 the ratio was increased. But in 2016-
2017 it was decreased. After that from 2017-2018 to 2018-2019 it was increased again. We know
that company is more efficient with higher quick ratio. So here in 2015-2016 the company was in
better position.

Cash Ratio:

Cash Ratio= Cash + Marketable Securities / Current Liabilities

Company 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

Name
HR Textiles 0.04 0.09 0.04 0.02 0.02
Limited
ENVOY 0.007 0.015 0.013 0.014 0.004
TEXTILES
LIMITED
Shaiham 0.55 0.31 0.01 0.01 0.02
Textiles
Limited

Interpretation: Cash ratio means the ability of a company to pay its current liabilities by
using its cash and market securities. A ratio above 1 means that a company will be able to
pay off its current liabilities with cash and cash equivalents. Higher the ratio better it is.

HR Textiles Limited: The cash cycle in 2015-2016 is 0.09, but then kept decreasing due to
decreasing payable turnover as well as decreasing operating cycle. And in 2014-2015 it’s 0.04

Envoy Textiles Limited: The company cash ratio was increased from 2015-2017 because
of the current liabilities were low. But in 2018 and 2019 the values decreased due to
increase of current liabilities. From the table we can see that the company was maintaining
a very low cash asset to pay their current liabilities.
Shaiham Textiles Limited: From 2014-2015 to 2017- 2018 the ratio was decreased. After that
the next year the ratio was increased again. In 2014-2015 the company was in better position
because higher the ratio the better the company is.

Debt to total Capital:

Debt to Total Capital = Total Debt / Total Capital

Company 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

Name
HR Textiles 29.08% 13.85% 25.58% 67.56% 80.06%
Limited
ENVOY 0.51 0.59 0.62 0.64 0.64
TEXTILES
LIMITED
Shaiham 45.89% 40.91% 0.43% 0.50% 0.32%
Textiles
Limited

Interpretation: Debt to Capital means this ratio shows what portion of total capital is formed
by total debt. Higher the ratio the financial risk is more. This ratio indicates that the total portion
of debt among its total capital.

HR Textiles Limited: From 2015 to 2019 the liability was increasing so The company ratio
was increased each year gradually. In 2014-2015 the ratio was 29.08 so the liability was high
in that year too .

Envoy Textiles Limited: The company ratio was increased from throughout the five years
because of the liabilities were so high. They were increasing their long-term loan every
single year that’s why the ratio was also increased.

Shaiham Textiles Limited: From the year of 2014-2015 to 2016-2017 the ratio was
decreased. Then in 2017-2018 it was increased and after that in 2018-2019 it was decreased
again. We know that lower ratio is better. So in 2018-2019 the company was in better
position.

Debt to equity:

Debt to Equity = Total Debt / Total equity

Company 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

Name
HR Textiles 3.28% 3.06% 3.17% 1.52% 2.25%
Limited
ENVOY 1.02% 1.41% 1.66% 1.79% 1.77%
Textiles
Limited
Shaiham 0.84% 0.69% 0.78% 1.03% 0.48%
Textiles
Limited

Interpretation: The debt to equity ratio imparts the percentage of company financing that comes
from creditors and investors. More creditor financing (bank loans) is used than investor financing
(shareholders) which is indicated by a higher debt to equity ratio. Higher ratio indicates more
risk for the organization.
HR Textiles Limited: In the year of 2015-2016 the ratio was lower than the previous year. Then
from 2016-2017 ratio increased. After that, in 2017-2018 it was decreased and increased again in
2018-2019.

Envoy Textiles Limited: We know that the lower debt is better for the company. In this scenario
companies debt to equity ratio was lowest in 2014-2015 after that it started to increase gradually
because of the increasing amount of debt.

Shaiham Textiles Limited: In the year of 2015-2016 the ratio was lower than the previous year.
Then from 2016-2017 to 2017-2018 it started to increase. After that, in 2018-2019 it was
decreased again. Lower the ratio better it is. So it can be said that in 2018-2019 the company was
in better position.

Time Interest earn ratio:

Company 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

Name
HR Textiles 1.10 1.05 0.90 0.53 0.32
Limited
ENVOY 3.40 2.53 1.83 1.70 1.94
TEXTILES
LIMITED
Shaiham 1.6 1.6 1.89 4.25 (12.39)
Textiles
Limited

Interpretation: Times interest earned ratio is a measure of a company’s ability to meet its
interest debt obligations based on its current income. Higher the ratio better for the
company. A higher ratio mean that a company has low level of leverage with earnings that
could be used for investment opportunities to get higher rate of return.
HR Textiles Limited: The ratio kept decreasing from 2014-2015 to 2018-2019, as EBIT kept
decreasing and interest expense kept increasing for HR textiles.

Envoy Textiles Limited: The ratio is decreased from 2015 to 2018 due to the higher EBIT
and lower interest expense than previous years. Only in 2019 they have a lower ratio
because the company paid their liabilities using their EBIT.
Shaiham Textiles Limited: Here in 2017-2018 TIE was higher than any other years, And in
2018-2019 the value of TIE was negative. We know that higher Tie is better, So it can be said
that in 2017-2018 company was better position in this case.

CFO to Debt:

CFO to Debt = Cash from Operations / Total Debt

Company 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

Name
HR Textiles 0.02 0.21 0.12 0.08 0.07
Limited
ENVOY 0.82 0.54 0.57 0.63 0.04
TEXTILES
LIMITED
Shaiham 0.23 (0.18) 0.03 5.27 0.05
Textiles
Limited

Interpretation: This ratio means how long a company would take to pay all their debt by
using their cash flow from operations. Higher the ratio indicates lower risk. It means the
company has a lower probability of defaulting on its loans, making it a safer investment
opportunity for debt providers.

HR Textiles Limited: The company ratio was 0.02 in 2015-2016, which means very low.
In 2016-2017 it increased to highest 0.21 which was surely the best one for the company
but it gradually decreased in rest of the years.

Envoy Textiles Limited: The company ratio was decreased from 2015-2017 because of the
liabilities were so high than cash from operations. Again in 2018 the ratio was high because
a big portion of bank loan was decreased so the company easily pay their liabilities using
their cash from operations.
Shaiham Textiles Limited: Here we can see that in 2015-2016 the CFO to debt is negative. Then
In 2017-2018 it was higher than previous years. After that in 2018-2019 it was decreased again.
In 2017-2018 the company was in better position because the ratio was higher. We know that
higher the ratio better the company is.

Profit Margin:
Company 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
Name
HR Textiles 0.03 0.02 0.02 0.02 0.01
Limited
ENVOY
TEXTILES 0.1 0.07 0.05 0.04 0.06
LIMITED
Shaiham 0.04 0.04 0.06 0.05 0.62
Textile
Limited

Interpretation: The profit margin ratio indicates what percentage of sales are left over after
all expenses are paid by the business. Creditors and investors use this ratio to know how
effectively a company can convert sales into net income. A high net profit margin shows
that a company is able to control its costs and provide goods or services effectively at a
price significantly higher than its costs.

HR Textiles Limited: The profit margin was highest in 2014-2015. Then it started
decreasing over the years. It all happened due to increase in overall expense

Envoy Textiles: For the same the profit margin was highest in 2014-2015. Then it started
decreasing over the years. It all happened due to increase in overall expense. Although their
 sales revenue in other years was comparatively higher than 2014-2015, they incurred huge
expenses in those years. The profit margin again increased a bit in 2018-2019 which is still
less than that of 2014- 2015.
Shaiham Textile Limited: Here in 2014-2015 and 2015-2016 the ratio was same. Then in 2016-
2017 it was increased. After that the next year it was again decreased. But in 2018-2019 it was
increased again. We know that higher ratio is better. So in 2018-2019 the company was in better
position.

Return on equity:

Return on equity = Net income / Shareholder’s Equity

Company 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

Name
HR Textiles 8.78% 9.7% 11% 4.4% 2.6%
Limited
ENVOY
TEXTILE 10.19% 6.04% 5.39% 9.03% 8.74%
S
LIMITED
Shaiham 4.23% 3.91% 4.53% 5.29% (4.68)%
Textiles
Limited

Interpretation: The return on equity ratio is a profitability ratio that measures the ability of
a firm to generate profits from its shareholders investments in the company. It is an
indicator of how effective management is at using equity financing to fund operations and
grow the company. Higher the ROE, the better it is.

HR Textiles Limited: In 2014-2015 the ROE was 8.79% it gradually increased till 2017. In
2016-2017 the ROE was highest 11% after that it started to decrease.
 Envoy Textiles: The highest return on equity was in 2014-2015. It started decreasing from
2015-2016 to 2016-2017 and then increased in 2017-2018 and again decreased in 2018-
2019. It all happened causing fluctuation in the ratio. It is found that the highest
shareholder’s equity was in 2014-15. But they could not utilize their equity.

Shaiham Textiles Limited: Here 2016-2017 and 2017-2018 the ratio was higher than previous
years. Then in 2018-2019 the ROE was negative. We know that higher ROE is better for a
company. So in 2017-2018 it was in better position.

Return on Asset:

Return on Asset = Net income / Total Assets

Company 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

Name
HR Textiles 2% 2.4% 2.6% 1.7% 0.79%
Limited
ENVOY
TEXTILES 5.19% 2.72% 2.12% 1.97% 3.15%
LIMITED
Shaiham 2.29% 2.83% 2.91% 2.74% (1.26%)
Textiles
Limited

Interpretation: Return on Asset shows that, by using total assets, how much profit has
been earned by the company. Higher the return on assets, higher the profitability. It
measures management’s ability and efficiency in using firm’s assets to generate profit.

HR Textiles Limited: In 2016-2017 the ratio was higher than other years and In 2017-2018
the ratio was lowest than other years. From 2014-2015 it gradually increased and from
2017-2018 it started to decrease.
 Envoy Textiles: From the above table, it is found that the highest return on asset was in
2014- 2015. In this year, although they had the lowest total assets, they could utilize their
assets. Then the ratio started decreasing from 2015-2016 to 2017-2018. Then again it got
increased a bit in 2018-2019. The total assets in rest of the years kept on increasing but
could not utilize and thus the ratios got decreased over the years.
Shaiham Textiles Limited: In 2016-2017 the ratio was higher than other years. And the value of
2018-2019 was negative. Higher the ROA value the better the company is. So we can say that in
2016-2017 the company was in better position.