Engro polymer and Chemicals ltd.

(EPCL)
Introduction:
Redco Textiles Limited as a Public Limited Company. incorporated in Pakistan
on 17 October 1991 It was incorporated under the repealed Companies
Ordinance, 1554 now the Companies Act, 2017 and is listed on Pakistan Stock
Exchanges. Redco's principal activities include manufacture and sale of yarn
and grey fabric. The registered office of the Company is stuated at 18-F, Redco
Arcade, Blue Area, islamabad.

Liquidity Ratios:
Liquidity ratios Current ratio Quick ratio Cash ratio Net working
capital
2020 0.2667 times 312469.95 times 33403 times 858976times
2021 0.2190 times 331752.96 times 15212 times 1182568 times
Change 0.0477 times 19283.01 182191 times 323592
times times

In liquidity ratio, the current ratio is decreased due to decrease in current assets.
The quick ratio is increased and the reason is that sales and inventory turnover are increased.
Now, the company can be more liquid and generate more cash in times of emergency. The
reason of decrease of cash ratio is due to an increase in short-term debt, a decrease
in current assets, or a combination of both. However, the net working capital is
increased due to the increase of current assets with no increase in current liabilities.

Efficiency Ratios:
Efficiency Account Average Inventory Conversion Operating Asset
ratio Receivable Collection Turnover period cycle Turnover
Turnover Period
2020 4.44 times 81.08 5.35 times 67.28 times 33475.63 0.28
times times times
2021 4.82 times 74.68 9.56 times 37.65 times 15231.12 0.28
times times times
Change 0.38 times 6.4 times 4.21 times 29.63 times 18244.51 0
times times
In efficiency ratio, account receivable turnover has increased due to high quality of customers.
Average collection period is decreased because the company collect payments faster. A increase
by driving input costs lower and sales higher. An decrease in conversation period could mean
that the code hasn’t been installed correctly, or needs to be updated to take account of a change
you’ve made. Operating cycle Speed up the sale of its inventory. Asset turnover is
remaining same indicate how efficiency a business is using its fix assets.

Leverage Ratios:
Leverage Ratios Debt ratio Equity ratio Debt to equity Interest
ratio coverage ratio

2020 0.01 ℅ 0.16℅ 0.05℅ 638.65℅

2021 0.00 ℅ 0.39℅ 0.00℅ 393.74℅
Change 0.01 ℅ 1.23℅ 0.05℅ 244.91%

In leverage ratio, the decrease of debt tells a good financial health of the company due to its
increased sales and lower costs. An increase of equity ratio means that a company’s effectively
funded its asset requirements with a minimal amount of debt. A decrease of debt to equity ratio
means that a company have more owned capital than borrowed capital. An decrease in interest
coverage ratio is due to less operating profits are available to meet interest payments and that the
company is more vulnerable to volatile interest rates.

Profitability Ratios:
Profitability Gross Operating Net Return Return
ratio profit profit profit on on
Margin margin margin equity assets
2020 0.14 ℅ 0.85℅ 0.05 ℅ 0.28 ℅ 0.01℅
2021 0.07 ℅ 0.92℅ 0.11 ℅ 0.25 ℅ 0.03℅
Change 0.07℅ 0.07℅ 0.06 ℅ 0.03 ℅ 0.02℅

In profitability ratio, gross profit margin has decrease reason is that the cost of materials may go
up. Sometimes suppliers increase costs or go out of business and new, more expensive suppliers
are sought. An increase of operating profit margin is due to the reduced cost of goods and
improved inventory management. Net profit margin has increased due to the increased revenues.
An decrease of return on equity is due to the company decreases its equity by increasing debt.
Increased return on assets means that a company is doing well at increasing profits with every
investment and so the net income increases.

Market Ratios:
Market Earning Market/book Dividen Dividend
ratio s per ratio d yield pay-out
 share ratio ratio
2020 0.425℅ 2.02℅ 0℅ 0℅
2021 0.43 ℅ 4.24℅ 0℅ 0℅
Change 0.005% 2.22℅ 0℅ 0℅

In market ratio, an an earning per share decrease when company issues new shares
Market ratio is increased which means that the market is valuing the company’s equity cheaply
compared to its book value. Dividend yield ratio has no change which means that return on
investment has same values throughout the year. A dividend pay-out ratio is zero in case a
company does not pay any dividend due to losses.