Almarai Co is a manufacturer and distributor of quality and nutritious food and beverages.

The
company's product portfolio consists of dairy products along with juices, bakery, poultry, and
infant formula under the brands Almarai, Joosy Life, Beyti, Teeba, L'usine, 7days, Alyoum, and
AlBashayer. Its segments include Dairy and Juice, Bakery, Poultry, and Other activities. The
majority of the revenue is derived from the sale of the dairy and Juice segment. Most of its
revenue is generated from Saudi Arabia.

Saudia Dairy and Foodstuff Co SJSC (SADAFCO) is a Saudi Arabia-based company, which is
engaged in local production, importation, distribution and marketing of a wide range of food and
beverage products. The Company reports two segments, namely Drinks segment and Non-drinks
segment. The drinks segment represents milk and juice products, while non-drinks represent ice
creams, tomato paste, cheese and snacks. Its products portfolio includes dairy products, ice
cream, tomato paste, snacks, drinks and other foodstuff items. The Company sells its products in
Saudi Arabia, as well as exports to Gulf Cooperation Council countries and European countries.

Liquidity

The current ratio for SADAFCO (2.61) is higher than ALMARAI (1.28), meaning that
SADAFCO has an advantage compared to Amarai when it comes to short-term debt paying. For
the quick ratio, SADAFCO has a ratio of 1.95 while Almarai’s ratio (0.55) is significantly lower,
this means that Almarai’s current assets consists mostly of inventory, meaning they are heavily
reliant on their inventory to meet obligations. Overall, the liquidity situation of SADAFCO is
better than Almarai

Asset Management
Asset management ratios are used by companies to show how they used/managed their assets in
generating revenues. Looking at accounts receivable turnover, SADAFCO has a turnover rate of
10.37, while Almarai has a turnover rate of 7.59. This means that SADAFCO is able to convert
its receivables into cash each year more times that Almarai. Inventory turnover measures how
many times a company’s inventory has been sold and replaced during the year. The inventory
turnover rate for SADAFCO is 3.94 while the inventory turnover rate for Almarai is 2.23, this
indicates that SADAFCO is using its inventory more efficiently and has fewer excessive
inventory compared to Almarai. The average sale period for SADAFCO is 92.58 while the
average sale period for Almarai is 163.97, this indicates that on average, SADAFCO takes fewer
days to sell the entire inventory compared to Almarai. Regarding Total asset turnover,
SADAFCO (asset turnover of 0.99) performs better than Almarai (asset turnover of 0.44).
Overall, it seems that SADAFCO is using their assets more efficiently than Almarai when
generating revenue.

Debt Management
For times interest earned, which is the most common measure of a company’s ability to provide
protection for its long-term creditors, there was insufficient information for SADAFCO as the
interest expenses and the income expenses were not available in neither the statement of
financial position and the income statements. However, for Almarai, it has a times interest ratio
of 38.86, which is efficient as anything below 1 is considered inadequate. For debt to equity
ratio, which measures the relative proportions of debt to equity on a company’s balance sheet,
SADAFCO has a debt to equity ratio of 0.4 while Almarai has a debt to equity ratio of 1.17. This
means that SADAFCO does better in satisfying its creditors as they prefer less debt and more
equity. For equity multiplier, which indicates the portion of a company’s assets that are funded
by equity. It focuses on average amounts maintained throughout the year rather than amounts at
one point in time, SADAFCO has an equity multiplier of 1.3 while Almarai has an equity
multiplier of 2.2, this means that Almarai has more portions of its assets funded by equity than
SADAFCO.

Profitability
Almarai (37%) has a higher gross margin than SADAFCO (32%), which means they have a
larger portion of their revenue left after deducting the costs of goods sold than SADAFCO.
Almarai (13%) also has a higher net profit margin percentage than SADAFCO (12%) which
means that a larger portion of their revenue left after deducting selling and other expenses than
SADAFCO (12%)