Ratios analysis

Ratio type Formula

Profitability Ratio

1 G.P ratio (Gross profit / Net sales) *100

2 Net profit ratio ( Net Profit /net sales) *100

3 Return on Investment (Profit after Tax / Average Assets )*100

(Profit after tax + Interest expense) /* ***Capital

4 Return on capital employed
employed

5 Return On Equity Profit after Tax / Equity

Liquidity Ratio

1 Net working capital Current asset - Current liabilities

2 Current ratio Current asset / Current liabilities

 Acid test / liquid /quick / ( Current Asset - inventories - Prepayments) /
3
short term solvency Ration current liabilities

Debt / Gearing ratios

Earning before Tax and Interest Expense /

1 Interest Cover ratio
interest expense

2 Capital gearing ratio Long term debt / (Long term debt + equity)

Activity / turnover ratios

1 Inventory Turn over Cost of goods sold /Average Inventory

2 Inventory turnover period 365/ inventory turnover ratio

3 Debtors turnover *Net credit sales / closing debtors

4 Debtors turn over period 365/ debtors turnover ratio

 5 Creditors turnover **Net credit purchases / Closing creditors

6 Creditors turnover period 365/ Creditors turnover ratio

7 Asset turnover Net sales / (total asset- current liability)

* All net sales has been considered on credit.

** Purchases figure is not reflected in FS .So Material consumed and Material purchased is same for ratio purpose.
*** Equity +Long term Loan
 2013 2012
Unit Ratio Remarks
Rs(000) Rs(000)

This ratio Represents How much margin Company earns form its sales.
% 28% 27% better from FY 2012.

This ratio Represents How much net profit Company earns form its sale
% 7% 7% 2013 and FY 2012 is same.

This ratio is to measure profitability on assets employed. How much pro

% 11.4% 11.4% employed. Return on Investment for FY 2013 and 2012 is same. Which
maintained its ratios.

This ratio shows return on total funds invested in the business. The maxi
% 36% 50% is. Return on capital employed is decreased for FY 2013 because long te
employed) has increased in FY 2013 resulting in decrease in return on ca

% 597% 597% This represents How much return is their on Equity. Return on equity is

Net working capital ratio shows that current liabilities are in excess of cu
positive indication for a Company. However current liabilities exceeds c
Rs. (64,506) (3,161,297) for FY 2013 and 19 % for FY 2012 which represents that working capita
2013 as Compare to FY 2012. increase of 0.4 % is immaterial for 2013.

Current ratio indicates the ability of Company to pay its current obligatio
Ideal current ratio is 1.5 : 1 and Comply has ratio of 0.996 for FY 2013 a
represents that in FY 2013 Company has more resources to pay off its cu
Times 0.996 0.84 to FY 2012. Because ratio below 1 shows lack of liquid resources to pay
above 1.5 times shows that resources of the Company is not appropriatel
 Liquid ratios reflects the most liquid assets available to meet current liab
Times 0.49 0.37 0.49 times liquid asset FOR fY 2013 and 0.37 time for FY 2012 to pay o
Which indicates that in FY 2013 Company is in better position.

This ratio represents the Company's ability to pay interest expense out o
cover ratio better it is for the Company. Interest Cover ratio for FY 2012
Times 4.8 5.4 is greater for FY 2013 but Interest Expense is also greater for FY 2013 a
increased during the year resulting in decrease in interest cover for FY 2

This ratio is the measure of long term solvency of a Company. This ratio
long term funds was financed through long term debt. Maximum ratio is
% 65% 57% funds are financed through long term debt due to which finance cost has
FY 2013 resultantly G.p and net profit ratio is same despite of increase i
year.

This ratio shows whether investment in stocks is within limit or not. Low
indicates that Comapays's Investment is stuck in stocks. Greater the Inve
Times 7.80 7.24 is in Company's favour. Inventory Turn Over Ratio is 7.8 times for FY 2
2012 which indicates FY 2013 is better as compare to FY 2012.

This ratio indicates that in how much days inventory is sold out. Minimu
days 47 50 it is in Company Position. Inventory turnover period is 47 days for FY 2
which indicates that FY 2013 is better as compare to FY 2012.

This ratio represents how quickly stock is converted to debtors after cred
Times 249 161 Debtors turnover ratio, the speedy and efficient collection of debtors. In
for FY 2013 is comparatively better.

This ratio represents debtor collection period and that how quickly debto
after credit sales. The lower the collection period, the higher and efficien
days 1.46 2.27 of the organization. It should be consistent with credit policy of the com
collection period for FY 2013 shows relatively efficient collection of cas
 This ratio represents how much time the organization takes to pay off it
Creditors turnover ratio, the better it is. It should be compared with cred
Times 13.09 16.00 and should also be close to that. In this case, Creditor turnover for FY 20

This represents creditors payment period and how much time the organiz
creditors. The more the time required for company to pay off its debts, th
days 27.89 22.82 organization to effectively manage its cash out flows. Creditors turnover
relatively better in this case, because organization has sufficient time app
off its debts.

This represents by investment of Rs. 1 in Average Fixed Assets, how mu

company. The higher the sales during the period, the better there Assets T
lower the net assets better the Asset turnover Ratio. Turn over Ratio for F
Times 2.5 2.6
asset for FY 2012 is lower as compare to FY 2013 even though sales for
2012.

same for ratio purpose.

 Remarks

mpany earns form its sales. G.p ratio for FY 2013 is

ompany earns form its sales. Net profit rationfor FY

s employed. How much profit is earned from assets

3 and 2012 is same. Which shows company's has

d in the business. The maximum the ratio, the better it

or FY 2013 because long term finance( capital
g in decrease in return on capital employed.

Equity. Return on equity is same for both years.

liabilities are in excess of current asset which is not a

current liabilities exceeds current assets by 0.4 % only
presents that working capital position is better in FY
4 % is immaterial for 2013.

y to pay its current obligations out of current assets.

ratio of 0.996 for FY 2013 and 0.84 for FY 2012 which
re resources to pay off its current liabilities as compare
k of liquid resources to pay off short term liabilities are
Company is not appropriately utilized.
vailable to meet current liabilities. The company has
7 time for FY 2012 to pay off its short term liabilities.
in better position.

o pay interest expense out of profit. More the Interest

est Cover ratio for FY 2012 is Better even though EBIT
s also greater for FY 2013 as Long term finance has
se in interest cover for FY 2013.

cy of a Company. This ratio shows how much portion of

erm debt. Maximum ratio is 60:40. for FY 2013 65%
e to which finance cost has been increased during the
s same despite of increase in sales during the current

ks is within limit or not. Lower inventory turn over

k in stocks. Greater the Inventory turn over ratio better it
Ratio is 7.8 times for FY 2013 and 7.24 times for FY
mpare to FY 2012.

ventory is sold out. Minimum the inventory days better

r period is 47 days for FY 2013 and 50 days for FY 2012
mpare to FY 2012.

nverted to debtors after credit sales. The higher the

ent collection of debtors. In this case, Debtor turnover

and that how quickly debtors are encased

riod, the higher and efficient the cash flows
ith credit policy of the company. Debtor
ly efficient collection of cash from debtors.
anization takes to pay off it debts. The higher the
ould be compared with credit terms agreed with suppliers
Creditor turnover for FY 2012 is comparatively better.

how much time the organization takes to pay off its

mpany to pay off its debts, the better the position of the
ut flows. Creditors turnover period for FY 2013 is
ation has sufficient time approximately 28 days to pay

erage Fixed Assets, how much sales is generated by the

iod, the better there Assets Turnover Ratio is Similarly
Ratio. Turn over Ratio for FY 2012 is better because net
2013 even though sales for FY 2013 is greater than FY