Financial Ratio Shezan
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Transcript of Financial Ratio Shezan
financial statement
shezan company limitedbalance sheet
for the year ended 2008
Aseet
Non current aseetplant property and equipmentlong term investementlong term deposits
current Aseetstores and sparesstoke in tradetrade debtadvances,deposits,prepaymentsincome tax recoverablecash and bank balance
total aseetEquity and Liabilitiesshare capital and reserveshare capital reservesunappropriated profitTotal Equity
long term liabilitiescurrent liabilitiesTotal liabilities
Income statementShezan company limitedfor the year ended 31,dec 2008
2007Rs
Sales 2174894Cost of sales 1489845
Gross profit 685049
Distribution Cost 289336Administrative cost 68213Other operating expences 70145Other operating income -13240
414454
Operating profit 270595
Finance cost 12940share of loss from associatesprofit before taxation 257655taxation 116981
net profit for the year 140674
Ratio Analysisprofitability ratios analysis
Gross profit margin2007
Err:509 Gross profit/net Sales 685049/2174894=31.50
Interpretation. Groos profit margin is an indicator of the total margin which is available to cover operating expences and yield a profit .the gros profit of shezan in 2007 was 31.50% which has decreased over the year and in 2008 it 31.48% and reason in decrease in gross profit margin is increase in the cost of good sold
Operating profit margin2007
operating profit/net sales 270595/2174894=12.44
Interpretation operating profit margin indivates that operating profit margin of shezan 12.44 &shows a decreasing trend in 2008 it was 11.23 it means that operating expences of shezan has increased over the year
Net profit marginNet income/net sales 140674/2174894=6.4
Interpretation the net profit margin is profit after taxation ,shezan net profit in decrease.
Return on Aseet2007
Net income/avg.total aseet 140674/1120347=12.55
Interpretation return on asset measure the return on total investement in org.the return on aset of a shezan company decreased over the period from 12.56%in 2007 to 12.32% in 2008
Return on Equity2007
Net income/avg.total.equity 140674/625412=22.49
Interpretation return on equity measure the rate of return on investement in busines.return on equity of shezan has decreased over time period of 2007 is 22.49 to 2008 is 21.88reason is that decrease in the net income of the shezan company
Return on common equitynet income-prefered dividend/avg.common equity
Interpretation return on common equity measures the rate of return on the common stokeholders investment in busines.return on common equity decrase over time period year 2007 it was 22.49 &in 2008 it is 21.88 reason is that decrease in the net income of company.
Liquidity ratio analysisCurent ratio
20007current aseet/current liabilities 836031/437654=1.91
Interpretation current ratio indicates the extent too which short term creditors are covered by aseet corospending to the maturity of liabilities.shezan,s cureent ratii has decreasedfrom year 2007 1.91 but considered as a threat becouse ideal curent ratio should be 2
Quick ratio2007
current aseet -inventory/curent liabilities 836031-612251/437654=0.51
Interpretation quick ratio is a measure of a firms ability to pay off short term obligation .quick ratio of shezan increase from 2007 is 0.51 &in 2008 the ratio is 0.60 .reason is that less inventories are stocked
c
Financial leaverageDebt to equity ratio
2007total liabilities/total equity 494935/625412=0.79
Interpretation Financial leaverages refers to the use of the data capital in a company to finance its assets.even though debt is cheaperit is considered riskier compare to equity &a huge threat to company.shezan is financing 100%of its asewhich is riskier
Debt to Aseet ratio2007
total liabilities/total asset 494935/1120347=0.44
Interpretation The debt to assets ratio show how much of your asset base its finance with debt debt to asset ratio for shezan has 2007&2008 are same its means shezan has finance its 44% of the aseet with debt
Long term debt to equity2007
long term liability/total equity 57281/625412=0.09
Interpretation Long term debt to equity measures the balance between debt and equity in the firm long term .long term debt to equity ratio decline in 2007 0.09&2008 it is 0.07,ths mean major chunk of long term debt was repaid
ACTIvity ratio
inventory turnover2007
cost of good sold/avg.inventory 1489845/836031=3.56
Interpretation inventory turnover provides an indicator of company exces amount of inventory of finish goods.shezan has low inventiry turnover ratio of 3.56 in 2007&in 2008 3.58
Fixed asset turnover2007
annual sale/fixed asset 2174894/284316=7.64
Interpretation fixed aset turnover is a measure of sale productivity and utilization of fixed aset.ratio of fixed asset turnover increase over the year 2007 is 7.64 &in 2008 it increase to 8.08due to sale of shezan
total aseet turnover2007
annual sale/total aset 2174894/1120347=1.94
Interpretation Total aseet tuenover is a measure of the firmx asset .the ratio for shezan has decreased from year2007 is 1.94 and in 2008 ratio is 1.88 reason is decrease in sale of shezan
for the year ended 2008
2007 2008Rs Rs
plant property and equipment 256787 292922
25591 9915
1938 2603284316 305440
1348 1091
610903 689438
59749 74892
advances,deposits,prepayments 13729 38897
42116 114255
108186 84042836031 1002615
1120347 1308055
50000 60000
425000 500000
150696 176900
625412 736700
57281 51858
437654 519497
494935 571355
Income statementShezan company limitedfor the year ended 31,dec 2008
2008Rs
24685721691443
777129
3682407895172555
-19880
499866
277263
8104760
268399107195
161204
Ratio Analysis
Gross profit margin2008
685049/2174894=31.50 777129/2468572=31.48
Groos profit margin is an indicator of the total margin which is available to cover operating expences and yield a profit .the gros profit of shezan in 2007 was 31.50% which has decreased over the year and in 2008 it and reason in decrease in gross profit margin is increase in the cost of good sold
Operating profit margin2008
270595/2174894=12.44 277263/2468572=11.23
operating profit margin indivates that operating profit margin of shezan 12.44 &shows a decreasing trend in 2008 it was 11.23 it means that operating expences of shezan has increased over the year
Net profit margin74894=6.4 161204/2468572=6.5
is profit after taxation ,shezan net profit in 2007 is 6.4 and in 2008 net profit margin increased by 6.5 reason is that interest charges and other expences
Return on Aseet2008
140674/1120347=12.55 161204/1308055=12.32
return on asset measure the return on total investement in org.the return on aset of a shezan company decreased over the period from 12.56%in 2007 to 12.32% in 2008
Return on Equity2008
140674/625412=22.49 161204/736700=21.88
return on equity measure the rate of return on investement in busines.return on equity of shezan has decreased over time period of 2007 is 22.49 to 2008 is 21.88reason is that decrease in the net income of the shezan company
Return on common equity2007 2008
140674-0/625412=22.49 161204-0/736700=21.88
return on common equity measures the rate of return on the common stokeholders investment in busines.return on common equity decrase over time period year 2007 it was 22.49 &in 2008 it is 21.88 reason is that decrease in the net income of company.
Liquidity ratio analysisCurent ratio
2008836031/437654=1.91 1002615/519497=1.92
current ratio indicates the extent too which short term creditors are covered by aseet corospending to the maturity of liabilities.shezan,s cureent ratii has decreasedfrom year 2007 1.91 but considered as a threat becouse ideal curent ratio should be 2
Quick ratio2008
836031-612251/437654=0.51 1002615-690529/519497=0.60
quick ratio is a measure of a firms ability to pay off short term obligation .quick ratio of shezan increase from 2007 is 0.51 &in 2008 the ratio is 0.60 .reason is that less inventories are stocked
Financial leaverageDebt to equity ratio
2008494935/625412=0.79 571355/736700=0.78
Financial leaverages refers to the use of the data capital in a company to finance its assets.even though debt is cheaperit is considered riskier compare to equity &a huge threat to company.shezan is financing 100%of its ase
Debt to Aseet ratio2008
494935/1120347=0.44 571355/1308055=0.44
The debt to assets ratio show how much of your asset base its finance with debt debt to asset ratio for shezan has 2007&2008 are same its means shezan has finance its 44% of the aseet with debt
Long term debt to equity2008
57281/625412=0.09 51858/736700=0.07
Long term debt to equity measures the balance between debt and equity in the firm long term .long term debt to equity ratio decline in 2007 0.09&2008 it is 0.07,ths mean major chunk of long term debt was repaid
ACTIvity ratio
inventory turnover2008
1489845/836031=3.56 1691443/1002614=3.58
inventory turnover provides an indicator of company exces amount of inventory of finish goods.shezan has low inventiry turnover ratio of 3.56 in 2007&in 2008 3.58
Fixed asset turnover2008
2174894/284316=7.64 2468572/305440=8.08
fixed aset turnover is a measure of sale productivity and utilization of fixed aset.ratio of fixed asset turnover increase over the year 2007 is 7.64 &in 2008 it increase to 8.08due to sale of shezan
total aseet turnover2008
2174894/1120347=1.94 2468572/1308055=1.88
Total aseet tuenover is a measure of the firmx asset .the ratio for shezan has decreased from year2007 is 1.94 and in 2008 ratio is 1.88 reason is decrease in sale of shezan
Groos profit margin is an indicator of the total margin which is available to cover operating expences and yield a profit .the gros profit of shezan in 2007 was 31.50% which has decreased over the year and in 2008 it
operating profit margin indivates that operating profit margin of shezan 12.44 &shows a decreasing trend in 2008 it was 11.23 it means that operating expences of shezan has increased over the year
2007 is 6.4 and in 2008 net profit margin increased by 6.5 reason is that interest charges and other expences
return on asset measure the return on total investement in org.the return on aset of a shezan company decreased over the period from 12.56%in 2007 to 12.32% in 2008
return on equity measure the rate of return on investement in busines.return on equity of shezan has decreased over time period of 2007 is 22.49 to 2008 is 21.88
return on common equity measures the rate of return on the common stokeholders investment in busines.return on common equity decrase over time period year 2007 it was 22.49 &in 2008 it is 21.88 reason is that decrease in the net income of company.
current ratio indicates the extent too which short term creditors are covered by aseet corospending to the maturity of liabilities.shezan,s cureent ratii has decreasedfrom year 2007 1.91 but considered as a threat becouse ideal curent ratio should be 2
quick ratio is a measure of a firms ability to pay off short term obligation .quick ratio of shezan increase from 2007 is 0.51 &in 2008 the ratio is 0.60 .reason is that less inventories are stocked
Financial leaverages refers to the use of the data capital in a company to finance its assets.even though debt is cheaperit is considered riskier compare to equity &a huge threat to company.shezan is financing 100%of its ase
The debt to assets ratio show how much of your asset base its finance with debt debt to asset ratio for shezan has 2007&2008 are same its means shezan has finance its 44% of the aseet with debt
Long term debt to equity measures the balance between debt and equity in the firm long term .long term debt to equity ratio decline in 2007 0.09&2008 it is 0.07,ths mean major chunk of long term debt was repaid
inventory turnover provides an indicator of company exces amount of inventory of finish goods.shezan has low inventiry turnover ratio of 3.56 in 2007&in 2008 3.58
fixed aset turnover is a measure of sale productivity and utilization of fixed aset.ratio of fixed asset turnover increase over the year 2007 is 7.64 &in 2008 it increase to 8.08due to sale of shezan
Total aseet tuenover is a measure of the firmx asset .the ratio for shezan has decreased from year2007 is 1.94 and in 2008 ratio is 1.88 reason is decrease in sale of shezan
return on common equity measures the rate of return on the common stokeholders investment in busines.return on common equity decrase over time period year 2007 it was 22.49 &in 2008 it is 21.88 reason is that decrease in the net income of company.
current ratio indicates the extent too which short term creditors are covered by aseet corospending to the maturity of liabilities.shezan,s cureent ratii has decreasedfrom year 2007 1.91 but considered as a threat becouse ideal curent ratio should be 2
through debt
Total aseet tuenover is a measure of the firmx asset .the ratio for shezan has decreased from year2007 is 1.94 and in 2008 ratio is 1.88 reason is decrease in sale of shezan