Ratio Anaylsis Of Nokia .. Adeel Ahmad Wahla
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Transcript of Ratio Anaylsis Of Nokia .. Adeel Ahmad Wahla
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NATIONAL COLLEGE OF BUSINESS ADMINISTRATION & ECONOMICS 24/02/2016
Project
Of
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NATIONAL COLLEGE OF BUSINESS ADMINISTRATION & ECONOMICS 24/02/2016
Project
Financial Management
Topic:
Ratio Analysis
Submitted To:
Shehraz Bajwa
Submitted By:
Adeel Ahmad
Roll#. Mcm14011
M.Com 3rd Semester
Departement Of Commerce
National College Of Business Administration & Economics
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NATIONAL COLLEGE OF BUSINESS ADMINISTRATION & ECONOMICS 24/02/2016
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NATIONAL COLLEGE OF BUSINESS ADMINISTRATION & ECONOMICS 24/02/2016
Dedication
I dedicating my valuable project to our parents, Profโs, friends and to the whole
class.
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NATIONAL COLLEGE OF BUSINESS ADMINISTRATION & ECONOMICS 24/02/2016
Acknowledgement
I thank to our Allah AL-Mighty and off course thankful to our honorable teacher
who has always been guiding us in a good way through understanding this course as
well as the whole project. He has given us an opportunity to show abilities in the
subject. I also like to thank our class mates because of their friendly attitude and
maintaining lovely environment in the class.
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NATIONAL COLLEGE OF BUSINESS ADMINISTRATION & ECONOMICS 24/02/2016
NOKIA
PERIOD ENDING Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Total Revenue 58,802,000 71,485,887 75,203,328
Cost of Revenue 39,772,000 46,995,169 49,716,267
Gross Profit 19,031,000 24,490,718 25,487,062
Operating Expenses
Research Development 8,478,000 8,413,090 8,317,466
Selling General and
Administrative
7,533,000 9,077,058 5,408,489
Non Recurring 1,303,000 - -
Others - - -
Total Operating Expenses - - -
Operating Income or Loss 1,717,000 7,000,570 11,761,107
Income from Continuing Operations
Total Other Income/Expenses
Net
(337,000) 266,433 480,165
Earnings Before Interest And
Taxes
1,380,000 7,267,004 12,241,272
Interest Expense - 260,795 63,335
Income Before Tax 1,380,000 7,006,209 12,177,937
Income Tax Expense 1,007,000 1,523,886 2,241,754
Minority Interest - 139,560 676,061
Net Income From Continuing
Ops
373,000 5,621,884 10,612,245
Non-recurring Events
Discontinued Operations - - -
Extraordinary Items - - -
Effect Of Accounting Changes - - -
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NATIONAL COLLEGE OF BUSINESS ADMINISTRATION & ECONOMICS 24/02/2016
Other Items - - -
Net Income 373,000 5,621,884 10,612,245
Preferred Stock And Other
Adjustments
- - -
Net Income Applicable To
Common Shares
$373,000 $5,621,884 $10,612,245
PERIOD ENDING Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Assets
Current Assets
Cash And Cash Equivalents 1,639,000 2,404,948 3,129,913
Short Term Investments 11,092,000 7,209,206 14,181,081
Net Receivables 11,471,000 13,455,587 16,726,252
Inventory 2,676,000 3,570,770 4,236,060
Other Current Assets 7,002,000 7,854,848 4,873,826
Total Current Assets 33,879,000 34,495,359 43,147,133
Long Term Investments 960,000 895,160 995,680
Property Plant and Equipment 2,679,000 2,946,273 2,816,185
Goodwill 7,419,000 8,820,493 2,038,494
Intangible Assets 3,963,000 5,860,123 4,029,854
Accumulated Amortization - - -
Other Assets 214,000 14,097 64,808
Deferred Long Term Asset Charges 2,162,000 2,767,241 2,287,414
Total Assets 51,276,000 55,798,745 55,379,567
Liabilities
Current Liabilities
Accounts Payable 16,434,000 17,266,006 20,897,505
Short/Current Long Term Debt 1,106,000 5,062,233 1,577,476
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NATIONAL COLLEGE OF BUSINESS ADMINISTRATION & ECONOMICS 24/02/2016
Other Current Liabilities 4,251,000 6,366,205 5,474,769
Total Current Liabilities 21,791,000 28,694,444 27,949,750
Long Term Debt - - -
Other Liabilities 6,454,000 1,311,021 474,274
Deferred Long Term Liability Charges 1,869,000 2,519,134 1,418,403
Minority Interest 2,383,000 3,245,129 3,777,989
Negative Goodwill - - -
Total Liabilities 30,114,000 35,769,728 33,620,415
Stockholders' Equity
Misc Stocks Options Warrants - - -
Redeemable Preferred Stock - - -
Preferred Stock - - -
Common Stock 353,000 346,786 362,333
Retained Earnings 14,537,000 16,482,212 20,429,123
Treasury Stock (977,000) (2,651,646) (4,633,743)
Capital Surplus 400,000 623,087 948,548
Other Stockholder Equity 4,465,000 5,228,577 4,652,891
Total Stockholder Equity 18,778,000 20,029,018 21,759,152
Net Tangible Assets $7,396,000 $5,348,402 $15,690,804
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NATIONAL COLLEGE OF BUSINESS ADMINISTRATION & ECONOMICS 24/02/2016
Ratio Analysis
Liquidity Ratio:
2013 2014 2015
Current Ratio:
Current Ratio
=CurrentAssets
Current Liability
Current Ratio
=$๐๐, ๐๐๐, ๐๐๐
$๐๐, ๐๐๐, ๐๐๐
Current Ratio:
Current Ratio
=CurrentAssets
Current Liability
Current Ratio
=$๐๐, ๐๐๐, ๐๐๐
$๐๐, ๐๐๐, ๐๐๐
Current Ratio:
Current Ratio
=CurrentAssets
Current Liability
Current Ratio
=$๐๐, ๐๐๐, ๐๐๐
$๐๐, ๐๐๐, ๐๐๐
๐๐ฎ๐ซ๐ซ๐๐ง๐ญ ๐๐๐ญ๐ข๐จ = ๐. ๐๐%
๐๐ฎ๐ซ๐ซ๐๐ง๐ญ ๐๐๐ญ๐ข๐จ = ๐. ๐๐%
๐๐ฎ๐ซ๐ซ๐๐ง๐ญ ๐๐๐ญ๐ข๐จ = ๐. ๐๐%
Interpretation:
Current ratio measures whether or not a company has enough resources to pay its debt over the
next business cycle.
In 2015 current ratio is comparatively less than the previous year.
In 2015 current assets not exceed Current liabilities.
This shows that the company is capable to pay its obligations.
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NATIONAL COLLEGE OF BUSINESS ADMINISTRATION & ECONOMICS 24/02/2016
Quick Ratio:
2014 2015 2015
Quick Ratio:
Quick Ratio
=CurrentAssets โ Inventory
Current Liability
Quick Ratio
=$๐๐, ๐๐๐, ๐๐๐ โ $4,236,060
$๐๐,๐๐๐, ๐๐๐
Quick Ratio:
Quick Ratio
=CurrentAssets โ Inventory
Current Liability
Quick Ratio
=$๐๐, ๐๐๐, ๐๐๐ โ $3,570,770
$๐๐,๐๐๐, ๐๐๐
Quick Ratio:
Quick Ratio
=CurrentAssets โ Inventory
Current Liability
Quick Ratio
=$๐๐, ๐๐๐, ๐๐๐ โ $2,676,000
$๐๐, ๐๐๐,๐๐๐
๐๐ฎ๐ข๐๐ค ๐๐๐ญ๐ข๐จ = ๐. ๐๐%
๐๐ฎ๐ข๐๐ค ๐๐๐ญ๐ข๐จ = ๐. ๐๐%
๐๐ฎ๐ข๐๐ค ๐๐๐ญ๐ข๐จ = ๐. ๐๐%
Interpretation:
Quick Ratio is also known as the "acid test" ratio; it is a refinement of the current ratio and is a
more conservative measure of liquidity.
The ratio expresses the degree to which a company's current liabilities are covered by the most
liquid current assets.
There is a slightly increase in the quick ratio as compare to previous year.
This indicates that the company relies too much on inventory or other assets to pay its short-term
liabilities.
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NATIONAL COLLEGE OF BUSINESS ADMINISTRATION & ECONOMICS 24/02/2016
Profitability Ratio:
2013 2014 2015
Gross Profit Margin:
Gross Profit Margin
=Gross Profit
Net Saleร 100
Gross Profit Margin
=$๐๐, ๐๐๐, ๐๐๐
$๐๐, ๐๐๐, ๐๐๐
ร 100
Gross Profit Margin:
Gross Profit Margin
=Gross Profit
Net Saleร 100
Gross Profit Margin
=$๐๐, ๐๐๐, ๐๐๐
$๐๐, ๐๐๐,๐๐๐
ร 100
Gross Profit Margin:
Gross Profit Margin
=Gross Profit
Net Saleร 100
Gross Profit Margin
=$๐๐, ๐๐๐, ๐๐๐
$๐๐, ๐๐๐, ๐๐๐
ร 100
๐๐ซ๐จ๐ฌ๐ฌ ๐๐ซ๐จ๐๐ข๐ญ ๐๐๐ซ๐ ๐ข๐ง
= ๐๐. ๐๐%
๐๐ซ๐จ๐ฌ๐ฌ ๐๐ซ๐จ๐๐ข๐ญ ๐๐๐ซ๐ ๐ข๐ง
= ๐๐. ๐๐%
๐๐ซ๐จ๐ฌ๐ฌ ๐๐ซ๐จ๐๐ข๐ญ ๐๐๐ซ๐ ๐ข๐ง
= ๐๐. ๐๐%
Interpretation:
Gross profit margin measures company's manufacturing and distribution efficiency during the
production process.
Gross profit decrease in 2015 as compare to 2014 or 2013.
Which is not better than previous year.
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NATIONAL COLLEGE OF BUSINESS ADMINISTRATION & ECONOMICS 24/02/2016
Operating Profit Margin:
2013 2014 2015
Operating Profit
Margin:
Operating Profit Margin
=Operating Profit
Net Saleร 100
Operating Profit Margin
=$๐๐, ๐๐๐,๐๐๐
$ ๐๐, ๐๐๐,๐๐๐
ร 100
Operating Profit
Margin:
Operating Profit Margin
=Operating Profit
Net Saleร 100
Operating Profit Margin
=$๐, ๐๐๐,๐๐๐
$๐๐, ๐๐๐,๐๐๐
ร 100
Operating Profit
Margin:
Operating Profit Margin
=Operating Profit
Net Saleร 100
Operating Profit Margin
=$๐, ๐๐๐,๐๐๐
$๐๐, ๐๐๐,๐๐๐ร 100
๐๐ฉ๐๐ซ๐๐ญ๐ข๐ง๐ ๐๐ซ๐จ๐๐ข๐ญ ๐๐๐ซ๐ ๐ข๐ง
= ๐๐. ๐๐%
๐๐ฉ๐๐ซ๐๐ญ๐ข๐ง๐ ๐๐ซ๐จ๐๐ข๐ญ ๐๐๐ซ๐ ๐ข๐ง
= ๐. ๐๐%
๐๐ฉ๐๐ซ๐๐ญ๐ข๐ง๐ ๐๐ซ๐จ๐๐ข๐ญ ๐๐๐ซ๐ ๐ข๐ง
= ๐. ๐๐%
Interpretation:
Operating profit margin is used to measure company's pricing strategy and operating efficiency.
In operating profit margin there is a great change as compare to previous year.
Operating profit decreases. It shows that the company is earning less as compare to previous
years.
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NATIONAL COLLEGE OF BUSINESS ADMINISTRATION & ECONOMICS 24/02/2016
Net Profit Margin:
2013 2014 2015
Net Profit Margin:
Net Profit Margin
=Net Profit After Tax
Net Saleร 100
Net Profit Margin
=$10,612,245
$๐๐, ๐๐๐,๐๐๐ร 100
Net Profit Margin:
Net Profit Margin
=Net Profit After Tax
Net Saleร 100
Net Profit Margin
=$5,621,884
$๐๐, ๐๐๐,๐๐๐ร 100
Net Profit Margin:
Net Profit Margin
=Net Profit After Tax
Net Saleร 100
Net Profit Margin
=$373,000
$๐๐,๐๐๐,๐๐๐ร 100
๐๐๐ญ ๐๐ซ๐จ๐๐ข๐ญ ๐๐๐ซ๐ ๐ข๐ง
= ๐๐. ๐๐%
๐๐๐ญ ๐๐ซ๐จ๐๐ข๐ญ ๐๐๐ซ๐ ๐ข๐ง
= ๐. ๐๐%
๐๐๐ญ ๐๐ซ๐จ๐๐ข๐ญ ๐๐๐ซ๐ ๐ข๐ง
= ๐. ๐๐%
Interpretation:
Net profit margin measures how much of each dollar earned by the company is translated into
profits.
Net profit margin provides clues to the company's pricing policies, cost structure and production
efficiency.
There is huge decrease in the net profit margin than previous year. It shows that company in bad
condition.
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NATIONAL COLLEGE OF BUSINESS ADMINISTRATION & ECONOMICS 24/02/2016
Return on Total Assets:
2013 2014 2015
Return on Total Assets:
Return on Total Assets
=Net Profit After Tax
Total Assetsร 100
Return on Total Assets
=$10,612,245
$๐๐,๐๐๐,๐๐๐
ร 100
Return on Total Assets:
Return on Total Assets
=Net Profit After Tax
Total Assetsร 100
Return on Total Assets
=$5,621,884
$๐๐,๐๐๐,๐๐๐
ร 100
Return on Total
Assets:
Return on Total Assets
=Net Profit After Tax
Total Assetsร 100
Return on Total Assets
=$373,000
$๐๐,๐๐๐,๐๐๐ ร 100
๐๐๐ญ๐ฎ๐ซ๐ง ๐จ๐ง ๐๐จ๐ญ๐๐ฅ ๐๐ฌ๐ฌ๐๐ญ๐ฌ
= ๐๐. ๐๐%
๐๐๐ญ๐ฎ๐ซ๐ง ๐จ๐ง ๐๐จ๐ญ๐๐ฅ ๐๐ฌ๐ฌ๐๐ญ๐ฌ
= ๐๐. ๐๐%
๐๐๐ญ๐ฎ๐ซ๐ง ๐จ๐ง ๐๐จ๐ญ๐๐ฅ ๐๐ฌ๐ฌ๐๐ญ๐ฌ
= ๐. ๐๐%
Interpretation:
Return on Assets shows how many dollars of earnings result from each dollar of assets the
company controls.
Return on total assets decrease from 19.16% to 10.07% to 0.72% and this is big change which
indicate that company is not doing well.
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NATIONAL COLLEGE OF BUSINESS ADMINISTRATION & ECONOMICS 24/02/2016
Return on Total Equity:
2013 2014 2015
Return on Total
Equity:
Return on Total Equity
=Net Profit After Tax
Total Equityร 100
Return on Total Equity
=$ 10,612,245
$๐๐,๐๐๐,๐๐๐ร 100
Return on Total
Equity:
Return on Total Equity
=Net Profit After Tax
Total Equityร 100
Return on Total Equity
=$5,621,884
$๐๐,๐๐๐,๐๐๐
ร 100
Return on Total
Equity:
Return on Total Equity
=Net Profit After Tax
Total Equityร 100
Return on Total Equity
=$373,000
$๐๐,๐๐๐,๐๐๐ร 100
๐๐๐ญ๐ฎ๐ซ๐ง ๐จ๐ง ๐๐จ๐ญ๐๐ฅ ๐๐ช๐ฎ๐ข๐ญ๐ฒ
= ๐. ๐๐%
๐๐๐ญ๐ฎ๐ซ๐ง ๐จ๐ง ๐๐จ๐ญ๐๐ฅ ๐๐ช๐ฎ๐ข๐ญ๐ฒ
= ๐๐. ๐๐%
๐๐๐ญ๐ฎ๐ซ๐ง ๐จ๐ง ๐๐จ๐ญ๐๐ฅ ๐๐ช๐ฎ๐ข๐ญ๐ฒ
= ๐. ๐๐%
Interpretation:
Return on Equity is also referred as Stockholder's return on investment, it tells the rate that
shareholders are earning on their shares.
Nokia is earning 1.98% on shareholder's equity as compare to the previous year.
It indicates the weakness of company.
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NATIONAL COLLEGE OF BUSINESS ADMINISTRATION & ECONOMICS 24/02/2016
Debt Ratio:
2013 2014 2015
Time Interest Earned
Ratio:
Time Interest Earned Ratio
=EBIT
Interest
Time Interest Earned Ratio
=$12,177,937
$567543
Time Interest Earned
Ratio:
Time Interest Earned Ratio
=EBIT
Interest
Time Interest Earned Ratio
=$7,267,004
$400355
Time Interest Earned
Ratio:
Time Interest Earned Ratio =EBIT
Interest
Time Interest Earned Ratio
=1,380,000
0
๐๐ข๐ฆ๐ ๐๐ง๐ญ๐๐ซ๐๐ฌ๐ญ ๐๐๐ซ๐ง๐๐ ๐๐๐ญ๐ข๐จ
= ๐๐.๐๐ ๐๐ข๐ฆ๐๐ฌ
๐๐ข๐ฆ๐ ๐๐ง๐ญ๐๐ซ๐๐ฌ๐ญ ๐๐๐ซ๐ง๐๐ ๐๐๐ญ๐ข๐จ
= ๐๐.๐๐ ๐๐ข๐ฆ๐๐ฌ
๐๐๐๐. ๐๐จ๐ญ ๐ข๐ง๐ญ๐๐ซ๐๐ฌ๐ญ ๐๐ฏ๐ข๐ฅ๐๐๐ฅ๐ ๐ข๐ง ๐๐๐๐
Interpretation:
Time interest earned ratio also known as interest coverage ratio.
Times Interest Earned is a great tool to measure a company's ability to meet its debt obligations.
In 2015 there is increase from 0.30 to 3.24%.
It shows that the company is able to meet its interest obligations because earnings are
significantly greater than annual interest obligations.
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NATIONAL COLLEGE OF BUSINESS ADMINISTRATION & ECONOMICS 24/02/2016
Debt Ratio:
2013 2014 2015
Debt Ratio:
Debt Ratio =Total Debt
Total Assetsร 100
Debt Ratio =$1,577,476
$๐๐,๐๐๐,๐๐๐
ร 100
Debt Ratio:
Debt Ratio =Total Debt
Total Assetsร 100
Debt Ratio =$5,062,233
$๐๐,๐๐๐,๐๐๐
ร 100
Debt Ratio:
Debt Ratio =Total Debt
Total Assetsร 100
Debt Ratio =$1,106,000
๐๐,๐๐๐,๐๐๐
ร 100
๐๐๐๐ญ ๐๐๐ญ๐ข๐จ = ๐. ๐๐%
๐๐๐๐ญ ๐๐๐ญ๐ข๐จ = ๐. ๐๐%
๐๐๐๐ญ ๐๐๐ญ๐ข๐จ = ๐. ๐๐%
Interpretation:
This ratio expresses the relationship between capital contributed by creditors and that contributed
by owners.
It expresses the degree of protection provided by the owners for the creditors.
The debt ratio in 2015 seems to be slightly decreased as compare to previous year and this is not
good sign for Nokia Company.
This ratio indicates that company increases their debt.
18
NATIONAL COLLEGE OF BUSINESS ADMINISTRATION & ECONOMICS 24/02/2016
Debt to Equity Ratio:
2013 2014 2015
Debt to Equity Ratio:
Debt to Equity Ratio
=Long Term Debt
Total Equity
Debt to Equity Ratio
=$1,577,476
$๐๐, ๐๐๐,๐๐๐
Debt to Equity Ratio:
Debt to Equity Ratio
=Long Term Debt
Total Equity
Debt to Equity Ratio
=$5,062,233
$๐๐, ๐๐๐,๐๐๐
Debt to Equity Ratio:
Debt to Equity Ratio
=Long Term Debt
Total Equity
Debt to Equity Ratio
=$1,106,000
$๐๐, ๐๐๐,๐๐๐
๐๐๐๐ญ ๐๐๐ญ๐ข๐จ = ๐. ๐๐%
๐๐๐๐ญ ๐๐๐ญ๐ข๐จ = ๐. ๐๐%
๐๐๐๐ญ ๐๐๐ญ๐ข๐จ = ๐. ๐๐%
Interpretation:
Debt to equity ratio seems to be decrease as compare to previous years. This indicates that
company has no financed its growth mostly via debt.
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NATIONAL COLLEGE OF BUSINESS ADMINISTRATION & ECONOMICS 24/02/2016
Activity Ratio:
2013 2014 2015
Average Age of
Inventory:
Average Age of Inventory
=No. of Days In Year
Inventory Turnover
Inventory Turn Over Ratio
=Cost of Goods Sold
Average Inventory
Average Inventory = $2,676,000
Inventory Turn Over Ratio
=$๐๐, ๐๐๐,๐๐๐
$2,676,000
Inventory Turn Over Ratio
= 28.10
Average Age of Inventory =365
28.10
Average Age of
Inventory:
Average Age of Inventory
=No. of Days In Year
Inventory Turnover
Inventory Turn Over Ratio
=Cost of Goods Sold
Average Inventory
Average Inventory = $2,676,000
Inventory Turn Over Ratio
=$๐๐, ๐๐๐,๐๐๐
$2,676,000
Inventory Turn Over Ratio
= 26.71
Average Age of Inventory =365
26.71
Average Age of
Inventory:
Average Age of Inventory
=No. of Days In Year
Inventory Turnover
Inventory Turn Over Ratio
=Cost of Goods Sold
Average Inventory
Average Inventory
= $2,676,000
Inventory Turn Over Ratio
=$๐๐, ๐๐๐,๐๐๐
$2,676,000
Inventory Turn Over Ratio = 21
Average Age of Inventory =365
21
๐๐ฏ๐๐ซ๐๐ ๐ ๐๐ ๐ ๐จ๐ ๐๐ง๐ฏ๐๐ง๐ญ๐จ๐ซ๐ฒ
= ๐๐. ๐๐ ๐๐๐ฒ๐ฌ
๐๐ฏ๐๐ซ๐๐ ๐ ๐๐ ๐ ๐จ๐ ๐๐ง๐ฏ๐๐ง๐ญ๐จ๐ซ๐ฒ
= ๐๐. ๐๐๐๐๐ฒ๐ฌ
๐๐ฏ๐๐ซ๐๐ ๐ ๐๐ ๐ ๐จ๐ ๐๐ง๐ฏ๐๐ง๐ญ๐จ๐ซ๐ฒ
= ๐๐. ๐ ๐๐๐ฒ๐ฌ
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NATIONAL COLLEGE OF BUSINESS ADMINISTRATION & ECONOMICS 24/02/2016
Interpretation:
Average age of inventory is the average number of days it takes for a company to sell a product.
In 2015 average age of inventory increase.
It shows that firm is not properly managing its inventory and it also the strength of company.
Average Collection Period:
2013 2014 2015
Average Collection
Period:
Average Collection Period
=No. of days in year
A/R turnover ratio
A/R Turnover ratio
=Net Sale
Accounts Receivable
A\R turnover ratio
=$๐๐, ๐๐๐,๐๐๐
$16,726,252
Account Receivable turnover ratio
= 4.49
Average Collection Period =365
4.49
Average Collection
Period:
Average Collection Period
=No. of days in year
A/R turnover ratio
A/R Turnover ratio
=Net Sale
Accounts Receivable
A\R turnover ratio
=$๐๐, ๐๐๐,๐๐๐
$13,455,587
Account Receivable turnover ratio
= 5.31
Average Collection Period =365
5.31
Average Collection
Period:
Average Collection Period
=No. of days in year
A/R turnover ratio
A/R Turnover ratio
=Net Sale
Accounts Receivable
๐ด\๐ turnover ratio
=$๐๐, ๐๐๐,๐๐๐
$11,471,000
Account Receivable turnover ratio
= 5.13
Average Collection Period =365
5.13
๐๐ฏ๐๐ซ๐๐ ๐ ๐๐จ๐ฅ๐ฅ๐๐๐ญ๐ข๐จ๐ง ๐๐๐ซ๐ข๐จ๐= ๐๐.๐๐ ๐๐๐ฒ๐ฌ
๐๐ฏ๐๐ซ๐๐ ๐ ๐๐จ๐ฅ๐ฅ๐๐๐ญ๐ข๐จ๐ง ๐๐๐ซ๐ข๐จ๐
= ๐๐.๐๐๐๐๐ฒ๐ฌ
๐๐ฏ๐๐ซ๐๐ ๐ ๐๐จ๐ฅ๐ฅ๐๐๐ญ๐ข๐จ๐ง ๐๐๐ซ๐ข๐จ๐
= ๐๐.๐๐ ๐๐๐ฒ๐ฌ
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NATIONAL COLLEGE OF BUSINESS ADMINISTRATION & ECONOMICS 24/02/2016
Interpretation:
The average collection period ratio represents the average number of days for which a firm has to
wait before its receivables are converted into cash.
Average collection period is no good because previously we receive collection in 81.2, 68.73
days and in current year we are receiving collection in 71.15 days. It is also the weakness of
company.
Average Payment Period:
2013 2014 2015
Average Payment Period:
Average Payment Period
=No. of days in year
A/P turnover ratio
A/P Turnover ratio
=Net Sale
Accounts Payable
Account Payable turnover ratio
=$๐๐, ๐๐๐,๐๐๐
$17,266,006
Account Payable turnover ratio
= 4.35
Average Collection Period =365
4.35
Average Payment Period:
Average Payment Period
=No. of days in year
A/P turnover ratio
A/P Turnover ratio
=Net Sale
Accounts Payable
Account Payable turnover ratio
=$๐๐, ๐๐๐,๐๐๐
$17,266,006
Account Payable turnover ratio
= 4.14
Average Collection Period =365
4.14
Average Payment Period:
Average Payment Period
=No. of days in year
A/P turnover ratio
A/P Turnover ratio
=Net Sale
Accounts Payable
Account Payable turnover ratio
=$๐๐, ๐๐๐,๐๐๐
$16,434,000
Account Payable turnover ratio
= 3.57
Average Collection Period =365
3.57
22
NATIONAL COLLEGE OF BUSINESS ADMINISTRATION & ECONOMICS 24/02/2016
Interpretation:
Average payment period ratio represents the average number of days taken by the firm to pay its
creditors.
Average payment period is very good because previously we are paying collection in 83.90days
88.14days but in current year we are paying collection in 102.24 days.
It shows that management of company is quite good.
23
NATIONAL COLLEGE OF BUSINESS ADMINISTRATION & ECONOMICS 24/02/2016
Conclusion
I have calculated the ratio of Nokia from this i understands the strength and weakness of
company. The main purpose of this project is to how to invest in a company. Which factors is
important for investor while investing in any company. A financial Ratio analysis also tells us
that which year it better or profitable. I take the decision of investment on following ratios such
as net profit, return on total assets, return on total equity and debt ratio. The comparison of net
profit of both years shows that 2015 has greater profit than 2013, 2014. Return on total asset is
also better of 2015 as compare to 2013, 2014. Return on total equity of is not good for 2015.