• Share
  • Email
  • Embed
  • Like
  • Save
  • Private Content
ATLAS HONDA ratio analysis
 

ATLAS HONDA ratio analysis

on

  • 343 views

 

Statistics

Views

Total Views
343
Views on SlideShare
343
Embed Views
0

Actions

Likes
0
Downloads
31
Comments
0

0 Embeds 0

No embeds

Accessibility

Categories

Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

    ATLAS HONDA ratio analysis ATLAS HONDA ratio analysis Presentation Transcript

    • Ratio Analysis Managerial Finance
    • Presenters 1 Omer Shahzad MB-12-08 2 Zeeshan Ahmad MB-12-09 3 Saleem Malik MB-12-23 4 Ali Asghar MB-12-34 5 Babar Chaudhary MB-12-54
    • Financial Ratios
    • Market Ratios Profitability Ratios Debt Ratios Activity Ratios Liquidity Ratios
    • Our Organization Vision: Market leader in the motorcycle industry, emerging as a global competitive center of production and exports.
    • Ali Asghar MB-12-34
    • Liquidity Ratios Firm’s ability to satisfy its shortterm obligations as they come due.
    • Liquidity Ratios Current Ratio Quick Ratio
    • Current Ratio Looks at the ratio between current assets and current liabilities.
    • Mostly Current Ratio of 2 is consider acceptable. For Atlas Honda, current ratio less than 2 is acceptable and has improved during last 5 years and remain stable in last 2 years at level of 1.45 which is quite acceptable.
    • Current Ratio Current Ratio 1.55 1.5 1.49 1.45 1.45 1.45 1.4 1.35 1.3 1.31 1.25 1.25 1.2 1.15 1.1 2008 2009 2010 2011 2012
    • Quick Ratio Is similar to the current ratio but it excludes inventory from current assets.
    • A Quick Ratio of 1 or greater is acceptable. For Atlas Honda, Quick Ratio mostly remain below 1 and remain deteriorating.
    • Quick Ratio Quick Ratio 1.2 1.02 1 1 0.9 0.84 0.8 0.7 0.6 0.4 0.2 0 2008 2009 2010 2011 2012
    • Liqidity Ratios Current Ratio Quick Ratio 1.6 1.49 1.45 1.45 1.4 1.31 1.25 1.2 1.02 1 1 0.9 0.8 0.84 0.7 0.6 0.4 0.2 0 2008 2009 2010 2011 2012
    • Liquidity Ratios According to company financial statement they are in Strong Liquidity position but their liquidity position is not that good as they stated. Company liquidity position appear to have remain stable but below acceptable criteria. Company may have problem to satisfy its short term obligations when they come due. But, it is also a fact that company do not have paid all its short term obligations at the same time so company can manage to pay its short liabilities.
    • Omer Shahzad MB-12-08
    • Activity Ratios Measures the speed with which various accounts are converted into sales or cash-inflows or cashoutflows.
    • Inventory Turnover Ratio Asset Turnover Ratio Activity Ratios Average Collection Period Average Payment Period
    • Inventory Turnover Ratio Measures the activity of a firm’s inventory.
    • Inventory turnover for ATLAS HONDA is improved very fast during last 5 years and a level of 16.3 is quite remarkable. Higher Inventory Turnover leads to reducing holding cost and increase the net income and profitability. But company need to remain conscious about inventory turnover because higher level of inventory turnover may indicate inadequate inventory level, which may leads to a loss for the business.
    • Inventory Turnover Inventory Turnover 18 16.3 16 15 14.15 14 12 10.36 10 8 7.13 6 4 2 0 2008 2009 2010 2011 2012
    • Asset Turnover Ratio Indicates the firm’s efficiency to use assets for generating sales.
    • It is generally consider that the higher the firm total asset turnover, the more efficiently its assets have been used. Asset turnover for ATLAS HONDA is improving and have excellent level.
    • Asset Turnover Asset Turnover 4 3.5 3.38 3 3.47 3 2.5 2.39 2 1.84 1.5 1 0.5 0 2008 2009 2010 2011 2012
    • Turnovers Inventory Turnover Asset Turnover 18 16.3 16 15 14.15 14 12 10.36 10 8 7.13 6 4 3 2 3.38 3.47 2.39 1.84 0 2008 2009 2010 2011 2012
    • Average Collection Period Shows the time needed to collect accounts receivables.
    • ATLAS HONDA have very good credit and collection policies. Average collection period of less than 1 week is amazing.
    • Average Collection Period Avg. Collection Period 9 8.5 8 7 7 6 6 6 5 4.5 4 3 2 1 0 2008 2009 2010 2011 2012
    • Average Payment Period Shows the time needed to pay accounts payables.
    • Average payment period is decreased as compared to 2009. But company still using its credit worth very well and taking full advantage of credit period from suppliers.
    • Average Payment Period Avg. Payment Period 80 76 70 60 61 51 50 48 50 40 30 20 10 0 2008 2009 2010 2011 2012
    • Periods Avg. Collection Period Avg. Payment Period 80 76 70 60 61 51 50 48 50 40 30 20 10 7 8.5 6 4.5 6 0 2008 2009 2010 2011 2012
    • Activity Ratios The company’s assets performance appears to be in a good shape. It is clear that company has efficiently use the various components of working capital cycle. It has been able to effectively control the receivables and inventories.
    • Zeeshan Ahmad MB-12-09
    • Debt Ratios Indicates the amount the firm uses to generate profits from others’ money.
    • Debt Ratios Times Interest Earned Ratio Debt Ratio Fixed-Payment Coverage Ratio
    • Debt Ratio Measures the proportion of total assets financed by the firm’s creditors.
    • The higher degree of debt ratio shows the greater the firm’s degree of indebtedness. Debt ratio for Atlas Honda in 2008 was nearly 61% which was not very favorable for the organization. But during the last 5 years, the debt ratio decrease continuously and reach to nearly 50% which is not very good but fair enough.
    • Debt Ratio Debt Ratio 70 60 60.89 55.63 54.33 51.95 50 50.54 40 30 20 10 0 2008 2009 2010 2011 2012
    • Times Interest Earned Ratio Measures the firm’s ability to make contractual interest payments. It is also called Interest Coverage Ratio.
    • Interest Coverage Ratio of Atlas Honda increase during the last 5 years but you can see a surprising increase in this ratio in 2012. You can understand this increase by comparing Debt and Interest coverage ratio.
    • Interest Coverage Ratio Interest Coverage Ratio 160 140 139.26 120 100 80 60 40 20 16 10.56 4.98 0 2008 2.4 2009 2010 2011 2012
    • Debt Ratios Debt Ratio Interest Coverage Ratio 160 140 139.26 120 100 80 60 60.89 55.63 54.33 51.95 50.54 40 20 16 10.56 4.98 0 2008 2.4 2009 2010 2011 2012
    • Debt Ratios In this graph you can see a negative relationship between Debt and Interest coverage ratio. As the company debt ratio decrease, the company times interest earned ratio increase rapidly. It is due to company policy introduced in 2010 to reshape its balance sheet approach and worked to reduce the interest bearing liabilities to improve its balance sheet. The outcome of this policy is the Achievement of “DEBT FREE STATUS” in 2012.
    • M. Saleem MB-12-23
    • Profitability Ratios Measures the firms’ profits with the given level of sales.
    • Gross-Profit Ratio Operating-Profit Ratio Net-Profit Ratio Profitability Ratios Earning Per Share Return on Total Assets Return on Common Equity
    • Gross-Profit Ratio Measures the percentage of each sales dollar remaining after the firm has paid for its goods.
    • Gross profit margin for ATLAS HONDA is unstable and mostly deteriorating. But separate using gross profit margin for measuring company profitability is not a good measure.
    • Gross Profit Margin Gross Profit Margin 8 7.82 7.8 7.6 7.5 7.46 7.4 7.3 7.2 7.02 7 6.8 6.6 2008 2009 2010 2011 2012
    • Operating-Profit Ratio Measures the percentage of each sales dollar remaining after all costs & expenses other than Interests and Taxes are deducted.
    • Operating profit margin for ATLAS HONDA decreased in 2009, but remain quite stable after that.
    • Operating Profit Margin Operating Profit Margin 7 6 6.02 5 4.65 4.62 4.4 4.3 4 3 2 1 0 2008 2009 2010 2011 2012
    • Net-Profit Ratio Measures the percentage of each sales dollar remaining after all costs & expenses including Interests and Taxes are deducted.
    • Net profit margin also decreased during 2009 but company recovered very well and its net profit continuously increasing from last 3 years.
    • Net Profit Margin Net Profit Margin 4 3.5 3.37 3.08 3 3.16 2.78 2.5 2 1.63 1.5 1 0.5 0 2008 2009 2010 2011 2012
    • Profitibility Ratios Gross Profit Margin Operating Profit Margin Net Profit Margin 9 8 7.82 7.5 7.46 7.02 7 6 7.3 6.02 5 4.65 4.4 4.62 4.3 4 3.37 3.08 3 3.16 2.78 2 1.63 1 0 2008 2009 2010 2011 2012
    • Earnings Per Share (EPS) Represents the dollar amount earned on behalf of each outstanding share of common stock.
    • Over the years, the company is focused on maintaining steady growth in EPS. In 2012, company delivered EPS of Rs.16.74 which is outstanding.
    • Earning Per Share Earning Per Share 18 16.74 16.03 16 14.86 14 12 11.39 10 8 6 4.75 4 2 0 2008 2009 2010 2011 2012
    • Profitability Ratios The Company’s Gross profit margin declined but it is due to the higher cost of goods sold. While the Operating and Net profit margin is improving so we can evaluate that company profitability is improving.
    • Babar Hussain MB-12-54
    • Return on Total Assets (ROA) Measures the overall effectiveness of the management in generating profits with its available assets. It is also called Return on Investment (ROI).
    • The higher the firm’s return on total asset consider the better. Return on total asset of ATLAS HONDA appear to be improved in last 3 year and rose to 11% despite significant in assets base on account of capacity expansion.
    • Return on Asset Return on Asset 12 10.98 10.42 10 8 8.36 8.07 6 4 3 2 0 2008 2009 2010 2011 2012
    • Return on Common Equity (ROE) Measures the return earned on the common stockholders’ investment in the firm.
    • Return on equity also have the same case like ROA. It is also improved after declining in 2009 and now rose to 22% due to steady income growth.
    • Return on Equity Return on Equity 25 21.68 20 22.21 20.65 18.3 15 10 6.76 5 0 2008 2009 2010 2011 2012
    • Returns Return on Asset Return on Equity 25 21.68 20 22.21 20.65 18.3 15 10.42 10 10.98 8.36 8.07 6.76 5 3 0 2008 2009 2010 2011 2012
    • Market Ratios Relates the firms’ market value as measured by its current share price, to certain accounting values.
    • Market Ratios Price/Earnings Ratio Market/Book Ratio
    • Price/Earnings Ratio (P/E) Measures the amount that investors are willing to pay for each dollar of a firm’s earnings.
    • The higher level price earnings ratio consider the better. Price earnings ratio for ATLAS HONDA decrease during previous years but it not due of low earning but due to the higher market price of ATLAS HONDA’s shares.
    • Price Earning Ratio Price Earning Ratio 20 18.7 18 16 14 14.1 12 10.9 10 8.8 8 8.5 6 4 2 0 2008 2009 2010 2011 2012
    • DuPont System of Analysis System used to dissect the firm’s financial statement and to assess its financial condition. The two measures of this this system are: 1. Return on total assets (ROA) 2. Return on common equity (ROE)
    • DuPont Formula Multiplies the firm’s net profit margin by its total asset turnover to calculate the firm’s return on total assets.
    • Modified DuPont Formula Relates the firm’s return on total assets to its return on common equity using financial leverage multiplier.