1. University of Turbat
• Present by Shahab Uddin
• Present to Sir Balach Malik
• Class financial statement analysis
• Department Management sciences
• Date.24/9/2019
2. Gul Ahmed Textile
liquidity analysis
• 1,current ratio= current asset/current liabilities
2018 2017
26836418/23643992 20424563/18336130
=1.13 =1.11
Comments. The current ratio is a liquidity ratio that measures whether a firm has enough resources
to meet its short-term obligations. It compares a firm's current assets to its current liabilities, and is
expressed as follows: The current ratio is an indication of a firm's liquidity.
3. Current ratio
• Interpretation. From the above calculation ,it has been identified that the growth
in current liabilities is comparatively less then current asset year on year basis
one of reason increase the current ratio of Gul Ahmed textile.
• An other resources. The current asset of balance sheet is been identified that
investment in merchandise inventory increasing and which causal that it`s cost
decrease trade creditor.
4. 2 Quick ratio=current asset-inventory/current liabilities
2018 2017
10692485/23643992 7954601/1833130
=0.45 =0.43
Comments. The quick ratio is a more restrictive measure than the current ratio. The numerator
consists of the most liquid current assets.it assumes a worst-case scenario in which inventory
cannot be sold.
5. Quick ratio
• Interpretation. According to the definition of quick Ratio, the company should
have the ability to pay its liabilities through its most liquid assets. The table shows
that in 2017, the firm has the ratio 0.43 cents. Then we observe a slight
improvement in 2018. So we can figure out from the ratios that Gull Ahmed
textile still cannot pay its debts without its inventory. This leads us to believe that
Gull Ahmed is a some what risky business,
6. 3 Cash ratio=cash + marketable securities/current liabilities
2018 2017
=470250/23643992 =269882/18336130
=0.019 =0.014
comments. The cash ratio or cash coverage ratio is a liquidity ratio that measures a
firm’s ability to pay off its current liabilities with only cash and cash equivalents.
The cash ratio is much more restrictive than the current ratio or quick ratio because
no other current assets can be used to pay off current debt–only cash.
• Interpretation.
From the above calculation that identified the company balance sheet or
financial statement is not satisfactory which identified by cash ratio.
8. Inventory turnover
• Comments. The inventory turnover ratio is an efficiency ratio that shows how
effectively inventory is managed by comparing cost of goods sold with average
inventory for a period. This measures how many times average inventory is
“turned” or sold during a period. In other words, it measures how many times a
company sold its total average inventory Rupees amount during the year.
• Interpretation. From the above calculation is that identified that the Gull Ahmed
textile Inventory turnover ratios deteriorated from 2017 to 2018,which means
that its ability to sell inventory has relatively come down. In 2017 Gull Ahmed
textile had a ratio of 2.63 and in 2018 has a ratio of 2.23.
• And other resources that the inventory turnover of Gull Ahmed textile is not
improve significantly from 139 days 2017 to 164 days 2018 which shows that the
mile is decrease is efficiency and converting inventory and making them.
9. Account receivable turnover=net sales / account receivable
2018 2017
=45625872/5398565 = 40065605/3345046
=8.45 =11.9
account receivable turn over in days=365/account receivable turnover
2018 2017
=365/8.45 =365/11.9
=43 days =31 days
10. Account receivable turnover
• Comments. The account receivable turnover ratio measure average collection
period of account receivable of business.]
• Interpretation. From the above calculation account receivable ratio average
period of Gull Ahmed textile show 43 days of 2018 which represent that the
average collection period of increase significantly ,from 31 days to 43 days that
shows the significantly of credit department or company relaxed credit policy.
11. Account payable turnover=credit purchase/account payable
2018 2017
=36049884/7008948 =32858312/5569167
=5.14 =5.9
account payable turnover in days=365/account payable turnover
2018 2017
=365/5.14 =365/5.9
=71 days = 62 days
