This report analyzes the financial performance of Rani Ltd over 2010-2012. It finds that while revenue has increased slightly, net profit margins have declined significantly from 13.9% in 2010 to 10.43% in 2012 due to rising cost of goods sold. Liquidity ratios are satisfactory but the quick ratio is low at 0.64. Inventory and receivables levels have increased substantially, worsening the operating cycle from 90 to 138 days. Earnings per share have fallen 17% from 2010-2012. The report recommends improving inventory turnover and receivables collection to enhance profitability and liquidity.
This Project deals with the comparative study of 2 companies listed in S&P 500 for their performance evaluation & ratio analysis for the 3 financial years.
This Project deals with the comparative study of 2 companies listed in S&P 500 for their performance evaluation & ratio analysis for the 3 financial years.
Hi Friends
This is supa bouy
I am a mentor, Friend for all Management Aspirants, Any query related to anything in Management, Do write me @ supabuoy@gmail.com.
I will try to assist the best way I can.
Cheers to lyf…!!!
Supa Bouy
This particular project is based on ratio analysis of Coca-Cola International. I have analyzed two years financial performance of Coke i.e. from 2011 to 2012. I hope my this effort will help other interested students.
Analysis of Financial Statement of SNGCMaaz HaCeeb
Analysis of Financial Statement of SNGC to determined the financial position of the company and also compared it with their previous year whether company progress increases or decreases
A Study on Financial Statement Analysis of Ultratech Cement Limitedijtsrd
The process of Financial Statement Analysis includes various steps like ratio analysis, trend analysis, comparative statement analysis, schedule of changes in working capital, common size percentages, fund analysis, etc. Financial statement analysis refers to an assessment of the viability, stability and profitability of a business, sub business or project. The main objective of any financial analysis or financial statement analysis will be assessing corporate excellence, judging creditworthiness, forecasting bond ratings, predicting bankruptcy, and assessing market risk. Saddapalli Sai Deekshitha | Dr. B. C. Lakshmanna "A Study on Financial Statement Analysis of Ultratech Cement Limited" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-5 | Issue-5 , August 2021, URL: https://www.ijtsrd.com/papers/ijtsrd45154.pdf Paper URL: https://www.ijtsrd.com/management/accounting-and-finance/45154/a-study-on-financial-statement-analysis-of-ultratech-cement-limited/saddapalli-sai-deekshitha
Mien Phi Tai 10 Bai Assignment Mau Tu Moi Chu De
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Bài viết dưới đây chia sẻ các bài assignment mẫu tiêu biểu, đạt điểm cao. Các bạn cùng tìm hiểu luôn nhé.
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Hi Friends
This is supa bouy
I am a mentor, Friend for all Management Aspirants, Any query related to anything in Management, Do write me @ supabuoy@gmail.com.
I will try to assist the best way I can.
Cheers to lyf…!!!
Supa Bouy
This particular project is based on ratio analysis of Coca-Cola International. I have analyzed two years financial performance of Coke i.e. from 2011 to 2012. I hope my this effort will help other interested students.
Analysis of Financial Statement of SNGCMaaz HaCeeb
Analysis of Financial Statement of SNGC to determined the financial position of the company and also compared it with their previous year whether company progress increases or decreases
A Study on Financial Statement Analysis of Ultratech Cement Limitedijtsrd
The process of Financial Statement Analysis includes various steps like ratio analysis, trend analysis, comparative statement analysis, schedule of changes in working capital, common size percentages, fund analysis, etc. Financial statement analysis refers to an assessment of the viability, stability and profitability of a business, sub business or project. The main objective of any financial analysis or financial statement analysis will be assessing corporate excellence, judging creditworthiness, forecasting bond ratings, predicting bankruptcy, and assessing market risk. Saddapalli Sai Deekshitha | Dr. B. C. Lakshmanna "A Study on Financial Statement Analysis of Ultratech Cement Limited" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-5 | Issue-5 , August 2021, URL: https://www.ijtsrd.com/papers/ijtsrd45154.pdf Paper URL: https://www.ijtsrd.com/management/accounting-and-finance/45154/a-study-on-financial-statement-analysis-of-ultratech-cement-limited/saddapalli-sai-deekshitha
Mien Phi Tai 10 Bai Assignment Mau Tu Moi Chu De
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Bài viết dưới đây chia sẻ các bài assignment mẫu tiêu biểu, đạt điểm cao. Các bạn cùng tìm hiểu luôn nhé.
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Analysis Based on the above factual data collected and compliedMargaritoWhitt221
Analysis
Based on the above factual data collected and complied, we now proceed to analysis the financial position of Caterpillar Inc. with respect to its competitors and the industry. The analysis is based on various parameters calculated above and measured based on yardsticks such as Liquidity, Activity, Leverage, Profitability, Market Value and Market-to-book ratio.
Liquidity
The first and foremost parameter to study liquidity is Net working capital. It can be observed that the net working capital has dropped by USD 2.87b when compared to 2014. The operating cash flows have dropped by USD 4.51b. This, prima facie appears to be alarming. However, on a careful evaluation of the other factors and the competitors, the following can be observedFinancial Analysis 11 | P a g e The main competitor as well has witnessed a drop of USD 3.08b in their net working capital numbers. Current ratio is stable and has not fluctuated. (from 1.39 to 1.31) The revenues have dipped by 85% (from USD 55b to USD 47b) It may be noted from the above that the current ratio is stable. It can therefore be concluded that there has not be any inefficiency as far as working capital management is concerned. However, there is an indication that there has been a slump in the industry as a whole in which the company is operating i.e. Manufacture of earth moving and other heavy equipment’s. The revenues have dipped by 15% where the competitor’s revenues have dipped by 20%. One of the broad causes for this can be attributed to an overall fall in the commodity and metal prices worldwide. The competitor has however, maintained very good liquidity position at 2.05 and is one of the best in the industry which is averaging at 1.7. On the whole, the working capital and liquidity levels are not the best in the industry. However, considering the capital intensive nature of business and heavy reliance on metal coupled with a slump in the metal industry, it can be concluded that the company has well managed and maintained its working capital and liquidity position.
Activity
In order to evaluate the Activity and Efficiency of operation, we have computed the Inventory and Receivable number of days. Inventory days have only marginally increased from 112 days to 116 days and receivable days from 123 to 139 days. On a careful analysis of these two parameters, it can be observed that in-spite of the pressure on the revenues, the Inventory days and receivable days have not drastically fluctuated. This is an indicator that the management has been quite sensitive to the developments in the industry and had taken adequate precautions regularly in order to keep the working capital under control. It can also be seen that the competitor could not control the receivable days and have increased by 82 days. With a dip in revenue, there is a high likelihood that the inventories pile up and customer payments get delayed resulting in higher inventory days and receivable days. However, in case of Cater ...
Jazzit Score is a financial reporting tool that automatically creates a comprehensive 32 page financial report analyzing the health of your clients’ business. Drawing on the trial balance info already entered in CaseWare Working Papers, it includes ratio analysis, trend analysis, comparative industry and custom defined benchmarks with insightful commentary.
Founded in 2000, Jazzit is Canada’s leading supplier of premium CaseWare templates for accountants. Our products include Jazzit Fundamentals, Jazzit Checklists and Jazzit Score, creating a powerful suite of automated solutions for SME practioners. Jazzit Fundamentals, the flagship product, is an integrated suite of over 115 templates and letters that assist public accountants in completing year-end engagements with their corporate clients. With offices in Calgary, Alberta, and Kelowna, B.C., Jazzit’s software serves over 5,000 accounting professionals across Canada.
Jazzit Score is a financial reporting tool that automatically creates a comprehensive 32 page financial report analyzing the health of your clients' business. Drawing on the trial balance info already entered in CaseWare Working Papers, it includes ratio analysis, trend analysis, comparative industry and custom defined benchmarks with insightful commentary.
Founded in 2000, Jazzit is Canada's leading supplier of premium CaseWare templates for accountants. Our products include Jazzit Fundamentals, Jazzit Checklists and Jazzit Score, creating a powerful suite of automated solutions for SME practioners. Jazzit Fundamentals, the flagship product, is an integrated suite of over 100 templates and letters that assist public accountants in completing year-end engagements with their corporate clients. With offices in Calgary, Alberta, and Kelowna, B.C., Jazzit's software serves over 5,000 accounting professionals across Canada.
Running Head: FINANCIAL ANALYSIS
1
FINANCIAL ANALYSIS
7
Financial Analysis
Students Name
Institutional Affiliation
Executive summaryThis report created from the financial statements of The Coca-Cola Company (KO) provides an analysis and evaluation of the actual and the prospective liquidity, profitability and the financial stability of the company. The methods that have been used in the analysis include trend analysis, the vertical analysis and the horizontal analysis. Also we have used certain analysis such as Quick ratio, debt ratio, and the current ratios. More calculations that have been used includes the returns on the owners equity, the earning per share, net operating working capital, total operating capital, net operating capital, net operating profit after taxes, operating cash flow and free cash flow. A result from the data reveals that, all the company ratios are above the industries averages. Comparative performance is good in the area of the liquidity, credit control and inventory management.
The report finds that the tidings for the company are positive in the near future. The major areas of weakness highlighted require further investigation and immediate action by management. The recommendations that were provided include;
· Improving the average accounts receivable collection period,
· Raising/ increasing the inventory turnover and reduction of prepayments in order to have enough operating cash for the subsequent periods.
The investigation in this report also had its shortcomings that arose and are highlighted as;
The forecasted figures used are estimates that sometimes maybe arbitrate; we also cannot fully provide data on the position of other companies with the data limitation we have experienced. The monthly details would have given us more information from which we could base a proper in year trend analysis, rather than the blanket whole year analysis provided. Though we had the above mentioned strain in preparation of this report, we still great belief that the analysis provided is best suited to show the standing of the Coca-Cola Company (KO).
In the financial report below, the strengths, weakness, opportunity and threats have been highlighted as we analyze the various financial sub segments.
Identify your company, its industry, and analyze the important segments (percentage of sales or subsidiaries) of your company compared to its industry and its overall business
The Coca-Cola Company (KO) is a multinational American Company that has its headquarters at Atlanta Georgia. The company has got its branches in more than 200 countries in the world and majority of its sales is in America, amounting to 40% of the total sales. The company operates in the non alcoholic beverage industry made up of the following companies as the main rivals, Dr Pepper Snapple Group, Inc, Nestle and Pepsi Inc. the company is the best performer in market capitalization compared to competitors with a capitalization of 169.49billion, higher .
The secret way to sell pi coins effortlessly.DOT TECH
Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just telegram this number below. I sold about 3000 pi coins to him and he paid me immediately.
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Introduction to Indian Financial System ()Avanish Goel
The financial system of a country is an important tool for economic development of the country, as it helps in creation of wealth by linking savings with investments.
It facilitates the flow of funds form the households (savers) to business firms (investors) to aid in wealth creation and development of both the parties
Even tho Pi network is not listed on any exchange yet.
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how to swap pi coins to foreign currency withdrawable.DOT TECH
As of my last update, Pi is still in the testing phase and is not tradable on any exchanges.
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What price will pi network be listed on exchangesDOT TECH
The rate at which pi will be listed is practically unknown. But due to speculations surrounding it the predicted rate is tends to be from 30$ — 50$.
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A merchant is someone who buys pi coins from miners and resell them to Investors looking forward to hold massive quantities till mainnet launch.
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@Pi_vendor_247
how to sell pi coins in all Africa Countries.DOT TECH
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How to get verified on Coinbase Account?_.docxBuy bitget
t's important to note that buying verified Coinbase accounts is not recommended and may violate Coinbase's terms of service. Instead of searching to "buy verified Coinbase accounts," follow the proper steps to verify your own account to ensure compliance and security.
US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
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Where can I sell my pi coins at a high rate.
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USDA Loans in California: A Comprehensive Overview.pptxmarketing367770
USDA Loans in California: A Comprehensive Overview
If you're dreaming of owning a home in California's rural or suburban areas, a USDA loan might be the perfect solution. The U.S. Department of Agriculture (USDA) offers these loans to help low-to-moderate-income individuals and families achieve homeownership.
Key Features of USDA Loans:
Zero Down Payment: USDA loans require no down payment, making homeownership more accessible.
Competitive Interest Rates: These loans often come with lower interest rates compared to conventional loans.
Flexible Credit Requirements: USDA loans have more lenient credit score requirements, helping those with less-than-perfect credit.
Guaranteed Loan Program: The USDA guarantees a portion of the loan, reducing risk for lenders and expanding borrowing options.
Eligibility Criteria:
Location: The property must be located in a USDA-designated rural or suburban area. Many areas in California qualify.
Income Limits: Applicants must meet income guidelines, which vary by region and household size.
Primary Residence: The home must be used as the borrower's primary residence.
Application Process:
Find a USDA-Approved Lender: Not all lenders offer USDA loans, so it's essential to choose one approved by the USDA.
Pre-Qualification: Determine your eligibility and the amount you can borrow.
Property Search: Look for properties in eligible rural or suburban areas.
Loan Application: Submit your application, including financial and personal information.
Processing and Approval: The lender and USDA will review your application. If approved, you can proceed to closing.
USDA loans are an excellent option for those looking to buy a home in California's rural and suburban areas. With no down payment and flexible requirements, these loans make homeownership more attainable for many families. Explore your eligibility today and take the first step toward owning your dream home.
Financial Assets: Debit vs Equity Securities.pptxWrito-Finance
financial assets represent claim for future benefit or cash. Financial assets are formed by establishing contracts between participants. These financial assets are used for collection of huge amounts of money for business purposes.
Two major Types: Debt Securities and Equity Securities.
Debt Securities are Also known as fixed-income securities or instruments. The type of assets is formed by establishing contracts between investor and issuer of the asset.
• The first type of Debit securities is BONDS. Bonds are issued by corporations and government (both local and national government).
• The second important type of Debit security is NOTES. Apart from similarities associated with notes and bonds, notes have shorter term maturity.
• The 3rd important type of Debit security is TRESURY BILLS. These securities have short-term ranging from three months, six months, and one year. Issuer of such securities are governments.
• Above discussed debit securities are mostly issued by governments and corporations. CERTIFICATE OF DEPOSITS CDs are issued by Banks and Financial Institutions. Risk factor associated with CDs gets reduced when issued by reputable institutions or Banks.
Following are the risk attached with debt securities: Credit risk, interest rate risk and currency risk
There are no fixed maturity dates in such securities, and asset’s value is determined by company’s performance. There are two major types of equity securities: common stock and preferred stock.
Common Stock: These are simple equity securities and bear no complexities which the preferred stock bears. Holders of such securities or instrument have the voting rights when it comes to select the company’s board of director or the business decisions to be made.
Preferred Stock: Preferred stocks are sometime referred to as hybrid securities, because it contains elements of both debit security and equity security. Preferred stock confers ownership rights to security holder that is why it is equity instrument
<a href="https://www.writofinance.com/equity-securities-features-types-risk/" >Equity securities </a> as a whole is used for capital funding for companies. Companies have multiple expenses to cover. Potential growth of company is required in competitive market. So, these securities are used for capital generation, and then uses it for company’s growth.
Concluding remarks
Both are employed in business. Businesses are often established through debit securities, then what is the need for equity securities. Companies have to cover multiple expenses and expansion of business. They can also use equity instruments for repayment of debits. So, there are multiple uses for securities. As an investor, you need tools for analysis. Investment decisions are made by carefully analyzing the market. For better analysis of the stock market, investors often employ financial analysis of companies.
1. INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF PAKISTAN
REPORT ON RATIO ANALYSIS
OF
M/S RANI LIMITED
PREPARED FOR:
Board of Directors
PREPARED BY:
Management Accountant
2. TABLE OF CONTENTS
Particulars Page No.
Executive Summary 3-4
Introduction 5
Financial Position and Ratio Analysis 6 - 10
Suggestions & Conclusion 11 - 12
Appendices
Horizontal & Vertical Analysis of Income Statement 13
Comparative Ratios & averages 14
Trend of Ratios & Percentages 15
Graphical Representation 16
Page 2 of 16
3. EXECUTIVE SUMMARY
This report provides an analysis and evaluation of the current and prospective
profitability, liquidity and financial stability of Rani Ltd. Methods of Analysis
include trend horizontal and vertical analyses as well as ratios such as Current and
Quick Ratios. Other calculations include return on Shareholders Equity and Total
Assets and earnings per share to name a few. All calculation can be found in the
appendices. Results of data analyzed show that the company’s total revenue has
increased but Net profit Margin have declined due to increase in cost of sales.
Over all liquidity position of Rani Ltd. is satisfactory although quick ratio is at
alarming level. Corrective measures are required to avoid any liquidity problems
in future.
The Operating cycle is rising due to huge level of inventories, and receivables
collection period. Fall in liquidity ratios, rapid increase in revenues, increase in
inventory in relation to revenue, uneven increase in receivables and increase in
accounts payable period and decrease in profit margin are the symptoms of
“Overtrading”.
In line with the decrease in net profit, earning per share has also drastically
reduced to Rs.3.22 (2010) from Rs.2.665 (2012) over preceding years.
Page 3 of 16
4. This report finds the prospects of the company in its current position are not
positive. The major areas of weakness require further investigation and remedial
investigation. Recommendations discussed include:
Improving the average collection period for trade debtors
Improving the Inventory turnover
Avoiding unnecessary overtrading
This report also indicates the fact that the analyses conducted has limitations.
Some of the limitations include
Nature and Type of the company is not known
Current Economic condition is also unknown
Data limitations as not enough information is provided or enough detail
Page 4 of 16
5. INTRODUCTION
This report provides information obtained through ratio analysis, regarding the
profitability, liquidity and financial stability of Rani Ltd for the years 2010-2012.
This report will pay particular attention to the earning power, liquidity and credit
management, inventory management, and will highlight major strengths and
weaknesses while offering some explanation for observed changes.
The report will comment on the prospects of the company and make
recommendations that would improve Rani Ltd’s current performance. These
observations do have limitations which will be noted. This report will explain how
a cash flow statement and a prospectus could enhance analysis.
Page 5 of 16
6. Financial Position and Ratio Analysis
Rani Ltd had a very good performance in the past but now some performance
indicators show that the present results are deteriorating and not in line with the
previous financial indicators of the company.
We understand that the term of reference of the assignment is to analyze the
performance and financial position of the company.
We have analyzed the financial position of the company on the basis of
information and ratios provided to us on the following grounds:
• Profitability of the Company
• Liquidity Position
• Efficiency Indicators
• Investment Perspective
Page 6 of 16
7. PROFITABILITY OF THE COMPANY
All three profitability ratios given in the table below (see appendices) have
positive values during the year, as the company gained gross profit and
comprehensive income from operational and financial activity for this period but
overall profitability of the Rani ltd has considerably declined due to the various
reasons out of which very obvious indicators are Cost of goods sold to net sales
ratio which show that the in spite of increase in sales over last three years Cost of
good sold has increased as % of total sales. This is mainly due to the amount of
inventory that Rani Ltd is maintaining in 2012.
As a result of above, very logically net profit to net sales ratio has significantly
reduced from 13.90% in 2010 to only 10.43% in 2012. This is certainly very
alarming position for the management of the company as well as shareholders of
the company. If the trend goes on further in next coming year it is very obvious
that the company will start incurring losses in the near future.
On the same lines Return on net worth has been falling to 7.54% in 2012 from
10.60 % in 2010 which indicates that the returns are not up to the mark and may
be below the required rate of return of the company and will certainly be not
acceptable to the investors of the company.
Page 7 of 16
8. LIQUIDITY POSITION
Current ratio of Rani Ltd has increased from 1.26 times in the year 2010 to 1.43
times in the year 2012, as we know that the normal level of current ratio is 2 : 1
that shows sound liquidity position. There is increase in current ratio from
previous year’s ration, this increase in current ratio is indicating pilling up of
inventories as compared to acid test ratio which is increasing as well.
Higher current ratio is also indicating under utilization of working capital as excess
current asset can be invested into more efficient utilization. For absolute reason
of this increase shows that the company has been involved in over trading due to
which account receivable & inventories turnover have declined and operating
cycle days have increased.
The Quick/acid test ratio is very useful in measuring the liquidity position of a
firm. It measures the firm’s capacity to pay off current obligations immediately
and is more rigorous test of liquidity than the current ratio. Usually a high liquid
ratio is an indicates that the firm is liquid and has the ability to meets its current
or liquid liabilities in time and on the other hand a low liquidity ratio represents
that the firm’s liquidity position is not good. The Quick Ratio which is 0.64 time in
2012 is at alarming situation, because, generally, a quick ratio of 1:1 is considered
to be satisfactory. It means that Rani Ltd does not have enough assets which can
be transferred to monetary funds in a very short time to meet current liabilities.
Working capital is required to maintain to meet the operational needs of the
company such as purchase of raw material and payment of salaries and wages to
labor but in Rani Ltd working capital has been rising above the needs which is due
to the increase in receivables and inventories that causing extra financing cost to
the company. But if we compare working capital with inventories, it turns out that
inventories are not covered with working capital in full at the end of the period
analyzed . The value of working capital is deemed to be normal when it
corresponds to the amount of inventories, which are the least liquid part of
current assets.
Page 8 of 16
9. EFFICIENCY INDICATORS
Debtors turnover has gone down abnormally during the current period over
preceding years i.e. from 24.99 times in 2010 to 7.31 times in 2012 as a result
collection period has increased to 49 days from 14 days which certainly need
extra financing. As we know that higher the collection period, the greater is the
chance of bad debts.
Inventories need detailed analysis from all aspects. Inventories could be of raw
material, work in progress and finished goods, all these when accumulate, block
huge amount of funds. This increase could be due to the obsolete or out dated
stock or due to excessive orders which were not matched with the production
schedules which result increase in storage cost.
In terms of days, presently it is taking 100 days to move to the customers which
has been increased from 84 days in 2010. It means that the company needs extra
financing for these extra days of pilling up of inventories.
The detailed analysis of receivables and inventories concludes that the Operating
cycle has severely moved up by 48 days from the level of 90 days in 2010 to 138
days in 2012.
Page 9 of 16
10. INVESTMENT PERSPECTIVE
Earning per share has been continuously falling and presently it has reached to
2.66 in 2012 from 3.22per share in 2010. EPS has decreased by 17% from 2010
to 2012
Reasons for this declining trend are the same as discussed earlier in profitability
ratio, but point of concern is that despite declined in profitability and earning per
share, company has maintained dividend per share of Rs 2 which is perhaps to
restrain share price from drastic reduction, this strategy might not work in
efficient market as investors are more informed and take rational decisions, on
the other hand, company will not be able to maintain this level of dividend per
share in near future as the company might be in a financial difficulty and may not
be able to distribute dividends at this level of profits
Dividend Per share of Rani ltd has increased from previous year which is good
indicator for investors as he/she receives dividend despite the fact that the
company is not having good profitability performance as compared to previous
years.
Book Value per share of Rani Ltd has also increased from 19.59 in 2010 to 21.32 in
2012.
Gearing Ratio measures the percentage of capital employed that is financed by
debt and long term financing. The higher the gearing ratio, the higher is the
dependence on borrowing and long term financing. Gearing Ratio between 25%
to 50% is considered normal for a business which is happy to finance its activities
using debts. Rani Ltd has maintained its gearing ratio at approximately 27% since
last 2010 which means that Rani ltd is neither issuing equity nor raising long term
liabilities.
Page 10 of 16
11. SUGGESTIONS & CONCLUSION
The comparative ratio analysis of Rani Ltd has created several mysteries which
need to be resolved prior to reach any hasty conclusion. From the interpretation
of financial ratios of Rani Ltd, it can be concluded that it is not in a very secure
financial position. Improvement in every area of the company is needed if the
company is, in the first instance, to survive and then grow.
The key areas of reform are the liquidity of the company and the quantity and
quality of working capital, profitability and financial stability. Management of Raja
Ltd must address these areas simultaneously if the company is going to take over
Rani ltd.
It must be remembered that this analysis is limited- a greater of understanding
and evaluation can only occur with utilization of other resources such as
comparisons with the companies operating in the same industry as of Rani ltd or
comparisons with budget forecasts and the statement of changes in financial
position. Only after this process can a full appreciation of the company’s current
situation and possible future occur.
At this point the company does not have strong future prospects in the areas of
profitability, liquidity or stability if it continues on its current path. Raja Ltd should
be concerned with current rates of return of Rani Ltd. Before making Investment
in Rani ltd our company should see other factors as well
We should see if we can get synergies by acquiring the Rani ltd, because from
given information and data company is performing not very well so it would be a
risky investment if made in hurry.
Company is having acute Working Capital Management Problems.
Rani Ltd has neither Aggressive Working capital policy nor conservative
one.
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12. AVOID OVERTRADING
Solution of all the problems lies in the overtrading. Rani ltd must avoid
overtrading activities and take reasonable orders which it can meet easily and
honor them timely, it will reduce extra finance cost, inventory storage costs and
other costs related to it. If Raja ltd takes over Rani ltd then we should consider
following options:
We must see the future Plans of the company before finalizing any deal.
Raja limited should change its working capital policies (if acquired).
We should see the post acquisition benefits and post acquisition operating
policies before taking any decision.
Rani ltd is suffering finance cost as a result of high receivable and inventory
level which needs to be lower.
Rani ltd is not issuing the equity nor raising long term loan, so this option
must be considered to increase the capital base.
We must take into account Market Price of the Rani ltd.
Board of Directors should investigate for any Intellectual Capital/Assets of
the company which may increase the value of the Rani ltd.
We must take into account market value of the shares of the company.
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13. APPENDICES
HORIZONTAL & VERTICAL ANALYSIS OF INCOME STATEMENT
Vertical Analysis
2012 2011 2010
% of total Rs % of total Rs % total Rs
Sales 100.0% 100% 100%
20,440.0 19,467.0 18,540.0
CGS 59.9% 55% 58%
12,247.0 10,650.0 10,753.0
Operating Expenses 15.1% 17% 17%
3,086.0 3,268.0 3,063.0
Financial Charges 5.3% 4% 4%
1,082.0 839.0 725.0
Net Profit 10.4% 14% 14%
2,132.0 2,650.0 2,578.0
Horizontal Analysis
Particular % 2012 % 2011 % 2010
Increase/(Dec Increase/(Dec Increase/(Dec
from previous from previous from previous
year year year
Sales 5.0% 5.0%
20,440.0 19,467.0 18,540.0
CGD 15.0% -1.0%
12,247.0 10,650.0 10,753.0
Operating Expenses -5.6% 6.7% Don’t know
3,086.0 3,268.0 3,063.0
Financial Charges 29.0% 15.7%
1,082.0 839.0 725.0
Net Profit -19.5% 2.8%
2,132.0 2,650.0 2,578.0
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14. COMPARATIVE RATIOS, PERCANTAGES & AVERAGES
S. No. Description 2012 2011 2010
1 Current Ratio 1.43 1.21 1.26
2 Quick Ratio 0.64 0.56 0.57
3 Working Capital 2239 894 698
4 Net Profit Margin 10.43% 13.61% 13.90%
5 Gross Profit Ratio 40.08% 45.30% 42.00%
6 Return On Assets 7.54% 9.85% 10.60%
7 Interest Cover (Times) 4.72 6.61 6.52
8 Receivable Turnover (Times) 7.31 10.21 24.99
9 Receivable Turnover (Days) 49 35 14
10 Payable Turnover (Times) 31.70 28.84 47.50
11 Payable Turnover (Days) 11 12 8
12 Inventory Turnover (Times) 3.57 4.66 4.42
13 Inventory Turnover (Days) 100 77 84
14 Operating Cycle (Days) 138 100 90
15 Earning Per share 2.66 3.31 3.22
16 Dividend Per Share 2.18 2.06 -
17 Dividend Payout Ratio 0.82 0.62 -
18 Book Value Per Share 21.32 20.84 19.59
19 Return On Capital Employed 22.15 24.48 21.80
20 Return On Shareholder Equity 12.5 15.90 16.44
21 Gearing Ratio 26.02% 26.47% 27.70%
Note: Assumed 360 days in a year
All ratios & percentages are rounded off to the nearest two decimal places
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15. TRENDS OF RATIOS & PERCENTAGES
Current Ratio
Quick Ratio
Working Capital
Receivable Turnover (Days)
Inventory Turnover (Days)
Operating Cycles
Sales
Cost of Sales
Dividend per Share
____________________________________________________
Net Profit Margin
Gross Profit
Return on Assets
Return on Capital Employed
Return on Shareholder Equity
Earning Per Share
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