Financial Ratio Analysis for Capral Limited

Running Head: Financial Ratio Analysis
Capral lIMITED
Accounting For Managers
9/6/2018

Financial Ratio Analysis 1
Executive Summary
In this report, the financial performance of Capral Limited for the year 2017 and 2016 has
been analysed. Capral Ltd is a public company that deals in the extruding and designing of
Aluminium related products. The liquidity ratio of the company has been found to be
improved in year 2017 as compared to 2016 but the profitability position of the company has
declined in 2017 as compared to 2016. The inventory management practices of the company
are not found to be satisfactory when they are compared with Rio Tinto Inc. which also deals
in aluminium product.

Financial Ratio Analysis 2
Table of Contents
Executive Summary...............................................................................................................................1
1.0. Introduction:...................................................................................................................................3
1.1. Purpose:......................................................................................................................................3
1.2. Scope:.........................................................................................................................................3
1.3. Limitations:.................................................................................................................................3
2.0. Company Overview:.......................................................................................................................3
3.0 Ratio Analysis...................................................................................................................................4
3.1. Current ratio:..............................................................................................................................5
3.2. Quick ratio:.................................................................................................................................5
3.3. Gross profit margin:....................................................................................................................6
3.4. Return on Equity:........................................................................................................................6
3.5. Return on Assets:........................................................................................................................7
4.0. Analysis and Comparison using the Inventory Ratio.......................................................................7
5.0. Conclusion:.....................................................................................................................................8
References:............................................................................................................................................9

Financial Ratio Analysis 3
1.0. Introduction:
1.1. Purpose:
The purpose of this report is to allow the users of the reports to have a clear picture of
financial performance of the company so that they can take sound economic decisions related
to the company.
1.2. Scope:
As a part of this report, the financial performance of Capral Limited in 2017 and 2016 is
analysed through the use of key technique of financial management i.e. Ratio Analysis. To
understand the overall financial performance of the company it is necessary to assess its
financial performance from various aspects such as profitability, liquidity, efficiency and
solvency. In the present report, certain ratios have been calculated to comment on the
profitability and liquidity position of the company.
1.3. Limitations:
Though ratio analysis is the key technique of financial management but even it suffers from
certain limitations that do not allow it to complete achieve its core purpose of accurate
financial decision making. In the present report, the company’s performance has been
compared with the performance of a large corporation which is not even in the direct
competition with Capral Limited because of non-availability of financial information of the
company’s direct competitor. The grounds of comparison are not appropriately comparable.
2.0. Company Overview:
Carpal limited is an Australian company which is engaged in the business of rolling, drawing
as well as extruding the aluminium. It is the leading supplier of fabricated as well non-
fabricated aluminium products in Australia. The company is trading as a public company and