Ratio Analysis Of Argil | Report

Added on - 26 Sep 2019

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.a. Compute the 2014 values of the following ratios:Ratio CalculationSr NoParticularFormula201420151Current Asset( Current Asset / Current Liability )3.62 times3.79 times2Days Sales Outstanding(Receivable /Sales) *36543.80 Days41.71Days3Inventory Turnover(Average Inventory/cost of goods Sold)*36582.13 Days65.83Days4Fixed Asset Turnover(Net Sales/Average Net Fixed Asset)3.95 times4.00Times5Debt Ratio(Total Debt / Total Asset)0.51 times0.48 times6Net Profit Margin( Net profit /Sales )*1003.60%4.11%7Return on Asset(Net Profit / Avarage Asset)*1006.35%7.66%Formula ViewSrNoParticularFormula201420151Current Asset( Current Asset / Current Liability )=(235/65)=(201/53)2Days Sales Outstanding(Receivable /Sales) *365=(90/750)*365=(80/700)*3653Inventory Turnover(Average Inventory/cost of goods Sold)*365=(135/600)*365=(101/560)*3654Fixed Asset Turnover(Net Sales/Average Net Fixed Asset)=(750/190)=(700/175)5Debt Ratio(Total Debt / Total Asset)=(217/425)=(181/376)6Net Profit Margin( Net profit /Sales )*100=(27/750)*100=(28.8/700)*1007Return on Asset(Net Profit / Avarage Asset)*100=(27/425)*100=(28.8/376)*100(b. )The financial position of the Argil’s is very strong, it is to be noted that the liquidity position ofthe company is good as the current ratio is quite good, 3.79 times. Company can easily pay itscurrent debt by the liquid assets.As far as profitability of the company is concern net profit margin is 4.11% which is nearer tothe industry average. Return on asset is 7.66% which is lower than industry average of 9.9% buttill on better position. Overall profitability ratio is lower in compare to industry but if we analyzeindependently it is quite good.The Days sales outstanding are 41.71 days as against industry standard of 33.5 days, Companyneed to implement credit control policy. The fixed Asset turnover is 4 which is almost similar tothe industry standard. Overall efficiency ratio is nearer to the industry standard andindependently quite good.
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