Financial Performance Analysis of Agthia Group: 2017-2019 Report

This report provides a financial analysis of Agthia Group, focusing on key performance indicators from 2017 to 2019. The analysis covers debt obligations, short-term assets, operational efficiency, and the company's current and fixed assets. The report examines ratios such as the debt-to-equity ratio, days to sales outstanding, net profit margin, and current ratio. It also includes a financial planning analysis to assess the need for external finance, evaluates the company's interaction with financial markets, and assesses its risk profile. Furthermore, the report explores the company's return on equity (ROE), earnings per share (EPS), and cost of capital, as well as the nature of its projects and financing activities. The analysis concludes with an assessment of the company's debt levels and recommendations for enhancing value. The report utilizes data from Agthia Group's annual reports and other financial sources to provide a comprehensive overview of the company's financial performance.

Agthia Group financial statement analysis

Introduction
In this report, the discussion is made on the financial statement analysis. The financial analysis
will be done on Agthia Group which is registered under the Abu Dhabi Stock Exchange or Dubai
Financial Market (adx.ae, 2020). In this regards, financial statement analysis will be done by
evaluating ratios. `
a) Conduct a comparative, wide range and comprehensive ratios analyses, trend
analysis to address the following key points about your chosen company. Support
your answers with necessary computation and with alternative measures.
1. Debt obligations in the future
Ratio 2017 2018 2019
Debt / Equity ratio 19 13 7
Debt-to-Equity ratio states that over the time period of three years the ratio has been decreases
from 2017 to 2019. It depicts that the Agthia Group has the ability to pay its liabilities and also
able to generate the satisfactory cash flow from its operational activities. Its liability amount is
reduces and profit amount has been increases due to which it can pay its liability in future
effectively (Agthia Group, 2018).
Short term assets into cash
Ratio 2017 2018 2019
Days to sales outstanding 107.87 148.96 153.23
It states that the group collects the amount in large days according to its number of collecting
days those are increases. It means it takes more days to covert the cash and pay the short term
expenses for operations.

2. Operational efficiency
Ratio 2017 2018 2019
Net profit margin =
(revenue / net income)
75% 68% 69%
NPM represents the ability to generate the profit. Net profit margin is decreases from last three
years from 75% to 69% the company face the challenges in handling expenses and generating
the profit (Agthia Group, 2018).
3. Current and fixed assets
Ratio 2017 2018 2019
Current ratio = (Current
assets / current liabilities)
1.95 1.96 1.61
Fixed assets = (total sales
/ net fixed assets)
1.49 1.41 1.39
Current asset: The current ratio of the company has been a decrease in 2019 which means its
ability to pay the current liability is increases. The amount of current assets has been increases
with the decreasing amount of current liabilities.
Fixed asset: This ratio has been decreases from 1.49 to 1.39 from 2017 to 2019. It means the
company has the ability to increases the net sales by using the fixed assets is increases as the
total assets has been increases (Agthia Group, 2019).
b) Conduct financial planning analyses to assess whether the company needs any
external finance in the future?
Ratio 2017 2018 2019

Leverage ratio 0.37 0.34 0.36
ROE 11% 11% 7%
Financial leverage of Agthia Group has been increases which mean its financial risk has been
increases due to increasing the debt.
ROE (Return on equity) of Agthia Group states that the company ability to pay the return to
shareholders. It depicts that the company ROE ratio is decreases which means the shareholders
gets the less amount of return from the company.
c) How does this firm interact with financial markets? How do markets get
information on the firm?
Agthia Group interacts with the market through its promotions and campaigns. The market gets
the information through its financial statements and from the others sites.
d) What is the risk profile of your company?
Moderate level of risk
e) How much overall risk is there in this firm?
The overall risk that the company have is moderate as it has the less fixed assets in order
to pay its liabilities. Currently, due to COVID-19 the business has been affected as the
global economy has been affected.
f) Where is this risk coming from (market, firm, industry)
Currently, the coronavirus (COVID 19) issue is affecting the business due to poor economic
situation (iea.org, 2020). The risk came from the market as the financial market is affected with
the major percentage.

(Source: Yahoo Finance, 2019).
g) What return would you have earned investing in this company’s stock?
EPS of the company has been decreases from 2017 to 2019 such as 0.34 to 0.22. EPS has been
decreases with the each investor
Ratio 2017 2018 2019
EPS (Earning per share) 0.34 0.35 0.22
h) Would you have under or outperformed the market?
The industry book value share is 2.75 and the company has 3.27 which means the company
outperformed the market as it has high value.

(Source: Investing. Com, 2019)
i) What is this company’s current cost of capital?
Not available
j) Is there a typical project for this firm? If yes, what does it look like in terms of life
(long term or short term), investment needs and cash flow patterns?
Agthia Group has commonly works on food and beverage market. Food and Beverage market
has huge scope nowadays that is why; it can be said that the company huge scope to long term
survival and need more investment (Agthia Group, 2018).
k) How good are the projects that the company has on its books currently?
According to financial analysis, it is observed that the company debt and capital has been used to
generate the revenue and the revenue has been increases which mean it has good projects on its
books (Agthia, 2019).
l) Are the projects in the future likely to look like the projects in the past? Why or
why not?
Although, the projects of the company is similar with the past projects but due to COVID-19, the
projects of the company has been changed.
m) What are the different kinds or types of financing that this company has used to
raise funds?
Debt and equity are the two types of financing activities that the company can use to raise the
funds (Agthia Group, 2017).
n) How large, in qualitative or quantitative terms, are the advantages to this company
from using debt?
Ratio 2018 2019
Leverage ratio 0.3% 16.5%

o) From the qualitative trade off, does this firm look like it has too much or too little
debt?
No, the company does not have high amount of debt and at the same time, it does not has less
amount of debt.
p) Based upon the cost of capital approach, what is the optimal debt ratio for your
firm?
The optimal debt ratio for the company should be average such as 25% as currently it is on 7%
that is why; it required to raise the more capital (Schroeder, Clark, & Cathey, 2019).
q) If you were hired to enhance value at this firm, what would be the path you would
choose?
It is required for the company to raise the capital through investors that is why; I would like to
found the market gaps, and challenges are to improve the firm value.

References
Investing. Com. (2019) Agthia Group (AGTHIA). Retrieved From:
https://in.investing.com/equities/agthia-group-ratios
Agthia Group (2018) Annual Report 2018. Retrieved From:
https://agthia.com/Portals/_default/Uploaded/PDF/FINAL_Annual
%20Report_English_revised.pdf
Agthia Group (2019) Annual Report 2019. Retrieved From:
https://agthia.com/Portals/_default/Uploaded/PDF/Annual%20Report%202019.pdf
Agthia Group (2017) Annual Report 2017. Retrieved From:
https://agthia.com/Portals/_default/Uploaded/PDF/Agthia%20Annual
%20Report_FINAL_EN_FINAL%20april%2021.pdf
Yahoo Finance. (2019). AGTHIA/HSBC 15 ELN (122924.L). Retrieved From:
https://finance.yahoo.com/quote/122924.L?p=122924.L
Agthia. (2019). About Agthia. Retrieved From: https://agthia.com/en-us/About-Agthia
Schroeder, R. G., Clark, M. W., & Cathey, J. M. (2019). Financial accounting theory and
analysis: text and cases. John Wiley & Sons.