Professional Documents
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( Saiham Textiles Mills Ltd. & Apex Spinning & Knitting Mills Ltd.)
1. To use financial statements to evaluate and compare Saiham Textile & Appex Spinnings.. -Financial performance -Financial position. 2. To apply analytical tools and techniques to financial statements to obtain useful information to aid decision making.
Financial Ratio Analysis: Financial Ratios can be classified into 5 main categories:-Profitability Ratios -Liquidity ratios -Activity Ratios -Capitalization Ratios -Financial Leverage Ratio
Liquidity ratio of
Current Ratio
Current Ratio
= = 1.14
= = 1.13
From this ratio we see Saiham Textile has better ability to meet its current liabilities with its current assets than Appex Spinning.
Liquidity ratio of
Acid-test Ratio
= =
= = .044 = 0.78
From quick ratio we see Appex Spinning has better ability to meet current liabilities with its most liquid assets than Saiham Textile.
= = 1.03
= = 1.11
From this ratio we see Appex Spinning has more debt utilization in their company than Saiham Textile.
= =
=0.51 =1.10 Saiham Textile has .51% total debt from their firms assets, on the other side Appex Spinning has 1.10% total debt from their firms assets. From this we see Appex Spinning has good debt utilization in their company.
Total Capitalization
Total Capitalization
= 0.94
= 1.11
Activity ratio of
Receivable Turnover
Receivable Turnover
= 4.27
= 6.74
Appex Spinning is more successful in receivable collection period than Saiham textile. Because Appex spinning 6.74 times collect their receivables & Saiham Textile 4.27 times collect their receivables in a year.
Activity ratio of
= = 85.5
= =54.2
Activity ratio of
Inventory Turnover =
=1.80
= 9.56
Appex spinning 9.56 times turn their raw matarials into finished goods.On the other side Saiham textile 1.80 times turn their raw matarials into finished goods. From this we see that Appex Spinning is in a better position.
Activity ratio
=0.72
=4.0
Appex Spinning 4.0 times utilize their assets to generate their sales. On the other side Saiham Textile 0.72 times utilize their assets to generate their sales. From this we can say that Appex Spinning is in a good position.
Profitability ratio of
=0.19
=0.096
Saiham Textile is more efficient in operating their firms & making pricing policies.Because Saiham textile has 0.19 gross profit margin.On the other side Appex Spinning has 0.096 gross profit.So Saiham textile is in a good position.
Profitability ratio of
=0.061
=0.0087
Appex spinning is in a weak position than Saiham textile.Because they have only 0.0087 net profit margin on the other side Saiham textile have 0.061 net profit margin.
Profitability ratio of
ROI=
ROI=
= =0.044
= =0.035
Appes spinning has a poor return on investment.Because they have only 0.035 ROI on the other side Saiham textile has 0.044 ROI.
Profitability ratio of
ROE=
ROE
=0.089
=0.035
Appex spinning has a poor return on equity.From the comparison of Appex spinning, Saiham Textiles shareholders are more profitable.