In: Finance
Please refer to the published financial performance results of Tiger Brands for the year ending 30 September 2017. The statements are obtainable from: http://www.tigerbrands-online.co.za/results/annuals-2017/index.php
Activity: Please use 2 ratios in each category and write a comment of your opinion about the company’s performance based on that particular ratio. That is, is the performance good or bad and give reason for your answer. Exclude Economic Value Added from this exercise.
1. Liquidity Ratio
Current Ratio
- Quick Ratio
- Working Capital Ratio
2. Activity Ratio
- Accounts Receivable Turnover Ratio
- Inventory Turnover Ratio
- Asset Turnover Ratio
- Collection Period Ratio
3.Leverage Ratio
- Debt Ratio
- Interest coverage ratio
- Equity Ratio
4.Economic Indicator Ratio
- Economic Value Added
5. Profitability Ratio
- Return On Assets (ROA)
- Return On Equity (ROE)
- Return On Current Assets
- Return On Equity
- Operating Profit to Sales
(1): Liquidity Ratio-
Current Ratio = Current Assets / Current Liabilities
Current Ratio = 106650 / 57761
Current Ratio = 1.84
Quick Ratio = (Current Assets - Inventory) / Current Liabilities
Quick Ratio = (106650 - 48120) / 57761
Quick Ratio = 1.01
(2): Activity Ratio :
Accounts Receivable Turnover Ratio = Net Credit Sales / Average account receivables
Average receivables: (46316 + 45923) / 2 = 46119.50
Accounts Receivable Turnover Ratio = 312979 / 46119.50
Accounts Receivable Turnover Ratio = 6.78 times
Inventory Turnover Ratio = Cost of sales / Average Inventory
Average inventory: (48120+57698) /2 = 52909
Inventory Turnover Ratio = 208564 / 52909
Inventory Turnover Ratio = 3.94
(3): Leverae Ratio:
Debt Ratio = Total debt(Long term + short term borrowings) / Total assets
Debt Ratio = (20+7886) / 239792
Debt Ratio = .033
Interest coverage ratio = EBIT / Total Interest
Interest coverage ratio = 42674/ 187
Interest coverage ratio = 228.20 times
Note: (EBIT is not given so Earning befor tax has been taken in calculation)
(5): Profitability Ratio:
ROA = Net profit / Total Assets
ROA = (31380 / 239792) * 100
ROA = 13.1%
ROE = Net Profit / Shareholder's equity
ROE = 31380 / 170612
ROE = 18.39%
Conclusion- Company is doing good as its current ratio is good that says, company has good liquidity position, company's profitability is good and it has less leverage. Company's overall financial position is good.