Question

Ratios	ned	STD	Fun	Sub
Equity ratio of debt	0,61	0,57	0,53	0,43
Proprietary ratio	11,4	10,58	11,23	12,83
Ratio of capital gearing	10,44	9,58	10,23	11,83

Discuss and analyze each ratios and compare Ned to its competitors

Answer 1

EQUITY RATIO OF DEBT =TOTA EQUITY/ TOTAL DEBT

IT INDICATES RATIO OF EQUITY TO TOTAL DEBT IF LESS THAN 1 MEANS EQUITY IS LESS THAN DEBT. DEBT INVOLVED INTEREST PAYMENTS SO IT EFFECT ON PROFIT SO EQUITY/ DEBT LESS THAN ONE IS NOT GOOD FOR COMPANY.

Ned has 0.61 even though it is better than other companies but it is less than 1 it is not good even though it is better compared to other companies.

Proprietary ratios = total equity/ total assets

more proprietary ratios indicate more equity as compared to other assets.

Ned has 11.4 and sub has 12.83 while std and fun has same nearly though slight difference is there proprietary ratios indicate FINANCIAL stability of company more it is more financially stable company is.

Rationof capital gearing =Debt/ equity

it indicates how much debt as compared to equity

more debt means more risky is company less debt means company is less risky

Ned has 10.44 more than std and nearly equal to fun but less than sub.

but such high ratio of debt as compared to equity is very risky

company may become insolvent in longer run.