Question

	2019	2018
Assets
Property,plant and equipment	12,458,491	11,116,316
Right of use assets	1,783,096	1,649,602
Intangible assets	11,308,062	10,050,172
Investment properties	16,283	15,425
Trade receivables	148,159	115,001
Receivables from financial services	123,136	884,686
Contract assets	10,291	3,513
Deferred tax assets	189,342	152,732
Investments in equity accounted investees	41,701	19,413
Other non current assets	304,270	421,306
Total non current assets	26,382,831	24,428,166
Inventories	178,399	180,434
Trade receivables	3,133,975	2,473,978
Due from related parties	4,477	13,533
Receivables from financial services	2,319,122	3,318,255
Contract assets	933,969	711,928
Derivative financial instruments	845,513	1,356,062
Financial asset at amorticez cost	5,368	9,409
Financial asset at fair value through other comprehensive income	345,602	42,454
Cash and cash equivalents	10,238,715	7,419,239
Other current assets	1,327,004	1,091,512
Assets classified as held for sale	-	1,720,305
Total Current Assets	19,332,144	18,337,109
Total Assets	45,714,975	42,765,275
Liabilities and Shareholder’s Equity
Liabilities
Borrowings	12,677,394	13,119,636
Employee benefit obligations	294,331	224,747
Provisions	337,404	268,722
Deferred tax liabilities	1,165,630	862,360
Contract liabilities	141,890	131,598
Other noncurrent liabilities	359,857	364,610
Total Noncurrent Liabilities	14,976,506	14,971,673
Borrowings	7,628,333	7,035,909
Current tax liabilities	121,258	133,597
Trade and other payables	4,117,471	3,788,174
Due to related parties	12,082	45,331
Deferred revenue	56,544	8,948
Provisions	342,812	307,068
Contract liabilities	290,408	255,756
Derivative financial instruments	86,617	165,265
Total Current Liabilities	12,655,525	11,740,048
Total Liabilities	27,632,031	26,711,721
Equity
Share capital	2,200,000	2,200,000
Share Premium	269	269
Treasury shares	(144,152)	(141,534)
Additional paid in capital	35,026	35,026
Reserves	2,816,359	2,503,537
Remeasurement of employee termination benefit	(63,539)	(34,871)
Retained Earnings	13,202,526	11,359,317
Noncontrolling interests	36,455	131,810
Total Equity	18,082,944	16,053,554
Total Equity and Liabilities	45,714,975	42,765,275

Can you specify your opinion as a financial analyst about the company's financial position?

Answer 1

Below are the ratios that a financial analyst can use to judge position of the company :-

1) Debt to equity ratio - In 2018, this was 1.66 (Total Liability - 26,711,721 / Total Equity - 16,053,554) and in 2019, this was 1.53 (Total Liability - 27,632,031 / Total Equity - 18,082,944). This is a good sign since the debt relative to the total equity has decreased.

2) Retained Earnings - We see that retained earnings has increased from 11,359,317 in 2018 to 13,202,526 in 2019 i.e. the company has earned a profit of 1,843,209. This means that the company earned a profit in 2019

3) Quick Ratio (Liquidity)- This measures ability of company to meet short term obligations. It is defined as "Cash + Other marketable securities / Current Liabilities)

In 2018 this was 7,419,239 / 11,740,048 = 0.63 and in 2019, it increased to 10,238,715 / 12,655,525 = 0.81, which means that the company has increased flexibility to meet short term obligations.

4) Debt to Assets - This ratio gives an indication of borrowing which has financed the company's assets.

In 2018, it is (Total Debt to Total Assets - 26,711,721 / 42,765,275 = 0.62), and in 2019, it is 27,632,031 / 45,714,975 = 0.6 which indicates an improvement of it's borrowing profile due to reduction in the debt to asset ratio

5) Current Ratio - this also measures liqquidity - it is defined as current assets / current liabilities

In 2018 it is 18,337,109 / 11,740,048 = 1.56 whereas in 2019 it is 19,332,144 / 12,655,525 = 1.52

The current ratio is almost similar in both years

There is also an increase in Property, Plant and equipment value from 2018 to 2019, along with an increase in cash and cash equivalent. This means that the company is investing capex and generating cash along with profits. In summary, the company has done well from 2018 to 2019. However, we need more information from a profit and loss and cash flow operating statement to give a more complete view of the company's financial health rather than just balance sheet information given in the question.