Question

PREPARE FINAL ANALYSIS

Investment Valuation Ratios
	18-Mar	17-Mar
Face Value	1	1
Dividend Per Share	50	47
Operating Profit Per Share (Rs)	145.25	137.48
Net Operating Profit Per Share (Rs)	508.58	470.42
Free Reserves Per Share (Rs)	--	--
Bonus in Equity Capital	79.13	79.13
Profitability Ratios
Operating Profit Margin(%)	28.56	29.22
Profit Before Interest And Tax Margin(%)	25.35	26.23
Gross Profit Margin(%)	26.86	27.52
Cash Profit Margin(%)	26.06	25.93
Adjusted Cash Margin(%)	26.06	25.93
Net Profit Margin(%)	25.92	25.51
Adjusted Net Profit Margin(%)	24.46	24.31
Return On Capital Employed(%)	42	38.43
Return On Net Worth(%)	33.27	30.31
Adjusted Return on Net Worth(%)	33.27	30.31
Return on Assets Excluding Revaluations	396.31	395.96
Return on Assets Including Revaluations	396.31	395.96
Return on Long Term Funds(%)	42.1	38.53
Liquidity And Solvency Ratios
Current Ratio	2.85	3.09
Quick Ratio	2.67	2.93
Debt Equity Ratio	--	--
Long Term Debt Equity Ratio	--	--
Debt Coverage Ratios
Interest Cover	1,065.37	1,880.13
Total Debt to Owners Fund	0	0
Financial Charges Coverage Ratio	1,120.27	1,978.56
Financial Charges Coverage Ratio Post Tax	897.27	1,577.75
Management Efficiency Ratios
Inventory Turnover Ratio	3,894.24	4,413.95
Debtors Turnover Ratio	5.48	5.2
Investments Turnover Ratio	3,894.24	4,413.95
Fixed Assets Turnover Ratio	4.79	10.06
Total Assets Turnover Ratio	1.28	1.18
Asset Turnover Ratio	1.26	1.29
Average Raw Material Holding	--	--
Average Finished Goods Held	--	--
Number of Days In Working Capital	45.52	37.19
Profit & Loss Account Ratios
Material Cost Composition	0.08	0.1
Imported Composition of Raw Materials Consumed	--	--
Selling Distribution Cost Composition	--	--
Expenses as Composition of Total Sales	94.76	93.17
Cash Flow Indicator Ratios
Dividend Payout Ratio Net Profit	36.78	38.73
Dividend Payout Ratio Cash Profit	34.52	36.31
Earning Retention Ratio	63.22	61.27
Cash Earning Retention Ratio	65.48	63.69
AdjustedCash Flow Times	0.01	0.01

Answer 1

Operating profit per share in the latest financial year ending on March, 2018 has increased to $145.25 per share compared to $137.48 of the corresponding period of previous financial year. Similarly net operating profit per share of the company for the current financial year ending in March, 2018 has increased to $508.58 whereas last year for the same period the company earned a net operating profit per share of 470.42. However, despite the increase in operating and net operating profit per share of the company for 2018 yet, the company has maintained same level of bond in equity capital of $79.13 as it was in the last financial year.     

Though the operating and net operating profit per share of the company have increased in the current financial year ending in March, 2018 however, the profitability ratios of the company for the latest financial years shows that the company has struggled to maintain the level of profit it earned in the previous financial year ending in March, 2017. Operating profit margin, profit before interest and tax margin and gross profit margin all have decreased in 2018 compared to the profitability ratios of 2017.

On the other hand cash profit margin of 26.06%, Adjusted cash margin of 26.06%, net profit margin of 25.92% and adjusted net profit margin of 24.46% in the financial year ending in March, 2018 have all improved compared to these ratios of previous year ending in March, 2017.

Thus, from the analysis of profitability ratios of the company it can be said that the financial performance of the company for the year ending in 2018 has neither been down nor up from the previous year. As in some cases the profitability ratios have improved whereas in some cases these have deteriorated.

Return on net worth for 2018 is 33.27% as well as return on assets excluding revaluation of 396.31 have improved significantly from last year, shows that the ability of the management to use the resources of the company in the current financial year have improved from last year. Return on long term fun in 2018 of 42.1% has also improved from the previous financial year 2017. Current ratio and quick ratio of the company in 2018 of 2.85 and 2.67 respectively both have deteriorated in 2018 shows that the liquidity position of the company have deteriorated in the current financial year compared to the previous year.

Inventory turnover ratio, investment turnover ratio, fixed assets turnover ratio and asset turnover ratio all have deteriorated in 2018. This is a clear indication of the inability of the company to improve its ability to use current assets in the business.

Dividend pay-out ratio to net profit of the company in 2018 with 36.78 shows that the company has been able to increase its retention of earnings. This is a positive indication for the company. Dividend pay-out ratio cash profit of 34.52 also suggests that the company has improved its ability of retention its profit as well as its cash in the business to have substantial funds for investment in new projects. Increase in earnings retention ratio in 2018 with 63.22 is a further proof of improvement of the company to keep its earnings for business expansion.