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17-Jun-16

Ratio Analysis

Ratio	Result
Current Ratio	3.4
Quick Ratio	2
Receivables Turnover	9.2 times
Days' Receivables	39.67 days
Inventory Turnover	3.29 times
Days' Inventory	110.94 days
Fixed Assets Turnover	5.75 times
Total Assets Turnover	1.84 times
Times Interest Earned (TIE)	11.11 times
Debt Ratio	52%
Debt to Equity Ratio	108.33%
Equity Multiplier	2.08
Profit Margin	23.74%
Return on Assets (ROA)	43.68%
Return on Equity (ROE)	91%
Payout Ratio	25.37%
Retention Ratio	74.63%
Earnings Per Share (EPS)	$2.18
Book Value Per Share	$2.40
Price/Earnings Ratio	3.64
Market-to-Book Ratio	3.32

1. Current Ratio:

Current ratio reveals an entity’s capability of paying current liabilities utilizing the assets which are convertible to cash in a shorter time period. The ratio of 3.4 is showing that the company has $3.4 of current assets to pay the current liability of every $1.

2. Quick Ratio

Quick ratio reveals an entity’s capability of paying current liabilities through utilizing its quick assets. The ratio of 2 is showing that the company has $2 of current assets to pay the current liability of every $1.

3. Receivables Turnover

Accounts receivable turnover is an efficacy ratio also called activity ratio that evaluate how many times the accounts receivable of a company can be  transformed into cash during a particular period. The ratio of 9.2 times indicates that the company turns out its accounts receivable into cash 9.2 times a year.

4. Days' Receivables

Average collection period reveals the average span of time a company waits for sale proceeds. The period 40 days on average here is shorter one, which is favorable for the company.

5. Inventory Turnover

Inventory turnover shows the inventory turns number on yearly basis. Expected to be higher here, this is not a good sign to the company. Results reveal that the company turns its inventory 3.29 times a year.

6. Days' Inventory

Days in inventory ratio reveals efficiency in the management of inventory. Days are expected to be higher here, which is not a good sign to the company. Results are not favorable to the company as it takes the inventory almost 111 to convert to sales.

7. Fixed Assets Turnover

An efficiency ratio computes the ability of a company to produce sales from its assets. Moreover, this ratio reveals how proficiently a company is using its assets to generate sales. The ratio indicates that 5.75 times the company has generated the sales for the year.

8. Total Assets Turnover

The total asset’s turnover ratio of 1.84 is revealing that each $1 asset of the company is generating about $1.84 of sales.

9. Times Interest Earned (TIE)

The TIE ratio, also called the interest coverage ratio measures the amount of income in proportion that can be utilized to deal with future interest expenses. About 11 times the income can be utilized to payoff future interest expenses.

10. Debt Ratio

A solvency ratio that evaluates the total liabilities a company’s as a percentage of the company’s total assets. It shows a company's capability of paying off liabilities by way of available assets.

The results of 52% indicate that 52% assets are attached to liabilities.

11. Debt to Equity Ratio

This is liquidity ratio that determines the percentage of total debt a company has to its total equity. Greater the ratio, more the creditor financing i.e. bank loans is use up than investor financing i.e. shareholders. The company has 108% debt as compared to its equities.

12. Equity Multiplier

It is a financial leverage ratio that rates the amount of a company’s assets that are financed by the shareholders of the company by the comparison of total assets of the company with the company’s total shareholder's equity. The results reveal that almost the assets are financed by the shareholders at the rate of 2.08.

13. Profit Margin

The PM ratio, also known as the return on sales ratio is profitability based ratio. The results reveal that 23% of net profit is produced with each dollar of sales made.

14. Return on Assets (ROA)

The ROA ratio is also known as the return on total assets. Results show that about 44% of net profit is produced by total assets during the year.

15. Return on Equity (ROE)

The ROE ratio is a profitability based ratio that calculates the capability of a company to produce profits from its investments by shareholders of the company. Almost 91% of profits are produced by investments of shareholders.

16. Payout Ratio

The dividend payout ratio assesses the percentage of net profit that is dispersed to shareholders in the mode of dividends during the year. Results are showing that 23% of the profits are distributed among the shareholders of the company.

17. Retention Ratio

The retention ratio is a financial based ratio. Results reveals that almost 75% of profits are added to retained earnings for the current year.

18. Earnings per Share (EPS)

Earnings per share are a market prospect ratio. The ratio indicates that $2.18 of net profit is earned per outstanding share of stock.

19. Book Value per Share

This ratio calculates the value of each share of the company based on the equity available to shareholders. The book value of the each share of the company is $2.40.

20. Price/Earnings Ratio

The P/E ratio is a market prospect ratio. Results indicate that the company has 3.64 market value of its stock pertinent to its earnings.

21. Market-to-Book Ratio

The Market-to-Book Ratio computes the value of a company by comparing the market value to its book value. The value of the company is 3.32 times of book value as compared to its market value.