Ratio Analysis
Ratio Analysis: 2009 | 2010 | 0.53 | 0.51 | Current Ratio:
Analysis: 2:1 is the benchmark of current ratio. Here in 2007 current asset is 0.53 against 1 current liability. In every year the company is unable to increase their current ration. Because the current ratio in 2010 decreases to 0.51. The company has a small amount of current asset for each amount of current liability in every year and its improvement was not that much remarkable. Though the company never crossed the benchmark, we can say that it has to try more to get close to the benchmark. 2009 | 2010 | 0.28 | 0.24 |
Acid Test Ratio:
Analysis: The benchmark of acid test ratio is 1:1. The closer, the better. From the table we can see that in 2009 the company had 0.28 asset against 1 current liability without short-term inventories. In 2010 the ratio decreased by 0.04. From this ratio the company is disabling to utilize their assets at an optimum level. The company failed to improve their liquidity. The company was far away from the benchmark. It is presenting not a good acid test ration.
Receivable Turnover: 2009 | 2010 | 59.3 | 69.1 |
Analysis: In receivable turnover, higher turnover is better for a company. The above table shows how many times each company was able to collect its debit. Here we can see that in 2009 the company was not less turnover comparing to 2010. The increasing receivable turnover ratio of this company indicates that the collection of account receivable of this company is efficient.
Inventory Turnover: 2009 | 2010 | 27.6 | 26.8 |
Analysis: In such a ration, the higher the turnover the better it is for the company. We can see that in 2009 the company’s inventory is sold and replaced 25.4 which is increased in 2010 and reach 26.8 times. The inventory of this company is less than the cost of goods sold. So the company is efficiently managing and selling its inventory.
Profit Margin: 2009 | 2010 |
Analysis: 2:1 is the benchmark of current ratio. Here in 2007 current asset is 0.53 against 1 current liability. In every year the company is unable to increase their current ration. Because the current ratio in 2010 decreases to 0.51. The company has a small amount of current asset for each amount of current liability in every year and its improvement was not that much remarkable. Though the company never crossed the benchmark, we can say that it has to try more to get close to the benchmark. 2009 | 2010 | 0.28 | 0.24 |
Acid Test Ratio:
Analysis: The benchmark of acid test ratio is 1:1. The closer, the better. From the table we can see that in 2009 the company had 0.28 asset against 1 current liability without short-term inventories. In 2010 the ratio decreased by 0.04. From this ratio the company is disabling to utilize their assets at an optimum level. The company failed to improve their liquidity. The company was far away from the benchmark. It is presenting not a good acid test ration.
Receivable Turnover: 2009 | 2010 | 59.3 | 69.1 |
Analysis: In receivable turnover, higher turnover is better for a company. The above table shows how many times each company was able to collect its debit. Here we can see that in 2009 the company was not less turnover comparing to 2010. The increasing receivable turnover ratio of this company indicates that the collection of account receivable of this company is efficient.
Inventory Turnover: 2009 | 2010 | 27.6 | 26.8 |
Analysis: In such a ration, the higher the turnover the better it is for the company. We can see that in 2009 the company’s inventory is sold and replaced 25.4 which is increased in 2010 and reach 26.8 times. The inventory of this company is less than the cost of goods sold. So the company is efficiently managing and selling its inventory.
Profit Margin: 2009 | 2010 |