Ratio Analysis: Lucky Lanka And Lanka Milk Food
1. RATIO ANALYSIS
1.1. Profitability Ratio
1.1.1. Gross Profit Ratio
Gross Profit equal to Gross Profit divided by Sales for the same time period and it is express as a percentage. Through the Gross Profit Ratio we can compare among companies’ with too different sales levels.
Lucky Lanka and Lanka Milk foods (CWE) both companies are in Dairy sector and comparing the two gross profit ratios is reasonable.
LUCKY LANKA LANKA MILK FOODS (CWE) 2014/2013 2013/2012 2014/2013 2013/2012
Gross Profit Ratio 41% 40% 10% 17%
Comparing Lucky Lanka company on 2013/2012 to 2014/2013 there is a 1% GPR of increase and Lanka Milk Foods (CWE) has decreased by 7% on the same period. Reason for the 1% GPR increased of Lucky Lanka is parallel increased of Cost of Goods Sold and Sales. Further Lucky …show more content…
According to the increase of Long Term Borrowings their net financial cost too increased. As a result of this NPR has reduced. So both companies have financial risk due to higher borrowing level but Lanka Milk Food is having more financial risk.
1.1.4 Return on Assets
ROA measures how efficiently a firm utilizes its assets. ROA ratio helps both management and the investors see how well company can convert its investments in assets into profits. In other word how efficiently a company can convert the money used to purchase assets into net income or profits.
LUCKY LANKA LANKA MILK FOODS (CWE) 2014/2013 2013/2012 2014/2013 2013/2012
ROA 2% 3% 0.23% 4%
According to the comparison of each year each company has reduced ROA ratio 4% to 0.23%. Even though it is Lanka Milk Foods has decreased ROA ratio badly.
It represents poor utilization of company assets to earn its revenue.
1.1.5 Return On Capital
1.1. Profitability Ratio
1.1.1. Gross Profit Ratio
Gross Profit equal to Gross Profit divided by Sales for the same time period and it is express as a percentage. Through the Gross Profit Ratio we can compare among companies’ with too different sales levels.
Lucky Lanka and Lanka Milk foods (CWE) both companies are in Dairy sector and comparing the two gross profit ratios is reasonable.
LUCKY LANKA LANKA MILK FOODS (CWE) 2014/2013 2013/2012 2014/2013 2013/2012
Gross Profit Ratio 41% 40% 10% 17%
Comparing Lucky Lanka company on 2013/2012 to 2014/2013 there is a 1% GPR of increase and Lanka Milk Foods (CWE) has decreased by 7% on the same period. Reason for the 1% GPR increased of Lucky Lanka is parallel increased of Cost of Goods Sold and Sales. Further Lucky …show more content…
According to the increase of Long Term Borrowings their net financial cost too increased. As a result of this NPR has reduced. So both companies have financial risk due to higher borrowing level but Lanka Milk Food is having more financial risk.
1.1.4 Return on Assets
ROA measures how efficiently a firm utilizes its assets. ROA ratio helps both management and the investors see how well company can convert its investments in assets into profits. In other word how efficiently a company can convert the money used to purchase assets into net income or profits.
LUCKY LANKA LANKA MILK FOODS (CWE) 2014/2013 2013/2012 2014/2013 2013/2012
ROA 2% 3% 0.23% 4%
According to the comparison of each year each company has reduced ROA ratio 4% to 0.23%. Even though it is Lanka Milk Foods has decreased ROA ratio badly.
It represents poor utilization of company assets to earn its revenue.
1.1.5 Return On Capital