Financial Ratio Analysis

Topics: Financial ratios, Inventory, Working capital, Balance sheet, Revenue / Pages: 11 (2705 words) / Published: Nov 13th, 2012
INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF PAKISTAN

REPORT ON RATIO ANALYSIS
OF
M/S RANI LIMITED

PREPARED FOR:
Board of Directors

PREPARED BY:
Management Accountant

TABLE OF CONTENTS

Particulars
 Executive Summary
 Introduction

Page No.
3-4
5

 Financial Position and Ratio Analysis

6 - 10

 Suggestions & Conclusion

11 - 12

 Appendices





Horizontal & Vertical Analysis of Income Statement
Comparative Ratios & averages
Trend of Ratios & Percentages
Graphical Representation

13
14
15
16

Page 2 of 16

EXECUTIVE SUMMARY
This report provides an analysis and evaluation of the current and prospective profitability, liquidity and financial stability of Rani Ltd. Methods of Analysis include trend horizontal and vertical analyses as well as ratios such as Current and
Quick Ratios. Other calculations include return on Shareholders Equity and Total
Assets and earnings per share to name a few. All calculation can be found in the appendices. Results of data analyzed show that the company’s total revenue has increased but Net profit Margin have declined due to increase in cost of sales.
Over all liquidity position of Rani Ltd. is satisfactory although quick ratio is at alarming level. Corrective measures are required to avoid any liquidity problems in future.
The Operating cycle is rising due to huge level of inventories, and receivables collection period. Fall in liquidity ratios, rapid increase in revenues, increase in inventory in relation to revenue, uneven increase in receivables and increase in accounts payable period and decrease in profit margin are the symptoms of
“Overtrading”.
In line with the decrease in net profit, earning per share has also drastically reduced to Rs.3.22 (2010) from Rs.2.665 (2012) over preceding years.

Page 3 of 16

This report finds the prospects of the company in its current position are not positive. The major areas of weakness require further

You May Also Find These Documents Helpful

  • Financial Ratio Analysis
  • financial ratio analysis
  • Financial Ratio Analysis
  • Financial Ratio Analysis
  • Financial ratios analysis
  • Financial Ratios and Analysis
  • Financial Ratio Analysis
  • Financial Ratios and Ratio
  • Financial Ratio
  • Financial Ratios