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Financial Analysis of Dubai Refreshments and Gulfa Mineral Water
I. Introduction
This report aims at conducting a financial analysis of two non-financial companies listed on the Dubai Financial Market. This analysis is conducted by calculating the ratios for both these companies for the year 2011 from their balance sheet and income statement for the same year.
The first company (Company 1) chosen for the purpose of analysis is Dubai Refreshments Company (DRC) is the first company in the UAE soft drink industry and still remains one of the leading companies in this industry. “Since the factory was established in 1959, DRC has remained at the forefront of the UAE refreshments industry, continually expanding through major investment in the latest bottling technology complemented by the highest levels of Quality Management” (Company Overview, 2007).
The second company chosen from the same sector is Gulfa Mineral Water and Processing Industries Co. PLC. The company was established in the year “1975 and it became the first bottled brand of mineral water in the GCC. Since then it has maintained its position as the country’s favorite mineral water, and continues to be one of the leading brands in the Middle East, even today” (History, 2010).
II. Analysis and Discussion
S.No. Financial Ratios Dubai Refreshments (Company 1) Gulfa Mineral Water (Company 2) Comment
I PROFITABILITY RATIOS
1) Profit Margin on Sales 13.39% 6.08% Above average
2) Return on Assets 19.10% 5.63% Good
3) Return on Equity 26.68% 8.81% Above average
II ASSET MANAGEMENT RATIOS
4) Accounts Receivables Turnover 14.43 times 4.52 times Above average
5) Average Collection Period 25.29 days 80.80 days Very good
6) Inventory Turnover 17.68 times 5.17 times Below average
III LIQUIDITY RATIOS
7) Current Ratio 2.30 times 2.33 times Good
8) Quick Ratio 1.98 times 1.65 times
IV DEBT UTILIZATION RATIOS
9) Total Debt Ratio 28.41% 36.10% Very high debt
10) Times Interest
I. Introduction
This report aims at conducting a financial analysis of two non-financial companies listed on the Dubai Financial Market. This analysis is conducted by calculating the ratios for both these companies for the year 2011 from their balance sheet and income statement for the same year.
The first company (Company 1) chosen for the purpose of analysis is Dubai Refreshments Company (DRC) is the first company in the UAE soft drink industry and still remains one of the leading companies in this industry. “Since the factory was established in 1959, DRC has remained at the forefront of the UAE refreshments industry, continually expanding through major investment in the latest bottling technology complemented by the highest levels of Quality Management” (Company Overview, 2007).
The second company chosen from the same sector is Gulfa Mineral Water and Processing Industries Co. PLC. The company was established in the year “1975 and it became the first bottled brand of mineral water in the GCC. Since then it has maintained its position as the country’s favorite mineral water, and continues to be one of the leading brands in the Middle East, even today” (History, 2010).
II. Analysis and Discussion
S.No. Financial Ratios Dubai Refreshments (Company 1) Gulfa Mineral Water (Company 2) Comment
I PROFITABILITY RATIOS
1) Profit Margin on Sales 13.39% 6.08% Above average
2) Return on Assets 19.10% 5.63% Good
3) Return on Equity 26.68% 8.81% Above average
II ASSET MANAGEMENT RATIOS
4) Accounts Receivables Turnover 14.43 times 4.52 times Above average
5) Average Collection Period 25.29 days 80.80 days Very good
6) Inventory Turnover 17.68 times 5.17 times Below average
III LIQUIDITY RATIOS
7) Current Ratio 2.30 times 2.33 times Good
8) Quick Ratio 1.98 times 1.65 times
IV DEBT UTILIZATION RATIOS
9) Total Debt Ratio 28.41% 36.10% Very high debt
10) Times Interest
References: "Company Overview." Dubai Refreshments (P.S.C.). Web. 22 Nov. 2012. . "History." Gulfa Mineral Water. N.p., 2010. Web. 22 Nov. 2012.