FINANCE ASSIGNMENT

Finance Assignment



Finance Assignment

Profitability

ROCE has increased momentously during the year. Last year, it was just 12% but in 2009, it increased to 58% marking a growth of more than 300%. This is mainly attributable to the decreased level of capital employed in year 2009 as compared to year 2008. Moving forward, asset turnover has increased from 0.650 to 0.697 which represents a growth of 7%. The total assets have decreased by -17% from 2085 million to 1730 million while at the same time, revenue has declined by only 7%. Consequently, it has resulted in improvement in asset turnover as compared to previous year. During the year 2008-90, the gross profit has declined further from negative 1% to negative 7% which is attributable to -11% declines in sales revenue. However, net profit before interest and taxes have witnessed some growth which was 12% in 2008 and stood at 14% in 2009. During the two years, the earnings before interest and taxes have increased by 5% from 160,900 to 169,648 and the gross profit had suffered a momentous loss which increased further from 20 m to 81m during the year.

Liquidity

Liquidity analysis of the company shows that the company liquidity position has deteriorated during the year 2008-09. The current assets have decreased by 64% during the year from 2085m to 749m while current liabilities have decreased from 42% from 796m to 459m. Clearly, current assets have decreased at a relatively higher rate than the current liabilities. As a result, working capital ratio has declined from 2.62 to 1.63 during the year marking negative growth of 38%. Since inventory constitutes a minute portion of balance sheet, it does not really have any significant impact on the liquidity position.

Efficiency

The ratio analysis of the company shows that overall efficiency of the company has ...