MG FABRICATIONS PLC

MG Fabrications PLC

MG Fabrications PLC

Balance Sheet Ratio Analysis 2001

While carrying out analysis of the financial report of the company for the year 2001 it was found that limited information about the company was available but what ever was available proved to be sufficient for working different ratios. Important Balance Sheet Ratios measure liquidity and solvency. Liquidity Ratios are the ratios, which specify the simplicity of converting the assets into cash. They include the Current Ratio, Quick Ratio, and Working Capital. Some of these ratios worked out are: -

[Total Current Assets] 398990,000 1. Current Ratio = ---------------------------------- = 1:0.80 [Total Current Liabilities] 320480,000

[Cash + Securities + Receivables] 780,000+0+268270 2. Quick Ratio = ______ _________________________ =1: 0. 839

[Total Current Liabilities] 320480,000

3. Working Capital = [Total Current Assets - Total Current Liabilities] 526940,000 - 329480,000 = 197460,000

The Debt/Worth or Leverage Ratio. This ratio signifies the level to which the business is dependent on debt financing:

[Total Liabilities] 320480,000 4. Debt/Worth Ratio =[Leverage] _________ = 1:0.608 [Net Worth] 526940,000

Income Ratios. The following is one of the important Income Ratios, which measure profitability: -

[Net Profit Before Tax] 22850,000 5 Net Profit Margin Ratio = _______________________________ = 1:101.849 Net Sales 2327250,000

Management Ratios. Some more important ratios, called Management Ratios, are also worked out from Balance Sheet and Statement of Income information. Some of these include: -

[Net Profit Before Tax] 22850,000 6 Return on Assets = ___________________ ______ = 1:0.043 [Total Assets] 526940,000

[Net Profit before Tax] 22850,000

7. Return on Investment (ROI) = __________________ 1;0. 043 [Net Worth] 526940,000

Balance Sheet Ratio Analysis 2002

Similarly the Important Balance Sheet Ratios for the year 2002 were worked out of the balance sheets. This liquidity includes the ratios that indicate the ease of turning assets into cash.

[Total Current Assets] 477940,000 1. Current Ratio = ------------------------------------------------ = 1: 1.266 [Total Current Liabilities] 377200,000

[Cash+ Securities+ Receivables] 2140,000+0+309210,000

2. Quick Ratio = _______________________________________________ =0.825:1 [Total Current Liabilities] 377,200,000

3. Working Capital.

Working Capital = [Total Current Assets - Total Current Liabilities] 477940,000 -377200,000 =100740,000

The Debt/Worth or Leverage Ratio

[Total Liabilities] 377200,000 4. Debt/Worth Ratio [Leverage] = ___________________ = 1: 1.267 [Net Worth] 477940,000

Income Ratio

[Net Profit Before Tax] 28670,000 5. Net Profit Margin Ratio = _______________________________ = 1: 91.147 Net Sales 2613190,000

Management Ratios

[Net Profit Before Tax] 28670,000

6. Return on Assets Ratio = ___________ = 1:47.154 [Total Assets] 608000,000

[Net Profit before Tax] 28670,000

7. Return on Investment = (ROI)______________ = 1:16.670 [Net Worth] 477940,000

Investor And Capital Structure

Ratios

[Classic Construction Plc]

Balance Sheet Ratio Analysis 2001

The different ratios of the Classic construction Plc have also been worked out based on the financial statements of the company, which emerge to be as follows for the year 2001: -

Liquidity ratios

[Total Current Assets] 9550,000 1. Current Ratio = -------------------------------- = 1:919 [Total Current Liabilities] 10,390,000

[Cash + Securities + Receivables] 2000,000 +0+4790,000

2. Quick Ratio = _____________________________ =1:530 [Total Current Liabilities] 10390,000

Working Capital = [Total Current Assets - Total Current Liabilities] = 9550,000 -10390,000 =840,000

Debt/worth (leverage) Ratios

[Total Liabilities] 1039,000 ...