Performance Evaluation of Firms

By

Performance Evaluation of Firms

4.0 DISCUSSION AND ANALYSIS

4.1 Overview of the Data Analysis

The data analysis section is one of the most important parts of the research. There were fifteen companies which were selected for the data analysis. The data analysis was based on the Cash Ratios of all the five companies. The fifteen companies are listed in the Ghana Stock Exchange and they represent different types of industries. The main focus on this data analysis is on the cash flow analysis in order to compare all the companies in this range. The comparison of the ratio analysis will be focused on the two year data that includes 2011 and 2012. In this way, it can be seen that what has been the status of the cash flows of all these companies. Therefore, the analysis of the data will be carried step by step in the upcoming paragraphs.

4.2 Financial Analysis of the Companies

The first company that will be analysed with the help of ratio is African Champion Industries Ltd. The ratio analysis is mentioned below.

African Champion Industries Ltd Ratios Yr 010 Yr 011 Yr 012

Current Ratio

57%

63.81%

68.96%

Cash Flow Ratio to Sales Ratios

0.8x

1.62x

0.41x

Cash Flow Returns on Assets

0.20x

0.09x

0.39x

Long-term Payment

48.24%

52.76%

55.72%

Dividend Payout Ratio

32%

36%

35%

Cash-Flow Adequacy Ratio

51%

46.32%

14.59%

Debt-Coverage Ratio

37.26%

50.12% 242.03%

Fixed Asset Turnover Ratio

0.41x

0.51x

0.21x

Sales to Inventory Ratio

5.46x

7.37x

1.21x

Sales to Working Capital

2.34%

1.67%

3.31%

The first analysis was based on the company known as African Champions Industries Ltd. There were two financial ratios included and calculated for all the companies. The first financial ratio was Net Cash and the second financial ratio was Current Ratio. The Net Cash in the year 2011 for African Champions Industries Ltd was negative 3,794. The reason why the figure was in negative value because the cash outflow for the company was much higher as compare to the cash inflow. The figure of the Net Cash in the year 2012 was negative 3827. There was not much difference in the value in these two years. On the other hand, the Current Ratio in the year 2011 was 63.81%. It means that for every one dollar of liability, the company had 0.63 to pay off their debts. This shows that the company's liquid position was not that good. In the year 2012, the Current Ratio was 68.96%. The liquidity position did improve slightly but not that much because the rate showed that the company has less cash to pay off their debts. Therefore, this was the overall analysis of the cash ratio of African Champions Industries Ltd.

Aluworks Ltd

Ratios Yr 010 Yr 011 Yr 012

Current Ratio

190.58%

170.73%

75.48%.

Cash Flow Ratio to Sales Ratios

0.60x

0.74x

0.84x

Cash Flow Returns on Assets

0.45x

0.36x

0.21x

Long-term Payment

46.79%

54.87%

32.51%

Dividend Payout Ratio

0.08

0.11

0.10

Cash-Flow Adequacy Ratio

9.87%

-11.3%

-11.52%

Debt-Coverage Ratio

152.12%

136.58%

96.74%

Fixed Asset Turnover Ratio

0.76x

0.63x

0.29x

Sales to Inventory Ratio

2.9x

2.47x

0.97x

Sales to Working Capital

73%

70.19%

1.1%

The second analysis was based on the company known as Aluworks Ltd. There were two financial ratios included and calculated for all the companies. The first financial ratio was Net Cash and the second financial ratio was Current Ratio. The Net Cash in the year 2011 for Aluworks Ltd was ...