Debt Ratios Analysis

Items Involved: EBIT, Interest Expenses, Total Assets, Total Equity, Tangible Net Worth

Years Involved:

Base Year:
2013
Current year: 2014

Analysis Table
Ratio

Base Year

Current Year

Times Interest
Earned

3.71

3.04

Favorable/UnFavorable
Un-Favorable

Debt Ratio

49.94%

51.04%

Un-Favorable

Debt To Equity
Ratio

154.96%

155.77%

Un-Favorable

Debt To
Tangible Net
Worth

1.57

1.57

Fixed Trend

Reasons of
Change
Interest Expense
increase and
EBIT decrease
Total Debts
and Total
Assets
increases
Total Debt and
Total Equity
increases
Tangible Net
Worth and Total
Debts increases

Debt ratios measure the long term abililty oh ittehad chemicals limited this analysis shows
that all the ratios estimating the debt ability of the company or un favourable in the current
year.unfavourable trend shows that company has increase its debt burden in the current year
when it compared with base year.

On the carefully analysis of financial statement of the ittehad chemical limited company it
can be seen that the debts of the company are increasing in the current year making increases
in interest expance total increases in the interest expanse is leading to unfavourable change I

the capital structure of the company in current year the assets of the company also showing as
improvement however remains failure of the management is cause in fail in the profit of the
company in the current year debt financing is not in the suitable for the company to increase
the assets for the growth of the business.debt increase and profit decrease in the current year.

Due to increases in debt burden shareholders can not turst on the company and want to may
not further invest in this company as well as creditors banks and other lending institutions
might not give loaning to this company.