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Ultratech and Ambuja Cement Detailed Ratio Analysis - Five Year Comparison
Ultratech and Ambuja Cement Detailed Ratio Analysis - Five Year Comparison
Ultratech and Ambuja Cement Detailed Ratio Analysis - Five Year Comparison
1. Liquidity Ratio
Liquidity ratios are a class of financial metrics used to determine a debtor's ability to
pay off current debt obligations without raising external capital. Liquidity ratios
measure a company's ability to pay debt obligations and its margin of safety through
the calculation of metrics including the current ratio, quick ratio.
Current Ratio
This ratio reflects the number of times short-term assets cover short-term liabilities
and is a fairly accurate indication of a company's ability to service its current
obligations. A higher number is preferred because it indicates a strong ability to
service short-term obligations.
2. Profitability Ratio
Net profit margin, or net margin, is equal to net income or profits divided by total
revenue, and represents how much profit each dollar of sales generates. Net profit
margin is the ratio of net profits or net income to revenues for a company, business
segment or product. Net profit margin is typically expressed as a percentage but can
also be represented in decimal form. The net profit margin illustrates how much of
each dollar collected by a company as revenue translates into profit. The term "net
profits" is equivalent to "net income" on the income statement, and one can use the
terms interchangeably. Most commonly, investors will refer to net profit margin as the
"net margin" and describe it as "net income" divided by total sales instead of using
the term "net profits."
Ambuja cement 2019-
2015
12% 15% 19% 20% 24%
Ultratech cement
2019-2015
5% 8% 20% 19% 16%
As you can see both the companies has been generating less profit margin
year by year.
Return on Asset (ROA)
Earnings before Taxes / Total Assets * 100
Ultra tech
Cement
3% 5% 14% 14% 12%
Ultra tech cement not showing a good sign here. ROA of Ultra tech is
Decreasing year by year.
Ultra tech Have to find solution for this.This was not a good indicator for the
company.
Return on Asset (ROI)
Earnings before Taxes / Total Equity * 100
ROE is expressed as a percentage and can be calculated for any company if net
income and equity are both positive numbers. Net income is calculated before
dividends paid to common shareholders and after dividends to preferred
shareholders and interest to lenders.
AMBUJA cement
ROE 13% 17% 21% 21% 27%
Ultratech
Cement
6% 10% 24% 25% 23%
3. Solvency Ratio
Ultratech
Cement
0.53 0.54 0.18 0.12 0.24
4. Efficiency Ratio
Inventory turnover is a ratio showing how many times a company has sold and
replaced inventory during a given period. A company can then divide the days in the
period by the inventory turnover formula to calculate the days it takes to sell the
inventory on hand. It is calculated as sales divided by average inventory. Calculating
inventory turnover can help businesses make better decisions on pricing,
manufacturing runs, how to leverage promotions to move excess inventory, and how
and when to purchase new inventory. Inventory turnover may also be found by
dividing cost of goods sold with average inventory.
Days sales outstanding (DSO) is a measure of the average number of days that it
takes a company to collect payment after a sale has been made. DSO is often
determined on a monthly, quarterly or annual basis, and can be calculated by
dividing the amount of accounts receivable during a given period by the total value of
credit sales during the same period, and multiplying the result by the number of days
in the period measured