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Financial Statement Analysis
Financial Statement Analysis
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Current Ratio
Interpretation
● For 1 tk liabilities against Reneta have
assets1.233008,1.126176 and 1.146703
Reneta
Beximco
The current ratio is a liquidity ratio that measures a company's ability to pay short-term and long-
term obligations.
Financial statement Ratio analysis 3
Current Ratio
2
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2006 2007 2008
Reneta Beximco
Comparing the three years of two companies. The current ratio decrease Apex Company &
current ratio increase Bata Company.
Recommendations: The Apex Company should have to reduce short terms, accounts and others
payable liabilities.
Financial statement Ratio analysis 4
Interpretation
For 1 Tk. Liabilities against Apex have and 0.48078,
0.43181 & 0.351877
0.4807
8
Beximco 0.633218 0.679521 0.865758
Financial statement Ratio analysis 5
The acid-test ratio is a strong indicator of whether a firm has sufficient short-term assets to cover
its immediate liabilities.
In graph we can understand The Acid test ratio of Apex decrease from 2013 to 2015 and Bata
have increase from 2013-2015
Problem: The inventories Apex Company had increased a lot from the last.
Recommendations: Apex Company should have to reduce inventories like raw materials.
Debt-to-Equity
Interpretation
For 1Tk. Equity Apex have liabilities
4.835778, 4.697024 and 4.99303.
Debt-to- Equity Ratio: calculated by dividing a company’s total liabilities by its stockholders'
equity, is a debt ratio used to measure a company's financial leverage. The D/E ratio indicates
how much debt a company is using to finance its assets relative to the value of shareholders’
equity.
Financial statement Ratio analysis 6
Debt-to-Equity
6
0
2013 2014 2015
Apex Bata
Though the comparing Apex with Bata. Apex company debt-to equity increase and Bata
company debt-to-equity ratio decrease. You are known standard value 0.50:1.These two
company crossed standard value. These two companies are facing financial risk.
Problem for: This two company are using more liabilities then Owner equity.
Recommendation for: This two company reduce using current liabilities .More using
shareholder equity and they should collect more shareholder equity issuing new share. Especially
Apex Company.
Interest Coverage
Interpretation
For 1Tk. Interest against Apex has 1.85075,
1.586057and 1.27415 TK.
Interest coverage ratio is a debt ratio and profitability ratio used to determine how easily a
company can pay interest on its outstanding debt.
Interest Coverage
300
250
200
150
100
50
0
2013 2014 2015
Apex Bata
The interest coverage ratio of Apex falls downward from 2013 to 2015, and the interest coverage
ratio of Bata rising upward from 2013 to 2015 and Bata has higher ratio than Apex. You are
known standard value 5 bar. Apex Company didn’t fulfill standard value. Apex Company facing
problem interest payment.
Recommendation for: Apex Company reduce their expenses and try to loan low interest rate.
Debt-to-total assets
Interpretation
Financial statement Ratio analysis 8
You are known standard value 0.25:1.These two company crossed standard value. These two
company are facing financial risk.
Problem for: This two company are using more liabilities then assets
Recommendation for: This two company reduce using liabilities .More using assets. Especially
Apex Company.
Debt-to-total assets
0.8
0.6
0.4
0.2
0
2013 2014 2015
Apex Bata
Net Profit
Interpretation
By comparing reneta with Beximco we can see that the net profit ratio of beximco increased
upward but in term of reneta fall downward.
Problem for: Though reneta's net profit is going on decrease day by day so we can say that it has
problem.
Recommendation for: Reneta should reduce utilities amd try turning down heating and cooling
outside of business hours.They need to reduce insurance premiums.
Operating profit
From the table we can see that beximco is in good position. Reneta couldn’t maintain their
operating profit properly.
Interpretation