State Trading Organization PLC

Maaya Afeef (S2000821)

Anoof Ahmed (S2100578)
Hanan Hameed (S1501648)
Aishath Shana (S1900698)
Sanfa Shahawath (S2001355)
 

Accounting for Business (ACCT1002)

 Contents
• Introduction
• Profitability Ratios
 Gross Profit Margin (GP Ratio)
 Net Profit Percentage
 Return on capital employed (ROCE)
• Liquidity Ratios
 Working capital ratio (current ratio)
 Quick ratio (Acid test ratio)
• Efficiency Ratios
 Inventory turnover ratio.
 Trade receivables collection period.
 Trade payables payment period
• Recommendations
• Conclusion

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Introduction
• STO is one of the largest trading company in Maldives.
• Government owns 81.6% shares and public owns
18.4% Shares.
• STO was listed in Maldives Stock Exchange 14th
September 2004.
• Ratios were calculated for year 2018 and 2019

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 Profitability Ratios

Profitability Ratios
 Gross Profit Margin (GP Ratio)

• Gross margins show how much money

a business makes by deducting the
costs of selling its goods or services.]
• GP of 2018 is 12.7%
• GP of 2019 is 14.4%

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 Profitability Ratios(Cont.…)

 Net Profit Percentage

• Net profit percentage is the probability of

after-tax earnings to net sales.
• Net profit percentage of STO in 2018 is
0.2%
• Net profit percentage in 2019 is 3.3%

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 Profitability Ratios(Cont.…)

 Return on capital employed (ROCE)

• ROCE is a financial ratio that can be

utilized in evaluating a firm's profitability
and equity efficiency
• ROCE of STO in 2018 is 0.6%
• ROCE in 2019 is 11.1%

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 Liquidity Ratio

Liquidity Ratio
• Liquidity ratios evaluate a firm’s capacity to
fulfil its deficit responsibilities utilizing its
current assets.
• Liquidity Ratios include;
• Working capital ratio (current ratio)
• Quick ratio (Acid test ratio)

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 Liquidity Ratio(Cont.…)

 Working capital ratio (current ratio)

• It is the comparative percentage of a firm's

current assets to its current liabilities and
demonstrates the capacity of a company to
spend for its current liabilities.
• Current ratio in 2018 is 1.0
• Current Ratio in 2019 is 1.1.

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 Liquidity Ratio(Cont.…)

 Quick ratio (Acid test ratio)

• It calculates the proficiency of a company to

spend its short-term liabilities by possessing
assets that are readily exchangeable into
money.
• Quick Ratio in 2018 is 0.8
• Quick Ratio in 2019 is 0.9

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 Efficiency Ratio

Efficiency Ratios
• It calculates how sufficiently the company is
utilizing its assets and liabilities to produce
sales and earn revenues.
• Efficiency ratios includes;
• Inventory turnover ratio.
• Trade receivables collection period.
• Trade payables payment period
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 Efficiency Ratios Cont.…

 Inventory turnover ratio

• It shows how resourcefully the

organization handles its inventory.
• Inventory turnover ratio in 2018 is 11.57.
• Inventory turnover ratio in 2019 in 9.53.

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 Efficiency Ratios(Cont.…)

 Trade receivables collection period

• This ratio illustrates the time lag between a credit

exchange and collecting payment from the client.
• Trade receivables collection period of 2018 is 123
Days
• Trade receivables collection period of 2019 is 119
Days

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 Efficiency Ratios(Cont.…)

 Trade payables payment period

• This ratio indicates the time lag between a credit

purchase and preparing expenditure to the
supplier.
• Trade payables payment period of 2018 is 105
Days
• Trade payables payment period of 2019 is 67 Days

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 Recommendation

Recommendations
• Improve Acid test ratio by possessing more
assets that are readily exchangeable to
cash in order to pay their sort term
liabilities.
• Improve inventory turn over ratio by selling
products more quickly.

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 Conclusion

Conclusion
• STO’s financial statements indicates that the
profitability ratio is high in 2019 compared
to 2018.
• Liquidity ratios are not improving.
• Inventory turnover ratio was decreased in
2019 compared to 2018.
• Trade receivables and collection period has
improved in 2019 compared to 2018.
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Thank you

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