Edita Financial

Statements

Dr/Alaa Safwat Thursday Youssef Mohamed 211006445 Youssef Mahmoud 211009346

Dr/Sara Diaa 10:30 Ashraf Mahmoud 211007708 Marwan Tamer 211006995
Agenda
Agenda
Introduction Short term solvency
Long term solvency

Asset Management
Financial Ratios Profitability
Market Value
Du Pont analysis

Comments

Comparison
 Introduction

Edita is an Egyptian company for food

industries Founded in 1996.
The Founder
 Market Share

The company has the largest market share in five sectors

of the snack food market in Egypt and the Middle East.
 Product Line

The company operates 32 production lines

 Portfolio

The company's portfolio includes well-known household brands like

Molto, HOHOs, Tiger tail, Twinkies, TODO, Bake Rolz, Bake Stix,
Freska, Mimix, and Onir
Short Term Solvency
 Short Term Solvency

Current Ratio Quick Ratio Net Working Capital Cash Ratio

 Current Ratio
2020 2021

CA=1,140,487,363 CL=895,172,324 CA=1,751,345,772 CL=1,229,164,863

CR=1,140,487,363/895,172,324 = 1.27 CR=1,751,345,772/1,229,164,863 = 1.42

Comments: Current Ratio (2020): Each $1 of current Comments: Current Ratio (2021): Each $1 of current
liabilities is covered by $1.27 of Edita company’s liabilities is covered by $1.42 of Edita company’s
current assets. current assets.

Comparison

the current ratio increased from 2020 to 2021 showing a better ability for the company to cover
short-term liabilities.
 Quick Ratio
2020 2021

CA=1,140,487,363 Inv= 295,420,425 CA=1,751,345,772 Inv= 526,494,164

CL=895,172,324 CL=1,229,164,863

QR=(1,140,487,363 -295,420,425)/895,172,324= 0.94 QR=(1,751,345,772 - 526,494,164)/ 1,229,164,863 =

0.99

Comments: Edita Company Without the need to sell inventory, each Comments: Edita Company Without the need to sell inventory, each
$1 of current liability is covered by $0.94 of cash and $1 of current liability is covered by $0.99 of cash and
accounts receivable.. accounts receivable.

Comparison

The quick ratio increased from 2020 to 2021, showing ability to cover short-term liabilities
without relying on inventory sales.
 Net Working Capital
2020 2021

CA=1,140,487,363 CL=895,172,324 CA=1,751,345,772 CL=1,229,164,863

NWC=1,140,487,363-895,172,324 = 245,315,039 NWC=(1,751,345,772 -1,229,164,863 = 522,180,909

Comments: Edita company had positive net working capital of Comments: Edita company had positive net working capital of
$245,315,039 , showing that its current assets $522,180,909, showing that its current assets
exceeded its current liabilities. exceeded its current liabilities.
.
Comparison

The ability of Edita to meet short-term financial liabilities has improved, showing improved liquidity.
 Cash Ratio
2020 2021

Cash=99,166,326 CL=895,172,324 Cash=1,751,345,772 CL=1,229,164,863

Cash Ratio= 99,166,326 / 895,172,324 = 0.11 Cash ratio=159,565,557/1,229,164,863 = 0.12

Comments: Edita company covered each $1 of current Comments: Edita company covered each $1 of current
liability by 0.11 of cash only liability by 0.12 of cash only.

Comparison

The cash ratio increased from 2020 to 2021, showing a stronger ability to cover
short-term liabilities with cash.
 Long Term Solvency

Total Debt Ratio Equity Ratio Debt to equity Equity Multiplier Cash Coverage
Time interest
earned
 Total Debt ratio
2020 2021

TA=99,166,326 TE=895,172,324 TA=1,751,345,772 TE=1,229,164,863

Total debt ratio= (3,331,021,725-1,650,077,504)/ Total debt ratio= (4,223,477,013-2,111,668,776)/

3,331,021,725=0.504 times 4,223,477,013=0.500 times

Comments: Each $1 used for buying TA is financed using

$0.500 of debts in 2021 and $0.504 of debts in
2020.

Comparison

the total debt ratio in 2021 is better than 2020 cause the less the ratio, the better the result.
 Equity Ratio
2020 2021

TE=99,166,326 TA=895,172,324 TE=1,751,345,772 TA=1,229,164,863

Equity Ratio= (1,650,077,504)/ (3,331,021,725) = Equity Ratio= (2,111,668,776)/ (4,223,477,013) = 0.499

0.495 times times

Comments: For each $1 invested using equity in TA, the

company borrows $1.000 as debt in 2021 and
$1.018 in 2020.

Comparison

Debt to Equity in 2021 is better than 2020 cause less reliant on borrowed funds 
 Equity Multiplier
2020 2021

D/E = 1+1.018=2.018 TE=895,172,324 D/E = 1+1.018=1.000 TE=1,229,164,863

Equity Multiplier = 1+1.018=2.018 times Equity Multiplier = 1+1.000=2.000 times

Comments: For each $1 invested in equity, the company

can purchase or finance assets of $2.000 in
2021 and $2.018 in 2021.

Comparison

So, equity multiplier in 2021 is better than 2021; since, buying more assets will entitle more debt as the TE will
remain 1 in the ratio as it is.
 Times Interest Earned
2020 2021

EBIT= 549,712,733 Interest Expense= EBIT= 777,619,127 Interest Expense=

86,548,093 74,944,742
Times Interest Earned= (549,712,733)/ (86,548,093) = Times Interest Earned= (777,619,127)/ (74,944,742) =
6.351 times 10.375 times

Comments: Each $1 of interest is covered by $10 of EBIT in

2021 and $6 of EBIT in 2020

Comparison

So, EBIT interest covered in 2021 is better than 2020.As, less of a risk to investors and creditors in terms of
solvency.
 Cash Coverage
2020 2021
EBIT=549,712,733 Interest Expense=6,548,093
Cash=1,751,345,772 CL=1,229,164,863
Depreciation&Ammortization=192,550,0420

Cash Coverage= (549,712,733+192,550,0420)/ Cash Coverage= (777,619,127+195,546,403)/ (74,944,742)

(86,548,093) = 9.500 times = 12.985 times
Each $1 of interest is covered by $13 of EBIT in
Comments:
2021 after adding up depreciation and
amortization, since these are non-cash
expenses and it covered $10 of EBIT in 2020

Comparison

So, interest covered in 2021 is better than

2020.
 
 Cash Ratio
2020 2021

Cash=99,166,326 CL=895,172,324 Cash=1,751,345,772 CL=1,229,164,863

Cash Ratio= 99,166,326 / 895,172,324 = 0.11 NWC=(1,751,345,772 -1,229,164,863 = 522,180,909

Comments: Edita company covered each $1 of current Comments: Edita company covered each $1 of current
liability by 0.11 of cash only liability by 0.12 of cash only.

Comparison

The cash ratio increased from 2020 to 2021, showing a stronger ability to cover
short-term liabilities with cash.
Asset Management Turn Over
 Asset Management Turn Over

Inventory Day’s sales in inventory

Receivable Day’s Sale in Total Asset Capital Intensity
Turn over
Turnover inventory Turnover Ratio
 Inventory Turn over

2020 2021

COGS=2,617,684,208 Inv=295,420,425 COGS = : 3,559,706,634 Inv = 526,494,164

ITO= 2,617,684,208 / 295,420,425 = 8.86 times ITO =(3,559,706,634 / 526,494,164 = 6.76 times

Comments: Edita sold off its inventory 8.86 times during Comments: Edita sold off its inventory 6.76 times during
the year the year

Comparison Recommendation
Improve accurate demand forecasting as accurate forecasting of
2020 is better than 2021 as the inventory customer demand is critical for ensuring that Edita maintains
turnover ratio decreased in 2021, this indicates optimal inventory levels. By analyzing sales data, market
that Edita experienced some challenges in trends, and other factors, Edita can better anticipate which
products will sell quickly and adjust its inventory levels
managing its inventory. accordingly.
 Day’s Sales in Inventory

2020 2021

365/Inventory turnover 365/Inventory turnover

DSI= 365 / 8.860877537495926 = 41.19 days DSI =365 / 6.761151172038443 = 53.98 days

Comments: It takes Edita on average 41.19 days to sell the Comments: It takes Edita on average 53.98 days to sell the
inventory per time inventory per time

Comparison Recommendation
Conduct regular inventory analysis can help Edita
2020 is better than 2021 as an increasing in Days sales
identify slow-moving items and obsolete stock, which
in inventory in 2021 compared to 2020 may suggest
can be sold or disposed of to reduce excess inventory
that Edita is experiencing challenges in managing
and improve inventory turnover. This can help reduce
inventory levels or experiencing slowing sales.
Days' Sales in Inventory.
 Receivables Turnover

2020 2021
Credit Sales=4,021,088,297 AR=197,708,112 Credit Sales=: 5,251,219,990 AR=218,917,056

RTO= 4,021,088,297 / 197,708,112 = 20.33 times RTO= 5,251,219,990 / 218,917,056 = 23.98 times

Comments: Edita collected its AR 20.33 times during the Comments: Edita collected its AR 23.98 times during the
year year

Comparison

2021 is better than 2020 as in 2021 Edita

collected it’s AR by 23.98 times.
 Day’s Sales in Receivable

2020 2021
365/Receivable Turnover 365/Receivable Turnover

DSIR= 365 / 20.33850941331128 = 17.94 days DSIR= 365 / 23.98725839799344= 15.21 days

Comments: It takes Edita on average 17.94 days to collect Comments: It takes Edita on average 15.21 days to collect
its AR per time its AR per time

Comparison

2021 is better than 2020 as Edita was able to collect

payments more quickly in 2021 compared to 2020.
 Total Asset Turnover

2020 2021
Sales/TA Sales/TA

TATO= 4,021,088,297 / 3,331,021,725 = 1.20$ TATO= 5,251,219,990 / 4,223,477,013 = 1.24$

Comments: : Each $1 invested in TA, generates sales by Comments: Each $1 invested in TA, generates sales by
$1.20 $1.24

Comparison

2021 is better than 2020 as Edita was able to generate

revenue by 1.24$
 Capital Intensity Ratio

2020 2021
TA/Sales TA/Sales

CIR= 3,331,021,725 / 4,021,088,297 = 0.82$ CIR= 4,223,477,013 / 5,251,219,990 = 0.80$

Comments: In order for Edita to generate $1 of sales, it has Comments: In order for Edita to generate $1 of sales, it has
to invest $ 0.82 in TA to invest $ 0.80 in TA

Comparison

2021 is better than 2020 as a decreasing capital intensity ratio may indicate
that Edita is becoming more efficient in generating revenue from its assets.
Profitability
 Profitability

Profit Margin Return On Assets Return On Equity

 Profit Margin

2020 2021
NI/Sales NI/Sales

PM= 528,870,483 / 5,251,219,990 = 0.1007$ PM= 347,691,983 / 4,021,088,297 = 0.086$

Comments: Edita is achieving 10.07% profit from sales. Comments: Edita is achieving 8.6% profit from sales.

Comparison

Edita is efficiently achieving profit sales in 2021 more than

2020.
 ROA

2020 2021
NI/TA NI/TA

ROA= 528,870,483 / 4,223,447,013 = 0.104$ ROA= 347,691,983 / 3,331,021,725 = 0.125$

Comments: Each 1$ investeted in TA generate 0.104 of NI. Comments: Each 1$ invested in TA generate 0.125$ of NI

Comparison

As it gets higher, it will benefit the company as it means

how efficiently the company uses the assets to generate
profit.
 ROE

2020 2021
NI/TE NI/TE

ROE= 528,870,483 / 1,650,077,504 = 0.21$ ROE= 347,691,983 / 2,111,668,776 = 0.25$

Comments: Each 1$ investeted from equity generate 0.21$ Comments: Each 1$ investeted from equity generate 0.25$
of NI. of NI.

Comparison

Since 2021 is better, it will operate efficiency, asset use

efficency and financial leaverage
 Market Value

Price Earning Ratio Price Sales Ratio Market to book

ratio
 Price Earning Ratio

2020 2021
Price Per share/EPS Price Per share/EPS

PER= 8.90 / 0.48 = $18.54 PER= 8.47 / 0.73 = $11.60

Comments: investors were willing to pay $18.54 for every Comments: investors were willing to pay $11.60 for every
dollar of earnings generated by the company dollar of earnings generated by the company

Comparison Recommenation
The P/E ratio for Edita decreased as a result of a change in Improve profitability by focusing on cost management
investor perception towards the company's profits and increasing sales company to rebuild investor
potential.
confidence by showing steady earnings growth.
 Price Sales Ratio
2020
Sales per share=Total Sales / Number of
Outstanding Shares
SPS= 4,021,088,297/725,362,900 = 5.54
Price Sales Ratio = 8.96/5.54 = $1.61
Comments: Investors were willing to pay $1.61 for every
dollar of sales generated by the company.
Comparison
The decrease of the P/S ratio indicates that Edita
experienced a change in investor perception or attitude
regarding the value of its sales.
2021
Total Sales / Number of Outstanding Shares
SPS= 5,251,219,990/ 723,058,439 = 7.26
Price Sales Ratio = 8.43/ 7.26 =$ 1.16
Comments: investors were willing to pay $1.16 for every
dollar of sales generated by the company.
Recommenation
Improve sales growth by expanding into new markets
and enhancing marketing and sales effort to make the
company able to attract investors who are willing to
pay a higher price for its sales by showing consistent
sales growth.
 Price Sales Ratio
2020
Sales per share=Total Sales / Number of
Outstanding Shares
SPS= 4,021,088,297/725,362,900 = 5.54
Price Sales Ratio = 8.96/5.54 = $1.61
Comments: Investors were willing to pay $1.61 for every
dollar of sales generated by the company.
Comparison
The decrease of the P/S ratio indicates that Edita
experienced a change in investor perception or attitude
regarding the value of its sales.
2021
Total Sales / Number of Outstanding Shares
SPS= 5,251,219,990/ 723,058,439 = 7.26
Price Sales Ratio = 8.43/ 7.26 =$ 1.16
Comments: investors were willing to pay $1.16 for every
dollar of sales generated by the company.
Recommenation
Improve sales growth by expanding into new markets and
enhancing marketing and sales effort to make the
company able to attract investors who are willing to pay a
higher price for its sales by showing consistent sales
growth.
 Market Book Ratio

2020 2021
Market Value Per Share = (8.90 * 723,058,439)/ 723,058,439 Market Value Per Share = (8.47 * 723,058,439)/
Book Value Per Share = 1,650,077,504 / 725,362,900 = 2.27
723,058,439
Market to Book Ratio = 8.90/2.27 =3.92
Book Value Per Share = 2,111,668,776/ 723,058,439 =
2.92
Market to Book Ratio = 8.47/2.92 =2.90

Comments: the market value per share of Edita was 3.92 Comments: the market value per share of Edita was 2.90
times the book value per share times the book value per share

Comparison Recommenation
Enhance financial performance by managing costs
The decrease in the M/B ratio indicates that Edita has
effectively and optimizing asset utilization to increase its
experienced a change in investor perception towards its
book value and attract investors willing to assign a higher
valuation in relation to the book value.
market value to the shares.
Thank You