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    Financial Statement Analysis

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    hashim shah
    The document analyzes various financial ratios of Diamond Industries over several years: 1) Liquidity ratios fluctuated as current assets and liabilities increased and decreased in different years, leading to an improved liquidity position by 2021 except in 2017 when current liabilities exceeded assets. 2) Profitability was negatively impacted in 2017 and 2019 with net losses those years as costs increased and sales declined in 2019, though sales were high in other years. 3) Solvency and leverage ratios indicate total liabilities increased significantly in some years due to trade payables and deferred liabilities, while earnings were negative due to higher expenses and lower sales. 4) Asset utilization improved in 2021 with higher sales

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    Financial Statement Analysis

    Uploaded by

    hashim shah
    7 views9 pages
    The document analyzes various financial ratios of Diamond Industries over several years: 1) Liquidity ratios fluctuated as current assets and liabilities increased and decreased in different years, leading to an improved liquidity position by 2021 except in 2017 when current liabilities exceeded assets. 2) Profitability was negatively impacted in 2017 and 2019 with net losses those years as costs increased and sales declined in 2019, though sales were high in other years. 3) Solvency and leverage ratios indicate total liabilities increased significantly in some years due to trade payables and deferred liabilities, while earnings were negative due to higher expenses and lower sales. 4) Asset utilization improved in 2021 with higher sales

    Original Description:

    Its financial statement analysis of diamond industries from the year 2017 to year 2021

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    The document analyzes various financial ratios of Diamond Industries over several years: 1) Liquidity ratios fluctuated as current assets and liabilities increased and decreased in different years, leading to an improved liquidity position by 2021 except in 2017 when current liabilities exceeded assets. 2) Profitability was negatively impacted in 2017 and 2019 with net losses those years as costs increased and sales declined in 2019, though sales were high in other years. 3) Solvency and leverage ratios indicate total liabilities increased significantly in some years due to trade payables and deferred liabilities, while earnings were negative due to higher expenses and lower sales. 4) Asset utilization improved in 2021 with higher sales

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pptx, pdf, or txt
    7 views9 pages

    Financial Statement Analysis

    Uploaded by

    hashim shah
    The document analyzes various financial ratios of Diamond Industries over several years: 1) Liquidity ratios fluctuated as current assets and liabilities increased and decreased in different years, leading to an improved liquidity position by 2021 except in 2017 when current liabilities exceeded assets. 2) Profitability was negatively impacted in 2017 and 2019 with net losses those years as costs increased and sales declined in 2019, though sales were high in other years. 3) Solvency and leverage ratios indicate total liabilities increased significantly in some years due to trade payables and deferred liabilities, while earnings were negative due to higher expenses and lower sales. 4) Asset utilization improved in 2021 with higher sales

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
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    of 9

    Financial Statement Analysis

    OF
    DIAMOND INDUSTRIES
    LIQUIDITY RATIOS
    Project analysis slide 5

    Current Assets Current Liabilities Liquidity Position


    Increased Significantly Increased in 2017 and 2021 Improved
     Increase in current assets due  Increase in Trade and other  But in 2017, CL exceeded
    to increase in trade debts and Payables. CA.
    stocks in trade in 2021.
    PROFITABILITY RATIOS
    Project analysis slide 5

    SALES NET INCOME TOTAL EQUITY


    Increased Net Loss in 2017 and Increased
     No sales in 2019. 2019
     Increase in Cost of
     High sales in 2017 and sales and S&D  Reserves increase
    2018. expenses.
     Cost of sales increases with  Increase in interest
    increase in sales. expense in 2021.
    SOLVENCY RATIOS
    Project analysis slide 7
    Financial Ratios Formula 2021 2020 2019 2018 2017

    Solvency
    Ratios Liabilities to Equity ratio TL / Equity 1.637 1.083 1.143 0.925 28.337

    Total Leverage Total Debt / EBITDA 7.990 33.836 -6.686 3.774 -0.989

    Times Interest Earned EBIT / Interest Expense 26.134 4154.522 -3083.000 -1.294 -53.449

    Total Liabilities • Trade and other payables increased significantly both in 2017 and 2021.
    • Increase in Deferred Liabilities.
    increased
    • EBIT in loss due to increase in cost of sales, expenses and lower sales.
    4
    ASSET UTILIZATION
    Project analysis slide
    • Sales Increased11
    over the years except in 2019 and
    2020.

    • Total Assets increased due to trade receivables and


    inventories.

    • Fixed Assets remain more or less same.

    Financial Ratios Formula 2021 2020 2019 2018 2017

    Asset
    Utilization &
    Efficiency
    Ratios Sales to Asset ratio (turnover) Sales / TA 0.254733055 0.022988556 0 0.228151525 1.286784225

    Sales to Avg NWC Sales / Avg NWC 1.727803383 0.178288166 0 -0.992326738 9.626740075

    Sales to Fixed Assets turnover Sales / Fixed Assets 0.509638277 0.027806869 0 0.288142488 2.722341643
    MARKET VALUE RATIOS
    Project analysis
    • Netslide 11
    loss in 2017 and 2019, generating loss per share.

    • No dividends paid in 2020 and 2021.

    • Market valuation of company relative to book value.

    Financial Ratios Formula 2021 2020 2019 2018 2017

    Market Value
    Ratios Earnings per share NI/ no. of shares 2.792912833 0.685875917 -2.356152083 1.2220855 -52.8117665

    Price Earning Ratio Stock Price / EPS 5.913978495 27.47252747 -14.28571429 22.5 0.57134695
    Dividend Per share / Stock
    Dividend Yield Price 0 0 0.622222222 0.622222222 0.7

    Stock Price / Book Value per


    Market to Book Value Share 1.086081142 1.556357648 2.997094866 2.456961932 22.21805531
    RETURN ON NET
    OPERATING ASSETS
    Project analysis slide 11
    Additional Data
    2021 2020 2019 2018 2017

    Operating Assets 417,703,813 203,337,856 189,151,554 218,988,765 418,138,332

    Operating Liabilities 260,549,508 71,437,262 68,126,257 64,832,110 612,184,723

    Net Operating Assets 157,154,305 131,900,594 121,025,297 154,156,655 -194,046,391

    Average NOA 144527449.5 126462945.5 137590976 -19944868 177509849.5

    NOPAT 21728845.5 7973565.75 -9709139.25 -1744774.5 -458360763.8

    RNOA 15.03% 6.31% -7.06% 8.75% -258.22%

    • In 2017, negative RNOA depicts loss generated from operating assets.

    • After-tax loss from operating from net operating assets.

    • Improved in 2020 and 2021 because of increase in after-tax profit and


    efficient utilization of company’s net operating assets.
    RETURN ON CAPITAL
    EMPLOYED
    Project analysis slide 11
    Additional Data
    2021 2020 2019 2018 2017

    Net Financial Obligation (NFO) -14,233,035 5,669,631 -469,236 -9,944,229 -144,621,055

    Net Financial Expense (NFE) 831426 1919.25 3149.25 1347855 8575671.75

    LEV -0.019648338 0.013944611 -0.02603639 -0.640319699 -0.775351983

    Net Borrowing Cost NBC -0.194181192 0.000738117 -0.000604842 -0.017440592 -0.080630185

    Spread 0.344525266 0.063013609 -0.069960391 0.104920464 -2.501540692

    ROE computed 14.36% 6.39% -6.87% 2.03% -64.26%

    NFR -0.194181192 0.000037 -0.000604842 -0.017440592 -0.080630185

    ROCE 14.36% 6.39% -6.87% 2.03% -64.26%

    • Two components, operating (RNOA) and non-operating (LEV*SPREAD).

    • LEV – lower financial debt relative to its equity.

    • SPREAD – low interest expense paid on its debt.

    • RNOA – positive RNOA.


    Thank You

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