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Ratio Analysis

The document analyzes key financial ratios for Square Textile Limited for the years ending 2020 and 2021. It shows that current ratio, quick ratio, inventory turnover ratio, fixed asset turnover ratio, and total asset turnover ratio all improved from 2020 to 2021, indicating stronger liquidity and more efficient use of assets. However, days sales outstanding decreased slightly. Net profit margin, return on assets, and return on equity all significantly increased from 2020 to 2021, with a large jump in net income.

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17 views2 pages

Ratio Analysis

The document analyzes key financial ratios for Square Textile Limited for the years ending 2020 and 2021. It shows that current ratio, quick ratio, inventory turnover ratio, fixed asset turnover ratio, and total asset turnover ratio all improved from 2020 to 2021, indicating stronger liquidity and more efficient use of assets. However, days sales outstanding decreased slightly. Net profit margin, return on assets, and return on equity all significantly increased from 2020 to 2021, with a large jump in net income.

Uploaded by

Shaleh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Analysis of Financial Statement for Square Textile Limited End of year 2020 and 2021.

SL Ratio 2020 2021

1. 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡
Current Ratio= 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑒𝑠 7,798,973,675 9,197,615,462
= =
7,509,456,668 5,661,519,456

= 1.04 = 1.62

2. Quick
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡−𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑒𝑠 7,798,973,675 − 3,212,755,636 9,197,615,462 − 2,664,689,616
Ratio= 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑒𝑠 = =
7,509,456,668 5,661,519,456

= 0.61 = 1.15

3. Inventory Turnover (9,610,006,494) (11,858,829,437)


𝐶𝑜𝑠𝑡 𝑜𝑓 𝐺𝑜𝑜𝑑𝑠 𝑆𝑜𝑙𝑑 = =
Ratio= 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑖𝑒𝑠
3,212,755,636 2,664,689,616

= 2.99 = 4.45

4. Days Sales Outstanding 4,006,190,860 4,808,315,632


𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒 = =
Ratio= 10,351,450,641/360 13,293,569,580/360
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑆𝑎𝑙𝑒𝑠 𝑃𝑒𝑟 𝐷𝑎𝑦

= 139.32 Days = 130.21 Days

5. Fixed Asset Turn Over 10,351,450,641 13,293,569,580


𝑆𝑎𝑙𝑒𝑠 = =
Ratio= 𝑁𝑒𝑡 𝐹𝑖𝑥𝑒𝑑 𝐴𝑠𝑠𝑒𝑡 7,143,572,161 7,064,213,305

= 1.45 = 1.88

6. Total Asset Turn Over Ratio 10,351,450,641 13,293,569,580


𝑆𝑎𝑙𝑒𝑠 = =
= 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡 14,942,545,836 16,261,828,767

= 0.69 = 0.82

7. 𝑇𝑜𝑡𝑎𝑙 𝐷𝑒𝑏𝑡
Debt Ratio = 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡 260,567,761 + 7,509,456,668 5,661,519,456 + 2,953,119,459
= =
14,942,545,836 16,261,828,767

= 0.52 = 0.53
8. Net Profit Margin on Sales =
𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 53,326,984 671,862,451
𝑆𝑎𝑙𝑒𝑠 = =
10,351,450,641 13,293,569,580

= 0.52 % = 5.05 %
9. Return on Total Asset (ROA)
𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒
= 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡 53,326,984 671,862,451
= =
14,942,545,836 16,261,828,767

= 0.36% = 4.13%

10. Return on Total Equity (ROE) = 𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 53,326,984 671,862,451


𝐶𝑜𝑚𝑚𝑜𝑛 𝐸𝑞𝑢𝑖𝑡𝑦 = =
1,972,520,000 1,972,520,000

= 2.70% = 34.06%

11. Price Earnings Ratio =


𝑀𝑎𝑟𝑘𝑒𝑡 𝑃𝑟𝑐𝑒 𝑃𝑒𝑟 𝑆ℎ𝑎𝑟𝑒
𝐸𝑎𝑟𝑛𝑖𝑛𝑔 𝑝𝑒𝑟 𝑆ℎ𝑎𝑟𝑒

Price Earnings Ratio


𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 𝐴𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 𝑡𝑜 𝑐𝑜𝑚𝑚𝑜𝑛 𝑠𝑡𝑜𝑐𝑘ℎ𝑜𝑙𝑑𝑒𝑟
= 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑐𝑜𝑚𝑚𝑜𝑛 𝑠ℎ𝑎𝑟𝑒 𝑜𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔
12. Market Ratio = 𝑀𝑎𝑟𝑘𝑒𝑡 𝑃𝑟𝑐𝑒 𝑃𝑒𝑟 𝑆ℎ𝑎𝑟𝑒
𝐵𝑜𝑜𝑘 𝑉𝑎𝑙𝑢𝑒 𝑝𝑒𝑟 𝑆ℎ𝑎𝑟𝑒

𝐶𝑜𝑚𝑚𝑜𝑛 𝐸𝑞𝑖𝑢𝑡𝑦
Market Ratio = 𝐶𝑜𝑚𝑚𝑜𝑛 𝑆ℎ𝑎𝑟𝑒 𝑜𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔

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