Financial statement analysis is regarded as the procedure of evaluating the financial statements of the company for decision-making. Stakeholders make use of it to build an understanding of the overall health of the company and to assess the business's worth and its financial position and performance (Palepu et al., 2020). In this assessment, the financial performance and position of XYZ Proprietary Limited will be analysed with the help of ratio analysis.
It can be concluded that XYZ Proprietary Limited has performed well in 2020 in terms of liquidity, profitability and efficiency. The gross profit ratio of 39% signifies that company is capable of covering the cost of goods sold. A higher return on assets ratio shows that the corporation's management is effective in generating higher profits from using the assets. The current ratio is greater than 1 signifying that it can easily pay off short-term debts with help of current assets. Lower debtors’ days and lower inventory days signify that company is efficient in converting the inventory into cash.
Almira, N. P. A. K., & Wiagustini, N. L. P. (2020). Return on asset, return on equity, dan earning per share berpengaruh terhadap return saham (Doctoral dissertation, Udayana University).
Evmenchik, O. S., Niyazbekova, S. U., Seidakhmetova, F. S., & Mezentceva, T. M. (2021). The role of gross profit and margin contribution in decision making. In Socio-economic Systems: Paradigms for the Future (pp. 1393-1404). Cham: Springer International Publishing.
Husna, A., & Satria, I. (2019). Effects of return on asset, debt to asset ratio, current ratio, firm size, and dividend payout ratio on firm value. International Journal of Economics and Financial Issues, 9(5), 50-54.
Kaur, R., & Kalotra, A. (2019). To analyze relationship between working capital management and profitability. International Journal of Management, Technology and Engineering. To analyze the relationship between working capital management and profitability.
Palepu, K. G., Healy, P. M., Wright, S., Bradbury, M., & Coulton, J. (2020). Business analysis and valuation: Using financial statements. Cengage AU.
Rahayu, H. C., Lestari, E. P., & Kuniawati, T. R. (2021). The Effect of Book Value, Debt to Equity Ratio, Roa, Interest Rate and Exchange Rate at Jakarta Islamic Index (JII). El-Qish: Journal of Islamic Economics, 1(1), 25-40.
1 |
Days Inventory = |
(Average inventory/Costs of Sales)*365 |
37 |
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2 |
Days Debtors = |
(Average Debtors/Credit Sales revenue) *365 |
14 |
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3 |
Current Ratio = |
Average Current Assets |
1.38 |
Average Current Liabilities |
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4 |
Quick Ratio = |
Average Current Assets- (Average Inventory + Average prepayments) |
0.68 |
Average Current Liabilities |
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5 |
Gross profit margin = |
(Sales Revenue - Costs of Sales) *100 |
39 |
Sales Revenue |
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6 |
Return on Assets = |
Net Profit after tax*100 |
59% |
Average Total Assets |
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7 |
Assets Turnover = |
Sales revenue/Average Total Assets |
9 |
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8 |
Inventory Turnover = |
Cost of sales/Average inventory |
10 |
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9 |
Debtors Turnover = |
Sales revenue/Average trade debtors |
25 |
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10 |
Debt to Equity ratio = |
Average total debt/Average equity |
- 5 |
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