Vous êtes sur la page 1sur 6

# Learning outcome 1 United Motors Lanka founded a market opportunity in the year 2010 and went to cash on it.

In this section we will analyze the financial statements of the company in order to find out the impact of the opportunity on the financials of the company. For this purpose, ratio analysis will be done. Liquidity Ratios The liquidity aspect will be judged using the current and the liquid ratios. Current ratio is calculated by dividing the current assets by the current liabilities. In order to make comparison we have used financial statements for the year 2011-12 and 2010-11. For 2011-12 Current assets = 4636719 Current Liabilities= 2621668 Current Ratio = Current assets/ Current Liabilities = 4636719/2621668 = 1.76 For 2010-11 Current assets = 1959919 Current Liabilities= 442782 Current Ratio = Current assets/ Current Liabilities = 1959919/442782 = 4.42 Liquid ratio For 2011-12 Liquid assets = 1919190 Liquid Liabilities= 2621668 Liquid Ratio = Liquid assets/ Liquid Liabilities = 1919190/2621668 = 0.73

For 2010-11 Liquid assets = 977882 Liquid Liabilities= 442782 Liquid Ratio = Liquid assets/ Liquid Liabilities = 977882/442782 = 2.20 Going by the liquidity ratios it is clear that the liquidity of the company has been adversely affected after going for the new market opportunity. Efficiency ratios Assets turnover ratio: This ratio will be calculated by dividing the sales by fixed assets. For 2011-12 Sales = 8529451 Fixed assets = 1865562 Assets turnover ratio = 8529451/1865562 = 4.57 For 2010-11 Sales = 4907368 Fixed assets = 1836437 Assets turnover ratio = 4907368/1836437 = 2.67 As the turnover has increased it shows high utilization of assets. Stock turnover ratio: It is calculated by dividing the cost of sales by the average stock For 2011-12 Cost of sales = 6083645 Average stock = 2717529

Stock turnover ratio = 6083645/2717529 = 2.24 For 2010-11 Cost of sales = 3665329 Average stock = 982037 Stock turnover ratio = 3665329/982037 = 3.73 The stock turnover seems to be quite low which shows that the firm is not very efficient in selling stocks. Debtors turnover ratio: this is calculated by dividing the debtors by the credit sales multiplied by 365 days. For 2011-12 Debtors= 15646 Credit sales = 6083645 Debtors turnover ratio = debtors * 365/credit sales = 15646*365/6083645= 0.93 For 2010-11 Debtors= 563629 Credit sales = 3665629 Debtors turnover ratio = debtors * 365/credit sales = 563629*365/3665629= 56.12 The debtors turnover ratio has improved quite a lot which shows that the firm has been able to receive money from its debtors on time. However, going by the actual figures of debtors there has been significant reduction from the year 2010-11 and 2011-12. Profitability ratios: these ratios measure the profit earning capacity of the organization. Gross Profit Margin: It is calculated by dividing the gross profit by the net sales.

For the year 2011-12 Gross Profit= 2445806 Net sales= 8529451 Gross Profit Margin = 2445806/8529451= 28.67% For the year 2010-11 Gross Profit= 1242039 Net sales= 4907368 Gross Profit Margin = 1242039/4907368= 25.30% The gross profit of the organization has improved marginally which is a good sign. Return on equity- it is calculated by dividing the net income by the shareholders equity. For the year 2011-12 Net income= 1341734 Equity = 4641403 Return on equity= 1341734*100/4641403= 28.90% For the year 2010-11 Net income= 518814 Equity = 3720088 Return on equity= 518814*100/3720088= 13.94% The return on equity has improved considerably after taking the opportunity.

Investment ratio Earnings per share: It is calculated by dividing the profit by the number of equity shares. For the year 2011-12 Net profit= 1341734 No. of Equity = 67267 Return on equity= 1341734/67267= 19.95 For the year 2010-11 Net income= 518814 Equity = 67267 Return on equity= 518814/67267= 7.71 With the taking up of this opportunity the earnings per share has also increased. Going by the above analysis, it seems that the liquidity is quite low; thus the company needs to have more liquid assets in order to combat with the difficult times. Further the company has been able to improve its gross profit ratio, return on equity, debtors turnover ratio. However the company is unable to realize its fixed assets to the maximum extent.