0% found this document useful (0 votes)
16 views19 pages

Net Profit Margin Trends 2014-2018

The document contains financial ratios for a company from 2014-2018. It shows that the company's net profit margin, gross profit margin, and operating income margin were increasing from 2014-2017 but decreased in 2018, indicating worsening profitability. Several other ratios like EPS, book value per share, and debt ratios were stable or improving over time, suggesting adequate financial strength. However, ratios like days in receivables, asset turnover, and cash conversion cycle worsened, showing inefficient use of assets and slower collection of receivables.

Uploaded by

Abdullah Sohail
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
0% found this document useful (0 votes)
16 views19 pages

Net Profit Margin Trends 2014-2018

The document contains financial ratios for a company from 2014-2018. It shows that the company's net profit margin, gross profit margin, and operating income margin were increasing from 2014-2017 but decreased in 2018, indicating worsening profitability. Several other ratios like EPS, book value per share, and debt ratios were stable or improving over time, suggesting adequate financial strength. However, ratios like days in receivables, asset turnover, and cash conversion cycle worsened, showing inefficient use of assets and slower collection of receivables.

Uploaded by

Abdullah Sohail
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Net Profit Margin

19.49% 19.90%
17.85%
16.58%
15.49%

2014 2015 2016 2017 2018

Net Profit Margin:

Companies net profit margin indicates that from 2014 to 2017 , It had an increasing trend which means
that company is converting sales to profit efficiently but in the last year the trend is decreased which
means that the company had not perform well to convert sales into profit.

Gross profit margin

33.93% 33.12%
31.28%
28.50%
26.24%

2014 2015 2016 2017 2018

Gross Profit Margin:

Companies gross profit margin indicates that company is going at a increasing trend from 2014 to 2017
as it is making profit after paying its cost of goods sold which means that company uses its labor and raw
material efficiently but in last year company had a decreasing trend which means the company is not
working efficiently.
Earnings per share
53.78
49.45 50.01
45.32
38.88

2014 2015 2016 2017 2018

Earnings per Share:

Earnings per share is the same as any profitability or market prospect ratio. Higher earnings per share is
always better than a lower ratio because this means the company is more profitable and the company
has more profits to distribute to its shareholders.

Book value per share

338.85
297.50
251.90
211.82
174.98

2014 2015 2016 2017 2018

Book Value Per Share:

This measurement is used by investors to evaluate the price of a company's common stock. For
instance, if the market value per share is lower than the book value per share, then the stock price may
be undervalued. However, book value is not market value.
Debt to Tangible Net worth ratio
0.64
0.62
0.56 0.55
0.50

2014 2015 2016 2017 2018

Debt to tangible net worth ratio:

a ratio indicating the level of creditors’ protection in case of the firm’s insolvency by comparing
company’s total liabilities with shareholder’s equity (excluding intangible assets, such as trademarks,
patents etc.). the Company ratio indicates that if the company is going to bankrupt, 1 dollar of tangible
net worth for every 0.64 cents of debt in 2014, 0.62 in 2015, 0.56 in 2016, 0.50 in 2017, 0.55 in 2018.
The decrease in trend is good for the company.

Debt to Asset

0.36 0.36

0.34
0.34

0.32

2014 2015 2016 2017 2018

Debt to asset:

As Debt to asset ratio is less then one which mean company had more assets then it liabilities so in case
of any obligations company can easily pay off.
Operating income Margin
27% 26%
23%
21%
19%

2014 2015 2016 2017 2018

Operating income Margin Ratio:

The operating profit margin ratio is a key indicator for investors and creditors to see how businesses are
supporting their operations. If companies can make enough money from their operations to support the
business, the company is usually considered more stable. On the other hand, if a company requires both
operating and non-operating income to cover the operation expenses, it shows that the business’
operating activities are not sustainable.

The Company had a increasing trend from 2014 to 2016, as it shows that company is making enough
money from its ongoing operations where as from 2017 and 2018 the company is not going well which
means it is not making enough money from its ongoing operations.

Price/Earnings Ratio

16.09 16.84

12.22
10.88
7.53

2014 2015 2016 2017 2018

Price to Earnings Ratio:

A company with a lower ratio, is usually an indication of poor current and future performance. This
could prove to be a poor investment. A higher ratio means that investors anticipate higher performance
and growth in the future. Here company had a decline phase inn 2018
Days Sales in Receivables
12.84
12.04

9.51 9.33
8.99

2014 2015 2016 2017 2018

Days Sales In Receivables:

Days Sales receivables are increasing which means that customers of this company are unable or
unwilling to pay on their purchases.

Time Interest Earning Ratio


33.07

28.68

22.02
18.74
15.62

2014 2015 2016 2017 2018

Time Interest Earning Ratio:

The ratio indicates how many times a company could pay the interest with its before tax income. So
company do have a increasing trend but In last year t is declining.
Debt to Equity Ratio

0.56 0.55

0.51
0.51

0.47

2014 2015 2016 2017 2018

Debt to Equity Ratio:

A lower debt to equity ratio usually implies a more financially stable business. Companies with a higher
debt to equity ratio are considered more risky to creditors and investors than companies with a lower
ratio. So the company is in stable condition.

Sales/Equity
0.92

0.77
0.66
0.62
0.59

2014 2015 2016 2017 2018

Sales to Equity:

The decreasing trend shows that company is not using it equity well to generate sales/
Total Asset Turnover

0.69

0.58

0.49
0.45 0.44

2014 2015 2016 2017 2018

Total asset Turnover:

The decreasing trend show the company is not using its assets efficiently to generate sales.

Cash Conversion Cycle (days)


2014 2015 2016 2017 2018
-12.75

-43.65

-73.50
-79.23
-83.14

Cash Conversion Cycle:

the cash conversion cycle can be viewed as a sales efficiency calculation. So It shows that company is not
quickly and efficiently is buying, selling, and collecting on its inventory.
Operating cycle (Days)

80.59

78.02
77.15

75.39

73.15

2014 2015 2016 2017 2018

Operating Cycle(Days):

The Company overall performance is not good but it take less time in converting inventories to cash in
year 2014 and 2018 as compare to other years.

A/P Turnover (days)

160.29 159.82
148.89

121.67

85.90

2014 2015 2016 2017 2018

Account Payable turnover (days):

Company is taking much time to pay cash to its suppliers, it may indicate that company had a worst
financial condition. but as compare to 2016 the turnover is slightly decreasing that may show that
company is utilizing the discount from suppliers. So that’s why the days of payments has decrease.
A/P Turnover
4.25

3.00

2.45
2.28 2.28

2014 2015 2016 2017 2018

A/P turnover:

It is decreasing which means company has started paying to is supplier to avail some benefits.

Receivables Turnover (days)

17.20

14.78
13.90 13.67
13.22

2014 2015 2016 2017 2018

Receivable Turnover days:

It is increasing that shows that company is having sales on credit term.


Receivables Turnover
27.61
26.27 26.71
24.69

21.21

2014 2015 2016 2017 2018

Receivables Turnover:

It shows that company had Less amount in its receivable accounts.

Inventory Turnover(Days)

65.81

64.12
63.49

59.93

58.18

2014 2015 2016 2017 2018

Inventory Turnover Days:

As compare to other years company is taking less time in converting inventory to sales.
Inventory Turnover
6.34
5.93
5.43 5.26
4.97

2014 2015 2016 2017 2018

Inventory Turnover:

It shows that inventory is in excess amount or having poor sales in 2018 as compare to other years.

Current Ratio

4.34

3.45 3.41 3.38


2.95

2014 2015 2016 2017 2018

Current Ratio:

Increase in trend show company had adequate asset settle it liabilities whereas decrease in trend shows
the opposite.
Quick Ratio
2.29
2.20
2.06

1.71
1.62

2014 2015 2016 2017 2018

Quick Ratio:

Overall performance to pay it current liabilities is in favorable condition.

Return on Assets

14.29%
13.77%
12.96%
12.33%

9.79%

2014 2015 2016 2017 2018

Return on Assets:

Decrease in trend indicates that it is not favorable to investors because it shows that the company is not
effectively managing its assets to produce greater amounts of net income.
Return on Equity

22.22%
21.40%
19.63%
18.08%

14.76%

2014 2015 2016 2017 2018

Return on Equity:

Company is having decreasing trend, which shows that company is not utilizing its shareholder equity to
generate profit.

Degree of financial leverage

1.06
1.03

1.00

0.95

0.92

2014 2015 2016 2017 2018

Degree of financial Leverage:

Degree of financial leverage is low which means that company may not face financial issues.
working capital

39,132,725
36,492,047
32,221,830

20,028,664 19,142,280

2014 2015 2016 2017 2018

Working Capital:

Working Capital is increasing which shows that current assets are more than current liabilities.

Cash Ratio

1.56
1.40

1.06
0.92 0.93

2014 2015 2016 2017 2018

Cash Ratio:

Cash Ratio is increasing which means that company is more liquid and can easily fund its debt.
Sales to working

8.58
8.10

5.09 5.35
4.47

2014 2015 2016 2017 2018

Sales to Working:

Decrease in trend shows that company is not using it working capital to sales.

Cash Basis times Interest Earned

40.74

35.21

29.02

19.02
15.86

2014 2015 2016 2017 2018

Cash Basis Times interest Earned:

high TIE-CB ratio indicates that a company has a lot of cash on hand that it can devote to repaying debts,
thus lowering its probability of default. This makes the business a more attractive investment for debt
providers. Conversely, a low TIE-CB means that a company has less cash on hand to devote to debt
repayment. Thus, there would be a higher probability of default. Thus the company is in Favorable
condition though it has decrease in last year.
Dupont analysis

11% 10%
10%
9%

7%

2014 2015 2016 2017 2018

Dupont Analysis:

The decrease in trend shows that company need to improve its strategy. To Increase profits and returns.

sales to fixed assets


4.63

4.43
4.39

4.14
4.08

2014 2015 2016 2017 2018

Sales to fixed Assets:

It indicate that company using small amount of asset to generate more sales.
return on common equity

61%
58%
52%
47%

37%

2014 2015 2016 2017 2018

Return on Common Equity:

Decrease in trend mean that company is not earning profit efficiently from its equity.

return on investment

24% 23% 23%


20%

15%

2014 2015 2016 2017 2018

Return on investment:

Decrease in trend shows that company is not utilizing it investment or assets to generate sales.
Dividend Payout
0.28

0.24 0.24
0.21 0.22

2014 2015 2016 2017 2018

Dividend Payout:

Increase in dividend payout means that companies operation are going well and so they are paying high
dividends

Dividend Yield
4%

2%

2%
1% 1%

2014 2015 2016 2017 2018

Dividend Yield:

Overall trend is decreasing means that investors are not getting high compensation on their investment.
Whereas increase in last year investors were highly compensated by company.
% of RE
98%
98%
98%
97%

97%

2014 2015 2016 2017 2018

% of RE:

Increase in trend means after paying all the dividend company have retained its earning efficiently.

Book value per share

338.85
297.50
251.90
211.82
174.98

2014 2015 2016 2017 2018

Book Value per Share:

Book Value per share is increasing so means that company is going good.

You might also like