ACL Cables evolved as the No. 1 cable
in Sri Lanka since inception in 1962. During its 56 year operation the company
has groomed to become a specialized manufacturer and supplier of an extensive
range of cables and conductors with superior quality and standard unmatched by
any other on the island. Excelling itself through advanced technology, quality
control and continues research and development. ACL Cables produce a range over
250 cables across 20 categories. ACL continued to expand its sector through
innovation and dominate the market with the introduction of new products and
many industry firsts. ACL cables comply with most local and international test
certificates including ISO 9002, ISO 9001-2000 & ISO 14001 environmental
management system certificate.
Ratio
Analysis.
4.1 Liquidity & Efficiency Ratio
|
|
2014
|
2015
|
2016
|
2017
|
2018
|
|
Current Assets
|
4,653,010
|
5,766,345
|
5,193,345
|
6,133,061
|
7,098,448
|
|
Current Liabilities
|
3,511,517
|
3,840,617
|
2,652,701
|
3,382,142
|
4,176,247
|
|
Current Ratio
|
1.325071187
|
1.501411101
|
1.957757395
|
1.813365908
|
1.699719389
|
|
|
1.33:1
|
1.5:1
|
1.96:1
|
1.81:1
|
1.7:1
|
According
to above ratio over 2014-2018 represents the companies’ ability to pay back its
liabilities with its assets. Current ratio reflects the company’s financial health. It considers
about current assets to current liabilities. If current assets are greater than
current liabilities, it’s a favorable condition. In 2014 assets are greater
than liabilities. 2015, 2016 & 2017 has that favorable condition and
increasing the asset amount per 1 rupee of liability. But in 2018 current
assets are less than current liabilities when compared with 2017 which means,
the company’s ability to pay its obligations are unfavorable. According to the
current ratio, it reveals that the financial health of the ACL Cable PLC is in a favorable over time.
|
|
2014
|
2015
|
2016
|
2017
|
2018
|
|
Current Assets
|
4,653,010
|
5,766,345
|
5,193,345
|
6,133,061
|
7,098,448
|
|
Inventory
|
1,722,317
|
2,032,571
|
1,791,058
|
1,995,157
|
2,311,360
|
|
Quick Assets
|
2,930,693
|
3,733,774
|
3,402,287
|
4,137,904
|
4,787,088
|
|
Current Liabilities
|
3,511,517
|
3,840,617
|
2,652,701
|
3,382,142
|
4,176,247
|
|
Acid Test Ratio
|
0.834594564
|
0.972180772
|
1.282574629
|
1.223456614
|
1.146265535
|
|
|
.83:1
|
.97:1
|
1.28:1
|
1.22:1
|
1.15:1
|
Acid-test ratio is a strong indicator
of whether a firm has sufficient short term assets to cover its immediate
liabilities. According to above calculations 2016, 2017 & 2018 has short
term liabilities more than 1 per 1 rupee of liability. In 2014 and 2015 short
term assets are less than current liabilities. According to the Acid-test
ratio, it reveals that ACL Cable PLC is moving towards favorable condition when
paying immediate obligations.
|
|
2014
|
2015
|
2016
|
2017
|
2018
|
|
Revenue
|
6,328,771
|
7,895,398
|
6,790,555
|
8,054,047
|
8,929,805
|
|
Trade Receivables
|
2,649,321
|
3,380,427
|
2,476,739
|
3,083,933
|
3,924,446
|
|
Average Trade Receivables
|
2,493,515
|
3,014,874
|
2,928,583
|
2,780,336
|
3,504,190
|
|
Accounts Receivable Turnover
|
2.538092
|
2.618815
|
2.3187169
|
2.8967890
|
2.5483225
|
This ratio measures the company’s
ability to covert its receivables into cash every year. And also measure how
efficiently a firm uses its assets. Comparing above years, 2017 has the highest
accounts receivable turnover & lowest turnover in 2016.
|
|
2014
|
2015
|
2016
|
2017
|
2018
|
|
Cost of Sales
|
5,636,344
|
6,740,484
|
5,729,860
|
6,567,847
|
7,865,346
|
|
Inventory
|
1,722,317
|
2,032,571
|
1,791,058
|
1,995,157
|
2,311,360
|
|
Average Inventory
|
1,666,404
|
1,877,444
|
1,911,815
|
1,893,108
|
2,153,259
|
|
Merchandise Turnover
|
3.382339
|
3.590245
|
2.9970794
|
3.4693470
|
3.6527644
|
Merchandise
turnover shows how many times a company’s inventory is sold and replaced over
time. High turnover means nothing unless the company is making a profit on each
sale. According to the above calculations, merchandise turnover fluctuates, in
2014 high turnover, in 2015 increases again 2016 rapid decrease again 2017 and
2018 again increase. 2018 has the highest merchandise turnover when compared to
other years.
|
|
2014
|
2015
|
2016
|
2017
|
2018
|
|
Net Revenue
|
6,328,771
|
7,895,398
|
6,790,555
|
8,054,047
|
8,929,805
|
|
Accounts Receivable
|
2,649,321
|
3,380,427
|
2,476,739
|
3,083,933
|
3,924,446
|
|
Day's Sales Uncollected
|
152.794
|
156.2753
|
133.1275
|
139.76024
|
160.40919
|
Above ratio
measure the approximate time period required to collect the receivable.
Unusually high figures imply the inadequate collection process within the
company. According to above calculations over time, 2018 has an unusually high
figure to collect receivables which means an unfavorable condition.
|
|
2014
|
2015
|
2016
|
2017
|
2018
|
|
Ending Inventory
|
1,722,317
|
2,032,571
|
1,791,058
|
1,995,157
|
2,311,360
|
|
Cost of Sales
|
5,636,344
|
6,740,484
|
5,729,860
|
6,567,847
|
7,865,346
|
|
Day's Sales in Inventory
|
111.5343
|
110.0645
|
114.0928
|
110.87839
|
107.26119
|
Days’ sales
in inventory reflect how long will it take a firm to convert its inventory into
sales. According to the above
calculations, ACL Cables PLC shows fluctuations where year 2018 shows the best
DSI and 2016 shows the worst DSI.
|
|
2014
|
2015
|
2016
|
2017
|
2018
|
|
Revenue
|
6,328,771
|
7,895,398
|
6,790,555
|
8,054,047
|
8,929,805
|
|
Total Assets
|
6,701,663
|
8,922,951
|
7,865,440
|
8,725,972
|
10,112,262
|
|
Average Total Assets
|
6,557,246
|
7,812,307
|
8,394,196
|
8,295,706
|
9,419,117
|
|
Total Asset Turnover
|
0.965156
|
1.010635
|
0.808958
|
0.9708693
|
0.9480511
|
Total asset
turnover measures the firm’s sales or revenues generated relative to the value
of its assets. According to above calculations year 2015 has the highest total
asset turnover rate. It implies that, for every 1 rupee generates 1.01 rupees
of sales. 2016 shows the lowest asset turnover when compared to the other
periods.
Solvency Ratio
|
|
2014
|
2015
|
2016
|
2017
|
2018
|
|
Total Liabilities
|
3,756,724
|
5,306,912
|
3,767,173
|
3,841,565
|
4,732,941
|
|
Total Assets
|
6,701,663
|
8,922,951
|
7,865,440
|
8,725,972
|
10,112,262
|
|
Debt Ratio
|
56%
|
59%
|
48%
|
44%
|
47%
|
Above ratio
measures the portion of a company’s assets are contributed by creditors.
According to above calculations year 2015 has the highest debt ratio. But overall
there is a high debt ratio in ACL Cables PLC over the periods.
|
|
2014
|
2015
|
2016
|
2017
|
2018
|
|
Total Shareolder's Equity
|
2,944,939
|
3,616,039
|
4,098,267
|
4,884,407
|
5,379,321
|
|
Total Assets
|
6,701,663
|
8,922,951
|
7,865,440
|
8,725,972
|
10,112,262
|
|
Equity Ratio
|
44%
|
41%
|
52%
|
56%
|
53%
|
The equity
ratio measures what portion of a company’s assets are contributed by the
owners. According to above calculations year 2017 has the highest equity ratio.
From 2014 to 2015 we can see overall decrement with certain fluctuations which
means investors seems reluctant to invest within the company. From 2016 to 2017
imply a favorable condition of the investment within the company.
|
|
2014
|
2015
|
2016
|
2017
|
2018
|
|
Profit Before Tax
|
118,135
|
612,220
|
710,555
|
1,212,422
|
582,380
|
|
Finance Cost
|
222,912
|
208,349
|
187,277
|
205,646
|
246,906
|
|
Profit Before Tax + Finance Cost
|
341,047
|
820,569
|
897,832
|
1,418,068
|
829,286
|
|
Times Interest Earned
|
1.529962
|
3.93843
|
4.794139
|
6.895675
|
3.358711
|
Times
interest earned ratio measures the ability of an organization to pay its debt
obligations. According to above calculations year 2017 has the highest times
interest earned ratio. From 2014 to 2018 ACL Cable PLC has a favorable times
interest earned which is greater than 1. That implies the ability to service
debt is not a problem for a borrower.
Profitability Ratio
|
|
2014
|
2015
|
2016
|
2017
|
2018
|
|
Revenue
|
6,328,771
|
7,895,398
|
6,790,555
|
8,054,047
|
8,929,805
|
|
Cost of Sales
|
5,636,344
|
6,740,484
|
5,729,860
|
6,567,847
|
7,865,346
|
|
Gross Profit
|
692,427
|
1,154,914
|
1,060,695
|
1,486,200
|
1,064,459
|
|
Gross Margin
|
11%
|
15%
|
16%
|
18%
|
12%
|
This ratio
measures how profitable a company sells its inventory or merchandise. In the year
2017 has the highest gross margin and the year 2014 has the lowest gross
margin. According to above calculations ACL Cables PLC has an unfavorable gross
margin of 2017 to 2018.
|
|
2014
|
2015
|
2016
|
2017
|
2018
|
|
Revenue
|
6,328,771
|
7,895,398
|
6,790,555
|
8,054,047
|
8,929,805
|
|
Net
Profit
|
98,244
|
491,775
|
544,334
|
1,001,898
|
478,444
|
|
Net Profit Margin
|
2%
|
6%
|
8%
|
12%
|
5%
|
The above
ratio measures the company’s ability to earn a net income from sales. According
to above calculations year 2017 has the highest profit margin. From 2017 to
2018 net profit margin has a decrement which is an unfavorable condition.
|
|
2014
|
2015
|
2016
|
2017
|
2018
|
|
Profit for the Year
|
98,244
|
491,775
|
544,334
|
1,001,898
|
478,444
|
|
Total Asset
|
6,701,663
|
8,922,951
|
7,865,440
|
8,725,972
|
10,112,262
|
|
Average Total Assets
|
6,557,246
|
7,812,307
|
8,394,196
|
8,295,706
|
9,419,117
|
|
Return on Total Assets
|
1%
|
6%
|
6%
|
12%
|
5%
|
The above
ratio measures the overall profitability of the company. In 2017 ACL Cables PLC
has the highest return on total assets ratio. In 2014 has the lowest return on
total assets ratio. From 2017 to 2018 return on total assets ratio has been
decreased. Above figures imply that the overall profitability of the company
has been decreasing over time.
|
|
2014
|
2015
|
2016
|
2017
|
2018
|
|
Profit for the Year
|
98,244
|
491,775
|
544,334
|
1,001,898
|
478,444
|
|
Total Equity
|
2,944,939
|
3,616,039
|
4,098,267
|
4,884,407
|
5,379,321
|
|
Average Total Equity
|
2,926,062
|
3,280,489
|
3,857,153
|
4,491,337
|
5,131,864
|
|
Return on Common Shareholder's
Equity
|
3%
|
15%
|
14%
|
22%
|
9%
|
The above
measure indicates how well the company employed the owners’ investment to earn
income. From 2014 to 2017 return on common shareholders’ equity has been
increased which means the way that the company has been employed the owners’
investment seems favorable. From 2017 to 2018 return on common shareholders’
equity has been decreased, which means the way that the company has been
employed the owners’ investment seems unfavorable.
|
|
2014
|
2015
|
2016
|
2017
|
2018
|
|
Total Equity
|
2,944,939
|
3,616,039
|
4,098,267
|
4,884,407
|
5,379,321
|
|
Number of Shares
|
59,893
|
59,893
|
59,893
|
119,787
|
119,787
|
|
Book Value Per Common Share
|
49.169
|
60.37
|
68.43
|
40.78
|
44.907
|
|
|
49.169:1
|
60.37:1
|
68.43:1
|
40.78:1
|
44.907:1
|
The above
ratio measures liquidation at reported amounts. The year 2016 has the higher
book value per common share. Which is a favorable for liquidation at reported
amount.
|
|
2014
|
2015
|
2016
|
2017
|
2018
|
|
Profit for the Year
|
98,244
|
491,775
|
544,334
|
1,001,898
|
478,444
|
|
Number of Shares
|
59,893
|
59,893
|
59,893
|
119,787
|
119,787
|
|
Basic Earning Per Share
|
1.640
|
8.21
|
9.09
|
8.36
|
3.994
|
The above
measure indicates how much income was earned for each share of common stock
outstanding. The year 2016 has the highest basic earnings per share and the year
2014 has the lowest basic earnings per share.
Market Ratio
|
|
2014
|
2015
|
2016
|
2017
|
2018
|
|
Market Price Per Share
|
61.00
|
76.00
|
100.90
|
54.50
|
41.00
|
|
Earning Per Share
|
1.64
|
8.21
|
9.09
|
8.36
|
3.99
|
|
Price Earning Ratio
|
37.19
|
9.26
|
11.10
|
6.52
|
10.27
|
According
to the above calculations, the year 2014 has the highest price earnings ratio. The
PE ratio has been increased from 2017 to 2018 which means the company has the
opportunity to grow compared with previous years.
|
|
2014
|
2015
|
2016
|
2017
|
2018
|
|
Dividend Per Share
|
1.0
|
1.0
|
1.0
|
1.5
|
1.5
|
|
Market Price Per Share
|
61.00
|
76.00
|
100.90
|
54.50
|
41.00
|
|
Dividend Yield
|
2%
|
1%
|
1%
|
3%
|
4%
|
According
to above calculations year 2018 has the highest dividend yield and seems to be
having a favorable condition.
Altman
Z-Score Analysis.
Z-Score = 1.2A +
1.4B + 3.3C + 0.6D + 1.0E
|
A = Working
Capital/Total Assets
|
|
B = Retained
Earnings/Total Assets
|
|
C = Earnings
Before Interest & Tax/Total Assets
|
|
D = Market
Value of Equity/Total Liabilities
|
|
E =
Sales/Total Assets
|
|
2014
|
2015
|
2016
|
2017
|
2018
|
|
|
Working Capital
|
1,141,493
|
1,925,728
|
2,540,644
|
2,750,919
|
2,922,201
|
|
Total Assets
|
6,701,663
|
8,922,951
|
7,865,440
|
8,725,972
|
10,112,262
|
|
T1
|
0.1703
|
0.2158
|
0.3230
|
0.3153
|
0.2890
|
|
Retained Earning
|
1,316,826
|
1,838,647
|
2,268,886
|
3,107,775
|
3,394,171
|
|
Total Assets
|
6,701,663
|
8,922,951
|
7,865,440
|
8,725,972
|
10,112,262
|
|
T2
|
0.20
|
0.21
|
0.29
|
0.36
|
0.34
|
|
Earning Before Tax
|
118,135
|
612,220
|
710,555
|
1,212,422
|
582,380
|
|
Total Assets
|
6,701,663
|
8,922,951
|
7,865,440
|
8,725,972
|
10,112,262
|
|
T3
|
0.0176
|
0.0686
|
0.0903
|
0.1389
|
0.0576
|
|
Market Value of Equity
|
3,653,514
|
4,551,919
|
6,043,272
|
6,528,411
|
4,911,281
|
|
Total Liabilities
|
3,756,724
|
5,306,912
|
3,767,173
|
3,841,565
|
4,732,941
|
|
T4
|
0.9725
|
0.8577
|
1.6042
|
1.6994
|
1.0377
|
|
Sales
|
6,328,771
|
7,895,398
|
6,790,555
|
8,054,047
|
8,929,805
|
|
Total Assets
|
6,701,663
|
8,922,951
|
7,865,440
|
8,725,972
|
10,112,262
|
|
T5
|
0.9444
|
0.8848
|
0.8633
|
0.9230
|
0.8831
|
|
Z Score
|
2.065530869
|
2.173363343
|
2.915438841
|
3.278082149
|
2.512407055
|
Zone of Discrimination
·
Z > 2.9 – “Safe” Zone
·
1.23 < Z 2.9 – “Grey” Zone
·
Z < 1.23 – “Distress” Zone
The Altman Z-score is the output of a
credit-strength test that gauges a publicly traded manufacturing company's
likelihood of bankruptcy. The Altman Z-score is based on five
financial ratios that can one can calculate from data found on a company's
annual report. It uses profitability, leverage, liquidity, solvency and
activity to predict whether a company has a high probability of being insolvent.
According
to the Z Scores derived from ACL Cables PLC Financials, in the years of 2014
and 2015 the company is in the Grey zone and the years of 2016 and 2017 showing
the Z value more than 2.9 seems good years for the company as it is located in
safe zone. Due to the marginal growth in the Performance of the Construction
sector and global upward trend in Metal and Plastic prices were not favorable
for Electric Cable industry in the year of 2018 have led ACL Cables PLC into
grey zone.
v Conclusion.
After analyzing 5 years of annual reports from ACL
Cables PLC, revenue has been raised in past 5 years. ACL Cables PLC shows a
favorable financial condition when analyzing current ratios from 2014 to 2018.
After analyzing accounts receivable turnover, the conclusion would be, ACL
Cables PLC has a poor collection process, a bad credit policy or none at
all. After analyzing equity ratio,
derivable conclusion would be, investors are attracted to invest within the
company. From 2014 to 2018 imply a favorable condition of the investment within
the company. Times interest earned ratio of the ACL Cables PLC has been derived some favorable conditions.
From 2014 to 2018 ACL Cables PLC has a favorable times interest earned which is
greater than 1. That implies the ability to service debt is not a problem for a
borrower. Ultimate conclusion would be, ACL Cable PLC does maintain a stable
position within the electrical cable industry, but they need to consider about
their existing credit policy in order to improve their poor collection process.
