ANALYZING FINANCIAL REPORTS OF LAUGFS HOLDINGS PLC

 

LAUGFS HOLDINGS PLC

Company Profile

The name of LAUGFS is strongly associated with the bold spirit of adventure that has taken us from a small enterprise to who they are now - a fast growing, strongly diversified corporate standing tall in the competitive industry landscape we operate in today.

They belief in their own capabilities has driven latest exploration into the maritime sector. The year under review saw proudly launch ‘Gas Challenger’, LPG vessel acquired with an investment of nearly USD7 million through our newest subsidiary company LAUGFS Maritime Services (Private) Limited.

The numerous awards for excellence won by LAUGFS Holdings PLC were the result of the dedication and commitment of the people engaged with the company.

Vision

 To be the most preferred and trusted Sri Lankan Multinational that touches the day-to-day lives of people in Sri Lanka and beyond, through a diverse group of companies.

Mission

• Be the Leader in the market segments we operate in.

 • Introduce latest innovations, technology and solutions to add value to the consumer.

 • Promote a ‘Safety’ culture, encompassing People, Products and Processes.

• Ensure fair returns to all our stakeholders.

• Lead by example as an exemplary Sri Lankan entity.

 

Board of Directors

01 W K H Wegapitiya (Chairman/Group CEO)                    05 C L De Alwis                    

02 U K Thilak De Silva (Group Managing Director)             06 P M Kumarasinghe PC

03 H A Ariyaratne                                                                  07 T K Bandaranayake

04 N M Prakash

 

                                                                       

1.     Horizontal Analysis

Horizontal analysis of financial statements involves comparison of a financial ratio, a benchmark, or a line item over a number of accounting periods. This method of analysis is also known as trend analysis. Horizontal analysis allows the assessment of relative changes in different items over time. Since this entire Statement Analysis is done by analyzing 5 years data including years 2015 to 2019, 2014 has been taken as the base year.

Horizontal Analysis of the Statement of Profit and Loss:

Dollar change=Analysis period amount- Based period Amount

Percentage change=Dollar change/Based period amount *100

·         Dollar Change

	2015	2016	2017	2018	2019
Revenue	-434,415,845	-940,830,149	-273,446,870	2,173,786,178	4,532,300,185
Cost of Sales	937,594,214	919,370,374	-350,101,213	-3,363,548,735	-4,960,330,440
Gross profit	503,178,369	-21,459,775	-623,548,083	-1,189,762,557	-428,030,255
Other operating expenses	-30,568,376	236,096,676	483,228,602	329,412,154	475,716,999
Selling and Distribution Expenses	-79,781,407	-166,384,419	-252,675,075	-415,431,464	-316,589,271
Administrative Expenses	-73,868,463	-185,076,361	-389,499,855	-173,052,406	-339,805,325
Foreign Currency Exchange gains	-39,492,364	-40,629,683	-69,239,062	33,616,199	-26,303,488
Operating Profit	279,467,759	-177,453,564	-851,733,474	-1,415,218,074	-635,011,340
Finance cost	-20,560,118	-279,346,068	-1,210,875,664	-1,667,707,175	-1,803,341,463
Fair Value Gain on Investment Properties	-7,075,000	-8,575,000	-9,575,000	7,425,000	-6,375,000
Finance income	-11,380,361	-23,689,561	-39,757,448	-39,506,800	-38,434,106
Profit Before Tax	240,452,280	-489,064,194	-2,111,941,587	-3,115,007,049	-2,483,161,909
Income Tax Expenses	-54,580,420	127,780,026	459,562,191	450,852,465	647,931,944
Profit for the year	185,871,860	-361,284,167	-1,652,379,396	-2,664,154,584	-1,835,229,965

 

So here most of the all values are negative which indicates the analysis period amount is less than the base period amount. There are very few values positive here.

 

 

 

·         Percentage Change

	2015	2016	2017	2018	2019
Revenue	-4.08%	-8.83%	-2.57%	20.39%	42.52%
Cost of Sales	-10.54%	-10.34%	3.94%	37.81%	55.77%
Gross profit	28.50%	-1.22%	-35.32%	-67.39%	-24.25%
Other operating expenses	-4.54%	35.05%	71.73%	48.90%	70.61%
Gain from bargain purchase on Acquisition	-	-	-	-	-
Selling and Distribution Expenses	16.51%	34.44%	52.30%	86.00%	65.53%
Administrative Expenses	18.31%	45.88%	96.55%	42.90%	84.23%
Foreign Currency Exchange gains	-88.70%	-91.26%	-155.52%	75.51%	-59.08%
Operating Profit	17.50%	-11.11%	-53.33%	-88.61%	-39.76%
Finance cost	141.68%	1,924.92%	8,343.93%	11,491.87%	12426.5%
Fair Value Gain on Investment Properties	-19.89%	-24.10%	-26.91%	20.87%	-17.92%
Finance income	-25.06%	-52.17%	-87.55%	-87.00%	-84.64%
Profit Before Tax	14.45%	-29.40%	-126.95%	-187.24%	-149.26%
Income Tax Expenses	20.19%	-47.26%	-169.98%	-166.75%	-239.65%
Profit for the year	13.34%	-25.93%	-118.60%	-191.22%	-131.72%

 

Here in Statement of profit and loss, in percentage change calculation, profit for the year becoming decrease from year to year. It shows a negative value after 2015. So there is a downward trend here. When compared to 2018, profit of 2019 is far better. But still it indicates a negative value.  Also revenue getting decrease from 2015 to 2017 and then increase in 2018 and 2019.  

Gross profit is positive in 2015 and then getting decreased by 2016. 2018 to 2019 there is a bit increase in gross profit. When concern about operating profit in 2015 it shows a positive value and after that it getting decreased. In 2019 again it increases.

 

 

 

 

 

 

 

 

 

Horizontal Analysis for the Statement of Financial position

·         Dollar change:

	2015	2016	2017	2018	2019
ASSETS
Non-Current Assets
Property, Plant and Equipment	394,392,665	1,172,814,893	1,638,391,382	2,594,866,995	2,942,072,103
Investment Properties	28,500,000	55,500,000	81,500,000	124,500,000	153,700,000
Intangible Assets	-2,551,625	29,001,597	15,414,449	2,601,456	-8,527,201
Prepayments	-	-	-	-	-
Deferred Tax Assets	-	-	-	-	-
Investments in Subsidiaries	600,000,010	3,602,479,238	9,654,034,982	4,677,733,088	29,987,240,014
Other Non-Current Financial Assets	5,508,028	19,692,095	23,227,218	38,033,449	3,663,698
Total Non-current assets	1,025,849,078	4,879,487,823	11,412,568,031	7,437,734,988	33,078,148,614
Current Assets
Inventories	75,067,985	121,410,775	179,664,823	381,419,970	424,470,317
Trade and Other Receivables	649,236,300	3,027,000,069	1,604,377,535	1,595,277,171	1,379,139,706
Prepayments	-22,497,433	-9,381,522	-16,101,533	-907,584	-20,105,448
Income Tax Recoverable	-	162,678,696	202,209,841	265,237,064	166,374,244
Other Current Financial Assets	867,020	-1,056,230	-636,230	-650,090	-20,760
Cash and Short-Term Deposits	-748,737,611	354,448,877	-955,451,385	-1,120,380,361	-856,415,222
Total Current Assets	-46,063,739	3,655,100,665	1,014,063,051	1,119,996,170	1,093,442,837
Total Assets	979,785,339	8,534,588,488	12,426,631,082	8,557,731,158	34,171,591,451
EQUITY AND LIABILITIES
Equity
Stated Capital	-	--	-	-2,285,000,260	-2,285,000,260
Reserves	5,172,839	19,356,906	144,569,442	339,047,451	21,989,469,565
Retained Earnings	810,419,412	1,073,653,217	426,543,326	-4,195,935,186	-3,809,948,159
Equity attributable to Equity Holders of the Parent	815,592,251	1,093,010,123	571,112,768	-6,141,887,995	15,894,521,146
Non-Controlling Interests	-	-	-	-	-
Total Equity	815,592,251	1,093,010,123	571,112,768	-6,141,887,995	15,894,521,146
Non-Current Liabilities
Interest Bearing Loans and Borrowings	-	4,553,223,809	8,120,292,137	6,245,291,408	6,808,001,961
Deferred Tax Liabilities	78,470,472	194,161,639	-9,218,975	-149,823,718	554,000,993
Deferred Income	-10,307,768	116,689,754	262,544,572	402,863,879	-408,107,846
Employee Benefit Liability	19,590,451	27,879,904	24,964,146	19,363,575	28,048,853
Refundable Deposits	150,018,187	606,000,999	806,460,210	1,075,714,202	989,449,483
Total Non-Current Liabilities	237,771,342	5,497,956,105	9,205,042,090	7,593,409,346	7,971,393,444
Current Liabilities
Trade and Other Payables	-244,982,226	-777,013,227	-458,482,536	572,197,965	1,698,624,101
Deferred Income	5,923,060	7,213,318	14,572,091	15,711,206
Refundable Deposits	16,668,687	67,333,444	89,606,690	119,523,800	204,848,036
Income Tax Payable	44,071,947	-72,092,479	-72,092,479	-72,092,479	-72,092,479
Interest Bearing Loans and Borrowings	104,740,278	2,718,181,204	3,076,872,458	6,470,869,315	8,474,297,203
Total Current Liabilities	-73,578,254	1,943,622,260	2,650,476,224	7,106,209,807	10,305,676,861
Total Equity and Liabilities	979,785,339	8,534,588,488	12,426,631,082	8,557,731,158	34,171,591,451

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

·         Percentage Change:

 

	2015	2016	2017	2018	2019
ASSETS
Non-Current Assets
Property, Plant and Equipment	7.90	23.50	32.82	51.99	58.94
Investment Properties	4.19	8.16	11.99	18.31	22.60
Intangible Assets	-26.14	297.06	157.89	26.65	-87.34
Prepayments
Deferred Tax Assets
Investments in Subsidiaries	27.32	164.02	439.56	212.98	1365.35
Other Non-Current Financial Assets	5.53	19.77	23.32	38.19	3.68
Total Non-current assets	12.86	61.17	143.07	93.24	414.67
Current Assets
Inventories	19.26	31.14	46.08	97.84	108.88
Trade and Other Receivables	36.34	169.45	89.81	89.30	77.20
Prepayments	-64.31	-26.82	-46.03	-2.59	-57.48
Income Tax Recoverable
Other Current Financial Assets	26.05	-31.73	-19.12	-19.53	-0.62
Cash and Short-Term Deposits	-60.22	28.51	-76.85	-90.11	-68.88
Total Current Assets	-1.33	105.70	29.33	32.39	31.62
Total Assets	8.57	74.64	108.67	74.84	298.84
EQUITY AND LIABILITIES
Equity
Stated Capital	0.00	0.00	0.00	-69.56	-69.56
Reserves	-1.53	-5.72	-42.73	-100.21	-6499.51
Retained Earnings	21.39	28.33	11.26	-110.73	-100.54
Equity attributable to Equity Holders of the Parent	12.11	16.23	8.48	-91.18	235.96
Non-Controlling Interests
Total Equity	12.11	16.23	8.48	-91.18	235.96
Non-Current Liabilities
Interest Bearing Loans and Borrowings
Deferred Tax Liabilities	13.04	32.28	-1.53	-24.91	92.09
Deferred Income	-2.53	28.59	64.33	98.72	-100.00
Employee Benefit Liability	56.12	79.86	71.51	55.47	80.34
Refundable Deposits	12.54	50.67	67.43	89.94	82.73
Total Non-Current Liabilities	10.61	245.38	410.83	338.90	355.77
Current Liabilities
Trade and Other Payables	-13.19	-41.83	-24.68	30.81	91.45
Deferred Income
Refundable Deposits	12.54	50.67	67.43	89.94	154.15
Income Tax Payable	61.13	-100.00	-100.00	-100.00	-100.00
Interest Bearing Loans and Borrowings	26.46	686.66	777.27	1634.65	2140.75
Total Current Liabilities	-2.99	79.06	107.82	289.07	419.22
Total Equity and Liabilities	8.57	74.64	108.67	74.84	298.84

 

Here is the summary of the Balance Sheet (Percentage Change)

2015

2016

2017

2018

2019

 

Total Non-current assets	12.86%	61.17%	143.07%	93.24%	414.67%
Total Current Assets	-1.33%	105.70%	29.33%	32.39%	31.62%
Total Assets	8.57%	74.64%	108.67%	74.84%	298.84%
Total Equity	12.11%	16.23%	8.48%	-91.18%	235.96%
Total Non-Current Liabilities	10.61%	245.38%	410.83%	338.90%	355.77%
Total Current Liabilities	-2.99%	79.06%	107.82%	289.07%	419.22%
Total Equity and Liabilities	8.57%	74.64%	108.67%	74.84%	298.84%

 

Here total non- current assets are increasing from 2015 to 2017 and decrease in 2018 again increase in a higher percentage in 2019.  Current assets are negative only in 2015. Then it increases higher percentage in 2016 and then decrease from 2017.

 However considering the total asset it shows that it increases considerably the study period. It is good sing of the company. Some assets are decreasing throughout the study period however the total assets shows positive increase compared with the base year.

When concern about total equity and liabilities, we can see there is a greater increase in liabilities compared to the base period.  It increases from 8.57 to 298.84 which show a 290% increment here.

 

 

 

 

 

 

2.     Vertical Analysis

A vertical analysis is used to show the relative sizes of the different accounts on a financial statement. For example, when a vertical analysis is done on an income statement, it will show the topline sales number as 100%, and every other account will show as a percentage of the total sales number. For the balance sheet, the total assets of the company will show as 100%, with all the other accounts on both the assets and liabilities sides showing as a percentage of the total assets number.

The main advantages of vertical analysis are that the balance sheets of businesses of all sizes can easily be compared. It also makes it easy to see relative annual changes within one business.

Vertical analysis of statement of profit and Loss:

Base year- 2014

	2015	2016	2017	2018	2019
Revenue	-128.51	-121.87	-112.35	-104.70	-109.65
Cost of Sales	100.00	100.00	100.00	100.00	100.00
Gross profit	-28.51	-21.87	-12.35	-4.70	-9.65
Other operating expenses	-8.08	-11.41	-12.51	-8.18	-8.30
Gain from bargain purchase on Acquisition	0.00	0.00	0.00	0.00	0.00
Selling and Distribution Expenses	7.07	8.14	7.96	7.33	5.77
Administrative Expenses	6.00	7.38	8.58	4.70	5.36
Foreign Currency Exchange gains	-0.06	-0.05	0.27	-0.64	-0.13
Operating Profit	-23.58	-17.80	-8.06	-1.48	-6.94
Finance cost	0.44	3.68	13.25	13.72	13.12
Fair Value Gain on Investment Properties	-0.36	-0.34	-0.28	-0.35	-0.21
Finance income	-0.43	-0.27	-0.06	-0.05	-0.05
Profit Before Tax	-23.93	-14.73	4.85	11.84	5.92
Income Tax Expenses	4.08	1.79	-2.05	-1.47	-2.73
Profit for the year	-19.84	-12.94	2.80	10.37	3.19

 

When concern about the vertical analysis of statement of financial position, there is a downward trend in many values. Most of all the values are negative here.

 

 

Vertical analysis of Statement of Financial position:

	2015	2016	2017	2018	2019
ASSETS
Non-Current Assets
Property, Plant and Equipment	43.38	30.87	27.78	37.94	17.40
Investment Properties	5.71	3.68	3.19	4.02	1.83
Intangible Assets	0.06	0.19	0.11	0.06	0.00
Prepayments	0.00	0.00	0.00	0.00	0.00
Deferred Tax Assets	0.00	0.00	0.00	0.00	0.00
Investments in Subsidiaries	22.52	29.04	49.66	34.38	70.57
Other Non-Current Financial Assets	0.85	0.60	0.51	0.69	0.23
Total Non-current assets	72.52	64.38	81.26	77.10	90.02
Current Assets
Inventories	3.74	2.56	2.39	3.86	1.79
Trade and Other Receivables	19.62	24.10	14.21	16.91	6.94
Prepayments	0.10	0.13	0.08	0.17	0.03
Income Tax Recoverable	0.00	0.81	0.85	1.33	0.36
Other Current Financial Assets	0.03	0.01	0.01	0.01	0.01
Cash and Short-Term Deposits	3.98	8.00	1.21	0.61	0.85
Total Current Assets	27.48	35.62	18.74	22.90	9.98
Total Assets	100.00	100.00	100.00	100.00	100.00
EQUITY AND LIABILITIES
Equity
Stated Capital	26.46	16.45	13.77	5.00	2.19
Reserves	-2.68	-1.60	-0.81	0.00	47.47
Retained Earnings	37.05	24.35	17.67	-2.03	-0.05
Equity attributable to Equity Holders of the Parent	60.83	39.20	30.62	2.97	49.62
Non-Controlling Interests	0.00	0.00	0.00	0.00	0.00
Total Equity	60.83	39.20	30.62	2.97	49.62
Non-Current Liabilities
Interest Bearing Loans and Borrowings		22.80	34.03	31.24	14.93
Deferred Tax Liabilities	5.48	3.98	2.48	2.26	2.53
Deferred Income	3.20	2.63	2.81	4.06	0.00
Employee Benefit Liability	0.44	0.31	0.25	0.27	0.14
Refundable Deposits	10.84	9.02	8.39	11.36	4.79
Total Non-Current Liabilities	19.96	38.75	47.97	49.19	22.39
Current Liabilities
Trade and Other Payables	12.99	5.41	5.86	12.15	7.80
Deferred Income	0.05	0.04	0.06	0.08	0.00
Refundable Deposits	1.20	1.00	0.93	1.26	0.74
Income Tax Payable	0.94	0.00	0.00	0.00	0.00
Interest Bearing Loans and Borrowings	4.03	15.59	14.55	34.35	19.45
Total Current Liabilities	19.21	22.04	21.41	47.84	27.99
Total Equity and Liabilities	100.00	100.00	100.00	100.00	100.00

 

 

 

 

 

 

 

Laugfs Holdings is having a figure above 50% for Total Non - Current Assets in all the five years. That is a good condition for a company. That depicts even their production and sales come down, still they have these assets with them to build up the company back. Laugfs Holdings has a very small amount of inventories in the analyzed five years.

They are getting decreased from one year to another. The figure less than 5%. It’s a good condition for the company because they don’t have to bear a huge cost for inventory management and also it depicts that their inventory sells fast without keeping a stock.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.     Trend Analysis

This is the process of analyzing the data to identify whether there is any trend or consistent results over past years. It helps in predicting and understanding the performance of businesses and its operations. Through that can understand the areas organization has to pay more attention.

Trend Period = Analysis period amount /Base period amount*100.

Base period – 2014

Trend analysis of the Statement of profit and loss:

	2015	2016	2017	2018	2019
Revenue	95.92%	91.17%	97.43%	120.39%	142.52%
Cost of Sales	89.46%	89.66%	103.94%	137.81%	155.77%
Gross profit	128.50%	98.78%	64.68%	32.61%	75.76%
Other operating expenses	95.46%	135.05%	171.73%	148.90%	170.61%
Selling and Distribution Expenses	116.51%	134.44%	152.30%	186.00%	165.53%
Administrative Expenses	118.31%	145.88%	196.55%	142.90%	184.23%
Foreign Currency Exchange gains	11.30%	8.74%	-55.52%	175.51%	40.92%
Operating Profit	117.50%	88.89%	46.67%	11.39%	60.24%
Finance cost	241.68%	2024.92%	8443.93%	11591.87%	12526.50%
Fair Value Gain on Investment Properties	80.11%	75.90%	73.09%	120.87%	82.08%
Finance income	74.94%	47.83%	12.45%	13.00%	15.36%
Profit Before Tax	114.45%	70.60%	-26.95%	-87.24%	-49.26%
Income Tax Expenses	120.19%	52.74%	-69.98%	-66.75%	-139.65%
Profit for the year	113.34%	74.07%	-18.60%	-91.22%	-31.72%

 

 

 

 

 

 

 

 

 

Here revenue is getting decrease from 2015 to 2016 and again after 2016 it increases. Cost of sales also getting increase and go beyond revenue after 2016. Gross profit decrease from 2015 to 2018 and increases after 2018.

Trend Analysis for Statement of Financial position:

 

ASSETS	2015	2016	2017	2018	2019
Non-Current Assets
Property, Plant and Equipment	107.90%	123.50%	132.82%	151.99%	158.94%
Investment Properties	104.19%	108.16%	111.99%	118.31%	122.60%
Intangible Assets	73.86%	397.06%	257.89%	126.65%	12.66%
Prepayments	-	-	-	-	-
Deferred Tax Assets	-	-	-	-	-
Investments in Subsidiaries	127.32%	264.02%	539.56%	312.98%	1465.35%
Other Non-Current Financial Assets	105.53%	119.77%	123.32%	138.19%	103.68%
Total Non-current assets	112.86%	161.17%	243.07%	193.24%	514.67%
Current Assets
Inventories	119.26%	131.14%	146.08%	197.84%	208.88%
Trade and Other Receivables	136.34%	269.45%	189.81%	189.30%	177.20%
Prepayments	35.69%	73.18%	53.97%	97.41%	42.52%
Income Tax Recoverable
Other Current Financial Assets	126.05%	68.27%	80.88%	80.47%	99.38%
Cash and Short-Term Deposits	39.78%	128.51%	23.15%	9.89%	31.12%
Total Current Assets	98.67%	205.70%	129.33%	132.39%	131.62%
Total Assets	108.57%	174.64%	208.67%	174.84%	398.84%
EQUITY AND LIABILITIES
Equity
Stated Capital	100.00%	100.00%	100.00%	30.44%	30.44%
Reserves	98.47%	94.28%	57.27%	-0.21%	-6399.51%
Retained Earnings	121.39%	128.33%	111.26%	-10.73%	-0.54%
Equity attributable to Equity Holders of the Parent	112.11%	116.23%	108.48%	8.82%	335.96%
Non-Controlling Interests
Total Equity	112.11%	116.23%	108.48%	8.82%	335.96%
Non-Current Liabilities
Interest Bearing Loans and Borrowings
Deferred Tax Liabilities	113.04%	132.28%	98.47%	75.09%	192.09%
Deferred Income	97.47%	128.59%	164.33%	198.72%	0.00%
Employee Benefit Liability	156.12%	179.86%	171.51%	155.47%	180.34%
Refundable Deposits	112.54%	150.67%	167.43%	189.94%	182.73%
Total Non-Current Liabilities	110.61%	345.38%	510.83%	438.90%	455.77%
Current Liabilities
Trade and Other Payables	86.81%	58.17%	75.32%	130.81%	191.45%
Deferred Income
Refundable Deposits	112.54%	150.67%	167.43%	189.94%	254.15%
Income Tax Payable	161.13%	0.00%	0.00%	0.00%	0.00%
Interest Bearing Loans and Borrowings	126.46%	786.66%	877.27%	1734.65%	2240.75%
Total Current Liabilities	97.01%	179.06%	207.82%	389.07%	519.22%
Total Equity and Liabilities	108.57%	174.64%	208.67%	174.84%	398.84%

 

 

 

 

 

 

 

 

 

 

 

When concern about total assets from 2015 to 2017, it increase and after 2017 it decreases and it 2019 increases again.

Above graph shows the variation occurs in total equity and total liabilities. Total equity decreases from 2015 to 2018 and increases after 2018 to 2019. Total liabilities are same. Only the thing is the rate of decrease is more in liabilities.

 

 

 

4.     Ratio Analysis

Ratio analysis is the comparison of line items in the financial statements of a business. Ratio analysis is used to evaluate a number of issues with an entity, such as its liquidity and efficiency of operations, profitability, solvency and market. Trend lines can also be used to estimate the direction of future ratio performance.

1.      Liquidity and Efficiency:

	2015	2016	2017	2018	2019
Working capital	48,818,609	55,320,903	70,926,994	76,914,447	65,886,010
Current Ratio	1.43	1.62	0.88	0.48	0.36
Acid Test Ratio	1.24	1.50	0.76	0.40	0.29
Account Receivable Turnover(Times)	4.84	2.68	2.53	3.79	4.64
Merchandise Turn Over(Times)	18.62	16.34	17.11	18.29	17.48
Day's Sales Uncollected (Days)	86.94	169.15	119.15	96.17	76.05
Day's Sales in Inventory(Days)	21.33	23.40	22.49	22.97	21.45
Total Asset Turn Over (Times)	1	0.60	0.47	0.59	0.46

 

·         Working Capital

 Working Capital represents current assets financed from long – term capital sources that do not require near – term repayment. Working Capital is the money need to run the day to day business, especially in settling the short term liabilities. Laugfs Holdings has positive figures for all the five years. That is a good condition for the company because they have money to settle the short term liabilities and to run the day to day business. In 2017 and 2018 they have a high amount of working capital and it has decreased in 2019.

·         Current Ratio and Acid Test Ratio

 The current ratio is a liquidity ratio that measures whether a firm has enough resources to meet its short-term obligations. It compares a firm's current assets to its current liabilities. The quick ratio or acid test ratio is a liquidity ratio that measures the ability of a company to pay its current liabilities when they come due with only quick assets. Quick assets are current assets that can be converted to cash within 90 days or in the short-term. Current Ratio and Acid Test Ratio have the same pattern throughout the five years.

·         Accounts Receivable Turnover and Merchandise Turnover

Receivable Turnover Ratio or Debtor's Turnover Ratio is an accounting measure used to measure how effective a company is in extending credit as well as collecting debts. The receivables turnover ratio is an activity ratio, measuring how efficiently a firm uses its assets. Merchandise turnover indicates how many times a company sells and replaces its stock of goods during a particular period. The formula for merchandise turnover ratio is the cost of goods sold divided by the average inventory for the same period. Accounts Receivable Turnover is around 3 times throughout the five years. Merchandise Turnover is above 16 times. It is a very good condition for the company because they are collecting account receivable from their customers around 3 times compared to their total sales. And also they are selling their inventory more than 16 times compared to the cost of sales.

 

·         Days’ Sales Uncollected and Days’ Sales in Inventory

 Days' sales uncollected are a liquidity ratio that is used to estimate the number of days before receivables will be collected. The days sales of inventory (DSI) is a financial ratio that indicates the average time in days that a company takes to turn its inventory, including goods that are a work in progress, into sales. Both Day’s sales uncollected and Day’s sales in inventory is around 21 times. That implies that the company can collect their trade receivables as well as can sell their inventory within less than one month. It is a good condition in a business.

 

·         Total Assets Turnover

 The asset turnover ratio is an efficiency ratio that measures a company's ability to generate sales from its assets by comparing net sales with average total assets. In other words, this ratio shows how efficiently a company can use its assets to generate sales. All the five years are having a figure less than 1 as the Total Assets Turnover. That implies that the average total assets are higher than the revenue. This is not a much preferred condition for a company. It is better if the company can have a figure more than 1.

 

2.      Solvency:

	2015	2016	2017	2018	2019
Debt Ratio(%)	39.17	60.80	97.03	97.03	50.38
Equity Ratio(%)	60.83	39.20	30.62	2.97	49.62
Times Interest Earned	55.29	5.00	0.63	0.14	0.55

 

 

 

 

·         Debt Ratio and Equity Ratio

Debt Ratio is a financial ratio that indicates the percentage of a company's assets that are provided via debt. It is the ratio of total debt and total assets. The equity ratio is a financial ratio indicating the relative proportion of equity used to finance a company's assets.

Debt Ratio is around 30% in all the years except in 2015. It is not a good condition because if the debt ratio is high it depicts that a high portion of assets have been contributed by creditors. The Equity Ratio is above 60% in all five years. It is also a bad condition because it implies that higher portion of company’s assets have been contributed by the owners. It gives a bad situation because when this ratio is high the company has to pay a higher amount of dividends to the shareholders.

 

3.      Profitability:

 

	2015	2016	2017	2018	2019
Profit Margin	15.44	10.62	-2.49	-9.90	-2.91
Gross Margin	22.18	17.94	10.99	4.49	8.80
Return on Total Assets	85.75	60.03	47.40	58.53	46.32
Return on Common Shareholder's Equity	22.10	13.42	-3.42	-32.17	-3.81

 

 

 

 

 

 

·         Profit Margin and Gross Profit Margin

 The net profit margin is equal to how much net income or profit is generated as a percentage of revenue. Net profit margin is the ratio of net profits to revenues for a company or business segment. Net profit margin is typically expressed as a percentage but can also be represented in decimal form. The net profit margin illustrates how much of each dollar in revenue collected by a company translates into profit.

 Gross profit margin is a metric used to assess a company's financial health and business model by revealing the amount of money left over from sales after deducting the cost of goods sold. The gross profit margin is often expressed as a percentage of sales and may be called the gross margin ratio. Profit Margin shows a downward trend along the five years. It is not a good situation for the company which shows company is not able to earn a profit and it is not able to pay the overhead costs. Gross profit margin shows figures around 22% in 2015 and it getting decrease from year to year which is not a good condition for a company.

·         Return on Total Assets

This ratio is considered to be an indicator of how effectively a company is using its assets to generate earnings. In all five years this ratio takes a figure around 45%. It is a very good condition for the company because the company is able to generate more income out of fewer assets.

·         Return on Common Shareholder Equity

 This ratio indicates the proportion of the net income that a firm generates by each dollar of common equity invested. In 2015 and 2016 it shows a positive value and after that it getting decrease and represent with a negative value which indicates vary bad condition for the company.

 

 

 

 

4. Market ratios

	2015	2016	2017	2018	2019
Price Earnings Ratio	6.35	5.36	14.89	15.07	18.01
Book value per common share	56.22	49.35	42.33	42.46	40.53

 

·         Price Earnings Ratio

The price-earnings ratio, also known as P/E ratio, P/E, or PER, is the ratio of a company's share price to the company's earnings per share. The ratio is used for valuing companies and to find out whether they are overvalued or undervalued.

This table depicts a upward trend along the five years. It is not good condition for the company because it implies that investors not need to spend few in order to get more as the return.

 

·         Book value per common share

This ratio measures the amount that would be distributed to holders of each share of common stock if all assets were sold at their balance sheet carrying amounts and if all creditors were paid off. This value is getting less with the time. In 2015 there was a big value but when concern about 2019, it was decreased from 16%.

 

 

 

 

 

 

 

 

 

 

CONCLUSIONS

 

LAUGFS Holdings is one of the largest diversified business conglomerates and a trusted name in Sri Lanka. Founded in 1995, LAUGFS today has expanded across 20 industries, establishing a strong presence as a leader and pioneer in the power and energy, retail, industrial, services, leisure, logistics and the real estate sectors in Sri Lanka and beyond.

By observing the behavior of Laughs Holdings during past five years we can say these years are not that much good for the company. There is a decreasing trend within that in this analysis.

Horizontal analysis done using dollar change and percentage change. When concern about the horizontal analysis, in Profit and loss account it indicates negative profit values during 5 years which is not that much good for the company. Other than that for Balance sheet, there is an increment in total assets and when concern about total equity in increase and then decrease.

Trend analysis was done to both statements to see whether there is any trend related with past patterns. So those patterns were indicated using graphs.

In ratio analysis, the comparison of line items in the financial statements of a business. Ratio analysis is used to evaluate a number of issues with an entity, such as its liquidity and efficiency of operations, profitability, solvency and market.

So as we all heard now, gas business is earning losses due to stop the import of equipment. So based on above results. If this condition continues that may not much good for the company during this kind of pandemic situation, where all businesses facing a kind of less earnings.