FINANCIAL STATEMENT ANALYSIS OF ALUMEX PLC 2018 – 2022

 

1          Introduction

 

Financial statement analysis is a judgmental process which aims  to estimate current and past financial positions and the results of the operations of an enterprise, with primary objective of determining the best possible estimates and predictions about the future conditions. It essentially involves regrouping and analysis of information provided by financial statements to establish relationships and throw light on the points of strengths and weaknesses of a business enterprise, which can be useful in decision marking involving comparison with the other firms and the firm’s  performance, over the  period. Financial statement analysis can be undertaken by the management of the firms, or by parties outside the firm, owners, trade creditors, lenders, investors, labor unions, analysts, and others. The nature of the analysis will differ depending on the purpose of the analyst.

In this report relationship between various items of the balance sheet and the statement of profit or loss of Alumex PLC has been identified using various techniques such as Horizontal analysis, Vertical analysis, and Ratio analysis. And these techniques are mostly used to analyze to financial statements. Following this report can be obtained a proper idea about the growth and performance about Alumex PLC.

 

 

 

 

 

 

 

 

 

 

 

 

 

2          Background information about the company

 

Alumex PLC has been a fully integrated manufacturer of aluminum profiles in Sri Lanka since 1986. With a comprehensive offering of architectural, residential, and industrial products made available through their national and retail distribution system, they provide their customers with product that always meet international standards. As a clear market leader, Alumex has for the past three decades led the Sri Lankan aluminum industry by example and innovation, a testament to its superior range of unmatchable high quality products. With the expansion in to international markets such as Europe, Asia, USA and Africa, Alumex has become the undisputed leader of aluminum in Sri Lanka. Furthermore, as a member of the highly reputed “World of Hayleys” , the company has also been acknowledge as one of the most diversified Sri Lankan multinational corporations with multifaceted manufacturing operations and capabilities. Hayleys products are marketed in over 80 countries across globe. Alumex is invested in upgrading their manufacturing infrastructure and technology, and as a result is always equipped with most up-to-date extrusion, anodizing, polished anodizing, wood finish and power coating facilities, their in-house capacity in producing aluminum extrusion die using CNC machinery with CAD/CAM & Solid works technology enable us to constantly provide their customers with unique combinations of profiles, and their well-trained design, operations, and customer support teams with over two decades of industry experience are committed to delivering complete satisfaction  their valued customers. 

 

 

 

 

 

 

 

 

 

 

 

3          Overview of Financial Statements Analysis

 

Alumex PLC is one of main aluminum product manufacturing company in Sri Lanka. This report contains five years comparative financial analysis of company performance. The analysis is done using the following techniques.

 

 

4          Evident Matter

 

STATEMENT OF PROFIT OR LOSS YEAR 2017 – 2022
Year	2017 (LKR)	2018 (LKR)	2019 (LKR)	2020 (LKR)	2021 (LKR)	2022 (LKR)
Net Revenue	4,033,968,000	3,866,900,000	4,516,788,000	4,351,891,000	5,562,394,000	9,042,944,000
Cost of Sales	2,953,528,000	3,119,674,000	3,672,354,000	3,480,974,000	4,100,334,000	7,027,596,000
Gross Profit	1,080,440,000	747,226,000	844,434,000	870,917,000	1,462,060,000	2,015,348,000
Other Income /(Expenses) and Gains	205,200,000	213,645,000	127,576,000	24,482,000	225,083,000	51,973,000
Selling and Distribution Expenses	141,928,000	164,253,000	210,139,000	245,005,000	185,072,000	261,289,000
Administrative Expenses	227,413,000	253,950,000	328,165,000	295,981,000	326,741,000	554,063,000
Operating Profit	916,299,000	542,668,000	433,706,000	354,413,000	1,175,330,000	1,251,969,000
Finance Cost	60,769,000	151,632,000	425,414,000	412,137,000	264,901,000	535,723,000
Finance Income	8,958,000	18,184,000	21,235,000	15,117,000	43,449,000	440,172,000
Profit Before Tax	864,488,000	409,220,000	29,527,000	42,607,000	953,878,000	1,156,418,000
Income Tax Expenses	201,319,000	66,939,000	25,421,000	12,590,000	137,266,000	189,670,000
Profit for the Year	663,169,000	342,281,000	54,948,000	55,197,000	816,612,000	966,748,000
Profit Attributable to Shareholders	663,169,000	342,281,000	54,948,000	55,197,000	816,612,000	966,748,000
Diluted and Basic Earnings per Share	2.22	1.14	0.18	0.09	1.36	1.61
Dividend Per Share	1.45	1.05	0.6		0.53	0.6

 

 

 

 

 

 

STATEMENT OF FINANCIAL POSITION YEAR 2017 – 2022
Year	2017 (LKR)	2018 (LKR)	2019 (LKR)	2020 (LKR)	2021 (LKR)	2022 (LKR)
Assets
Non-Current Assets
Property, Plant and Equipment	1,704,715,000	3,089,885,000	3,568,970,000	3,485,837,000	3,540,963,000	4,166,241,000
Intangible Assets	42,121,000	46,426,000	55,124,000	72,009,000	101,490,000	88,868,000
Right-of-Use Assets				45,820,000	198,325,000	272,775,000
Investments in Subsidiaries	30,000,000	30,000,000	30,000,000	30,000,000	30,000,000	30,000,000
Total Non-Current Assets	1,776,836,000	3,166,311,000	3,654,094,000	3,633,666,000	3,870,778,000	4,557,884,000
Current Assets
Inventories	907,919,000	1,443,879,000	1,594,881,000	1,684,732,000	1,670,701,000	3,247,592,000
Trade and Other Receivables	715,534,000	817,983,000	840,724,000	774,052,000	877,895,000	1,347,316,000
Advances and Prepayments	124,827,000	58,090,000	65,573,000	90,198,000	166,702,000	1,240,377,000
Income Tax Receivable		13,965,000	39,123,000	51,234,000
Other Current Financial Assets	1,233,000
Cash and Cash Equivalents	154,774,000	207,038,000	59,961,000	70,728,000	469,230,000	843,214,000
Total Current Assets	1,904,287,000	2,540,955,000	2,600,262,000	2,670,944,000	3,184,528,000	6,678,499,000
Total Assets	3,681,123,000	5,707,266,000	6,254,356,000	6,304,610,000	7,055,306,000	11,236,383,000
Equity and Liabilities
Stated Capital	283,735,000	283,735,000	283,735,000	283,735,000	283,735,000	283,735,000
Reserves	754,806,000	640,268,000	779,892,000	774,607,000	829,945,000	939,771,000
Retained Earnings	758,333,000	788,262,000	669,910,000	617,213,000	1,125,965,000	1,732,361,000
Total Equity	1,796,874,000	1,712,265,000	1,733,537,000	1,675,555,000	2,239,645,000	2,955,867,000
Non-Current Liabilities
Interest Bearing Loans and Borrowings	512,000,000	1,133,750,000	1,198,750,000	1,353,950,000	823,025,000	1,128,989,000
Non-Current Portion of Lease Liability				33,039,000	186,843,000	286,046,000
Retirement Benefit Liability	82,638,000	96,644,000	99,292,000	111,225,000	128,639,000	148,940,000
Deferred Tax Liabilities	102,395,000	216,580,000	247,603,000	241,868,000	241,633,000	245,033,000
Total non-current liabilities	697,033,000	1,446,974,000	1,545,645,000	1,740,082,000	1,380,140,000	1,809,008,000
Current Liabilities
Trade and Other Payables	1,107,504,000	1,101,508,000	1,114,244,000	1,153,744,000	1,785,924,000	2,951,594,000
Current Portion of Long Term Interest Bearing Borrowings		380,000,000	527,500,000	727,900,000	736,650,000	651,392,000
Current Portion of Lease Liability				23,698,000	18,629,000	17,301,000
Short-Term Interest Bearing Borrowings	16,821,000	1,061,367,000	1,311,460,000	972,909,000	855,249,000	2,642,751,000
Other Current Financial Liabilities			14,413,000	791,000
Provisions	7,715,000	5,152,000	7,557,000	9,931,000	13,181,000	17,093,000
Income Tax Liabilities	55,176,000				25,888,000	191,377,000
Total current liabilities	1,187,216,000	2,548,027,000	2,975,174,000	2,888,973,000	3,435,521,000	6,471,508,000
Total liabilities	1,884,249,000	3,995,001,000	4,520,819,000	4,629,055,000	4,815,661,000	8,280,516,000
Total Equity and Liabilities	3,681,123,000	5,707,266,000	6,254,356,000	6,304,610,000	7,055,306,000	11,236,383,000

 

 

 

 

 

 

 

 

 

 

5          Analysis

 

5.1        Horizontal Analysis

 

Horizontal analysis is the comparison of financial information of a company with historical financial information of the same company over a number of reporting periods. It is used to identify the change in values of each year compared to the base year. Rupee change and percentage change are calculated.

 

5.1.1        Horizontal Analysis of Financial Position

 

Rupee Change

Rupee change = Analyze period amount – Base period amount

	2022 (LKR)	2021 (LKR)	2020 (LKR)	2019 (LKR)	2018 (LKR)
Assets
Non-Current Assets
Property, Plant and Equipment	625,278,000	55,126,000	(83,133,000)	479,085,000	1,385,170,000
Intangible Assets	(12,622,000)	29,481,000	16,885,000	8,698,000	4,305,000
Investments in Subsidiaries	0	0	0	0	0
Total Non-Current Assets	687,106,000	237,112,000	(20,428,000)	487,783,000	1,389,475,000
Current Assets
Inventories	1,576,891,000	(14,031,000)	89,851,000	151,002,000	535,960,000
Trade and Other Receivables	469,421,000	103,843,000	(66,672,000)	22,741,000	102,449,000
Advances and Prepayments	1,073,675,000	76,504,000	24,625,000	7,483,000	(66,737,000)
Cash and Cash Equivalents	373,984,000	398,502,000	10,767,000	(147,077,000)	52,264,000
Total Current Assets	3,493,971,000	513,584,000	70,682,000	59,307,000	636,668,000
Total Assets	4,181,077,000	750,696,000	50,254,000	547,090,000	2,026,143,000
Equity and Liabilities
Stated Capital	0	0	0	0	0
Reserves	109,826,000	55,338,000	(5,285,000)	139,624,000	(114,538,000)
Retained Earnings	606,396,000	508,752,000	(52,697,000)	(118,352,000)	29,929,000
Total Equity	716,222,000	564,090,000	(57,982,000)	21,272,000	(84,609,000)
Non-Current Liabilities
Interest Bearing Loans and Borrowings	305,964,000	(530,925,000)	155,200,000	65,000,000	621,750,000
Retirement Benefit Liability	20,301,000	17,414,000	11,933,000	2,648,000	14,006,000
Deferred Tax Liabilities	3,400,000	(235,000)	(5,735,000)	31,023,000	114,185,000
Total non-current liabilities	428,868,000	(359,942,000)	194,437,000	98,671,000	749,941,000
Current Liabilities
Trade and Other Payables	1,165,670,000	632,180,000	39,500,000	12,736,000	(5,996,000)
Short-Term Interest Bearing Borrowings	1,787,502,000	(117,660,000)	(338,551,000)	250,093,000	1,044,546,000
Provisions	3,912,000	3,250,000	2,374,000	2,405,000	(2,563,000)
Total current liabilities	3,035,987,000	546,548,000	(86,201,000)	427,147,000	1,360,811,000
Total liabilities	3,464,855,000	186,606,000	108,236,000	525,818,000	2,110,752,000
Total Equity and Liabilities	4,181,077,000	750,696,000	50,254,000	547,090,000	2,026,143,000

 

 

Percentage Change

Percentage change = (Rupee change / Base period amount) * 100%

	2022	2021	2020	2019	2018
Assets
Non-Current Assets
Property, Plant and Equipment	17.7%	1.6%	-2.3%	15.5%	81.3%
Intangible Assets	-12.4%	40.9%	30.6%	18.7%	10.2%
Investments in Subsidiaries	0.0%	0.0%	0.0%	0.0%	0.0%
Total Non-Current Assets	17.8%	6.5%	-0.6%	15.4%	78.2%
Current Assets
Inventories	94.4%	-0.8%	5.6%	10.5%	59.0%
Trade and Other Receivables	53.5%	13.4%	-7.9%	2.8%	14.3%
Advances and Prepayments	644.1%	84.8%	37.6%	12.9%	-53.5%
Cash and Cash Equivalents	79.7%	563.4%	18.0%	-71.0%	33.8%
Total Current Assets	109.7%	19.2%	2.7%	2.3%	33.4%
Total Assets	59.3%	11.9%	0.8%	9.6%	55.0%
Equity and Liabilities
Stated Capital	0.0%	0.0%	0.0%	0.0%	0.0%
Reserves	13.2%	7.1%	-0.7%	21.8%	-15.2%
Retained Earnings	53.9%	82.4%	-7.9%	-15.0%	3.9%
Total Equity	32.0%	33.7%	-3.3%	1.2%	-4.7%
Non-Current Liabilities
Interest Bearing Loans and Borrowings	37.2%	-39.2%	12.9%	5.7%	121.4%
Retirement Benefit Liability	15.8%	15.7%	12.0%	2.7%	16.9%
Deferred Tax Liabilities	1.4%	-0.1%	-2.3%	14.3%	111.5%
Total non-current liabilities	31.1%	-20.7%	12.6%	6.8%	107.6%
Current Liabilities
Trade and Other Payables	65.3%	54.8%	3.5%	1.2%	-0.5%
Short-Term Interest Bearing Borrowings	209.0%	-12.1%	-25.8%	23.6%	6209.8%
Provisions	29.7%	32.7%	31.4%	46.7%	-33.2%
Total current liabilities	88.4%	18.9%	-2.9%	16.8%	114.6%
Total liabilities	71.9%	4.0%	2.4%	13.2%	112.0%
Total Equity and Liabilities	59.3%	11.9%	0.8%	9.6%	55.0%

 

Total non-current assets value has suddenly dropped in 2019. Then in 2022 it has increased significantly. From 2018 to 2022 it has fluctuated drastically. Total current assets value has decreased from 2018 to 2020 and from 2020 to 2022 it has increased and highest value of total current assets shows in 2022. When considering total assets value, it has decreased from 2018 to 2020 and then to 2022 it has increased. This increment is a good sign of the company’s growth over the years from a financial perspective. Total liabilities suddenly dropped in 2019 and then in 2022, it has increased suddenly. It is not a good sign for the company’s performance. Total equity valves drastically change in all over the years.

 

5.1.2        Horizontal Analysis of the statement of Profit or Loss

Rupee Change

	2022 (LKR)	2021 (LKR)	2020 (LKR)	2019 (LKR)	2018 (LKR)
Net Revenue	4,691,053,000	1,210,503,000	(164,897,000)	649,888,000	(167,068,000)
Cost of Sales	3,546,622,000	619,360,000	(191,380,000)	552,680,000	166,146,000
Gross Profit	1,144,431,000	591,143,000	26,483,000	97,208,000	(333,214,000)
Other Income /(Expenses) and Gains	27,491,000	200,601,000	(103,094,000)	(86,069,000)	8,445,000
Selling and Distribution Expenses	16,284,000	(59,933,000)	34,866,000	45,886,000	22,325,000
Administrative Expenses	258,082,000	30,760,000	(32,184,000)	74,215,000	26,537,000
Operating Profit	897,556,000	820,917,000	(79,293,000)	(108,962,000)	(373,631,000)
Finance Cost	123,586,000	(147,236,000)	(13,277,000)	273,782,000	90,863,000
Finance Income	425,055,000	28,332,000	(6,118,000)	3,051,000	9,226,000
Profit Before Tax	1,113,811,000	911,271,000	13,080,000	(379,693,000)	(455,268,000)
Income Tax Expenses	177,080,000	124,676,000	(12,831,000)	(41,518,000)	(134,380,000)
Profit for the Year	911,551,000	761,415,000	249,000	(287,333,000)	(320,888,000)
Profit Attributable to Shareholders	911,551,000	761,415,000	249,000	(287,333,000)	(320,888,000)

                        

Percentage Change

	2022	2021	2020	2019	2018
Net Revenue	84.3%	27.8%	-3.7%	16.8%	-4.1%
Cost of Sales	86.5%	17.8%	-5.2%	17.7%	5.6%
Gross Profit	78.3%	67.9%	3.1%	13.0%	-30.8%
Other Income /(Expenses) and Gains	12.2%	819.4%	-80.8%	-40.3%	4.1%
Selling and Distribution Expenses	8.8%	-24.5%	16.6%	27.9%	15.7%
Administrative Expenses	79.0%	10.4%	-9.8%	29.2%	11.7%
Operating Profit	76.4%	231.6%	-18.3%	-20.1%	-40.8%
Finance Cost	46.7%	-35.7%	-3.1%	180.6%	149.5%
Finance Income	978.3%	187.4%	-28.8%	16.8%	103.0%
Profit Before Tax	116.8%	2138.8%	44.3%	-92.8%	-52.7%
Income Tax Expenses	129.0%	990.3%	-50.5%	-62.0%	-66.7%
Profit for the Year	111.6%	1379.4%	0.5%	-83.9%	-48.4%
Profit Attributable to Shareholders	111.6%	1379.4%	0.5%	-83.9%	-48.4%

 

Total revenue from 2018 to 2022 has fluctuated drastically. It has rapidly increased in 2022 than 2021. And also cost of sale has rapidly increased in 2022 comparing 2020. Therefore, gross profit has increased less amount in 2022 than 2020. In the year 2020 lowest net revenue is shown. In this company net profit fluctuation from 2018 to 2022 shows the most varied pattern. When considering net profits 2020 and 2021, it shows a rapid increment and then from 2021 to 2022 shows a rapid decrement in the company’s net profit. Finally, the  highest profit value is recorded in 2020.

5.2        Trend Analysis

 

Trend percentage = (Analysis period amount/ Base period amount)* 100%

5.2.1        Trend Analysis of Financial Position

 

	2018	2019	2020	2021	2022
Total Non-Current Assets	100%	115%	115%	122%	144%
Total Current Assets	100%	102%	105%	125%	263%
Total Assets	100%	110%	110%	124%	197%
Total Equity	100%	101%	98%	131%	173%
Total non-current liabilities	100%	107%	120%	95%	125%
Total current liabilities	100%	117%	113%	135%	254%
Total liabilities	100%	113%	116%	121%	207%

 

Total assets and total liabilities have gradually increased over the years but total equity decreased in 2020 and then it has rapidly increased from 2021 to 2022.

Trend Analysis of Profit or Loss statement

	2018	2019	2020	2021	2022
Net Revenue	100%	117%	113%	144%	234%
Cost of Sales	100%	118%	112%	131%	225%
Gross Profit	100%	113%	117%	196%	270%
Other Income /(Expenses) and Gains	100%	60%	11%	105%	24%
Selling and Distribution Expenses	100%	128%	149%	113%	159%
Administrative Expenses	100%	129%	117%	129%	218%
Operating Profit	100%	80%	65%	217%	231%
Finance Cost	100%	281%	272%	175%	353%
Finance Income	100%	117%	83%	239%	2421%
Profit Before Tax	100%	7%	10%	233%	283%
Income Tax Expenses	100%	38%	19%	205%	283%
Profit for the Year	100%	16%	16%	239%	282%

 

 

According to this graph suddenly net profit has declined from 2018 to 2019 and no change shows 2019 and 2020 and then suddenly increment of net profit shows from 2020 to 2021. This increment of net profit is a good sign for company performance.

5.3        Vertical Analysis

Another technique used to analyze balance sheet and income statement information is to convert the statement to a common-size vertical analysis format. This method requires only one period of financial data. Common size means that total assets have a value of 100 percent and the numerical value of each item being converted represents a fractional part of total assets in the balance sheet and net revenues have a value of 100 percent and the numerical value of each item being converted represents fractional part of net revenue in the income statement.

 

 

 

 

5.3.1        Vertical Analysis of Financial Position

Common – size

	2022	2021	2020	2019	2018
Assets
Non-Current Assets
Property, Plant and Equipment	37.1%	50.2%	55.3%	57.1%	54.1%
Intangible Assets	0.8%	1.4%	1.1%	0.9%	0.8%
Investments in Subsidiaries	0.3%	0.4%	0.5%	0.5%	0.5%
Total Non-Current Assets	40.6%	54.9%	57.6%	58.4%	55.5%
Current Assets
Inventories	28.9%	23.7%	26.7%	25.5%	25.3%
Trade and Other Receivables	12.0%	12.4%	12.3%	13.4%	14.3%
Advances and Pre payments	11.0%	2.4%	1.4%	1.0%	1.0%
Cash and Cash Equivalents	7.5%	6.7%	1.1%	1.0%	3.6%
Total Current Assets	59.4%	45.1%	42.4%	41.6%	44.5%
Total Assets	100.0%	100.0%	100.0%	100.0%	100.0%
Equity and Liabilities
Stated Capital	2.5%	4.0%	4.5%	4.5%	5.0%
Reserves	8.4%	11.8%	12.3%	12.5%	11.2%
Retained Earnings	15.4%	16.0%	9.8%	10.7%	13.8%
Total Equity	26.3%	31.7%	26.6%	27.7%	30.0%
Non-Current Liabilities
Interest Bearing Loans and Borrowings	10.0%	11.7%	21.5%	19.2%	19.9%
Retirement Benefit Liability	1.3%	1.8%	1.8%	1.6%	1.7%
Deferred Tax Liabilities	2.2%	3.4%	3.8%	4.0%	3.8%
Total noncurrent liabilities	16.1%	19.6%	27.6%	24.7%	25.4%
Current Liabilities
Trade and Other Payables	26.3%	25.3%	18.3%	17.8%	19.3%
Short-Term Interest Bearing Borrowings	23.5%	12.1%	15.4%	21.0%	18.6%
Provisions	0.2%	0.2%	0.2%	0.1%	0.1%
Total current liabilities	57.6%	48.7%	45.8%	47.6%	44.6%
Total liabilities	73.7%	68.3%	73.4%	72.3%	70.0%
Total Equity and Liabilities	100.0%	100.0%	100.0%	100.0%	100.0%

 

Total non-current assets are not more than 60% of total assets throughout the five years. Total current assets has increased from 2019 to 2022. It is good sign to company growth. Total liabilities percentage is more than 68% and total equity percentage less than 32% throughout the five years. This mean liabilities more than owners’ equity. This is not good sign to company performances. 

5.3.2        Vertical Analysis of Profit or Loss statement

 

Common – size

	2022	2021	2020	2019	2018
Net Revenue	100.0%	100.0%	100.0%	100.0%	100.0%
Cost of Sales	77.7%	73.7%	80.0%	81.3%	80.7%
Gross Profit	22.3%	26.3%	20.0%	18.7%	19.3%
Other Income /(Expenses) and Gains	0.6%	4.0%	0.6%	2.8%	5.5%
Selling and Distribution Expenses	2.9%	3.3%	5.6%	4.7%	4.2%
Administrative Expenses	6.1%	5.9%	6.8%	7.3%	6.6%
Operating Profit	13.8%	21.1%	8.1%	9.6%	14.0%
Finance Cost	5.9%	4.8%	9.5%	9.4%	3.9%
Finance Income	4.9%	0.8%	0.3%	0.5%	0.5%
Profit Before Tax	12.8%	17.1%	1.0%	0.7%	10.6%
Income Tax Expenses	2.1%	2.5%	0.3%	0.6%	1.7%
Profit for the Year	10.7%	14.7%	1.3%	1.2%	8.9%
Profit Attributable to Shareholders	10.7%	14.7%	1.3%	1.2%	8.9%

 

5.4        Ratio Analysis

 

Two individual items on the statements can be compared with one another and the relationship is expressed as ratios. Ratios are computed for items on the same financial statement or different statements. These ratios are compared with those of prior years and with those of other companies to make them more meaningful. It determines to address four main components and gives a clear idea of the company’s performance in each component.

Liquidity and efficiency – Ability to meet short-term obligations and to efficiently generate revenues.

Solvency – Ability to generate future revenues and meet long terms obligations.

Profitability – Ability to provide financial rewards sufficient to attract and retain financing.

Market – Ability to generate positive market expectations.

5.4.1        Liquidity and Efficiency

 

	2022	2021	2020	2019	2018
Working capital  ( LKR)	206,991,000	(250,993,000)	(218,029,000)	(374,912,000)	(7,072,000)
Current ratio	1.03:1	0.93:1	0.92:1	0.87:1	1.00:1
Acid test ratio	0.53:1	0.44:1	0.34:1	0.34:1	0.43:1
Account Receivable Turnover ( times)	8.13	1.90	5.39	5.45	5.04
Merchandise Turnover                   ( times)	2.86	2.44	2.12	2.42	2.65
Days' sales uncollected                ( days)	54.38	57.61	64.92	67.94	77.21
Days ‘sales in inventory                 ( days)	168.67	148.72	176.65	158.52	168.93
Total Assets Turnover               ( times)	0.99	0.83	0.69	0.76	0.82

 

Working Capital

This represents current assets financed from long-term capital resources that do not require near-term repayment. If the company lacks liquidity, it doesn’t have adequate cash to pay for day-to-day business activities. This is the difference between current assets and current liabilities. In Alumex PLC from 2018 to 2022 working capital valve is negative which means they don’t have adequate cash to pay day to day business activities. But in 2022 their working capital is a positive value which means they have more current assets than their current liabilities. That is more improvement of this company.

Current Ratio

The current ratio considers how well a business can cover the current liabilities with its current assets. This company’s only 2018 and 2022 show more than one current ratio valves and other three years this ratio is less than one and throughout these five years, the current ratio is low which depicts that the company’s liquidity position is not good.

Acid Test Ratio

The acid test ratio excludes inventory as it takes longer to run into cash and therefore places emphasis on the business’s quick assets and whether these are sufficient to cover the current liabilities. Alumex PLC acid test ratios from 2018 to 2022 are less than zero. Therefore, it is not good for the company. But show some increment of this ratio from 2020 to 2022.

Account Receivable Turnover

This ratio measures how many times a company converts its receivable into cash each year. The bigger the value, the better to company’s efficiency. This valve of Alumex PLC has dropped in 2021 and this value suddenly increased in 2022. This indicates healthy performance.

Merchandise Turnover     

This ratio measures the number of times merchandise is sold and replaced during the year. The higher the valve, the better the company’s ability to sell goods. During these five years company has maintained this value between 2 to 3 ranges.  From 2018 to 2020 this valve has dropped and then to 2022 it has increased. This increment is good for company performance.

Days' sales uncollected   

This measures days between the day of sales and the day the receivable collected. Lesser the no of days, the better   the liquidity of the company. This value has slightly decreased from 2018 to 2022. It is better for the company’s performance. This value is more than 100, which is not good. (Less than 30 days is optimal) This company has kept their days’ sales uncollected under the 100 days. It is good for the company.         

Days ‘sales in inventory

This measures the average time in the days that a company takes to turn its inventory, including goods that are work in progress, into sales. Also lower the value, the better. In this, all these calculated valves are more than 140 days. It is not good for the company.

Total Assets Turnover

This ratio measures the efficiency of assets in producing sales. The value should be greater than 1 to indicate a higher efficiency rate. All five years’ values are less than one, which shows the average total assets are more than the total revenue.  This means the company is less efficient. But from 2019 to 2022 this value has slightly increased. It is better to company increase its efficiency.    

 

5.4.2        Solvency

 

	2022	2021	2020	2019	2018
Debt Ratio	73.69%	68.26%	73.42%	72.28%	70.00%
Equity Ratio	26.31%	31.74%	26.58%	27.72%	30.00%
Times interest Earned	3.16	4.60	1.10	1.07	3.70

 

Debt Ratio

This ratio measures what portion of the company’s assets are contributed by creditors. This debt ratio has exceeded more than 68% in any year, which mean its assets consist of more contribution from creditors. That is not good.

Equity Ratio

This ratio measures what portion of the company’s assets are contributed by owners. Less than 32% of all assets are contributed through the owners ’equity. It is a not good sign.

Times interest Earned

 

This ratio means how strong the company is in paying the interest. The higher the value, the higher the ability of the company. In 2021 shows highest valve is 4.6 times.

5.4.3        Profitability

 

,	2022	2021	2020	2019	2018
Profit Margin	23.97%	14.68%	1.27%	1.22%	8.85%
Gross Margin	22.29%	26.28%	20.01%	18.70%	19.32%
Return on Total Assets	10.57%	12.22%	0.88%	0.92%	7.29%
Return on Common Shareholder’s Equity	37.21%	41.71%	3.24%	3.19%	7.29%
Basic Earnings per Share ( LKR per Share)	1.61	1.36	0.18	0.18	1.14
Book Value per Common Share ( LKR per Share)	4.94	3.74	5.60	5.79	5.72

 

Profit Margin

This ratio measures a company’s ability to earn a net income from sales. The higher the value, the company is more profitable. From 2018 to 2019 profit margin decreased and from 2019 to 2020 it slightly increased. Then from 2020 to 2022 it, increased which is a good indication of the company’s performance.

Gross Margin

This ratio measures the amount remaining from 1 rupee in the sales left to cover operating expenses and a profit after considering the sales cost. The value should be high for the company to survive. This margin is less than 30% in the company and the highest value shows 2021 as 26.28%.

Return on Total Assets

This ratio indicates how effectively a company uses its assets to generate earnings.  This is the best overall measure of a company’s profitability. In 2021 this value has significantly increased comparing 2019 and 2020. But in 2020 it has decreased. But this value is more than in 2019 and 2020. Therefore to earn more profit the company should be increased this value.

Return on Common Shareholder’s Equity

This measure indicates how well the company employed owners’ investments to earn income. This also fluctuated from 2018 to 2022. In 2021 this value has significantly increased comparing 2019 and 2020. This is a good sign for company profitability. But in 2022 this value has decreased by some amount. This sign is not good for company performance.

Basic Earnings per Share

This measure indicates the company’s profitability by showing how much money a business makes for each share of its stock. This is an essential factor to consider when buying or selling shares. If this value is high, it is favorable to buy shares and if it is low, it unfavorable to buy shares. This value fluctuated over the year. All values are less than two. But when considering from 2019 to 2022 this value has increased slightly. It is a good sign for company profitability.

Book Value per Common Share

This ratio measures liquidation at reported amounts or the amount a shareholder gets in the situation of the company bankruptcy. These values have fluctuated throughout the years. The highest value was recorded in 2019 and the lowest value was recorded in 2021. And also in 2022, it has slightly increased. This is a good sign for the company.

 

5.4.4        Market

 

	2022	2021	2020	2019	2018
Price - Earnings ratio           ( times)	6.38	58.83	39.04	7.33	10.46
Dividend Yield	8.22%	4.91%		6.00%	6.21%

 

Price - Earnings Ratio

Investors mostly consider this value as a general guideline in gauging stock values. The higher the price-earnings ratio represents the more opportunity a company has for growth. 2021 shows the highest PE ratio and in 2022 it has decreased suddenly to the lowest value. It indicates the opportunity the company has for growth is reduced. It is bad for company growth.

Dividend Yield

This ratio indicates the return, in terms of cash dividends, on the market price of the stock. The values have fluctuated throughout the years the highest value is recorded in 2022 and the lowest value is recorded in 2021.

 

 

 

 

 

6          Conclusion

 

This report consists of throughout analysis of Alumex PLC. Data from five years were taken and horizontal, vertical, and ratio analyses were performed. When considering horizontal analysis company has shown good revenue growth throughout the years. And also total assets increased last year *5 times more than the previous year. It is a good sign for company growth.

According to trend analysis, net revenue has increased throughout the years without 2020. And also gross profit has increased significantly. It is good for company growth. But gain more profit the company should be reduced its cost of sales because it has increased in the last three years.

According to vertical analysis total current asset has increased throughout the years without 2019. But total liabilities are more than the owner’s equity and total liabilities have increased gradually. It is not a good sign for the company’s performance.

According to the ratio test performed, the company’s liquidity position is not good. When considering the overall test ratio performed, company performance is inefficient. And it can be a high production cost to keep good quality of final products. Therefore management should focus to increase their production efficacy. And also solvency ratios are not in a good position. Profit margin fluctuation is very low. It means the company profit increment is very low. It is not good for the company. And also, EPS is very low for this company. Therefore, investing money is very risky. Therefore, Alumex PLC should increase financial performance by taking proper reasonable decisions to enhance their company performance.