Financial Statement Analysis of Hayleys PLC

 

Company profile

 

Hayleys PLC

Hayleys PLC is the largest listed business and most diversified conglomerate in Sri Lanka. It became the first listed firm in Sri Lanka to generate revenue exceeding $1 billion USD. Hayleys PLC is one of the largest gloves manufacturers in Sri Lanka, also a world leader in coconut shell based activated carbon solution with 16% global market share. Hayleys produce 3 million metres of fabric every month.

 

Divesification of Hayleys PLC

·         Eco solution

·         Hand protection

·         Purification

·         Textile manufacturing

·         Construction material

·         Agriculture

·         Plantation

·         Tea exports

·         Consumer and retail

·         Leisure

·         Transportation and logistic

·         Engineering solution

·         Industrial solution

·         Power and energy

·         BPO

·         Investment and services

Hayleys comprises over 130 business units and subsidiaries, nine of which are publicly listed in the Colombo Stock Exchange. In addition to Sri Lanka, Hayleys today has manufacturing facilities in Indonesia and Thailand and marketing operations in Australia, India, Bangladesh, Italy, Japan, Netherlands, UK and USA and its produce are sold in 80 countries.

 

 

 

 

 

 

 

Here, Analyzing the financial statement of the Hayleys PLC.

There are 4 types of financial statements mainly.

1.      Balance sheet

2.      Income statement

3.      Statement of cash flows

4.      Statement of shareholder’s equity

 

Financial statement analysis helps users make better decisions.

 

Building blocks of analysis

 

 

 

 

 

 

 

 

 

Analysis overview

Below mentioned tools are used for the analyzing financial statement.

      Horizontal Analysis

It is comparing company’s financial condition and performance across the time.

Horizontal analysis can be manipulated to make the current period look better if specific historical periods of poor performance are chosen as a comparison.

      Trend Analysis

Trend analysis is also called horizontal analysis. It assesses a number of financial data point throughout the time. Determining the uptrend and downtrend of financial statement data is its main purpose.

      Vertical Analysis

It is comparing a company’s financial condition and performance to a base amount.

In income statement, revenue is used as base amount and in balance sheet total assets is used as a base amount.

      Ratio Analysis

Ratio analysis is a quantitative method that examines financial accounts like income statement and balance sheet to provide insight into a company’s liquidity, profitability and operational efficiency. A key component of fundamental equity analysis is ratio analysis.

 

Liquidity and efficiency

·         Current Ratio

·         Acid Test Ratio

·         Accounts Receivable Turnover

·         Merchandise Turnover

·         Days' Sales Uncollected

·         Days' Sales in inventory

·         Total Assets Turnover

 

Solvency

·         Debt Ratio

·         Equity Ratio

·         Times Interest Earned

 

Profitability

·         Profit Margin

·         Gross Margin

·         Return on Total Assets

·         Return on Common Shareholders’ Equity

·         Book value per Common share

·         Basic Earnings per share

 

Market

·         Price-Earnings Ratio

·         Dividend Yield

 

 

 

 

Statement of profit or loss

For the year ended 31st March	2023 Rs. ‘ 000	2022 Rs. ‘ 000	2021 Rs. ‘ 000
Revenue	608,270	497,642	422,634
Cost of sales	(467,357)	(379,217)	(368,700)
Direct interest cost	-	-	-
Gross profit	140,913	118,425	53,934
Group dividend	5,897,496	5,145,509	3,618,236
Other income	-	13,111	153,209
Distribution expenses	-	-	-
Administrative expenses	721,291	257,512	132,199
Other expenses	(306)	(6,089)	-
Results from operating activities	6,759,394	5,528,468	3,957,578
Finance income	609,056	188,410	32,755
Finance cost	(5,276,184)	(2,219,372)	(2,587,774)
Net finance cost	(4,667,128)	(2,030,962)	(2,555,019)
Change in fair value of investment properties	5,900	9,250	3,700
Share of profit of equity accounted investees (net of tax)	-	-	-
Value added tax on financial services	-	-	-
Profit before tax	2,098,166	3,506,756	1,406,259
Tax expense	(197,146)	139,979	(207,625)
Profit for the year	1,901,020	3,646,735	1,198,634
Profit for the period attributable to:   Owners of the parent	1,901,020	3,646,735	1,198,634
Non-controlling interest	-	-	-
Profit for the year	1,901,020	3,646,735	1,198,634
Earnings per share   Basic - (Rs.)	2.53	4.86	1.60
Diluted - (Rs.)	2.53	4.86	1.60
Dividend per share (Rs.)	5.35	4.00	1.30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statement of Comprehensive Income

 

For the year ended 31st March	2023 Rs. ‘ 000	2022 Rs. ‘ 000	2021 Rs. ‘ 000
Profit for the year	1,901,020	3,646,735	1,198,634
Other comprehensive income
Items that will not be reclassified subsequently to the Statement of Profit or Loss
Revaluation of land
Actuarial loss on employee benefit obligations	(47,227)	(140,653)	(12,818)
Net change on equity instruments designated at fair value through other comprehensive income
Tax on other comprehensive income	2,125	2,730	(1,571)
Items that will be reclassified subsequently to the Statement of Profit or Loss
Net exchange differences on translation of foreign operations
Net gain/(loss) on cash flow hedges	-	-	-
Share of other comprehensive income of equity accounted investees
Total other comprehensive income for the year, net of tax	(45,102)	(137,923)	(14,389)
Total comprehensive income for the year, net of tax	1,855,918	3,508,812	1,184,245
Total comprehensive income for the year attributable to: Owners of the parent	1,855,918	3,508,812	1,184,245
Non- controlling interest	-	-
	1,855,918	3,508,812	1,184,245

 

 

 

Statement of Financial Position

	2023 Rs. ‘ 000	2022 Rs. ‘ 000	2021 Rs. ‘ 000
Assets Non-current assets Property, plant & equipment	202,883	100,095	137,225
Right-of-use assets	127,664	191,497	255,329
Investment properties	94,750	88,850	79,600
Biological assets	-	-	-
Intangible assets	65,245	74,310	58,698
Investments in subsidiaries	39,630,538	38,903,712	39,070,361
Investments in equity accounted investees	1,504,863	1,504,863	1,504,863
Other non-current financial assets	49,563	57,125	64,687
Non- current trade and other receivables	-	-	-
Other non-current assets	-	-	-
Deferred tax assets	68,643	14,771	24,525
Amounts due from subsidiaries	-	610,000	610,000
Total non-current assets	41,744,149	41,545,223	41,805,288
Current assets   Inventories	36,535	7,493	1,739
Amounts due from subsidiaries	4,264,131	3,897,840	2,509,908
Amounts due from equity accounted investees	986	1,190	90,985
Trade and other receivables	36,558	32,907	39,391
Other current assets	56,203	31,555	19,716
Income tax recoverable	-	68,645	-
Other current financial assets	14,891	7,706	8,002
Short term deposits	1,489,160	254,515	241,719
Cash in hand and at bank	1,144,208	697,773	85,613
Total current assets	7,042,672	4,999,624	2,997,073
Total assets	48,786,821	46,544,847	44,802,361
Equity and liabilities   Stated capital	1,575,000	1,575,000	1,575,000
Capital reserves	13,226	13,226	13,226
Other components of equity	-	-	-
Revenue reserves	12,871,201	15,027,783	14,518,971
Total equity attributable to equity holders of the company	14,459,427	16,616,009	16,107,197
Non-controlling interest	-	-	-
Total equity	14,459,427	16,616,009	16,107,197
Non-current liabilities   Interest-bearing borrowings	13,185,518	18,265,278	19,205,466
Grants	-	-	-
Deferred tax liabilities	-	-	-
Security deposits	-	-	-
Other non-current liabilities	-	-	-
Other non-current financial liabilities	-	-	-
Employee benefit obligations	1,560,016	1,298,429	1,055,971
Total non-current liabilities	14,745,534	19,563,707	20,261,437
Current liabilities   Trade and other payables	4,843,225	1,268,500	1,147,119
Other current liabilities	67,602	29,704	17,185
Deferred revenue	-	-	-
Other current financial liabilities	-	-	-
Amounts due to subsidiaries	305,479	672,807	224,881
Amounts due to equity accounted investees	385	322	3,152
Income tax payable	118,116	-	84,485
Current portion of long term interest-bearing borrowings	9,080,337	5,361,853	4,945,176
Short-term interest-bearing borrowings	5,166,716	3,031,945	2,011,729
Total current liabilities	19,581,860	10,365,131	8,433,727
Total liabilities	34,327,394	29,928,838	28,695,164
Total equity and liabilities	48,786,821	46,544,847	44,802,361

 

 

 

Analyzing financial statements

 

 

Horizontal Analysis

 

 

 

 

 

 

Horizontal analysis of statement of Financial Position :

For the year ended 31st March	Dollar change		Percent Change (%)
	2023	2022	2023	2022
Assets non current assets
Property, plant & equipment	102,788	-37,130	102.69	-27.05
Right-of-use assets	-63,833	-63,832	-33.33	-24.99
Investment properties	5,900	9,250	6.64	11.62
Biological assets	-	-	-	-
Intangible assets	-9,065	15,612	-12.19	26.59
Investments in subsidiaries	726,826	-166,649	1.86	-0.42
Investments in equity accounted investees	0	0	0	0
Other non-current financial assets	-7,562	-7,562	-13.23	-11.69
Non- current trade and other receivables	-	-	-	-
Other non-current assets	-	-	-	-
Deferred tax assets	53,872	-9,754	364.71	-39.77
Amounts due from subsidiaries	-	0	0	0
Total non-current assets	198,926	-260,065	0.47	-0.62
Current assets
Inventories	29,042	5,754	387.58	330.87
Amounts due from subsidiaries	366,291	1,387,932	9.39	55.29
Amounts due from equity accounted investees	-204	-89,795	-17.14	-98.69
Trade and other receivables	3,651	-6,484	11.09	-16.46
Other current assets	24,648	11,839	78.11	60.04
Income tax recoverable	-	-	0	-
Other current financial assets	7,185	-296	93.23	-3.69
Short term deposits	1,234,645	12,796	485.09	5.29
Cash in hand and at bank	446,435	612,160	63.97	715.03
Total current assets	2,043,048	2,002,551	40.86	66.81
Total assets	2,241,974	1,742,486	4.81	3.88
Equity and liabilities
Stated capital	-	-	0	0
Capital reserves	-	-	0	0
Other components of equity
Revenue reserves	-2,156,582	508,812	-14.35	3.50
Total equity attributable to equity holders of the company	-2,156,582	508,812	-12.97	3.15
Non-controlling interest
Total equity	-2,156,582	508,812	-12.97	3.15
Non-current liabilities
Interest-bearing borrowings	-5,079,760	-940,188	-27.81	-4.89
Grants	-	-	-	-
Deferred tax liabilities	-	-	-	-
Security deposits	-	-	-	-
Other non-current liabilities	-	-	-	-
Other non-current financial liabilities	-	-	-	-
Employee benefit obligations	261,587	242,458	20.14	22.96
Total non-current liabilities	-4,818,173	-697,730	-24.62	-3.44
Current liabilities
Trade and other payables	3,574,725	121,381	281.80	10.58
Other current liabilities	37,898	12,519	127.58	72.84
Deferred revenue	-	-	-	-
Other current financial liabilities	-	-	-	-
Amounts due to subsidiaries	-367,328	447,926	-54.59	199.18
Amounts due to equity accounted investees	63	-2,830	19.56	-89.78
Income tax payable	-	-	-	0
Current portion of long term interest-bearing borrowings	3,718,484	416,677	69.35	8.42
Short-term interest-bearing borrowings	2,134,771	1,020,216	70.40	50.71
Total current liabilities	9,216,729	1,931,404	88.92	22.90
Total liabilities	4,398,556	1,233,674	14.69	4.29
Total equity and liabilities	2,241,974	1,742,486	4.81	3.88

 

According to the above calculation,

Total assets growth rate in 2023 is higher than 2022. It is a healthy picture of the hayleys from financial.

Total equity has decreased in 2023 compare to 2022, it is not a good indication of the company stability.

Total liabilities have increased in 2023 compare to 2022. The increase of the total liabilities includes of mainly due to increase bearing borrowing of the company.

 

 

 

Horizontal analysis of income statement :

For the year ended 31st March	Dollar change		Percent change (%)
	2023	2022	2023	2022
Revenue	110,628	75,008	22.23	17.74
Cost of sales	-88,140	-10,517	23.24	2.85
Gross profit	22,488	64,491	18.98	119.57
Other income		-140,098		-91.44
Distribution expenses
Administrative expenses	463,779	125,313	180.1	94.79
Other expenses	5,783		-94.97
Results from operating activities	1,230,926	1,570,890	22.26	39.69
		0
Finance income	420,646	155,655	223.26	475.20
Finance cost	-3,056,812	368,402	137.73	-14.23
Profit before tax	-1,408,590	2,100,497	-40.16	149.36
	0	0
Tax expense	-337,125	347,604	-240.84	-167.41
Profit for the year	-1,745,715	2,448,101	-47.87	204.24

 

Gross profit has decreased in 2023. And profit for the year also decreased in 2023 compare to 2022

 

 

 

Trend Analysis

 

 

 

 

 

For the year ended 31st March	2023 Rs. ‘ 000	2022 Rs. ‘ 000	2021 Rs. ‘ 000	2020 Rs. ‘ 000	2019 Rs. ‘ 000
Revenue	608,270	497,642	422,634	400,102	388,745
Cost of sales	(467,357)	(379,217)	(368,700)	(173,195)	(213,963)
Gross profit	140,913	118,425	53,934	226,907	174,782

 

For the year ended 31st March	2023	2022	2021	2020	2019
Revenues	156.47%	128.01%	108.71%	102.92%	100%
Cost of sales	218.42%	177.23%	172.31%	80.94%	100%
Gross profit	80.62%	67.75%	30.85%	129.82%	100%

                                                                                                                       

           

 

 

 

 

Vertical Analysis

           

 

 

 

Vertical analysis for Income statement -

	Common size percent
For the year ended 31st March	2023 (%)	2022 (%)
Revenue	100	100
Cost of sales	76.83	76.20
Gross profit	23.16	23.79
Other income		2.63
Distribution expenses
Administrative expenses	118.58	51.74
Other expenses	0.05	1.22
Results from operating activities	1111.24	1110.93
Finance income	100.12	37.86
Finance cost	867.40	445.97
Net finance cost	767.27	408.11
Change in fair value of investment properties	0.96	1.85
Value added tax on financial services
Profit before tax	344.93	704.67
Tax expense	32.41	28.12
Profit for the year	312.52	732.80

 

Vertical analysis for Financial position -

	2023 (%)	2022 (%)
Assets
non current assets
Property, plant & equipment	0.41	0.21
Right-of-use assets	0.26	0.41
Investment properties	0.19	0.19
Biological assets
Intangible assets	0.13	0.15
Investments in subsidiaries	81.23	83.58
Investments in equity accounted investees	3.08	3.23
Other non-current financial assets	0.10	0.12
Non- current trade and other receivables
Other non-current assets
Deferred tax assets	0.14	0.03
Amounts due from subsidiaries		1.31
Total non-current assets	85.56	89.25
Current assets
Inventories	0.07	0.01
Amounts due from subsidiaries	8.74	8.37
Amounts due from equity accounted investees	0.002	0.0025
Trade and other receivables	0.074934	0.0707
Other current assets	0.11	0.06
Income tax recoverable		0.14
Other current financial assets	0.03	0.016
Short term deposits	3.05	0.54
Cash in hand and at bank	2.34	1.49
Total current assets	14.43	10.74
Total assets	100	100
Equity and liabilities
Stated capital	3.22	3.38
Capital reserves	0.02	0.028
Other components of equity
Revenue reserves	26.38	32.28
Total equity attributable to equity holders of the company	29.63	35.69
Non-controlling interest
Total equity	29.63	35.69
Non-current liabilities
Interest-bearing borrowings	27.02	39.24
Grants
Deferred tax liabilities
Security deposits
Other non-current liabilities
Other non-current financial liabilities
Employee benefit obligations	3.19	2.78
Total non-current liabilities	30.22	42.03
Current liabilities
Trade and other payables	9.92	2.72
Other current liabilities	0.13	0.06
Deferred revenue
Other current financial liabilities
Amounts due to subsidiaries	0.62	1.44
Amounts due to equity accounted investees	0.000789	0.000692
Income tax payable	0.24
Current portion of long term interest-bearing borrowings	18.61	11.51
Short-term interest-bearing borrowings	10.59	6.51
Total current liabilities	40.13	22.26
Total liabilities	70.36	64.30
Total equity and liabilities	100	100

 

 

 

 

Ratio analysis

 

 

Liquidity and Efficiency

Liquidity ratio indicates the company ability to settle short term liabilities and debt planning and to make revenues. This ratio important to the parties like stakeholders / lenders. Here, having high ratio means company has healthy finance. 

 

 

·         Working capital

	Current Assets	Current Liabilities	Working capital
2023	7,042,672	19,581,860	-12,539,188
2022	4,999,624	10,365,131	-5,365,507

 

They have negative working capital for both two years. This is not good for the company. It usually means that the company has made a sizable purchase of good and services from its vendors, which may have resulted in a sizable cash outflow or a significant increase in accounts payable.

 

 

 

·        Current ratio = ( Current Assets / Current Liabilities )

 

	Current Assets	Current Liabilities	Current ratio
2023	7,042,672	19,581,860	0.35965286	0.35:1
2022	4,999,624	10,365,131	0.4823503	0.48:1

 

Current ratio determines the ability to settle short term liabilities by current assets. Higher the ratio is means company’s can to settle short term liabilities and ongoing good financial status. In hayleys has less than 1 current ratio value for both years. But it still in positive figure. It might not be able to easily pay down its short term obligations.  

 

 

 

·         Acid – Test ratio = ( Quick Assets / Current Liabilities )

 

	Current Assets	Inventory	pre payment	Quick Assets	Current Liabilities	Acid – Test ratio
2023	7,042,672	36,535	67,938	6,938,199	19,581,860	0.3543177	0.35:1
2022	4,999,624	7,493	64,115	4,928,016	10,365,131	0.4754417	0.47:1

 

This ratio measure company’s ability to settle short term liabilities except inventories and pre payment. Inventories are difficult to quickly convert into cash. This provide the better understanding of organization liquidation. In 2023 is less than 2022 acid test ratio. This ratio is higher then it is good.

In both two years have less than 1 acid test ratio value. They would not be able to settle short term liabilities by quick assets in both 2023 and 2022 years.

 

 

 

·         Account Receivable Turnover = ( Sales on Account / Average Accounts Receivable )

 

	Sales on Account	Average Accounts Receivable	Account Receivable Turnover
2023	608,270	34732.5	17.51 times
2022	497,642	36149	13.76 times

 

This ratio measures how many times a company converts its receivable into cash each year. This value in high is not a good position to company. Then 2023 is not good compare to 2022.

 

 

·         Merchandise Turnover = (Cost of Sales / Average Inventory )

 

	Cost of Sales	Average Inventory	Merchandise Turnover
2023	467,357	22014	21.22 times
2022	379,217	4616	82.15 times

 

This ratio measures the number of times merchandise is sold and replaced during year. When low value of this means the poor sales and poor performance of the organization. In 2023 is poor sales and poor performance compare to 2020.

 

 

·         Days’ Sales Uncollected = (Accounts Receivable / Net Sales ) * 365

 

	Accounts Receivable	Net Sales	Days’ Sales Uncollected
2023	36,558	608,270	21.93 days
2022	32,907	497,642	24.13 days

 

This ratio measures the liquidity of receivable. Having less no of days value is specified healthy collection. Therefore in 2023 is somewhat bad compare to 2022.

 

·         Days’ Sales in Inventory = (Ending Inventory / Cost of Sales ) * 365

 

	Ending Inventory	Cost of Sales	Days’ Sales in Inventory
2023	36535	467357	28.53 days
2022	7493	379217	7.21 days

 

This ratio measures the liquidity of inventory. This ratio should be in lower rate,  but in 2023 shows higher rate than 2022, then company should take immediate marketing strategies and innovative implication to reduce this situation

 

·         Total Assets Turnover = Revenues / Average Total Assets

	Revenues	Average Total Assets	Total Assets Turnover
2023	608,270	47665834	0.013times
2022	497,642	45673604	0.011times

 

This ratio measures the efficiency of assets in producing sale.

 

Solvency

The solvency ratio is a key metric used to measure an enterprise’s ability to meet its long term debt obligation. This ratio reflects the respective creditors and shareholders against the assets. Debt equity ratio measures the relationship between borrowing and total assets / and equity, and to measure the financial solvency of the company. And also capability to generate future revenues and meet term requirements.  

 

 

• Debt Ratio = (Total Liabilities / Total Assets ) * 100

	Total Liabilities	Total Assets	Debt ratio
2023	34,327,394	48,786,821	70.36%
2022	29,928,838	46,544,847	64.30%

 

This ratio measures what portion of a company’s assets are contributed by creditors. In both 2023 and 2022 year have high value then it is looking bad.

 

 

 

·         Equity Ratio = (Total Shareholders’ Equity / Total Assets ) * 100

	Total Shareholders’ Equity	Total Assets	Equity Ratio
2023	14,459,427	48,786,821	29.64%
2022	16,616,009	46,544,847	35.69%

 

This ratio measures what portion of a company’s assets are contributed by owners. A low equity ratio means that the company primarily used debt to acquire assets, which is widely viewed as an indication of greater financial risk. With high value indicates that the company’s effectively funded its assets requirements with a minimal amount of debt.

 

 

 

 

·         Time Interest Earned = (Net Income before Interest Expenses and Income Taxes / Interest Expense)

 

 

	Profit before tax	Finance cost/Interest cost	Time Interest Earned
2023	2,098,166	5,276,184	1.397667
2022	3,506,756	2,219,372	2.580067

 

This is the most common measure of the ability of a firm’s operations to provide protection to the long term creditors.

 

 

Profitability

 

Here calculation is to determine profitability of the company.

·         Profit Margin = (Net Income / Net Sales ) * 100

	Net Income	Net Sales	Profit Margin
2023	1,901,020	608,270	312.53%
2022	3,646,735	497,642	732.80%

 

This ratio describes a company’s ability to earn a net income from sales.  High profit ratio is high profitability of the company. Because of getting extra net incomes then this ratio is high.

 

 

·         Gross Margin = (Gross Profit / Net Sales) * 100

	Gross Profit	Net Sales	Gross Margin
2023	140,913	608,270	23.17%
2022	118,425	497,642	23.79%

 

This ratio measures the amount remaining from $1 in sales that is left to cover operating expenses and a profit after considering cost of sales. This company has somewhat high level and it is god identification of financial health. It this value “–“  then cannot run the business.

 

·         Return on Total Assets = ( Net Income / Average Total Assets ) * 100

	Net Income	Average Total Assets	Return on Total Assets
2023	1,901,020	47665834	3.98%
2022	3,646,735	45673604	7.98%

 

This ratio is generally considered the best overall measure of a company’s profitability. This identifies how many net income generate as per each rupee of assets invested. In 2023 is less than compare to 2022.

 

 

·         Return on Common Shareholders’ Equity = ( Profit for the year / Average Shareholders’ Equity ) * 100

	Profit for the year	Average Shareholders’ Equity	Return on Common Shareholders’ Equity
2023	1,901,020	15537718	12.23%
2022	3,646,735	16361603	22.28%

 

This measure indicates how well the company employed the owners’ investment to earn income.  This value has decreased in 2023 compare to 2022. This is also not good identification to company’s finials.

 

 

• Book Value per Common Share = (Shareholders’ Equity / Number of Shareholders )

	Shareholders’ Equity	Number of Shareholders	Book Value per Common Share
2023	14,459,427	1,575,000	9.18%
2022	16,616,009	1,575,000	10.54%

 

This ratio measure liquidation at reported amounts. If the company’s book value per common share is higher than its market value per share – its current stock price then the stock is considered undervalued.

 

·         Basic Earnings per Share = (Profit for the year / Number of shares issued )

	Profit for the year	Number of shares issued	Basic Earnings per Share
2023	1,901,020	750,000	2.53%
2022	3,646,735	750,000	4.86%

 

 

This measure indicates how much income was earned for each share of common stock outstanding. The higher the earning per share of a company, the better is its profitability. In 2023 is lower than 2022. Then it is not good.

 

 

Market

·         Price Earnings Ratio = (Market Price per Share /  Earning per Share )

	Price Earnings Ratio
2023	3.30 times
2022	3.16 times

 

This measure is often used by investors as a general guideline in gauging stock values. Generally the higher the price -earnings ratio, the more opportunity a company has for growth.  In 2023 it has increased compare to 2022. Then it has opportunity for growth.

 

 

·         Dividend Yield = (Annual Dividends per Share / Market Price per Share ) * 100

 

	Annual Dividends per Share	Market Price per Share	Dividend Yield
2023	5.35	72	7.43%
2022	4	76.9	5.20%

 

This ratio identifies the return in terms of cash dividends on the current market price of the stock.

 

 

Altman Z- Score

Altman’s Z- score model is a numerical measurement that is used to predict the chances of bankruptcy of the company.

This is combination of five weighted business ratios that is used to estimate the profitability of financial distress.

Z = 1.2X1 + 1.4 X2 + 3.3X3 + 0.6X4 + 0.999X5

X1  -  Working capital/Total Assets

X2 - Retained Earnings/Total Assets

X3 - Earnings before interest and taxes /Total assets

X4 - Market value of equity/  Total liabilities

X5 - Sales/Total assets

Z > 2.99          - Safe zone

1.8 < Z > 2.99 - Grey zone

Z < 1.80          - Distress zone

 

	2023	2022
x1	0.25702	0.1152761
x2	0.2638254	0.3228667
x3	0.1511546	0.1230239
x4	0.2638254	0.3228667
x5	0.0124679	0.0106917

 

	Z score	zone
2023	1.294575	Distress zone
2022	1.136151	Distress zone

 

According to above calculation, company in distress zone in both 2023 and 2022 years.

 

 

 

 

 

Conclusion

 

Analyzing financial statement is helpful to make better decision for internal users and external users of the company.

It has deficiency of working capital for 2023 and 2022 years. Then need to take necessary short term plan and long term plans.

Current ratio and acid test ratio are not closer to 1. It is not good for the company performance. Also  this company has higher debt ratio because of more liabilities than assets. Therefore need to take action to reduce this ratio.

Based on the financial statement analysis of Hayleys PLC for 2023- 2022, it appears that the company has shown distress zone in current year. 

 

 

 

References

https://www.hayleys.com

annual report of Hayleys (2023-2022)