Business Research information

Liquidity Ratio Analysis

(1)   Current Ratio

This measures the short term solvency of the company using the balance sheet. Also known as the working capital ratio, it tells if a firm has sufficient funds to pay its liabilities over the period of next 12 months. The current ratio can also give a sense of the efficiency of a company’s operating cycle or its ability to turn its product into cash.

During the last 5 years, within 2012 – 2015 it kept around 1.5 in the last year 2016 it was almost 2. It is a good sign, now the company is having more liquidity and it can cover the current liability easily.

(2)   Acid-test Ratio

The acid test ratio is similar to the current ratio except that Inventory, Supplies, and Prepaid Expenses are excluded. In other words, the acid test ratio compares the total of the cash, temporary marketable securities, and accounts receivable to the amount of current liabilities.The acid-test ratio is far more strenuous than the working capital ratio, primarily because the working capital ratio allows for the inclusion of inventory assets

During 2012 – 2014 the acid test ratio is less than 1 and it is not a good sign for the company any way in the past 2 years they have managed to get back there ratio to 1,28 in 2016. It is a good sign and company liquidity level is good.

Z-Score Analysis In Singar Sri Lanka

According to the information gathered on Singer Z-score is 2.31. Z-score analysis defined if the score is between 2.99 and 1.8, the company falls down in to grey zone. If there score leads to go below 1.8 company is probably headed for bankruptcy situation. Thus managers should consider about this situation and should try to increase the score more than 3.

 Financial Statement Analysis for Regins ( Lanka) PLC

      Profitability Ratios

Profitability ratio calculation of a company complies with major six sections. Those are Profit Margin, Gross Margin, Return on Total Assets, Returns on Common Share Holders’ Equity, Book Value per Common Share and Basic Earnings per Share

Table 2.4.4 Profitability Ratio

	2011 Rs.	2012 Rs.	2013 Rs.	2014 Rs.	2015 Rs.
Profit Margin	4.07%	2.48%	4.87%	5.28%	8.38%
Gross Margin	8.43%	6.66%	7.52%	6.99%	10.99%
Return on total asset	7.28%	4.50%	7.53%	9.75%	18.03%
Return on Common Shareholders’ Equity	14.30%	8.22%	13.27%	16.07%	26.40%
Book value per common share  (RS.)	54.32	70.52	68.68	81.47	98.76
Basic earnings per share	7.77	5.06	8.71	12.06	23.79

Profit Margin

Profit Margin explains the ability of a company to earn net income from the sale revenue. Profit Margin ratio is increasing by increasing rate in Regins (Lanka) Company shows the success of the operation in the business. The profit margin ratio in year 2015 is 8.38%.

Gross Margin

Gross Margin ratio explain the sales that covering the operating expenses and profit after considering cost of sales. Gross Margin ratio has been reduced in 2012 and 2014 are 6.66% and 6.99%. in the rest of  years the gross profit margin has increased in slowly.

Return on Total Assets

This ratio generally considers the best overall measure of the company profitability. In the year 2012 ratio has been reduced but after 2013 ratio has been increased in the Regins (Lanka) Company financial statements.

Returns on Common Shareholders’ Equity

This ratio measures the how well the company employed the owners’ investment to earn income. Ratio has been declined in the year up to 8.22% and again the ratio has increased up to 26.40% in the year 2015. The increasing of the ratio explain the wealth of the owners in investment in the Regins (Lanka) Company.

Book Value per Common Share

Book Value per Common Share measures liquidation at reported amount. Higher value of Book Value per Common Share is good sign to the organization performance. Book Value per Common share in Regins (Lanka) Company increased gradually but in the year 2013 it has reduced.

Basic Earnings per Share

Basic Earnings per Share measures how much income was earned for each share of common stock outstanding in the organization.

Based on the performance of the Regins (Lanka) Company they have incersd their EPS gradually but in the year 2012 ratio has been declined litte with comaring to the operation of the business.