LAUGFS Holdings

Introduction

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.

(Courtesy: www. laugfs.lk)

Statement of the Problem

The role of financial reporting by companies is to provide information about their performance, financial position and changes in the financial position that is useful to a wide range of users in making economic decisions. The role of financial statement analysis is to take financial reports prepared by companies, combined with other information, to evaluate the past, current and prospective performance and financial position of a company for the purpose of making investment, credit and other economic decisions. As Laughs being a prominent company in Sri Lanka conducting financial statement analysis for Laughs PLC is found important at this juncture.

Objective of the Study

The following were the objectives to analyse the financial statement of Laughs PLC

·         To analyse the Working Capital Position of Laughs PLC.

·         To study the Cash position of Laughs PLC

·         To find out the Profitability Position of Laughs PLC

·         To measure the Returns of Laughs PLC.

·         To study the Efficiency of Laughs PLC in managing its assets

·         To scrutinize the Liquidity position of Laughs PLC.

·         To scrutinize the common size analysis

Period of the Study A period of five years is taken for the analysis purpose from 2013-2017

Overview of the statements of financial position at LAUGHS PLC for the last five years

Ratio Analysis

This is the liquidity and efficiency ratios related to Laughs PLC

liquidity and efficiency

Ratio	2013	2014	2015	2016	2017
Working Capital	1505189177	999582445	1027096960	2711060850	-636830728
Current Ratio	2.48	2.41	2.54	1.57	1.37
Acid Test Ratio	0.96	1.23	1.56	1.21	0.89
Acounts Recievable  Turnover	2.12	2.44	2.35	2.68	3.45
Days sale Uncollected	100.23	110.58	121.38	163.54	186.32
Merchandise Turnover	2.66	2.84	3.97	2.88	2.31
Days Sales in Inventory	2.43	3.35	3.35	3.44	3.23
Total Asset  Turnover	0.75	0.89	1.22	1.26	1.45

 

 

 

 

Solvency ratios of LAUGHS PLC

Ratio	2013	2014	2015	2016	2017
Debt Ratio	0.4	0.41	0.38	0.64	0.73
Equity Ratio	0.48	0.47	0.4	0.33	0.29
Times Interest Earned	3.43	3.56	3.8	3.3	2.9

Profitability Ratios Related to Laughs PLC

Ratio	2013	2014	2015	2016	2017
Profit Margin	12%	13%	15%	11%	-2%
Gross Margin	11%	16%	22%	18%	11%
Return on total Assets	17%	19%	23%	20%	5%
Return on Common shareholders	12%	14%	16%	15%	7%

 

Stock Market Ratio Related to Laughs PLC

Ratio	2013	2014	2015	2016	2017
Book value per common  share	42.55	45.69	56.22	49.35	42.33
Earning Pershare	2.71	3.38	4	3.32	-1.65
Price Earning Share	2.52	2.86	6.35	5.36	Data Not Sufficient
Dividend Yield	1.56%	1.69%	3.25	2.86	-0.65

Liquidity and Efficiency Ratios

Asset Test Ratio

(Current asset - inventory) / Current Liabilities

Interpretation:

This ratio shows the relationship between the quick asset and the current liabilities and shows the company ability to pay back its current liability within its short period of time. There is a slight change in this ratio since last three years. This ratio is slightly unfavorable for the organization, it should be improved.

Working Capital

Current Asset - Current Liabilities

Interpretation:

Working capital is the difference between the current asset and current liabilities. This is the amount used for day to day operations of the company., which mean the current asset may increase, that is, in some cases good for the organization if the organization treat it like a reserve account but in other conditions its unfavorable because of less utilization of the current asset.

LEVERAGE RATIOS

 

Times Interest Earned

EBIT / Interest Exp

Interpretation:

It shows how many times the company can pay its interest with its income of one year, higher the ratio will be more favorable for the organization.

 

Debt - Equity Ratio

Total Debt / Total Equity

Interpretation:This ratio shows the relationship between Long term debt and total equity of the organization.

DEBT RATIO

Formula:

Total liabilities / total assets *100

Interpretation:

This ratio shows that how much portion of the assets are covered by the liabilities of the organization.

EQITY RATIO Formula:

Equity / total assets *100

This ratio is showing increasing trend except in 2017 in which it was at its lowest value because increase in equity is lower increase than assets.

Fixed Asset to Equity Ratio

Fixed asset / equity

Interpretation:

This ratio shows the relationship between fix asset of the company with the equity held by the company. This ratios show that how much times your fixed asset are of your equity. Although in laughs PLC’s case the equity was increased but fixed asset was also on increase, that is the reason of sustainability of the ratio.

Profitability Ratios

Net Profit Margin (in %)

Profit after tax / net sale x 100

Interpretation:

This ratio interprets the net profit as a percentage of net sales. In 2016, the ratio was pretty good but in 2017, there was enormous decline, That is Alarming for the organization and it should take action for its improvement. Higher the ratio results higher market position of the organization.

Return of Asset (in %)

Net income/ total asset x 100

Interpretation:

This ratio shows the relationship between net profit and total assets. It is the main objective of an organization to maximize its return on assets. 

Sales to Fix Asset

Net sale / fixed asset

Interpretation:

This ratio also shows the utilization of the asset but the fix asset. If we look at the graph, there is gradual increase in this ratio. This shows the fix assets are properly being utilized for the purpose of earning interest.

Gross Profit Margin (%)

Gross profit / Net Sales * 100

Interpretation:

Gross profit margin ratio the shows the gross profit as a % of the net sale. there was nominal change. This ratio is favourable for the company, there may be two reasons for this increase, one is to increase interest earning or lowering the interest expenses.

Activity Ratios

Total Asset Turn Over

Sales / Total Assets

This ratio shows the utilization of the total asset. If we look at the graph, there is gradual slight increase in this ratio. This shows the total assets are properly being utilized for the purpose of earning interest. In 2017 there a decrease in terms of laughs. This decrease shows some degree in- efficiency of the organization.

 

Fixed Asset Turn Over

Sales/ fixed asset

Interpretation:

This ratio shows the earning on each share of the company. With respect to Laughs PLC the steady values has lost its control in 2017. There may be some reason for this variation, this variation may be caused due to three factors, Increase or Decrease in Interest Earned, Expenses or number of shares issued.

CASH FLOWS RATIOS

Operating CF per Share

Operating cash flow / # of share out standing

Interpretation:

Operating cash flow shows the actual cash incoming and outgoing through the operation of the company/organization. Operation CF will be favourable if it shows the positive balance. Higher the Operating CF, stronger the organization will be considered.

Safety Issues in hazardous waste Management in Heavy Industries

Safety Issues in hazardous waste Management in Heavy Industries 

Sri Lanka was having an agricultural based economy before the emergence of market economy which was first introduced in the year 1977. The market economy helped the country to attract more industries which were nationally based and internationally owned.

Some of the industries introduced to the country were high electricity consumption industries (than 1 MW) also known as heavy industries (HI); such as iron scarp smelting (collection of scrap and melting them into furnace oil) Generating thermal power and manufacturing asbestos cement sheets. Although the above industries are vital for the economic growth of a nation, the hazardous waste (HW) generated by these HI were injurious to health. Hazardous waste could result in an increase in mortality or an increase in serious irreversible or incapacitating reversible illnesses. And also HW has been identified as a source which poses a substantial damage to the natural and built environment in a country. There are various types of HW such as heavy metals (such as Chromium, Cadmium and Nickel) Asbestos fiber waste, sludge from water treatment plants, slag from smelting factories and used oil were generated from heavy industries.

Sri Lanka (SL) did not have adequate and appropriate law and regulations to control HW until the year 1992. During this period an irreversible damage might have happened to the human life, animals or environment. As per the regulation introduced under the National Environmental Act No 47 of 1980 it is mandatory to obtain license to manage and dispose HW. Although the regulations had been gazette by Central Environmental Authority (CEA) stating improper disposal of HW is an offense, the existence of suitably licensed places to do the final disposal of HW remains problematic in SL.

With the present day tax benefits and concessions awarded by the Board of Investments (BOI) of SL, a large number of HI have been established in the country. Therefore an intervention of research personnel is essential to find out whether there are adequate and legitimate final disposal facilities for HW are available in SL to sustain its present day volume.

“What are the existing Hazardous Waste Management Practices in Sri Lankan Heavy Industries and what factors have an impact over those practices?”

 This focuses on identifying the existing hazardous waste management practices in the HW generating HI of SL. It will also look at the factors which have a positive or negative influence over the execution of those practices. While the market economy helps to boost the economy of a country, it intern will attract heavy industries which will generate various types of waste including Hazardous Waste as a result of their production process. Hazardous Wastes are always injurious to health and create adverse environmental effects.

Problems created by hazardous waste contamination can be controlled / managed by disposing them in a proper way in a suitable / technically constructed Hazardous waste disposal facility.

Sri Lanka does not have adequate facilities to dispose Hazardous Waste generated by Industries (Director – Provincial Environmental Authority –NWP). By the meantime the government of Sri Lanka had introduced stringent laws and regulations compiling industrialists on proper disposal of Hazardous waste.

Those industrialists are facing big problem due to unavailability of suitable hazardous waste disposal facilities while the law threatens them to dispose of hazardous waste in proper manner.