Financial ratios of premier Cement .pptx

ratios of premier Cement .pptx

1. “ FINANCIAL RATIO ANALYSIS ON PREMIER CEME NT ” Sakibul Islam Rabbi ID:25010710 Department of Marketing(EMBA) Comilla University

2. Comment: In 2019, Premier’s current ratio of 0.864 is below the average for its industry, 1.039, so its liquidity position is somewhat weak. With a current ratio of 0.864, Premier could liquidate current assets at only 116 percent of book value and still pay off its current creditors in full. Same result happened in both 2017 and 2018 where Premier’s current ratio was below the average for its industry.

3. Comment: In 2019, the Cement industry’s average quick ratio is 0.831 which is has declined from previous year, but Premier’s ratio value of 0.775 is even lower in comparison with the ratios of its competitors. This difference suggests that Premier’s level of inventories is relatively high. Even so, if the accounts receivable can he collected, the company can pay off its current liabilities even without having to liquidate its inventory .

4. Comment: In 2019, each item of Premier’s inventory was sold out and restocked, or “turned over,” 11.724 times per year, which is considerably higher than the industry average of 9.18 times. The same case happened in both 2017 as well as 2018.

5. Comment: In 2019, Premier’s ratio was slightly lower than the industry average, indicating that the company was not generating a sufficient volume of business given its investment in total assets. To become more efficient, Premier should increase its sales, dispose of some assets, or pursue a combination of these steps. Although in 2018 and 2017 Premier managed to keep itself in a better position regarding using its assets as compared to the industry.

6. Comment: In 2019, Premier’s debt ratio is almost 73 percent, which means that its creditors have supplied slightly more than half of the firm’s total financing. Because the average debt ratio for the industry is 66.4 percent, Premier might find it difficult to borrow additional funds without first raising more equity capital through a stock issue. In 2018, although it had a slightly higher debt ratio than the average, but in 2017, same Premier managed to keep its debt ratio lower than the industry average.

7. Comment: In 2019, Premier’s interest was covered 3.046 times. Because the industry average was 1.334 times, compared with firms in the same business, Premier was covering its interest charges by a high margin of safety. Its TIE ratio reinforces our conclusion based on the debt ratio that Premier probably would not face difficulties if it attempted to borrow additional funds.  

8. Comment: From 2017 to 2019 , Premier’s percent return on assets was well higher than percent average for the cement industry. This high return results from the company’s lower-than-average use of debt.

9. Comment: Premier’s percent return was higher than the industry average from 2017 to 2018. This result follows from the company’s lesser use of debt (leverage).  

10. Comment: In 2019, Premier’s net profit margin was higher than the industry average of 2.10 percent, indicating that its sales might be good, its costs might be low. In 2018, the firm had higher profit margin too, but in 2017, Premier’s net profit margin was lower than the industry average of 9,80 percent, indicating that its sales might be too low, its costs might be too high, or both.  

11. Comment: Other things held constant, P/E ratios are higher for firms with high growth prospects and lower for riskier firms. In 2019, Premier’s P/E ratio was lower than those of other cement manufacturers, it suggests that the company is regarded as being somewhat riskier than most of its competitors, as having poorer growth prospects, or both.

12. Comment: Premier’s M/B ratio has declined over the last three years. But, Clearly, Premier’s future prospects are being viewed favorably by investors, who are willing to pay more than its book value for the firm’s shares  

13. Ratios Ratio Value for 2019 Industry Average for 2019 Comment 1. Liquidity Current Ratio 0.864 times 1.039 times Low Quick Ratio 0.775 times 0.831 times Low 2. Asset Management Inventory Turnover 11.724 times 9.180 times High Total Asset Turnover = 0.637 times 0.739 times Poor 3. Debt Management Debt to Total Assets 72.9% 66.4% Poor 4. Profitability Net Profit Margin 5.1% 2.1% Good ROA 3.3% 2.8% Good ROE 12% -78.9% Good

14. THANK YOU