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Gulf Mineral Water GMW
Name
Affiliation
| Name of Ratio | Formula | Solution
Year 1 |
Solution
Year 2 |
2014 | 2013 | % Change /Increase or Decrease | |
| Return on Total Assets | Net Income ÷ Average Total Assets | 1222/879 | 1182/1222 | 146% | 142% | Decrease | |
| Return on Equity | Net Income available to Common
Stockholders ÷ Average Common Stockholders’ Equity
|
2441/4422 | 4422/8122 | 68%
|
49% | Decrease | |
| Age of Receivables | Average AR (net) x 461 ÷ Net Credit
Sales |
124*461/412 | 124*461/412 | 24 | 41 | Increase | |
| Inventory Turnover | Cost of Sales ÷ Average Inventory
|
1892/422 | 1442/412 | 6.2 | 1.1 | Decrease | |
| Percentage change
in Sales
|
Current Year Net Sales – Prior Year Net Sales/Prior Year Net Sales | 1212/412 | 1172/622 | 24% | 28% | Increase | |
| Gross Profit
Percentage |
Net Sales – Cost of Sales ÷ Net Sales | 912/6119 | 971/9244 | 14.1% | 12% | Decrease | |
| Operating Expenses as a Percentage of
Sales |
Operating Expenses ÷ Net Sales | 1976/1622 | 2422/9242 | 44% | 21% | Decrease | |
| Bad Debt as a Percentage of Sales | Bad Debt Expense ÷ Net Credit
Sales
|
182/712 | 212/982 | 41% | 24.4% | Decrease | |
| Repairs and
Maintenance as a Percentage of Net Fixed Assets |
Repairs and Maintenance Expense ÷
Net Fixed Assets
|
2222/4122 | 2722/8222 | 22.9% | 21.1% | increase | |
| Current Ratio | Current Assets ÷ Current Liabilities | 2622/24 | 4222/29 | 112% | 116% | Increase | |
| Quick Ratio | Current Assets – Inventory – Prepaid items ÷ Current Liabilities
|
461/128 | 722/222 | 42.1% | 49.1% | Decrease | |
| Debt Ratio | Debt ÷ Total Assets | 1482/1222 | 1272/112 | 1.4% | 4.6% | increase | |
| Times Interest
Earned |
Operating Income ÷ Annual Interest
Payments |
2277/1712 | 4422/842 | 21.67% | 44.16% | increase | |
| Debt Service
Coverage |
Net Income + Depreciation ÷ Annual
Principal Payments |
172/142 | 192/422 | 41.2% | 48.7% | Increase |
Profitability Analysis
Gulf Mineral water (GMW) experienced development in its profitability from 2013 to 2014; notwithstanding, the net pay lessened altogether amid 2014. The arrival on value (ROE) was 4.24 percent in 2013, expanded to 14.68 percent in 2014 and diminished back to 5.10 percent in 2010. Additionally, the arrival on resources (ROA) likewise at first expanded and later declined in 2014; the decay was more keen contrasted with the decrease in ROE as the ROA in 2014 of 1.73 percent is lower than 2.08 percent in 2013. The ROE contains two principle segments: the arrival on net working resources (RNOA) and the arrival on obligation (ROD). RNOA for GMW has likewise weakened amid 2014 diminishing from 16.61 percent in 2014 to 5.08 percent in 2014. The RNOA is utilized to measure the general execution of the GMW administration. The ROD segment of the ROE has likewise weakened from 13.68 percent in 2014 to negative 3.32 percent in 2014 (Sherif, 2010). .
The ROCE was the most elevated in 2014 evaluated 11.39 percent. It infers that the capital utilized by GMW yielded exceptional yields before the development period and that the organization was fundamentally gainful. An extensive decrease in 2014 to 4.82 percent can be unfavorable for the financial specialists; notwithstanding, as the organization has not sold its imparts to people in general a diminishment in this degree for a transitory period is not a significant sympathy toward the current proprietors.
The working overall revenues for GMW at first expanded from 10 percent in 2013 to 17.45 percent in 2014; on the other hand, the organization reported brought down edges of 8.53 percent in 2014. The decrease in the working net revenues of GMW is to a great extent ascribed to the increment in expenses connected with the extension of the business. The working edges are required to recoup through the following year accepting that the new operations will get to be gainful as deals increment. The expense of products sold have expanded in outright terms yet the general gross net revenues for the organization have enhanced from 35 percent in 2013 to 42.01 percent in 2014. This suggests that the organization is viably dealing with its relations with suppliers and has kept a control over the expenses appended to purchasing the hamsters for reproducing; however the working expenses have expanded because of the low deals movement in the new operations.
Liquidity investigation
The current degree of GMW stays over the base edge of one and is at present 1.22; truly, the proportion has stayed somewhere around 2.73 and 3.25 times. Nonetheless, the speedy degree for the organization uncovers genuine concerns as it has diminished from 1.67 in 2014 to 0.22 in 2014. The low snappy proportion infers that a significant bit of the current resources of the organization are tied up as a feature of its stock. This could likewise imply that GMW may be not able to offer the hamsters and deals may be enduring. The organization must build its working money to meet its close term current liabilities and hold its dissolvability.
Efficiency analysis
The company’s effectiveness has not so much diminished amid the most recent year; an investigation of the proficiency degrees proposes a pattern that is unique in relation to what is seen through the gainfulness and liquidity proportions. The stock turnover has somewhat disintegrated from 3.00 in 2013 to 2.89 in 2014; comparatively affecting the day’s stock close by from 121.67 to 126.35 amid the same period. The long stock holding period recommends that the organization needs to enhance its liquidity position to keep up its profitability and mean to lessen its stock turnover essentially (Brigham and Ehrhardt 2014, pp. 57-62). The times of records receivables have diminished from 45.63 in 2013 to 40.05 in 2014 and in the meantime the times of records payables have decreased significantly all the more definitely from 40.56 to 28.08. The working resource turnover for GMW has weakened extensively from 0.87 in 2013 to 0.60 in 2014, owing to a long stock holding period and a speedy installment of the records payables.
Capital structure analysis
The capital structure has essentially changed in the course of recent years as GMW has expanded its budgetary influence and is utilizing a significant obligation to fund its extension exercises. The obligation degree of the firm has increment from 0.47 in 2013 to 0.60 in 2014; infer that GMW is currently financing 60 percent of its benefits through obligation (Berry 2006, pp. 68-71). The premium scope degree of the organization had enhanced impressively in 2014 and was 4.29, yet it has decayed to 1.89 raising extra attentiveness toward the GMWs. The ROD for the organization has diminished significantly however stays positive suggesting that the current level of money related influence is producing extra returns for the organization. Working money streams (OCFs) for the organization stay negative being normal of youthful firms encountering a high development rate, yet the capacity of GMW to raise extra financing is restricted; in this way negative OCFs raise genuine attentiveness toward the GMW administration.
References
Sherif, M. (2010). Water availability and quality in the Gulf Cooperation Council countries: implications for public health. Asia-Pacific Journal of Public Health,22(3 suppl), 40S-47S.
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