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Alkyl Amines Chemicals Ltd

2. Liquidity Ratio
2.1 Current ratio
Current assets
Current ratio =

-------------------------Current liabilities

PARTICULAR

2014

2013

2012

20111

2010

Current Assets

214.43

179.71

131.69

109.95

120.1

Current Liability

74.75

58.75

42.27

33.57

34.04

Current Ratio

2.86

3.05

3.12

3.27

3.52

14
12
10
8
6
4
2
0
Particular 2014

2013

2012

2011

2010

Interpretation:
Current Ratio of the Alkyl Amines Chemicals is 2.86 in the current year and it is lower then the
previous 3 years. Reason is that the company has changed their R&D department. The higher current
ration show the healthy business so from this ration shareholder are aware that company has able to
fulfill their liabilities.

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2.2 Quick Ratio


Quick ratio, also called acid test ratio, establishes a relationship between quick, or liquid, assets
and current liabilities. An asset is liquid if it can be converted into cash is the most liquid asset.
Current assets Inventories
Quick ratio = --------------------------------------------Current liabilities
PARTICULAR

2014

2013

2012

20111

2010

Current Assets - inventories

131.71

107.02

81.96

57.99

64.48

Current Liability

74.75

58.75

42.27

33.57

34.04

Quick ratio

1.77

1.83

1.93

1.72

1.89

14
12
10
8
6
4
2
0
Particular 2014

2013

2012

2011

2010

Interpretation:
Quick Ratio is an indicator of company's short-term liquidity. A common rule of thumb is that
companies with a quick ratio of greater than 1.0 are sufficiently able to meet their short-term
liabilities. Here the Quick Ratio is 1.77, which is more than 1.

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2. Cash Ratio
Since cash is the most liquid asset, a financial analyst may examine cash ratio and its equivalent to
current liabilities. Trade investment or marketable securities are equivalent of cash; therefore, they
may be included in the computation of cash ratio:

Cash ratio =

Cash + Marketable securities


------------------------------------------Current liabilities

PARTICULAR

2014

2013

2012

20111

2010

Cash +Marketable securities

22.86

15.44

11.07

1.26

3.33

Current Liability

74.75

58.75

42.27

33.57

34.04

0.26

0.26

Cash ratio

0.31

0.03

0.09

14
12
10
8
6
4
2
0
Particular 2014

2013

2012

2011

2010

Interpretation:
The cash ratio is most commonly used as a measure of company liquidity. It can therefore
determine if, and how quickly, the company can repay its short-term debt. A cash ratio of 1.00 and
above means that the business will be able to pay all its current liabilities in immediate short term.
But here this industry is not able to pay all its current liabilities in immediate short term.

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3. Debt Ratio
Several debt ratios may be used to analyze the long-term solvency of a firm. The firm may be
interested in knowing the proportion of the interest-bearing debt in the capital structure.
Total debt
Debt ratio = -----------------------Net Assets
PARTICULAR

2014

2013

2012

20111

2010

Total Debt

150.64

146.01

123.41

120.08

113.58

Net Assets

139.68

120.96

89.42

76.38

86.06

Debt Ratio

1.07

1.20

1.38

1.57

1.31

14
12
10
8
6
4
2
0
Particular 2014

2013

2012

2011

2010

Interpretation:
The Debt Ration if Higher than the previous 3 years. here ratio is high so the leverage used by
company is also high.

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4. Debtors turnover
A firm sells goods for cash and credit is used as a marketing tool by a number of companies.
Sales
---------------------Debtors

Debtors turnover =
PARTICULAR

2014

2013

2012

20111

2010

Sales

89.8

75.97

60.36

47.33

38.98

Debtors

480.86

395.88

308.32

252.81

232.86

0.18

0.19

0.19

0.18

0.16

Debtors turnover

14
12
10
8
6
4
2
0
Particular 2014

2013

2012

2011

2010

Interpretation:
Higher debtor turnover ratio is good because more higher debtor turnover ratio means, more soon,
we are collecting Money. Lower debtor turnover ratio is not good because it tells us that we have
not manage debtors better ways. Money from debtors are not collected Soon. Here, Debtor Ration
is lower so we can say that collecting the money process is low from this company.

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5. Assets turnover Ratios


Assets are used to generate sales. Therefore, a firm should manage its assets efficiently to
maximize sales. The relationship between sales and assets is called assets turnover. Several
assets turnover ratios can be calculated.
Sales
-------------------------Net assets

Net assets turnover =

PARTICULAR

2014

2013

2012

20111

2010

Sales

89.8

75.97

60.36

47.33

38.98

Net assets

139.68

120.96

89.42

76.38

86.06

Net assets turnover

0.65

0.62

0.68

0.61

0.45

14
12
10
8
6
4
2
0
Particular 2014

2013

2012

2011

2010

Interpretation:
It is an efficiency ratio which tells how successfully the company is using its assets to generate
revenue. If a company can generate more sales with fewer assets it has a higher turnover ratio which
tells it is a good company because it is using its assets efficiently and vise a versa. Here, turnover
ratio is high so we can say that company using their assets effectively and efficiently.

6. Gross profit Margin


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The first profitability ratio in relation to sales is the gross profit margin. It is calculated by
dividing the gross profit by sales:
Gross profit margin =

PARTICULAR

Gross profit
--------------------Sales

2014

2013

2012

2011

2010

Gross profit

74.36

45.96

32.59

22.78

23.39

Sales

89.8

75.97

60.36

47.33

38.98

Gross profit margin

0.83

0.61

0.53

0.48

0.57

14
12
10
8
6
4
2
0
Particular 2014

2013

2012

2011

2010

Interpretation:
High gross profit margin indicates that the company can make a reasonable profit, as long as it
keeps the overhead cost in control. Low gross profit margin indicates that the business is unable
to control its production cost. Gross margin ratio is a profitability ratio that measures how
profitable a company can sell its inventory. It only makes sense that higher ratios are more
favorable. Higher ratios mean the company is selling their inventory at a higher profit percentage.
Here, this ratio is higer than the previous year ratio.

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