Ratios Analysis

National Foods LimitedRatios AnalysisSubject: Financial ManagementGroup membersWaqas Khan01-120111-069Asim Mehmood01-122142-008Awais Bilal01-122142-010Muhammad Bilal01-122142-036Muhammad Furqan01-122142-037Raja Hasnain Tahir01-122142-049

Purpose Of The StudySignificanceFavorable or Un-favorableIf favorable, how?If un-favorable, how to improve?

SignificanceFavorable or Un-favorableIf favorable, how?More stock in trade and trade debts More investmentsMoney market funds and cash funds If un-favorable, how to improve?

SignificanceFavorable or Un-favorableUnfavorableIf favorable, how?If un-favorable, how to improve? Just in time approach (JIT) for inventoryForecasting for future production

SignificanceFavorable or Un-favorableFavorableIf favorable, how?In 2014 company has more net income after deducting all of the expensesCompany did good expense management Company did good sales which lead to high net incomeAddition of other incomeIf un-favorable, how to improve?

SignificanceFavorable or Un-favorableUnfavorableIf favorable, how?If un-favorable, how to improve?Produce goods as demanded by following the JIT (just in time) approachConcentrate on advertisement or MARKETING strategies

SignificanceFavorable or Un-favorableUnfavorableIf favorable, how?If un-favorable, how to improve?Company should not do credit sales in red areasCredit period decreased like from 30 days to 20 daysEnhance operations of collection departmentDiscounts policy to debtors on early payment

SignificanceFavorable or Un-favorableFavorableIf favorable, how?Company has more purchases in current year i.e. 2014Company has efficient operation of payable departmentCompanys sales are more which lead the company to pay its payables more quickly Company is getting discounts on early payments

If un-favorable, how to improve?

SignificanceFavorable or Un-favorableUn-favorableIf favorable, how?If un-favorable, how to improve?Utilize its fixed assets properly and efficientlyTrain laborsDispose-off useless assetsDo more sales

SignificanceFavorable or Un-favorableUNFAVORABLEIf favorable, how?If un-favorable, how to improve?Increase in revenue by doing more sales through high promotionDispose-off or liquidate useless assetsLease assets instead of buying themEfficient utilization of assetsAccelerate accounts receivable Better inventory management through Just in Time approach

SignificanceFavorable or Un-favorableunfavorableIf favorable, how?If un-favorable, how to improve?Efficient expense management optimal capital structureCOGS should be minimum through efficient production

SignificanceFavorable or Un-favorableUnfavorableIf favorable, how?receivables are increased sales were increasedIf un-favorable, how to improve?

SignificanceFavorable or Un-favorable2014 statements show that NFL has inclined to 24.12 which is favorable to the company. If favorable, how?Effective Cost ManagementSales Net ProfitsIncreased Value of EPSGood WillIf favorable, how?

SignificanceFavorable or Un-favorableFavorableIf favorable, how?Good profitsUsing their assets effectively & efficientlyGood will in the marketMore investorsPrice of its stocks increased

SignificanceFavorable or Un-favorableFavorableIf favorable, how?Good marketing strategy planIncreasing their annual salesMore profitsGood will in the marketStock price increased

SignificanceFavorable or Un-favorableFavorableIf favorable, how?More sales were donehow to improve?Increase selling price without increasing cost of goods soldReduce cost of goods sold without changing your selling priceIncreasing your sales volume without increasing cost of goods sold and without lowering selling priceLook for ways to reduce product or delivery costs sothat net income should be moreFind alternate, cost-effective ways to get your products or services to customersIdentify effective ways to add value that customers will pay for so you can raise prices more than the cost of the value addedCompany should differentiate itself so it can stop competing on price

SignificanceFavorable or Un-favorableUn-favorableIf favorable, how?If un-favorable, how to improve?Dispose-off its useless assetsEfficient expense managementReducing Cost of Goods SoldIncrease revenueMinimize production costs

SignificanceFavorable or Un-favorableunfavorableIf favorable, how?If un-favorable, how to improve?Enhance its operating efficiency to increase profit margin and return on salesDo effective expense managementUtilization of assets efficientlyPaying less taxes, as taxes can have negative impact on companys return on equity

SignificanceFavorable or Un-favorableUn-favorableIf favorable, how?If un-favorable, how to improve?Company should do more salesCompany should use less debt Company should use retained earnings to finance its operations and assets.

SignificanceFavorable or Un-favorableunfavorableIf favorable, how?If un-favorable, how to improve?If debt->interestIf equity-> dividendsSo, optimal mixture of both debt and equity

SignificanceFavorable or Un-favorableFavorableIf favorable, how?Increase the SalesAdditional/ New Stock IssueIf un-favorable, how to improve?To improveAdditional/ New Stock IssueDebt / Equity SwapLease AssetsIncrease the Sales

SignificanceFavorable or Un-favorableFavorableIf favorable, how?Sold more sharesMore profitsIf un-favorable, how to improve?To improveSell shares. The board of directors could authorize the sale of shares in the company, which could be used to pay down debt.Convert loans.Negotiate with lenders to swap existing debt for shares in the company.Increase profits. Use any methods available to increase profits, which should generate more cash with which to pay down debtThanks