Inventory turnover in days

The inventory turnover results just repeat the previous conclusions. Rakhat has more days than Bayan Sulu, which is worse for them. However, the overall trend for them is decreasing.

Quick ratio

The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets. We subtracted the most liquid inventories from current assets in this case. The result is higher ratio(around 3) for Rakhat in comparison with Bayan Sulu (maximum 2). Again the reason maybe because of better AR ratios for Rakhat, as they have lesso of AR

Rakhat 2014 2013 2012

The working capital gives us only absolute numbers that do not say anything to us, as companies are different in size.

Cash ratio is higher for Rakhat Company. However, it seems unwise to hold so many cash available, whereas they can invest it somewhere to make them work for profit.

Sales to working capital figures are relatively same for both companies, which can be the average for both.

Long-term debt paying ability

TIE

There is extremely big difference between two companies TIE ratios. The reason is that Rakhat has very small amount of interest expenses in the income statement, furthermore it has decreased gradually since 2012. In contrast, Bayan Sulu has relatively higher amount of interest expenses and trend is increasing over time.

Debt ratio

The higher this ratio, the more leveraged the company is, implying greater financial risk. We see that Rakhat has in average 11% of DR, whereas Bayan Sulu has even 30% in 2014. Here is the reason of small TIE for Rakhat, they do not use liabilities as a main source of funding, they are financed mostly with equity. It seems that Rakhat can change its strategy as leverage is an important tool that companies use to grow. What's more Rakhat in general show stable growth over time and has good future forecasts.

Debt to equity

The D/E ratio indicates how much debt a company is using to finance its assets relative to the amount of value represented in shareholders’ equity. The results have the same explanations as a debt ratio results.

This ratio is the most conservative ratio among all other above-mentioned as it eliminated the intangible assets, as they do not provide resources to pay creditors. The results only slightly higher from previous DR and D/E ratio, and Rakhat has very low ratio in comparison with Bayan Sulu.

Date: 2015-12-24; view: 771