Muhammad Ahmed
FA17-BBA-184
Business Finance
Assignment 02
Submitted to :DR.Waheed Akhtar
Ratio Analysis of Bata Pakistan PVT Ltd
Ratio Analysis :
Ratio Analysis is a form of Financial Statement Analysis
that is used to obtain a quick indication of a firm's
financial performance in several key areas. The ratios are
categorized as Short-term Solvency Ratios, Debt
Management Ratios, Asset Management Ratios,
Profitability Ratios, and Market Value Ratios
Quick Ratio
Quick ratio of Bata Shoe Company shows the taka
available for covering each of taka current asset. To
find the quick ratio the formula is:
Quick Ratio = (Cash + Account Receivable)/Total
current liabilities.
YEAR Quick
Ratio
2008 0.2477
2009 0.3080
2010 0.1919
2011 0.2690
2012 0.2439
Current Ratio of Bata Shoe Company measures the
margin of safety present to cover any possible
reduction of current asset. To find the Current Ratio
the formula is:
Current Ratio = Total current asset / Total current
liabilities.
YEAR Current Ratio
2008 1.4542
2009 1.4721
2010 1.4526
2011 1.4687
2012 1.5347
: Current Liabilities To Net Worth ratio of Bata Shoe
Company contrasts the amount due creditors within
a year with funds permaneently invested by the
owners. The smaller the net worth and the larger the
libilities, the greater the risk. To find the Current
Liabilities To Net Worth Ratio the formula is
Current Liabilities To Net Worth= Total current
liabilities/ Net Worth.
YEAR Current Liabilities to
Inventory Ratio
Current Liabilities to Inventory Ratio of Bata Shoe
Company tells how much a firm relies on funds from
disposal of unsold inventories to meet debt. To find
the Current Liabilities to Inventory Ratio the
formula is:
Current Liabilities to Inventory Ratio = Total current
liabilities/ Inventory.
2008 0.9480
2009 1.0259
2010 0.9325
2011 1.0438
2012 1.0195
Total Liabilities to Net Worth Ratio of Bata Shoe
Company compares the company’s indebtedness to
the venture capital invested by the owner. To find
the Total Liabilities to Net Worth Ratio the formula
is:
Total Liabilities to Net Worth Ratio = Total Liabilities/
Net Worth
Fixed Assets to Net Worth Ratio of Bata Shoe
Company reflects the portion of net worth that
consists of fixed assets. Generally a smaller ratio is
desired. To find the Fixed Assets to Net Worth Ratio
the formula is:
Fixed Assets to Net Worth Ratio= Fixed Assets/ Net
Worth.
YEAR Fixed Assets to Net Worth
Ratio
2008 0.4837
2009 0.4981
2010 0.5686
2011 0.5470
2012 0.5317
Inventory Turnover Ratio determines the rate at
which merchandise is being moved and the effect on
the flow of funds into a business. To find the
Inventory Turnover Ratio the formula is:
Inventory Turnover Ratio=Sales/Inventories.
YEAR Inventory Turnover Ratio
2008 3.16
2009 3.48
2010 3.32
2011 3.78
2012 3.75
Compare how much in assets a company has relative
to the amount of revenues the company can
generate using their assets.
Assets to Sales
0.56
0.56 0.56
0.55
0.55 0.55
0.54 0.54
0.54
0.54
0.53
0.53
0.53
0.52
2008 2009 2010 2011 2012
Measures the speed with which a company pays
vendors relative to sales.
A high ratio can indicate that a firm is delaying
payment to suppliers.
Accounts Payable to Sales
0.160
0.155 0.154
0.150
0.145 0.147
0.140 0.141
0.139
0.135
0.130 0.130
0.125
0.120
0.115
2008 2009 2010 2011 2012
Accounts Payable to Sales
Days to Pay Suppliers
58
56
54
52
50 56
48 54
51 52
46 48
44
42
2008 2009 2010 2011 2012
Measures net income per dollar of sales and is
calculated as net profits after taxes divided by sales.
Return on Sales
9.80%
9.60%
9.40%
9.20%
9.00% 9.72% 9.61%
8.80%
9.00%
8.60% 8.73% 8.84%
8.40%
8.20%
2008 2009 2010 2011 2012
ROA gives an idea as to how efficient management is
at using its assets to generate earnings.
Return on Assets
19.00% 18.10%
17.79%
18.00%
17.00% 16.50%
16.37%
16.00% 15.88%
15.00% Return on Assets
14.00%
2008
2009
2010
2011
2012
ROE measures a company's profitability by revealing
how much profit a company generates with the
money shareholders have invested.
Return on Equity
50.00%
40.00%
30.00%
46.23%
40.11% 41.13% 37.19%
20.00% 33.74%
10.00%
0.00%
2008 2009 2010 2011 2012
Return on Equity 46.23% 40.11% 41.13% 37.19% 33.74%
