The financial ratio Analysis of almarai company saudi arabia

1.      Calculate and explain activity ratios for the year 2017, 2016, 2015

It can be seen that there are four activity ratios and these are receivables turnover, payables turnover, Inventory turnover and Asset turnover.

2.      Calculate and explain liquidity ratios for the year 2017, 2016, 2015

It can be seen that there are four liquidity ratios discussed here, including the current ratio, quick ratio, cash ratio and net working capital.

3.      Calculate and explain profitability ratios for the year 2017, 2016, 2015

There are four profitability ratios discussed and these include the gross profit margin. Ney margin, return on assets and return on equity.

4.      Calculate and explain Debt ratios for the year 2017, 2016, 2015

There are three ratios in debt ratios that are discussed here and there include Debt ratio, Debt to equity ratio, and times interest earned ratio.

5.      All the ratios calculated must be graphed so that a trend is created and the decision in (part 6) is justified

The graphs of each set of ratios is given below

Activity ratios

It can be seen that inventory turnover is almost constant, payables turnover is increasing. Asset turnover is constant too and the receivable turnover is also increasing.

Liquidity ratios

It can be seen that the current ratio and quick ratio are almost consistent and the net working capital along with the cash ratio are both volatile, lowest in 2016, and high in 2017 and 2015.

Profitability ratios

It can be seen that the Gross margin, net margin and ROE are all constant, with a small percentage decline, whereas return of assets is seeing a constant decline.

Debt Ratios

It can be seen that there is a decline in times interest earned and the debt ratio along with the debt to equity ratio are almost constant.

6.      In a couple of paragraphs, advice a friend on whether or not this company represents a good investment opportunity. Your answer must go in-line with the above ratios you have calculated.

From the ratios of the three years, it can be concluded that the company is observing a decline and this decline indicates that the investment in the company should not be made, as instead of growing the company is shrinking.

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