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    Azgard Nine Ratio Analysis

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    Mohammad Adil Choudhary
    This document analyzes the profitability ratios of Azgard Nine, a textile company, from 2016-2019. It compares the company's gross profit margin, operating profit margin, and net profit margin over time and against a competitor. The gross, operating, and net profit margins have generally increased over time for Azgard Nine, showing improved profitability. However, the competitor's ratios were sometimes higher, suggesting they better controlled costs. The document performs an in-depth time series and cross-sectional analysis of the ratios to understand factors impacting Azgard Nine's financial performance.

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    Azgard Nine Ratio Analysis

    Uploaded by

    Mohammad Adil Choudhary
    59 views6 pages
    This document analyzes the profitability ratios of Azgard Nine, a textile company, from 2016-2019. It compares the company's gross profit margin, operating profit margin, and net profit margin over time and against a competitor. The gross, operating, and net profit margins have generally increased over time for Azgard Nine, showing improved profitability. However, the competitor's ratios were sometimes higher, suggesting they better controlled costs. The document performs an in-depth time series and cross-sectional analysis of the ratios to understand factors impacting Azgard Nine's financial performance.

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    This document analyzes the profitability ratios of Azgard Nine, a textile company, from 2016-2019. It compares the company's gross profit margin, operating profit margin, and net profit margin over time and against a competitor. The gross, operating, and net profit margins have generally increased over time for Azgard Nine, showing improved profitability. However, the competitor's ratios were sometimes higher, suggesting they better controlled costs. The document performs an in-depth time series and cross-sectional analysis of the ratios to understand factors impacting Azgard Nine's financial performance.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    59 views6 pages

    Azgard Nine Ratio Analysis

    Uploaded by

    Mohammad Adil Choudhary
    This document analyzes the profitability ratios of Azgard Nine, a textile company, from 2016-2019. It compares the company's gross profit margin, operating profit margin, and net profit margin over time and against a competitor. The gross, operating, and net profit margins have generally increased over time for Azgard Nine, showing improved profitability. However, the competitor's ratios were sometimes higher, suggesting they better controlled costs. The document performs an in-depth time series and cross-sectional analysis of the ratios to understand factors impacting Azgard Nine's financial performance.

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    Azgard Nine Ratio Analysis

    We are working on textile sector industry Azgard nine here we discuss the relationship of this
    firms with its competitor. Here we discuss the ratio analysis with respect to textile sector similar
    industry under following head

    Profitability Ratio;
    In this section we will compare Azgard nine with respect to cross sectional analysis ,benchmark
    and time series. Here we will calculate the gross profit ratio with respect to cross sectional
    analysis, benchmark and time series,

    Ratio analysis of Azgard Nine


    Profitability Ratios 2019 2018 2017 2016
    Gross Profit Margin 17.26% 16.21% 14.73% 11.38%
    Operating profit Margin 10.21% 8.90% 7.28% 4.55%
    Net profit Margin 1.51% 1.23% -1.04% -6.18%

    GROSS PROFIT RATIO;

    The formula of gross profit ratio is as under;

    Gross profit
    Gross profit = ---------------------------------- x 100
    Net sales

    Now by putting the value in the formula and then we have time series analysis,

    Gross Profit 2019 2018 2017 2016


    Gross Profit Margin 17.26% 16.21% 14.73% 11.38%

    Time Series Analysis;


    In 2019 latest financial statement shows the gross profit ratio was 17.26% as compare
    with 2016 and other previous year it will continuously rise from previous years, but if we talk
    about 2016 and compare with current 2019 it is quite good but the rate of rise from previous year
    is although decrease but In sales was much increase from 2018 to 2019,(approx 56%)it mean
    company expand its business sales and a silent view on the cost of sale with previous comparison
    we see (approx 56%) from 2018 there we see no such change in the cost of sale of the company
    purchases with respect to sale of 2018 let a view on 2018 and 2017,In 2018 the sale comparison
    it also rise with the same pattern of (approx 56) as we see in pervious year of 2019-2018 it also
    grow with the same peak it mean company expand its sale in term of exporting and domestic sale
    now let check the cost of sale comparison with 2016 it will be 55% no such change in the cost of
    sale comparison with previous it depend with the sale if sale rise the cost of sale rise with almost
    same proportion and , In 2016 the amount of gross profit will be gross profit is 11.378% but the
    as we se it will increase in 2017 by approximately 3.351% as in back 2016 the company our all
    profit will decrease but the sale is quite good in 2016 as compare to 2017 but the increase in sale
    is due to export increases in 2017 export will be 90.22% and in 2016 it will be slightly decreases
    of 89.86% but the cost of sale will be increase as compare to the sale although sale will be
    increase in 2016 but cost of goods sold will also increase and if we talk about 2017 sale will not
    increase but their also the rebate on sale will also of the major factor in 2017 sale impact and the
    company cost of sale will also reduce as compare to 2016 sale impact these are some key issue
    due to the gross profit increase in 2017 .

    Cross Sectional Analysis with its competitor Sapphire Limited;


    Sapphire limited is the competitor of Azgard Limited here we discuss the competitor analysis with
    recpect to the performance growth and the physical analysis environment;

    Gross Profit analysis ;

    Here is the gross profit ratio of our competitor(Kooh e Noor Limited)

    Ratio analysis of Kooh e Noor

    Profitability analysis 2019 2018 2017 2016


    Gross Profit Margin 14.43% 12.00% 13.56% 16.29%
    &

    The gross Profit Analysis of Azgard Limited;

    Profitability Ratios 2019 2018 2017 2016


    Gross Profit Margin 17.26% 16.21% 14.73% 11.38%

    As we notice that in 2019 our (Azgard Limited) gross profit is 17.26% and our competitor have
    less than us it would be in 14.43% it mean our sales is much better than our competitor may one
    reason is that our focus on export is much than our competitor sales and it might also happen that
    our cost grip is much better than our competitor, if we see the result of 2018 in previous year our
    gross profit is much better than previous year our competitor gross profit is 12.00% and our
    gross profit is 16.21% respectively, and in 2017 financial statement result shows that our gross
    profit is about 14.93% and if we put a review on our competitor financial statement results of
    2017 it shows 13.56% on this year we are also in better position than our competitor ,and in
    2016 financial statement shows that 11.38% and our competitor shows a huge 16.29% this may
    be his focus on sale and provide better quality and may be his focus on cost is as much as our
    control on cost is not.

    Operating Profit Analysis;


    The formula of operating profit is

    Operating profit
    Operating profit ratio = ---------------------------------------- x 100
    Net sales

    Now we have to putting the value in the above formula and then we have ,

    Operating Profit Ratio 2019 2018 2017 2016


    Operating profit Margin 10.21% 8.90% 7.28% 4.55%

    Operating Profit in time Series Analysis;


    The operating profit margin ratio indicates how much profit a company makes after paying for
    variable costs of production such as wages, raw materials, etc. It is also expressed as a
    percentage of sales and then shows the efficiency of a company controlling the costs and
    expenses associated with business operations. In 2019 our operating ratio shows that 10.21% and
    in four year comparison we are at the boom from all previous years if we talk about 2018
    operating profit ratio we are in the better in current year this may be happen due to our sales
    increases and may be our focus on the cost is also involved. and we analyze this ratio on the
    gross profit it clearly show that our current financial year sales is not much better than previous
    year because there is huge gap in the ratio may current year we here new staff training session to
    be become more efficient in near future,As we know operating profit is that profit that we get
    from operation as in above we calculate the operating profit in the in 2017 is 7.28%and in 2016
    is 4.55%there is too much difference in the operating profit as compare to the 2016 it is almost
    2.73% this huge difference because of gross profit difference but more deeply in 2017 our selling
    and distribution cost is much high they don’t have too grip on the these cost as compare to the
    previous year .

    Cross Sectional Analysis of Azgard Limited with our competitor Koh e Noor;
    In this context we see a comparison with our relevant industry sector whose are working in the
    same environment here is some data of our company and our competitor performance;

    Profitability analysis 2019 2018 2017 2016


    Operating profit Margin 8.94% 5.15% 4.76% 7.64%

    &

    The data of Azgard Limited is as under;

    Profitability Ratios 2019 2018 2017 2016


    Operating profit Margin 10.21% 8.90% 7.28% 4.55%

    As we see a result of our competitor we see in 2019 our competitor shows 8.94% and we are
    much better position in operation 10.21% this might happen ;our sales is increase and it also
    have another reason may be our grip on efficiency is much as our competitor and if we talk about
    of previous year in 2018 our result is also satisfactory than our competitor and in 2017 our result
    is also in better position than our competitor and in 2016 our result in terms of percentage is
    4.55% and our competator is in much better in 2016 financial position as we see in 2016 their
    percentage shows 7.64% we much away from our competitor because of our sales is not as much
    as our competitor sales and may be our staff is not shows much efficiency as they can show and
    may we conduct tanning session this also have effect on the operating profit

    Net Profit Analysis;


    Now we net profit formula is

    Net profit
    Net Profit Ratio= -------------------------------x100
    Net sales

    Now we have to put the value in the above formula then we have;

    Profitability Ratios 2019 2018 2017 2016


    Net profit Margin 1.51% 1.23% -1.04% -6.18%
    Net profit analysis in Time series analysis;
    Net Profit Margin Ratio indicates the proportion of sales revenue that translates into net profit.
    This ratio is calculated on the basis of the sales. Here we have net profit of Azgard Limited as we
    see that in 2019 our net profit is 1.51% and in previous year our net profit is 1.23% this shows
    that in this year our improvement is much as we see in previous year this year our sales in
    increases as we see in gross profit ratio in above this is main factor but may be another factor
    also involve that our tax saving and if we see in the operation margin ratio we also analyze that
    our operation is much efficient as in 2017 and 2016 respectively. As it is clearly seen that in
    2016 the is to high as compare to 2017 the main reason of this loss is the company mainly taken
    huge amount of loan from financial institution some are in the shape of long term loan and also
    huge borrrowing in the form of short term finance. In2016 company basically short term
    borrowing is to high and basically rely on the short term loan this is the main reason the huge
    finance cost show the position of the firm in losses.

    Cross Sectional analysis of Azgard Limited with Industry (Kooh e Nor);


    Net profit analysis of Kooh e Noor is as Under;

    Profitability Analysis 2019 2018 2017 2016

    Net profit Margin 5.22% 2.20% 1.26% 1.39%

    While our company( Azgard) Net profit analysis is as under;

    Profitability Ratios 2019 2018 2017 2016

    Net profit Margin 1.51% 1.23% -1.04% -6.18%

    As we see in above calculation in 2019 our result shows 1.51% while our competitor shows
    5.22% this clearly shows that our company takes huge amount of long term loan that and our
    taxes is also have effect on the profit. but as above from gross profit and operating profit result
    shows that we our sales is satisfactory from our competitor and in previous year same like
    situation as we see in 2016 our net profit ratio shows in loss (6.18%)and in 2017 it will be also
    in loss but in better than in loss (1.04%) and in 2018 it is in profit than previous year of 1.23%
    and in current year 2019 it is 1.51% from these calculation we see that in 2016 company is
    working in short term loan rather than long term loan but in 2017 company gradually pay off its
    short term and convert it in on long term financing and in 2018 we see in we are as much better
    then previous year and in 2019 we finance our operation on the long term finance.

    Liquidity Ratio;

    Current Ratio;

    The formula of current ratio is

    Current ratio

    Current ratio= ______________________x 100

    Current liability

    Now we have to put the value in respected year;

    2017 2016

    Current ratio =

    Current Ratio in time series analysis ;

    Basically this ratio show the business current position in short term period. Now here we
    calculate the current position of Azgard Nine which was a private sector organization in textile
    industry,here we compare the current ratio in 2017 the current ratio of Azgard Nine is and in
    2016 the current ratio is basically our main criteria of which preferred good as in industry is 2.

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