Impact Stories & Blog
Our team share their insights and perspectives on the impact our program is having on youth in Southern Africa.
ACTIVITY 4 FINANCIAL PERFORMANCE
Financial Performance Liquidity Ratios Current Ratio Total current assets /Total Liabilities = 10665/5776 = 1.8 Tiger brands, their current ratio is 1.8:1. The company therefore has 1.8 more current assets than current liabilities and is therefore can be able to pay off its debts and considered to have a good performance. Quick Ratio (Total current assets - Total Inventory) = (10665- 4812) = 5853 = 1.013 Total current liabilities 5776 5776 The Quick Ratio for Tiger Brands is 1.013, this means that the company can pay off all of its current liabilities with quick assets and still have some quick assets left over and it shows a good performance of the company. Activity Ratios Inventory Turnover Ratio Cost of goods sold/Total Inventory = 20856 = 4.334 4812 The ratio for Tiger Brands shows a good performance because the company does not overspend on buying too much inventory and waste resources by storing non-saleable inventory. Accounts Receivable Turnover Ratio Net sales = 31298/ = 6.504 /Net accounts receivables 4812 Tiger Brands has a ratio of 6.504. This means that the company collected its average receivables 6.505 times during the year, which in turn means every 2 or so months. This is a favourable ratio and indicates a good performance by the company. Profitability Ratios Return on Assets Profit before Taxes/ = 4267 = 0.1779 Total Assets 23979 For every rand invested in assets in Tiger Brands during the year, the company produced R0.178. The return on assets is not high; it would still be considered a worthy investing given that it is not less than zero. Measures however need to be taken to improve. This would differ if it compared lower to other investment avenues. Return on Equity Profit before Taxes = 4267 = 0.2501 Equity 17061 Similar to the ROI, the company would still be considered a worthy investing given that it is not less than zero. Measures however need to be taken to improve. This would differ if it compared lower to other investment avenues. Leverage Ratio Debt Ratio Total Liabilities/Total Assets = 6745/23979 =0.28 *100 =28% The company’s assets are not significantly funded by liabilities, but only 28% which is good Interest Coverage Ratio Earnings before interest and tax (EBIT)/Interest payment = 3941/207 =19.06 The company is able to pay interest 19 times from its earnings before interest Profitability Ratios Return on Equity Net Income/Equity = 3138/17061 = 0.18*100 = 18% Return on equity is good compare to 2016 Operating Profit to Sales Profit for the year/revenue =3138/31298 = 0.1 *100 = 10% The company is profitable with 10% profit in the current year. This is good
THIS INFORMATION IS MADE POSSIBLE BY THE GENEROUS SUPPORT OF THE AMERICAN PEOPLE THROUGH THE UNITED STATES AGENCY FOR INTERNATIONAL DEVELOPMENT (USAID). THE CONTENTS ARE THE RESPONSIBILITY OF DELOITTE EAST AFRICA AND DO NOT NECESSARILY REFLECT THE VIEWS OF USAID OR THE UNITED STATES GOVERNMENT.