FINANCIAL ANALYSIS (2008):

All the value from balance sheet and profit & lost account are in Rupees and in
billions.
1. Current Ratio = Current
Assets
= 2.56
Current Liabilities
EXPLANATION:
IMC has comfortable current ratio, thanks to its large cash balance. Company is in
position to meet its current obligations.
2. Quick Ratio = Current Assets Inventories
=1.86
Current Liabilities
EXPLANATION:
IMC acid test ratio showed that it has not sufficient liquid asset to meet is current
obligations.
3. Average Collection Period = Accounts Receivable
=18 days
Annual Credit Sales / 365
EXPLANATION:
Average collection period is satisfactory; it recovers its receivables in 5
Days
4. Fixed Assets Turnover = Total
Sales
=10.27
Total fixed Assets
EXPLANATION:
Asset turnover ratio shows the level of sales generated with respect to productive
capacity. The level and trend of sales is growing with respect to its investment in assets
5. Debt Ratio =
Total Debt
=27.5%
Total Assets
EXPLANATION:
Indus Motor Company has sufficient assets to cover its debts.
6.

Debt-to-Equity Ratio = Total Debt

= 0.4005
Total Equity
EXPLANATION:
IMC is less leverage compare to other companies to finance there assets. The risk born by
IMC is lower as compared to other companies
7. Gross Profit Ratio = Gross Profit
Sales
EXPLANATION:

= 9.29%

Gross profit ratio of IMC shows that the firms production and procurement efficiency is
better than the industry Competitors.
8. Net Profit Margin = Net Income
=5.53%
Sales
EXPLANATION:
The Profit Margin Ratio is used as a Measure of Profitability. Ratio shows that company
earned 2.25 % on its sales.
9.

Return on Assets (ROA) = EBIT

= 25.76%
Total Assets

EXPLANATION:
10. Return on Equity (ROE) = Net Income
= 6.12%
Stockholders' Equity
EXPLANATION:
The Return On Equity measures the profits after taxes, IMC ROE ratio shows that it has
sufficient assets relative to shareholders investment.

Permalink Reply by + M.Tariq Malik on February 27, 2012 at 9:55pm

Cross Sectional Analysis

RATIOS
Current Ratio
Quick Ratio
Average Collection
Period
Fixed Assets Turnover
Ratio
Debt Ratio
Debt-to-Equity Ratio
Gross Profit Ratio
Net Profit Margin
Return on Assets
(ROA)
Return on Equity
(ROE)

TOYOTA
2.56
1.86

HONDA
1.21
0.93

PAK-SUZUKI
0.95
0.63

18

20.28
27.5%
0.4005
9.29%
5.53%

0.81
55.0
0.80
5.21
2.21

1.23
44.0
0.75
4.24
2.22

25.76%

5.2

2.3

6.12%

26.0

28.2

Read more: Financial Analysis Ratio Analysis of Indus Motor Company Toyota Pakistan Virtual University of
Pakistan http://vustudents.ning.com/group/fini619internshipreportfinance/forum/topics/financial-

analysis-ratio-analysis-of-indus-motor-company-toyota-p#ixzz3BrYHN9P4
Read more at
http://vustudents.ning.com/group/fini619internshipreportfinance/forum/topics/financial-analysisratio-analysis-of-indus-motor-company-toyota-p#bQGmzuYGtqTUmuWB.99