Calculate liquidity ratios current and quick ratios

Reference no: EM13925073

The following are the financial statements (along with common sized analysis) of XYZ Ltd.

PROFIT AND LOSS ACCOUNT
Statement Date 3/31/2008 Amounts in: US$ Millions No. of Months 12 %			3/31/2009 12		%
Turnover 36,441 100.0			42,674		100.0
Less: Carriage inwards 701 1.9			822		1.9
Less: Cost of Goods Sold 11,005 30.2			14,443		33.8
Gross Profit / (Loss) 24,735 67.9			27,409		64.2
Less: Admin Overheads 16,469 45.2			18,997		44.5
Less: Selling Overheads 3,755 10.3			3,797		8.9
Less: Depreciation 1,652 4.5			2,150		5.0
Less: Amortization of Intangibles 48 0.1			61		0.1
Total Operating Expenses 21,924 60.2			25,005		58.6
Operating Profit/(Loss) 2,811 7.7			2,404		5.6
Add: Other Income/(Expenses) 3,027 8.3			(910)		(2.1)
Less: Interest Payable 734 2.0			535		1.3
Net Profit/(Loss) before Taxation 5,104 14.0			959		2.2
Less: Current Taxation 59 0.2			(78)		(0.2)
Less: Deferred Taxation (31) (0.1)			(7)
Net Profit/(Loss) after Taxation 5,076 13.9			1,044		2.4
BALANCE SHEET - ASSETS AND LIABILITIES
Statement Date		3/31/2008		3/31/2009
CURRENT ASSETS Cash	10,360	% 22.3	7,168	% 15.1
Trade Debtors	1,679	3.6	1,107	2.3
Liquid Assets	12,039	25.9	8,275	17.4
Stock	751	1.6	1,053	2.2
Due from Related Companies	1,384	3.0	2,070	4.4
Advance Lease Deposits	912	2.0	900	1.9
Other Debtors	1,482	3.2	1,682	3.5
Prepayments	1,723	3.7	1,350	2.8
Available for Sale Financial Assets	96	0.2	-

Held to Maturity Investments	216	0.5	200	0.4
Derivatives	188	0.4	-
Other Current Assets	6,001	12.9	6,202	13.1
Total Current Assets FIXED AND NON-CURRENT ASSETS Total Fixed Assets	18,791 21,369	40.4 45.9	15,530 29,086	32.7 61.3
Held-to-Maturity Investments	2,048	4.4	113	0.2
Investment in Joint Ventures	560	1.2	441	0.9
Loans and other receivables	1,228	2.6	1,039	2.2
Other Operating Non-Current Assets	223	0.5	192	0.4
Derivatives	1,377	3.0	125	0.3
Other Non-Current Assets	5,436	11.7	1,910	4.0
Total Fixed Assets and Non-Current Assets INTANGIBLE ASSETS Total Intangible Assets	26,805 919	57.6 2.0	30,996 924	65.3 1.9
TOTAL ASSETS CURRENT LIABILITIES Total Short Term Loans	46,515 1,416	100.0 3.0	47,450 1,372	100.0 2.9
Trade Creditors	6,916	14.9	7,453	15.7
Due to Related Parties	56	0.1	194	0.4
Dividends Payable	912	2.0		-
Tax Payable	162	0.3		23
Other Creditors	5,666	12.2	4,883	10.3
Accruals	165	0.4	169	0.4
Derivatives	170	0.4	31	0.1
Total Current Liabilities NON-CURRENT LIABILITIES Total Long Term Debt	15,463 12,301	33.2 26.4	14,125 15,140	29.8 31.9
Total Other Non-Current Liabilities	2,063	4.4	1,774	3.7
Total Non-Current Liabilities	14,364	30.9	16,914	35.6
CAPITAL AND RESERVES Ordinary Shares	801	1.7	801	1.7
Other Reserves	782	1.7	-
Retained Earnings	15,105	32.5	15,610	32.9
Total Capital and Reserves	16,688	35.9	16,411	34.6
TOTAL LIABILITIES	46,515	100.0	47,450	100.0

Using the above information, complete a comprehensive ratio analysis for XYZ Ltd:

(i) Calculate liquidity ratios: current and quick ratios.

(ii) Calculate activity ratios: inventory holding period, debtors collection period.

(iii) Calculate finance ratios: gearing ratio, debt-to-equity ratio, net debt to EBITDA.

(iv) Calculate coverage ratios: interest coverage ratio, finance cost to sales.

(v) Calculate profitability ratios: gross profit margin, net profit margin.

(vi) Use the DuPont method, and after calculating the component ratios, compute the ROCE for this firm.

(vii) Calculate Altman's Z Score and appraise the bankruptcy risk.

Reference no: EM13925073

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