Table of Contents

INTRODUCTION..................................................................................................... ..2
COMPANY NAME: DANGOTE SUGAR.........................................................................3
COMPANY NAME: JULIUS BERGER............................................................................6
COMPANY NAME: SETRACO....................................................................................8
COMAPANY NAME: ARIK AIRWAYS.........................................................................10
COMPANY NAME: SOKOTO CEMENT.......................................................................12
CONCLUSION..................................................................................... ...................15
REFRENCE.................................................................................. ..........................16

INTRODUCTION
 This is an individual assignment. I have been giving a task which am required to select from
my opinion any five companies in my country (Nigeria) which are in the current stock
exchange and perform the following below:

a) Prepare a ratio analysis of key financial variables for the last three years
b) Analyze the performance of the companies, in about 2,000 words (about 5 pages)
using the information obtained in (a) and any other information you find useful.
Marks will be awarded for correct formulas and its breakdown values over the three
years. Your ability to infer the health (based on the trends as indicated by the ratios) of
the companies from the ratios calculated will form 50% of the marks. Ratios from at
least three of the following groups are expected: Liquidity, Gearings, Efficiency,
Profitability and Investment.

The main aim of any business is to make profit. Therefore, it becomes imperative for
businesses to examine their performance over a given period of time. This information is very
important not only to the businesses but also to other stakeholders such as share holders and
also potential investors. Financial Ratios provide a means of examining the financial status of
a business. Calculating Ratios portray a good view of the position and performance of a
particular business and also helps in bringing to light the financial strengths and weaknesses
of a business. Ratios are helpful in comparing the financial condition of different businesses
(Atrill & Mclaney, 2001). For the purpose of this work, 2 different companies namely: Courts
Mammoth and Tii Hen will be examined and their financial performance will be evaluated
and analyzed using the appropriate Ratios.

COMPANY NAME: DANGOTE SUGAR

PROFITABILITY 2006(millions) 2007(millions) 2008(millions)

 Net profit * 17,552 * 100 30,663 * 100 52,891 * 100
100
Net margin =
83768 80,649 99678
Sales
=38.8% =39.8% =38.2 %

Gross 20144 * 100 32,465 * 100 41987* 100

profit *100
Gross margin =
83,768 80,649 99678
sales

=61.6%

= 64.9% = 63.1%

Return cap = profit before

tax*100
16,657 * 100

Share +long 30,661 *100 41345 * 100

term loan
47,978+ 7521

66,956 +7567 76891 + 8588

=30% = 48%
=41%
Rosf = profit after tax*100

Ord share cap +

reserve

16,657 *100

21343 * 100 32189 * 100

47,978 +205

Current ratio = current 66,956 + 231 76891 + 241

assets
=34.5%

Current = 31.7.8% = 41.7 %

liabilities
83666

91608 243775

94774

71606 194346

= 0.88 : 1

= 1.2 : 1 =1.25 : 1
Quick ratio = C A – 13666 – 3,378 25603- 15084 243775 – 6078
inventory

94774 71606 194346

Current
liabilities = 0.34 : 1 = 1.38: 1 =1.22 : 1

34127 * 100 45670 * 100 35880 * 100

Gearing = long term 192345 273567 349875

liability *100
= 17,7% = 16.67% =10.8%

capital

16,657 21343 32189

27,978 25956 27891

EPS = profit for the year
= O.59 =0.82 =1.15

No of ord share
5,783 * 365 15,456* 365 20844 * 365

9945 20252 43401

Assets turn over =
inventory* 365 = 212days = 278days = 188days

Cost 52787 * 365 58797 * 365 82596 * 365

of sales

84140 92917 41914

= 229 days = 230 days = 719 days

Debtors call period = trade
receivable*365
412378 * 365 53501 * 365 61126 * 365

Credit sales 92200 67878 13581

= 165 days = 181 days = 136 days

Creditors call period =
trade receivable
Credit purchase

http://www.dangote-sugar.com/admin/uploads/DSR%20-%20Results%20Presentation.pdf
 In terms of profitable ratio Dangotte’snet profit ratio is very high in 2007 because their sales
high and their cost of expenses is low during their period which makes their gross profit to
be high. the net profit ratio during that 39.8% but in the year 2008 their net ratio fall to 38.2%
due to decrease in sales and their gross profit is 48.8 % 2006 and 2008 are lower than 2007
because their cost of sales figure in that year is higher , the year with the best gross profit and
roceis 2006 because during that year their cost of goods sold and interest obligations are low,
their gross profit is 75% and their roceis 23% but both the roce and the gross profit ratios
falls in 2008 because increase in interest obligation and cost of goods sold. it improve a bit
2008 to gross of 19% and roce of 12%, the roce is very high in 2007 which 18% as compare
to 14% and 14% of 2006 and 2008 respectively this due may decrease in tax or increase in
reserves

Dangotte’scurrent ratio for the three year are all acceptable because it is all more than
1 but in 2007 the current ratio is very good because it is 2.43 as compare to 2006 and 2008
which are 1.92 and 1.4 respectively, this is indicting that their assets are more than their
liability in this three years which put them in strong position to pays back their debt .their
quick acid acids are acceptable because is it more than one but 2007 is the bset because
higher as compare to 2006 and 2008, in 2007 it is 1.98 and in 2006 and 2008 it is 1.38 and
1.24 respectively. Their gearing ratio follows this pattern too

The shares earning is higher in 2008 which is 0.2 to every shares as compared to 0.132 and
0.113 of 2006 and 2007 respectively . This is due to the huge profit in 2008; their stock
turnover is very high in 2008 which is 111days. This indicates that there have it difficult to
sales of their product as compare to 2006 and 2007 which are 101 and 68 days respectively
and also in 2008 their debtors don’t paid back their debt in time which makes their debtors
collection to be 718days as compare to 2006 and 2008 and their creditors paying period is
very low in 2008 indicating that their pays their debt quicker in 2008 as compare to other
years

COMPANY NAME: JULIUS BERGER

PROFITABILITY 2006(MILLIONS) 2007(MILLIONS) 2008(MILLIONS)

 Net profit * 99* 100 199* 100 228 * 100
100
Net margin =
271 411 516
Sales
= 36.5% =48.3% =44 %

Gross 145 * 100 233* 100 309 * 100

profit *100
Gross margin =
271 411 516
sales

=53.5 = 56.6 = 59.8%

Return cap = profit before

tax*100

166 * 100 277*100 302* 100

Share +long
term loan
623 + 32 757 +56 787+ 98

= 34.84 %

= 25.34% = 34.18%

Rosf = profit after tax*100

Ord share cap +

reserve

98 *100 103 * 100 210 * 100

623 757 787

Current ratio = current
assets
=15% = 13.6% 26.6%
Current
liabilities
126 126 158

127 143 165

= 0.99 : 1 = O.86 : 1 =0.96 : 1

Quick ratio = C A – 126 - 11 126- 59 158 – 23
inventory

127 143 165

Current
liabilities = 0.90 : 1 = 0.82: 1 =0.89 : 1

341 * 100 456 * 100 358* 100

Gearing = long term 364 320 409

liability *100
= 9.36% = 14.27% =8.8%

capital

98 103 210

45 99 103
EPS = profit for the year
= 2.17 =1.04 =2,04

No of ord share
106 * 365 199 * 365 170* 365

283 268 285

stock turn over =
inventory* 365 = 136days = 8 days = 17 days

Cost
52 * 365 170* 365 127 * 365
of sales

225 198 216

= 229 days = 313 days = 214 days

Debtors call period = trade
receivable*365
32 * 365 71 * 365 87* 365

Credit sales 283 271 246

= 41 days = 95 days = 129days

Creditors call period =
trade receivable
Credit purchase
 COMPANY NAME: SETRACO

PROFITABILITY 2006(MILLIONS) 2007 2009

Net profit * 474* 100 599* 100 728 * 100

100
Net margin =
1989 2003 2109
Sales
= 6.44% =2.89% =2.44 %

Gross 642 * 100 794* 100 900 * 100

profit *100
Gross margin =
1989 2003 2109
sales

=15.18% = 1.27% = 17.66 %

Return cap = profit before

tax*100

266 * 100 297*100 332* 100

Share +long
term loan
2111 + 321 7571 +561 7871+ 981

= 6.84 %

= 25.34% = 10.18%

Rosf = profit after tax*100

Ord share cap +

reserve

123 *100 223 * 100 344 * 100

703 713 889

Current ratio = current
assets
=6.5% = 9.25% 96.14 %
 Current
liabilities

336 326 258

223 234 278

= 0.99 : 1 = O.86 : 1 =0.96 : 1

Quick ratio = C A – 126 - 17 326- 65 458 – 98
inventory

223 234 278

Current
liabilities = 0.90 : 1 = 0.82: 1 =0.89 : 1

314 * 100 465 * 100 385* 100

Gearing = long term 364 392 490

liability *100
= 9.36% = 14.27% =8.8%

capital
123
223 344

231 296 280

EPS = profit for the year
= O.113 =0.132 =0.2

No of ord share
126 * 365 326 * 365 458* 365

283 313 371

stock turn over =
inventory* 365 = 14 days = 8 days = 17 days

Cost
112 * 365 214* 365 198 * 365
of sales

84 198 216

= 229 days = 117 days = 215 days

Debtors call period = trade
receivable*365
115* 365 271 * 365 311* 365

Credit sales 138 207 298

= 41 days = 50 days = 82 days

Creditors call period =
trade receivable
Credit purchase
COMAPANY NAME: ARIK AIRWAYS

PROFITABILITY RATIO 2008 2007 2006

Gross margin = Gross profit * 100 34737 *100 30577 *100 30123 *100
Sales 290571 358406 360571
=11.95% =8.53% =8.35%
Net margin* 100 19438 *100 20495*100 20624*100
Net margin = 290571 358406 360571
Sales =6.69% =5.72% =5.72%
ROCE = profit before tax*100 19438 *100 20495*100 20624*100
181749+5457 181749+56560 181749+56790
3
Share +long term loan =5.72% =2.75%
=8.23%

ROSF = profit after tax*100 10111 *100 4760 *100 5601 *100
323973 328517 32902
Ord. share cap + reserve =3.12% =1.45% =1.70%

LIQUIDITY RATIO 2008 2007 2006

Current ratio = current assets 181388 155541 145926
139092 108137 106347
Current liabilities =1.30:1 =1.44:1 =1.37:1
Quick Ratio = C A – inventory 181388- 155541-33655 145926-34654
29033
108137 106347
130992
Current liabilities =1.13:1 =1.05:1
=1.09s:1

GEARING RATIO 2008 2007 2006

Gearing = long term liability *100 76075 *100 78062 *100 78097 *100
323804+7607 328514+78062 329826+78091
5
Capital + long term liability =19.19% =19.15%
=22.38%
Interest Cover=profit before tax * 100 19438 *100 20495 *100 20621 *100
Interest payable 9307 9900 9923
=208.85 =207.02 =207.81

EFFICIENCY RATIO 2008 2007 2006

stock turn over = inventory* 365 29033 *365 33655 *365 34654 *365
Cost of sales 273936 333585 343512
=38.68days =36.82days =36.82days
Debtors coll. period = trade receivable *365 126626 *365 97656 *365 99193 *365
290571 358406 360571
Credit sales =159.06days =99.45days =100.41days

Creditors call period = trade payable * 365 43892 *365 22038 *365 21071 * 365
273936 333585 343512
Credit purchase =58.48days =24.11days =22.39days

INVESTMENT RATIO 2008 2007 2006

EPS = profit for the year 10111 4760 3972
181566 181672 181820
No of ordinary share =0.056 =0.026 =0.022
COMPANY NAME: SOKOTO CEMENT

PROFITABILITY RATIO 2008 2007 2006

Gross margin = Gross profit * 100 38277 * 100 41263 * 100 8994 * 100
Sales
216731 271865 311128

= 17.66 % =15.18% =2.89%

Net margin* 100 5284 * 100 17496 * 100 8994 * 100
Net margin =
Sales 216731 271865 311128

=2.44 % = 6.44% =2.89%

ROCE = profit before tax*100 5284 * 100 16629 * 100 7772 *100
 Share +long term loan 75790 + 1461 62371 + 3263 75790 +568

= 6.84 % = 25.34% = 10.18%

ROSF = profit after tax*100 11621 * 100 4064 *100 10367 * 100

Ord. share cap + reserve 120881 62371 112088

96.14 % =6.5% = 9.25%

LIQUIDITY RATIO 2008 2007 2006

Current ratio = current assets 158160 126643 123648

Current liabilities 165075 127927 143319

=0.96 : 1 = 0.99 : 1 = O.86 : 1

Quick Ratio = C A – inventory 158160 – 126643 - 11569 123648- 5905
11569

Current liabilities 127927 143319

165075

= 0.90 : 1 = 0.82: 1
=0.89 : 1

GEARING RATIO 2008 2007 2006

Gearing = long term liability *100 35880 * 100 34127 * 100 45670 * 100

Capital + long term liability 409650 364791 320054

=8.8% = 9.36% = 14.27%

Interest Cover=profit before tax * 100 5284 * 100 16629 * 100 7772 *100
Interest payable 9902 9383 9056
 = 53.36 % = 177.22% = 85.82%

EFFICIENCY RATIO 2008 2007 2006

stock turn over = inventory* 365 11569 * 365 10609 * 365 5995 * 365
Cost of sales
246935 283019 271660

= 17 days = 14 days = 8 days

Debtors coll. period = trade receivable 127747 * 365 52785 * 365 96484 * 365
*365

216731 84140 198454

Credit sales

= 215 days = 229 days = 117 days

Creditors call period = trade payable * 55425 * 365 32126 * 365 37151 * 365
365

246935 283019 271660

Credit
purchase
= 82 days = 41 days = 50 days

INVESTENT RATIO
EPS = profit for the year 43274 29660 34862

No of ordinary share 263160 263160 263160

=0.2 = O.113 =0.132

Profitability is the ability of firm to generate earnings. Analysis of profit is vital concern to
stockholders, as they derive revenue, in the form of dividends. Further more, increased profits
can cause an increase in market price leading to capital gains. Profits are also important to
creditors, because profits are sources of funds for debt coverage
Company Dec 2008 Dec 2007 Dec 2006
DANDOTTE Current ratio: 0.88:1 Current ratio: 1.2:1 Current ratio:1.25:1

Quick ratio: 0.34:1 Quick ratio: 1.38:1 Quick ratio:1.22:1

JULIUS Current ratio: =0.99 : Current ratio: = 0.86 : 1 Current ratio: = O.96 :
1 1
BERGER Quick ratio: 0.82 : 1
Quick ratio: 0.90 : 1 Quick ratio: 0.89: 1
STRACO Current ratio: 0.99 : 1 Current ratio: 0.86 : 1 Current ratio: O.96 : 1

Quick ratio:0.90:1 Quick ratio:0.82:1 Quick ratio:0.89:1

ARIK Current ratio:1.30:1 Current ratio:1.44:1 Current ratio:1.37:1

AIRWAYS Quick ratio:1.09:1 Quick ratio:1.13:1 Quick ratio:1.05:1

SOKOTO Current ratio:0.89:1 Current ratio:0.90:1 Current ratio:0.82:1

CEMENT Quick ratio:8.8:1 Quick ratio:9.36:1 Quick ratio:14.27:1

GROSS PROFIT MARGIN also known as Mark-up, and refers to the amount of gross
profit added to the cost of sales. It dictates how much of gross profit could be earned for the
cost incurred in producing the goods after the goods are sold at specific prices. Higher mark-
up ratio shows a good signal to the company (Oxford, 2006).
RETURN ON CAPITAL EMPLOYED (ROCE) which is a measure of the returns that a
company realizes from its capital. The resulting ratio represents the efficiency of the
company in utilizing its capital to create revenue.
NET PROFIT MARGIN: This refers to the much of profit made by the Group for each
dollar of sales. It provides hints to the company’s pricing, cost structure and production
efficiency as well as a good ratio against competitors. The higher the ratio, the better it is.
Company 2008 2007 2006
DANGOTTE Gross profit ratio: 61.6 Gross profit ratio: Gross profit ratio:

Net profit ratio: 38.8 64.9 63.1

ROCE: 30 Net profit ratio: 39.8 Net profit ratio: 38.2

ROCE: 41 ROCE: 48
JULIUS Gross profit ratio: 53.5 Gross profit ratio: Gross profit ratio:

BERGER Net profit ratio: 36.5 56.6 59.8

ROCE: 25.34 Net profit ratio: Net profit ratio: 44

48.3% ROCE: 34.84

ROCE: 34.18
Gross profit ratio: 15.76 Gross profit ratio: Gross profit ratio:

Net profit ratio: 3.31 15.12 12.09

STRACO ROCE: 4.4 Net profit ratio: 3.44 Net profit ratio:2.87

ROCE: 4.40 ROCE:1.03

ARIK Gross profit ratio: 11.95 Gross profit ratio: 8.53 Gross profit ratio: 8.35

AIRWAYS Net profit ratio: 6.69 Net profit ratio: 5.72 Net profit ratio: 5.72

ROCE: 8.23 ROCE: 5.72 ROCE: 2.75

SOKOTO Gross profit ratio: 17.66 Gross profit ratio: Gross profit ratio: 2.89

CEMENT Net profit ratio: 2.44 15.18 Net profit ratio: 2.89

ROCE: 6.84 Net profit ratio: 6.44 ROCE: 10.18

ROCE: 25.34

RETURN ON SHAREHOLDERS FUND (ROSF): This ratio is used by the investors to

measure how does the money pump in by them is being spent by the company (Special
Investors, 2005). In other words it basically shows how many dollars of earnings are
generated per dollar of equity the shareholders’ provided (Spireframe, 2006)
Liquidity ratio shows the relationship between the current asset and current liability where
the company has the ability to pay its current bills. In the measurement of liquidity, current
ratio is used to measure the group’s solvency and the acceptable range though varies across
industries yet is mostly acceptable between 1.0 to 2.0. The initial liquidity position shows a
low ratio of current assets to cover current liability (0.88: 1) in 2006, this means the current
cash flow cannot be used to repay back short term obligations as the ratio is less than 1.

EFFICIENCY RATIOS: In assessing the performance of 5 companies chosen, we also need

to take into account how good the company is utilizing its assets. In asset utilization, stock
turnover, debtors’ collection period, creditors’ collection period and asset turnover ratio all
showed a positive results as most are in the acceptable limit of debtors collection period and
are mostly showing a stagnant or increasing creditors collection period which is good for the
companies because it can be utilized as a means of capital financing. Creditor’s payment ratio
shows how many days the company takes to pay back its creditors.
The gearing ratio represents the relationship between the amounts of fixed interest capital
(i.e. loan stock, debenture, preference shares, etc.) and the amount of equity capital (i.e.
ordinary shares). To sum up, the ordinary shareholders in a high-geared company benefit
from gearing when profits are relatively large
Final ratio used in the calculation of these companies under the Investment ratio was
EARNINGS PER SHARE: Earnings per share is a measure of return on investment of a
company. It measures a business’s profitability from the point of view of equity shareholders.
It was defined as earnings attributable to equity shareholders divided by the number of equity
shares in an issue over the years

CONCLUSION

The five companies mention above on the main board of Nigerian stock exchange, the five
companies chosen was in the same industry of producing consumer goods and services;
however forms a base for comparison and for investment decisions.

REFRENCE

1. http://www.dangote-sugar.com/admin/uploads/DSR%20-%20Results%20Presentation.pdf
2.

Williams, Jan R.; Susan F. Haka, Mark S. Bettner, Joseph V. Carcello (2008). Financial &
Managerial Accounting.
Malaysian Industrial Development Authority, 2003, ‘AKN to bank on high-tech edge, online,.
Available from: http://www.mida.gov.my/beta/news/print_news.php?id=458

Weygandt, J. J., Kieso, D. E., & Kell, W. G. (1996). Accounting Principles (4th ed.).
New York, Chichester, Brisbane, Toronto, Singapore: John Wiley & Sons, Inc. p.
801-802