FINANCIAL RATIOS ANALYSIS

SHAKARGANJ SUGAR MILL

Introduction
Shakarganj is Pakistan’s top leading sugar mill. It was established in 1967. The companies supply
chain is not only in Pakistan. It is also exporting its products in different countries of the world.

Liquidity Ratios
Liquidity ratios are used to determine the company’s ability to meet its short term loans.
𝐶𝑎𝑠ℎ
 Current Ratio =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
2017 2016 2015 2014 2013
Sakrand Sugar Mill 0.462
Shakarganj Sugar Mill 0.40 0.18 0.35 0.23 0.21
Sanghar Sugar Mill 0.69
Interpretation: Here we see that for Shakarganj Current ratio for 2017 is greater as compare to all other
years so it means that 2017 was a better year than other. However the standard current ratio is
considered to be equal to 2.
𝐶𝑎𝑠ℎ
 Cash Ratio = 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
2017 2016 2015 2014 2013
Sakrand Sugar Mill 0.23
Shakarganj Sugar Mill 0.0013 0.0041 0.1917 0.0142 0.0152
Sanghar Sugar Mill 0.01
Interpretation: In 2015 Shakarganj had more cash to pay its current liabilities as compare to other years.

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠−𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑖𝑒𝑠
 Quick/Acid test Ratio = 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
2017 2016 2015 2014 2013
Sakrand Sugar Mill 0.435
Shakarganj Sugar Mill 0.1 0.086 0.23 0.13 0.11
Sanghar Sugar Mill 0.27
Interpretation: Inventories take time to convert into cash so determining ability bitterly we may exclude
it. In this section again 2015 is having greater value and is better than all other financial years.
Solvency Ratios
𝑇𝑜𝑡𝑎𝑙 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
 Total Debt Ratio = 𝐸𝑞𝑢𝑖𝑡𝑦
2017 2016 2015
Sakrand Sugar Mill 1.48
Shakarganj Sugar Mill 7.07 380.9 2.56
Sanghar Sugar Mill 4.7
Interpretation: As compare to other sugar mills Shakarganj has a greater number of this ratio
which is a bad sign. In 2016 we can see that the total liabilities of the company were 380.9 times
greater than its equity.

𝐿𝑜𝑛𝑔 𝑇𝑒𝑟𝑚 𝐷𝑒𝑏𝑡

 Debt Equity Ratio = 𝐸𝑞𝑢𝑖𝑡𝑦
2017 2016 2015 2014 2013
Sakrand Sugar Mill 0.5
Shakarganj Sugar Mill 0.36 22.45 (1.45) (2.07) 84.01
Sanghar Sugar Mill 3.10
Interpretation: In 2016 we can see that the total liabilities of the company were 22.45 times greater
than its equity. In 2017 company showed improvement in this section.
𝐸𝐵𝐼𝑇
 Times Interest Earned Ratio =
𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑐ℎ𝑎𝑛𝑔𝑒𝑠
2017 2016 2015 2014 2013
Sakrand Sugar Mill 8.39
Shakarganj Sugar Mill 3.06 0.83 0.82 (0.78) 1.75
Sanghar Sugar Mill (1.75)
Interpretation: 2017 and 2013 are the only years where Shakarganj made enough income to pay its
interest. Other years are critical where it can’t even pay its interest amount

Asset Management Ratios

𝑆𝑎𝑙𝑒𝑠 365
 Inventory Turnover = 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 , Days in inventory = 𝐼𝑛𝑣 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟
2017 2016 2015 2014 2013
Sakrand Sugar Mill 74.3 , 4.9
Shakarganj Sugar Mill 13.42,27.21 7.14,51.09 9.05,40.32 18.73,19.48 9.88,36.94
Sanghar Sugar Mill 3.12 , 116.9
Interpretation: Sakrand sugar mill as compare to its competitors sales its inventory in less days. 2014
was the where this ratio was maximum for Shakarganj
𝑆𝑎𝑙𝑒𝑠 365
 A.R Turnover = , Days in AR =
𝐴.𝑅 𝐴.𝑅
2017 2016 2015 2014 2013
Sakrand Sugar Mill 42.16 , 8.65
Shakarganj Sugar Mill 125.62, 2.9 200.06,1.82 189.45,1.9 205.53,1.78 85.83,4.25
3
Sanghar Sugar Mill 2.57 , 142
Interpretation: Accounts receivable turnover means that the ability of a company to efficiently recover
its credit. Shakarganj sugar mill is doing better as compare to its competitors in this sector.
𝑆𝑎𝑙𝑒𝑠 365
 A.P Turnover = 𝐴.𝑃
, Days in AR = 𝐴.𝑃
2017 2016 2015 2014 2013
Sakrand Sugar Mill 7.54 , 58.4
Shakarganj Sugar Mill 3.20,114.22 0.80,456.5 1.46.249.1 3.56,102.56 4.27,85.50
9 5
Interpretation: Accounts payable ratio measures the speed of company to pay its suppliers. Shakarganj
is lacking behind in this section. 2013 was much better than other years for Shakarganj.
𝑆𝑎𝑙𝑒𝑠
 Fixed Assets Turnover = 𝐹.𝐴
2017 2016 2015 2014 2013
Sakrand Sugar Mill 0.75 0.61
Shakarganj Sugar Mill 1.34 0.49 0.69 1.11 2.16
Sanghar Sugar Mill 147.96 193.37 245.93 278.88 383.94
Interpretation: It determine the efficiency of a company to use its assets to generate revenue. Low
turnover indicates low profit margin. So, 2016 was best year as compare to other years

Profitability Ratios
𝐺.𝑃
 Gross Profit Margins = 𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠 𝑥100
2017 2016 2015 2014 2013
Sakrand Sugar Mill 0.19
Shakarganj Sugar Mill 5.77 (6.76) (1.04) (0.40) 7.36
Sanghar Sugar Mill (2.74)
Interpretation:Gross profit margin is used to determine the difference between revenue and COGS.
2013 was the year with maximum margin. Sharganj is leading in this sector
𝑂.𝑃
 Operating Profit Margins = 𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠 𝑥100
2017 2016 2015 2014 2013
Sakrand Sugar Mill -3.4%
Shakarganj Sugar Mill 35 -31 -35 29 23.73
Interpretation: It shows the efficiency of a company to control its cost and expenses associated with
business operations. Shakarganj made its maximum margin in 2017.
𝑁.𝑃
 Net Profit Margins = 𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠 𝑥100
2017 2016 2015 2014 2013
Sakrand Sugar Mill 8.4
Shakarganj Sugar Mill 1.86 (0.41) (2.17) (5.63) 1.98
Sanghar Sugar Mill (11.11)
Interpretation: It shows the efficiency of a company to maximize its profit.Shakarganj made maximum
profit in 2013.
𝐸𝐵𝐼𝑇
 Basic Earning Power = 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 𝑥100
2017 2016 2015 2014 2013
Sakrand Sugar Mill 0.462 0.0678 0.332 0.846 0.45
Shakarganj Sugar Mill 5.8 (1.2) (1.37) 3 6.45
Interpretation:It calculate the operating earning power of company to utilize its assets.
𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡
 Return of Assets = 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 𝑥100
2017 2016 2015
Sakrand Sugar Mill 5.4%
Shakarganj Sugar Mill 1.8 -45.49 19.38
Interpretation: It shows how much assets a company utilized to maximize its net profit. So 2015 was a
best year.
𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡
 Return of Equity = 𝐸𝑞𝑢𝑖𝑡𝑦
𝑥100
2017 2016 2015 2014 2013
Sakrand Sugar Mill 10.8
Shakarganj Sugar Mill 28.77 (5.24) (20.89) (202.98) 94.53
Sanghar Sugar Mill (85.28)
Interpretation: It shows how much net profit a company made utilized to overcome its equity. So 2013
was a best year.

Market Value Ratios

𝑃𝑟𝑖𝑐𝑒 𝑜𝑓 𝑠ℎ𝑎𝑟𝑒
 Price Earning Ratio =
𝐸𝑃𝑆
2017 2016 2015 2014 2013
Sakrand Sugar Mill 7.58
Shakarganj Sugar Mill 50.42 (166.38) (9.37) (1.71) 5.08
Sanghar Sugar Mill (1.55)
Interpretation: It shows the sum of the money company is paying on each rupee earning of the
company. So, 2017 is the best year where company paid 50 times then original price.
𝑃𝑟𝑖𝑐𝑒
 Market Book Ratio = 𝐵𝑜𝑜𝑘 𝑉𝑎𝑙𝑢𝑒 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒
2017 2016 2015 2014 2013
Sakrand Sugar Mill 0.462
Shakarganj Sugar Mill 1.80 0.16 -1.89 -9.19 3.84
Sanghar Sugar Mill 37.35
Interpretation: It tells that the book value of a share is achieved in market or not. Sanghar made it
better than others.