MS AR 2018 (1)
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COMMENTS ON<br />
RATIO ANALYSIS<br />
Profitability ratios<br />
Profitability ratios depicted mix trend. Sales and profits over<br />
the years increased. However, sales and margins in 2017<br />
dropped due to removal of discount by China and imposition<br />
of regulatory duty on imported of billet and fall in steel prices<br />
in local markets.<br />
Liquidity ratios<br />
As sales volume increased over the years, liquidity position<br />
of the Company improved and resulted in better cash flows.<br />
Therefore, ratios started improving from year 2012 and<br />
ended in much better condition in <strong>2018</strong> as compared to year<br />
2012.<br />
Activity / turnover ratios<br />
The ratios depicted an overall mixed trend over the years.<br />
However, inventory days and ratio became stable 2015<br />
onwards. Receivables days decreased due to increase in<br />
outstanding overdue recoveries.<br />
Investment / Market ratios<br />
Increased profitability means increased EPS and this is<br />
evident from the figure which has gone up to 5.13 from<br />
4.21 last year. Break-up value increased during the year<br />
to 29.67 due to increased profitability. The market value<br />
of the share however closed at 62.57 which was lower<br />
than last year mainly due to overall political environment<br />
prevailing in the country.<br />
Capital structure ratios<br />
These ratios have continued to get better since 2012 based<br />
on increase in equity, improved results and healthy cash<br />
flows, which have helped the Company repay its debts at<br />
accelerated rates and the trend is evident this year. However,<br />
during the year interest cover ratio decreased due to<br />
increase in financial costs as a result of increase in shortterm<br />
borrowings.<br />
Annual Report <strong>2018</strong><br />
73
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