An Analysis of Uchumi Supermarkets’ Financial Ratios

2693 Words Apr 10th, 2012 11 Pages
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Financial Ratios are relative magnitudes of select numeric items of a company’s financial statements. The assessment of the operating performance of a company is based on five main types of ratios. These are liquidity, gearing or solvency, activity, profitability and investor ratios. Profitability ratios
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Despite the positive gross profit margin, the negative values in the other ratios indicate a strong inability to cover operating expenses. These ratios should be relatively constant. Retailers generally have lower profit margins than other industries, with food retail averaging 3%margins. The rising competition may
1
Gross Profit Margin
GP / Rev
14.42%
16.27%
17.31%
15.40%
16.84%
2
Operating Profit Margin
EBIT / Rev
-8.13%
-2.85%
1.01%
1.90%
6.25%
3
Net Profit Margin
PAT / Rev
-8.68%
-2.29%
0.63%
1.12%
3.92%
MBA 8101 Assignment: Financial Ratios - Uchumi Supermarkets 4 force reduction in prices and this would also not auger well with the current margins of the company. Overall, not good.
b. Return on Investment Amount of profit relative to the assets employed to produce that profit.
The returns to investors have sharply decreased with time. Currently they are negative values. These indicate inability to efficiently apply the resources to generate proportionate wealth. It also suggests difficulty in servicing its debt. Not good.
4
Return on Investment ROI
PAT / TA
-21.16%
-5.95%
1.97%
4.57%
13.39%
5
Return on Equity ROE
PAT / TL
-21.90%
-7.46%
3.10%
8.80%
23.84%
6
Return on Capital Employed ROCE
EBIT / ( TE + NCL )
-123.00%
-36.60%
8.57%
16.10%
48.76%
D.
Activity Ratios Efficiency in applying resources/assets. How well assets are used. Usually turnover rations and indicate the benefits produced by specific assets in classes or collectively.
The turnover days on

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