14 February 2023
Hi all, Could you pls help me for do comment on Debt/PBDIT-0.22 in FY.21 & 2.61 in FY22 Current Ratio is 2.07 in FY 21 & 1.54 in FY 22 PBDIT / NET SALES (%) -13.97% in FY 21 17.98% in FY 22 NET PROFIT / NET SALES (%)-12.78% in FY 21 & 12.79% in FY 22 CASH PROFIT / NET SALES (%)- 14.23% in FY 21 & 13.52% in FY 22. DSCR-9.19 in FY 21 & 12.06 in FY 22 PBDIT-9.02 in FY 21 & 16.04 in FY 22 Interest Cov Ratio-39.22 in FY 21 & 32.08 in FY 22
07 July 2024
Based on the financial ratios provided for FY 2021 and FY 2022, here are some comments and insights:
1. **Debt/PBDIT Ratio**: - FY 21: 0.22 - FY 22: 2.61 - **Comment**: There has been a significant increase in the Debt/PBDIT ratio from FY 21 to FY 22, indicating higher dependency on debt to finance operations relative to earnings before depreciation, interest, and taxes (PBDIT). This increase should be carefully monitored as it could indicate higher leverage and financial risk.
2. **Current Ratio**: - FY 21: 2.07 - FY 22: 1.54 - **Comment**: The current ratio has decreased from FY 21 to FY 22, suggesting a potential decrease in short-term liquidity. A ratio above 1 indicates the company's ability to meet short-term liabilities with current assets, but the decrease indicates a tighter liquidity position in FY 22.
3. **PBDIT / Net Sales (%)**: - FY 21: -13.97% - FY 22: 17.98% - **Comment**: There has been a significant improvement in the PBDIT margin from a negative in FY 21 to positive in FY 22. This indicates better profitability per unit of sales, which is a positive trend for the company's financial performance.
4. **Net Profit / Net Sales (%)**: - FY 21: -12.78% - FY 22: 12.79% - **Comment**: The company has achieved positive net profit margins in both FY 21 and FY 22, showing profitability from operations after considering all expenses. Maintaining positive net profit margins is crucial for sustaining operations and growth.
5. **Cash Profit / Net Sales (%)**: - FY 21: 14.23% - FY 22: 13.52% - **Comment**: Although there has been a slight decrease in cash profit margins from FY 21 to FY 22, both years show healthy cash profit margins relative to net sales. This indicates the company's ability to generate cash from its core operations.
**DSCR (Debt Service Coverage Ratio)**: - FY 21: 9.19 - FY 22: 12.06 - **Comment**: The DSCR has improved significantly from FY 21 to FY 22, indicating the company's enhanced ability to cover its debt obligations from its operating income. A higher DSCR suggests better financial health and lower risk of default on debt payments.
**Interest Coverage Ratio**: - FY 21: 39.22 - FY 22: 32.08 - **Comment**: Although there has been a decrease in the interest coverage ratio from FY 21 to FY 22, both ratios are comfortably above 1, indicating that the company generates sufficient operating income to cover its interest expenses. However, monitoring this ratio is crucial to ensure continued ability to service debt.
**Overall Assessment**: The company has shown improvements in profitability metrics, DSCR, and operational efficiencies from FY 21 to FY 22. However, there are concerns regarding the increase in the Debt/PBDIT ratio and the decrease in current ratio, which warrant close attention. Continued focus on managing debt levels and maintaining liquidity will be key to sustaining financial health and growth.
CAclubindia
