Key Points to be Noted:
• The gearing ratio shows that the company’s business has become more risky in 2010 than it was in 2009. However, it still is less risky than the other companies in the industry who have an approximate gearing ratio of 30%.
• The gross profit and the operating profit margin decreased which shows that the company lost profitability even though it’s net income increased by 47m dollars.
• Customer’s collection period increased in 2010 which means the customers took more time to pay back their debts; company’s liquidity was affected negatively.
• Current ratio and quick ratio increased which is a good sign of improving liquidity.
• Price Earnings ratio decreased which means that the future expectations from the company are not so good as predicted by the stockholders. The stock price also decreased which shows lesser popularity and negative side of the business.
• The dividend yield decreased therefore the shareholders are getting lesser cash flow
• The ability to pay dividends increased as shown by the dividend cover ratio
• I would recommend the directors to improve their business and bring it up to the standards of the industry. In some areas the company has prospered but mainly it has declined. However it has made a profit of 47m more dollars than in 2009. However, this could also be due to many reasons.