Ratio analysis of KOHAT CEMENTAND BEST WAYCEMENT

Current ratio:
Formula:
Current ratio= current assets /current liability
Kohat
2021 2020
0.914 times 0.906 times

Interpretation:
Whereas the some portion of current liabilities also increases like current portion of long-term
liabilities accured markup trade and other payables, also increase
In 2021as compared to 2020
Bestway:
2021 2020
0.99 times 0.89 times
Interpretation:
Current ratio of The company increase in 2021 because there is a major increase in account
receivables in 2021 and inventory as well short term deposits and prepayments also increases in
2021 and in 2021 company also do short term investments which was zero in 2020.
.
 Quick ratio:
Formula:
CURRENT ASSETS−INVENTORY
Quick Ratio=
CURRENT LIABILITY
KOHAT
2021 2020
0.846 times 0.790 times
Interpretation:
Inventory increases in 2021 which means company generating more finish goods than 2020
In 2020 company may unable to utilize its resources well Because of pandemic
But in 2021 company utilize its resources well ha generate more inventory than 2020
Quick ratio in 2021 is 0.672, which is greater than 2020
BESTWAY
2021 2020
0.672 times 0.514 times
Interpretation:
Inventory increases in 2021 which means company generating more finish goods than 2020
In 2020 company may unable to utilize its resources well Because of pandemic
But in 2021 company utilize its resources well ha generate more inventory than 2020
Quick ratio in 2021 is 0.672, which is greater than 2020
Gross profit margin:
Formula:
Gross margin ratio = Gross profit / Net sales
KOHAT
2021 2020
21% 4.3%
Interpretation:
Gross profit is profit from direct operations of business such as goods and services provided to
customers. Cost of goods sold are all the direct expense incurred in making a product. It appears
on an income statement and typically includes money spent on raw materials and labor. Gross
profit margin indicates the percentage of each dollar of revenue that the company retains as gross
profit. KOHAT CEMENT
BESTWAY
2021 2020
29.8% 27.8%
Interpretation:
Gross profit is profit from direct operations of business such as goods and services provided to
customers. Cost of goods sold are all the direct expense incurred in making a product. It appears
on an income statement and typically includes money spent on raw materials and labor. Gross
profit margin indicates the percentage of each dollar of revenue that the company retains as gross
profit. Bestway gross profit margin decrease from 2020 to 2021 mainly due to decrease in local
sales. Although the company 2021 COGS is high as compare to 2020 but the percentage of
increase in COGS is less as compare to Percentage of increase in sales that increase in gross
profit margin.
Net profit margin
 It measures how much net income or profit is generated as a percentage of revenue
Formula:
Net profit ratio = Net income / Net sales
Kohat
2021 2020
10% 5.9%

Interpretation:
Net profit margin consider net profit and sales. Sales is combination of foreign and local sales.
While Net sales excludes sales tax, excise duties, duties and The reasons behind such frequent
dramatic changes were pandemic, lockdown all around the world and in mid-end of 2020 uplift
of lockdown and resume of construction project after COVID.
Bestway cement
2021 2020
7.03% 6.02%
Interpretation:
Net profit margin consider net profit and sales. Sales is combination of foreign and local sales.
While Net sales excludes sales tax, excise duties, duties and The reasons behind such frequent
dramatic changes were pandemic, lockdown all around the world and in mid-end of 2020 uplift
of lockdown and resume of construction project after COVID.
Operating margin
Formula:
Operating margin ratio = Operating income / Net sales
Kohat
2021 2020
12.8% 10.3%
Interpretation:
Higher operating profit means company is earning enough from business
It indicates positive effect in the business activities in 2021 ratio is greater as compared to 2020
Therefore, higher operating profit also indicates operating efficiency of business
Best way
2021 2020
14.4 % 11.39%
Interpretation:
higher operating profit also indicates operating efficiency of business
But less ratio indicate companies may have high costs that vary directly with sales but have
lower fixed costs to cover each month.so in 2021companies earn smaller profit on each sale
Return on assets:
Formula:
Return on assets ratio = Net income / Total assets
Kohat
2021 2020
2.69 1.67
Interpretation:
ROA of 5% or better is typically considered good it shows that the return earned is how much
percentage of the total asset of the company or against the total asset of 1 rupee, the return earned
is how much rupee. In 2020, it was very low due to covid. This ratio saw the sound position from
2021 because it has been more than 2.69% so nowadays the company is running well with this
ratio but in 2020, this ratio was negative so improved from this year so now they try to maintain
the number which currently has or improve the number if possible.
Bestway
2021 2020
4% 3%
Interpretation:
ROA is consider good which 5% is typically. This ratio saw the sound position in 2021 because
it is 4% so in these days company is running well with this ratio but in 2020, this ratio was low
from previous year its means company has more efficient and productive at managing its
balances to generate profits
In 2020 ratio, is 3% a low ratio indicate that the company is not able to make maximum uses of
its assets for getting more profit. However, they have room for improvement
ROE
 Common shareholders want to know how profitable their capital is in the businesses they
invest.
Formula:
Return on equity ratio = Net income / Shareholder’s equity
Kohat
2021 2020
5.06 3.24
Interpretation:
ROE of the KOHAT CEMENT Company in 2021 was 5.06 and in 2020 was 3.24 ROE was
decreased in 2021 as compared to 2020
Bestway
2021 2020
6.6% 6.4%
Interpretation:
ROE of the BESTWAY Company in 2021 was 6.6% and in 2020 was 6.4%. ROE was increased
in 2021 as compared to 2020
The net income of the BESTWAY Company slightly increase because their distribution cost
decreased as 2020
Debt to equity ratio
Formula:
Debt to equity =Total debt/total equity
Kohat
2021 2020
 0.89 0.65
Interpretation:
A debt-to-equity or debt-to-assets ratio below 1.0 would be seen as relatively safe, whereas ratios
of 2.0 or higher would be considered risky. The higher a company's debt-to-total assets ratio, the
more it is said to be leveraged. Higher debt can result in volatile earnings due to additional
interest expense as well as increased vulnerability to business downturns.
Debt to equity =Total debt/total equity
Bestway
2021 2020
0.98 0.56
Interpretation:
Debt to equity ratio shows how much financing come from creditors and investors. Higher debt
to equity ratio indicates that more creditors (bank loan) financing is used than investor financing
(shareholders). When we check the overall company's debt to equity ratio higher part of
company's financing come from the investors. In 2021 company, increase their financing by
creditors and taking loan. Company enter into a long-term agreement to increase their financing
which impact on increase in liability. In addition, result is increase in debt to equity ratio

Debt ratio:
• The debt ratio measures the relative amount of a company’s assets that are provided from
debt
Formula:
Debt ratio = Total liabilities / Total assets
Kohat
2021 2020
0.48 times 0.46 times
Interpretation:
It shows company may be at risk of default if interest rates rise suddenly. Less than one shows
greater portion of company's asset is funded by equity. Debt ratio of both years indicate that
company has more assets than debts. However, when we compare both years, in 2020 debt ratio
slightly decrease which shows companies. In 2020 a low ratio indicate company has decrease
their short-term investment. In addition, company pay the government grants as deferred income.
Bestway
2021 2020
0.47 times 0.39 times
Interpretation:
It shows company may be at risk of default if interest rates rise suddenly. Less than one shows
greater portion of company's asset is funded by equity. Debt ratio of both years indicate that
company has more assets than debts. However, when we compare both years, in 2021 debt ratio
slightly increase which shows companies. In 2021 company, decrease their short-term
investment. In addition, company pay the government grants as deferred income.
Asset turnover ratio
Formula:
Asset turnover ratio = Net sales / Average total assets

Kohat
2021 2020
32.7 times 29.6 times
Interpretation:
Asset turnover ratio slighty decreased in 2021 was 0.65 as compare to 2020 was 0.67. Although
the total assets and the net sales of the Kohat company increased in 2021 but company is not
efficient enough to utilize the assets generating more revenues. Kohat Company in 2021 not
controlled the expenses and the other factor sales are highly time consuming. It shows that in
2021 not utilizing company assets to generate sales. 2020 reason being it has increased its assets,
which may help in increase in company future growth
Bestway
2021 2020
0.67 times 0.65times
Interpretation:
Asset turnover ratio slighty decreased in 2021 was 0.65 as compare to 2020 was 0.67. The asset
turnover ratio of BESTWAY company decreases from 2020 to 2021it may appear that the
company has utilized its assets less effectively but we can see enormous increase in the year
2020 reason being it has increased its assets, which may help in increase in company future
growth
Inventory turnover:
Formula:
Inventory turnover ratio = Cost of goods sold / Average inventory

Kohat
2021 2020
12.84 times 8.375 times
Interpretation:
From the above data, we can understand that the inventory turnover ratio is increasing and that is
good. The higher ratio shows that the conversion of finished goods into sales is high whereas the
lower ratio shows that the conversion of purchased goods into sales is low. In 2020, the ratio has
been 1.67 that is the not good sign but in 2021 ratio increase by positive number
 It can attract the investors to invest because goods are sold too fast so early revenue will be
generated.

Bestway
2021 2020
555 times 3.22 times
Interpretation:
Inventory turnover ratio of BESTWAY Company increased in 2021as compared to 2020, which
is 5.55 in 2021 and 3.22 in 2020. The Ratio was better in 2020 as compared to 2021

Account Receivable turnover

 it measures how many times a company can turn receivables into cash over a given
period
Formula:
Receivables turnover ratio = Net credit sales / Average accounts receivable
Kohat
2021 2020
0.89 times 0.42 times
Interpretation:
The higher a receivable turnover ratio, the better because it means your customers pay their
invoices on time, and your company collects debts efficiently. A higher turnover ratio also
illustrates a better cash flow and a more robust balance sheet or income statement.so in 2020
ratio is higher as compared to 2021.
Bestway
2021 2020
0.56 times 0.89 times
Interpretation:
The higher a receivable turnover ratio, the better because it means your customers pay their
invoices on time, and your company collects debts efficiently. A higher turnover ratio also
illustrates a better cash flow and a more robust balance sheet or income statement.so in 2020
ratio is higher as compared to 2021.
Account Payable turnover:
Formula:
Account payable turnover= total purchases /average account payable
Kohat
2021 2020
0.54 0.34
Interpretation:
AP turnover ratio is an indicator of a business' short-term liquidity (i.e. cash flow) meaning it is a
calculation of the company's ability to pay its short-term debts. The higher the accounts payable
turnover ratio, the quicker the business is paying off its debt.

Bestway:
2021 2020
0.16 0.17
Interpretation:
AP turnover ratio is an indicator of a business' short-term liquidity (i.e. cash flow) meaning it is a
calculation of the company's ability to pay its short-term debts. The higher the accounts payable
turnover ratio, the quicker the business is paying off its debt.
AP is an important figure in a company's balance sheet. If AP increases over a prior period, that
means the company is buying more goods or services on credit, rather than paying cash.
A high ratio may be due to suppliers demanding fast payments or the company taking advantage
of early payment discounts

Market value:
Market value ratios are used to evaluate the share price of a company’s stock

EPS:
 Earnings per share (EPS) measures net income earned on each share of a company's
common stock.
Formula:
EPS=net income/earnings per share

Kohat
2021 2020
8.49 times -4.93 times
Interpretation:
higher Eps indicates greater value this ratio shows that if no of shares are not increases but net
profit after taxes are increases So EPs increases when EPs is increases then chance of dividend
increases both buyer and seller are relate with EPS it is an attractive ratio for an investor
Bestway
2021 2020
8.06 times 8.06 times

Interpretation:
higher Eps indicates greater value this ratio shows that if no of shares are not increases but net
profit after taxes are increases So EPs increases when EPs is increases then chance of dividend
increases both buyer and seller are relate with EPS it is an attractive ratio for an investor

Price To earnings:
 This ratio reflects investors' assessments of those future earnings

Formula:
Price to earning= price per share/earnings per share
KOHAT
2021 2020
13.88 times -17.32 times
Interpretation:
Companies with low price earnings ratio are often considered to value stock
Its means they are undervalued in 2020. Because their stock price trade lower relative to their
fundamentals. It may increase when improvement in profit it is a positive factor if company
reserves increases than in coming Years Company will grow like in 2022

Price to earning= price per share/earnings per share

BESTWAY
2021 2020
22.33 times 15.50 times

Interpretation:
Companies with low price earnings ratio are often considered to value stock
Its means they are undervalued in 2020. Because their stock price trade lower relative to their
fundamentals. It may increase when improvement in profit it is a positive factor if company
reserves increases than in coming Years Company will grow like in 2021
.