Financial Analysis & Growth Strategy

Financial Analysis & Growth Strategy:

1. Gross Profit Margin (GPM): (Gross Profit / Revenue) × 100 – Measures profitability of core activities.

2. Operating Profit Margin (OPM): (Operating Profit / Revenue) × 100 – Reflects profitability after operating costs.

3. Liquidity Ratios: Current Ratio and Acid Test Ratio – Measures ability to meet short-term obligations.

4. Gearing Ratio: (Non-current Liabilities / Total Equity + Non-current Liabilities) × 100 – Measures long-term financial stability.

5. Rate of Inventory Turnover: (Cost of Goods Sold / Average Inventory) – Evaluates inventory management efficiency.

6. Dividend Yield: (Dividend per Share / Market Price per Share) × 100 – Indicates return on investment for shareholders.

7. Return on Capital Employed (ROCE): (Operating Profit / Capital Employed) × 100 – Measures efficiency in using capital to generate profit.

8. Financial Efficiency Ratios: Trade Receivables Turnover, Trade Payables Turnover – Assess how efficiently a business manages its receivables and payables.

9. Investment Appraisal: Payback Period, Net Present Value (NPV), Internal Rate of Return (IRR) – Methods to evaluate potential investment projects.

10. Growth Strategies: Organic growth (expanding internally) vs. Inorganic growth (acquisitions and mergers).