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Ltd Financial Ratios

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Introduction:

Financial ratios provide valuable insights into a company's financial health and performance. This analysis focuses on the financial ratios of Lloyds Ltd. for the years 2014 and 2015. The ratios cover liquidity, activity, debt, profitability, and market performance. By examining these ratios, we can gain a better understanding of the company's strengths and weaknesses and assess its investment potential.

Step 2:

These ratios collectively provide a comprehensive overview of Lloyds Ltd.'s liquidity, operational efficiency, profitability, debt management, and market valuation and Overall, Lloyds Ltd. demonstrated strong liquidity, improved asset utilization, and profitability in 2015. However, there were some declines in gross …show more content…

Current Ratio

The preferred current ratio is 2:1, however financial institutions only accept ratios of 1.33:1. The company's current ratio decreased from 3.25:1 in 2014 to 3:1 in 2015, a decrease. One can see the amount owed fell in 2015, indicate that the company has fallen behind on its short-term debt payments and that this needs to strengthen the ability to do so.

2. Quick Ratio

Quick ratio's ideal ratio is 1:1. The Quick ratio for the fiscal year 2014 was 2.5:1, and it is now 2.2:1 for the fiscal year 2015. With a lower quick ratio compared to 2014, this can be assumed that the corporation will find it problematic to fulfill any immediate responsibilities given the absence of short-term liquidity.

3. Inventory Turnover Ratio

In 2014, the company's stock turnover ratio was 12.8 times, and in 2015, the number was 10.3 times. This indicates that the business faces difficulties turn the stock into sales.

4. Average Collection Period

2015 saw a reduction in the average collection period from 42.6 days in 2014 to 31.4 days. This indicates that both the consumers' timely payments and the company's credit line have …show more content…

The number was 1.4 in 2014 and rose to 2 in 2015, indicate that the business is effective at earn money from the company's assets
Lloyds Ltd. improved its total asset turnover from 1.4 in 2014 to 2 in 2015. This signifies increased efficiency in utilizing its assets to generate revenue. The company has made better use of its assets, resulting in improved productivity.

6. Debt Ratio

A ratio greater than 1 denotes that assets cover the majority of the debt. This indicates that the corporation has fewer assets and more liabilities. A high debt-to-income ratio also suggests that a business may be at risk of loan default in the event that interest rates were to unexpectedly increase.

In this instance, the ratio is below one for both of the years. thus can be claimed that equity funds the company's assets. However, the data makes clear that as the ratio rises, debt levels increase as well. In other words, the business places itself at risk of default.

7. Gross Profit Margin

The gross profit ratio for FY 2014 was 68%, and the ratio was 65% for FY 2015. This indicates that, despite the ratio's decline, business has remained reasonably stable in adherence to revenues over the past two years.

8. Net Profit

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