Comparative Ratio Analysis of Two Companies: Bata & Apex 2011-14

8/15/2019 Comparative Ratio Analysis of Two Companies: Bata & Apex 2011-14

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1. Liquidity Ratios

1.1: Current Ratio: Current Ratio is a liquidity ratio that measures company's ability to pay its debt

over the next 12 months or its business cycle. The higher the current ratio is, the more capable the

company is to pay its obligations. Current ratio gives an idea of company's operating efficiency. A

high ratio indicates "safe" liquidity, but also it can be a signal that the company has problems getting

paid on its receivable or have long inventory turnover, both symptoms that the company may not be

efficiently using its current assets.

=

Time Series

Year Bata Apex

2011 1.47 1.75

2012 1.49 1.202013 1.62 1.19

2014 1.71 1.17

Both the companies have acceptable current ratio. Liquidity of Bata increases gradually & liquidity of Apexdecreases which is means liquidity of Apex is decreasing.

Cross sectional

Year Bata Apex Average

2014 1.71 1.17 1.44

In 2014 Bata has a current ratio significantly higher than Apex giving it more capability to pay its

obligations.

1 . 4

7 1 . 7

5

1 . 4

9

1 . 2

1 . 6

2

1 . 1

9 1 . 7

1

1 . 1

7

0

0.5

1

1.5

2

B A T A A P E X

2011 2012 2013 2014

1 . 7

1

1 . 1

7 1 . 4

4

0

1

2

2 0 1 4

Bata Apex Average


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1.2: Quick Ratio: Quick Ratio is an indicator of company's short-term liquidity. It measures the

ability to use its quick assets to pay its current liabilities. Ideally, quick ratio should be 1:1. A quick

ratio higher than 1:1 indicates that the business can meet its current financial obligations with the

available quick funds on hand. If quick ratio is higher, company may keep too much cash on hand or

have a problem collecting its accounts receivable. A quick ratio lower than 1:1 may indicate that the

company relies too much on inventory or other assets to pay its short-term liabilities.

Many lenders are interested in this ratio because it does not include inventory, which may or may not

be easily converted into cash.

= −

Time series

Year Bata Apex

2011 0.51 0.82

2012 0.54 0.53

2013 0.63 0.48

2014 0.71 0.42

Quick ratio of Bata increases gradually where quick ratio of Apex decreases. Bata is at a better position.

Cross sectional


2014 0.71 0.42 0.56

In 2014 Bata has significantly better quick ratio than Apex. So, Bata is preferable to the creditors among the

two companies.

0 . 5

1 0 . 8

2

0 . 5

4

0 . 5

3 0 . 6

3

0 . 4

8 0 . 7

1

0 . 4

2

0

0.5

1

B A T A A P E X

2011 2012 2013 2014

0 . 7

1

0 . 4

2 0 . 5

6

0

0.5

1

2 0 1 4

Bata Apex Average


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2. Activity Ratios:

2.1. Accounts receivables turnover: Receivables Turnover Ratio is one of the efficiency ratios and

measures the number of times receivables are collected, on average, during the fiscal year. A high

receivables turnover ratio implies either that the company operates on a cash basis or that its

extension of credit and collection of accounts receivable are efficient. Also, a high ratio reflects a

short lapse of time between sales and the collection of cash, while a low number means collection

takes longer. The lower the ratio is the longer receivables are being held and the risk to not be

collected increases. A low receivables turnover ratio implies that the company should re-assess its

credit policies in order to ensure the timely collection of credit sales that is not earning interest for

the firm.

=

Time series

Year Bata Apex

2011 34.88 9.962012 26.70 12.30

2013 18.09 11.35

2014 17.73 8.85

Accounts receivables turnover ratio of Bata decreases gradually which is a bad sign but it still has

better accounts receivable turnover than Apex.

Cross sectional


2014 17.73 8.85 13.29

In 2014 Bata has a significantly higher accounts receivable turnover than Apex which ensures Bata a

better position.

3 4 . 8

8

9 . 9

6

2 6 . 7

1 2 . 3 1

8 . 0

9

1 1 . 3

5 1 7 . 7

3

8 . 8

5

0

20

40

B A T A A P E X

2011 2012 2013 2014

1 7 . 7

3

8 . 8

5 1 3 . 2

9

0

10

20

2 0 1 4

Bata Apex Average


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2.2. Average collection period: Average Collection Period represents the average number of days it

takes the company to convert receivables into cash. Lower is better.

=

Time series

Year Bata Apex

2011 10.47 36.64

2012 13.67 29.68

2013 20.18 32.16

2014 20.58 41.24

Average collection period of Bata is increased (bad sign) where average collection period of Apex

decreased then again increased.

Cross sectional


2014 20.58 41.24 30.91

In 2014 Bata has significantly lower average collection period which means it collects its receivable

more efficiently than Apex.

1 0 . 4

7 3

6 . 6

4

1 3 . 6

7 2 9 . 6

8

2 0 . 1

8 3 2 . 1

6

2 0 . 5

8 4 1 . 2

4

0

50

B A T A A P E X

2011 2012 2013 2014

2 0 . 5

8 4 1 . 2

4

3 0 . 9

1

0

50

2 0 1 4

Bata Apex Average


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2.3. Accounts payable turnover: Since the accounts payable turnover ratio indicates how quickly a

company pays off its vendors, it is used by supplies and creditors to help decide whether or not to

grant credit to a business. As with most liquidity ratios, a higher ratio is almost always more

favorable than a lower ratio. A higher ratio shows suppliers and creditors that the company pays its

bills frequently and regularly. It also implies that new vendors will get paid back quickly. A highturnover ratio can be used to negotiate favorable credit terms in the future.

Accounts payable turnover(Bata) =70%

Accounts payable turnover(Apex 2011,12,13) =70%

& ℎ

Accounts payable turnover(Apex 2014) =70%

+

Time series

Year Bata Apex

2011 7.33 3.49

2012 9.34 3.76

2013 7.38 3.92

2014 6.58 4.49

Accounts payable turnover of Bata is decreasing accounts payable turnover of Apex is increasing,

which is a good sign for Apex and means that Apex is trying to pay its creditors more frequently than

the previous year.

Cross sectional


2014 6.58 4.49 5.53

Accounts payable turnover of Bata is higher than Apex and industry average which means creditors

and suppliers would prefer Bata over Apex.

7 . 3

3

3 . 4

9 9 . 3

4

3 . 7

6 7 . 3

8

3 . 9

2 6 . 5

8

4 . 4

9

0

5

10

B A T A A P E X

2011 2012 2013 2014

6 . 5

8

4 . 4

9

5 . 5

3

0

5

10

2 0 1 4

Bata Apex Average


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2.4. Average payment period: Average payment period means the average period taken by the

company in making payments to its creditors. A shorter payment period indicates prompt payments

to creditors. Like accounts payable turnover ratio, average payment period also indicates the

creditworthiness of the company. But a very short payment period may be an indication that the

company is not taking full advantage of the credit terms allowed by suppliers.

= 365

Time series

Year Bata Apex

2011 49.78 104.67

2012 39.09 97.01

2013 49.48 93.10

2014 55.47 81.28

Apex is improving by reducing its average payment period.

Cross sectional


2014 55.47 81.28 68.37

In 2014 average payment period of Bata is lower. So creditors will prefer Bata.

4

9 . 7

8 1 0 4 . 6

7

3 9

. 0 9

9 7 . 0

1

4

9 . 4

8 9 3 . 1

5 5 . 4

7 8 1 . 2

8

0

50

100

150

B A T A A P E X

2011 2012 2013 2014

5 5 . 4

7 8 1 . 2

8

6 8 . 3

7

0

50

100

2 0 1 4

Bata Apex Average


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2.5. Inventory turnover: Inventory Turnover Ratio is one of the efficiency ratios and measures the

number of times, on average, the inventory is sold and replaced during the fiscal year. Inventory

Turnover Ratio measures company's efficiency in turning its inventory into sales. Its purpose is to

measure the liquidity of the inventory. Low inventory turnover ratio is a signal of inefficiency. It implies

either poor sales or excess inventory. A low turnover rate can indicate poor liquidity, possible

overstocking, and obsolescence. High inventory turnover ratio implies either strong sales or ineffective

buying (the company buys too often in small quantities, therefore the buying price is higher).A highinventory turnover ratio can indicate better liquidity, but it can also indicate a shortage or inadequate

inventory levels, which may lead to a loss in business.

=

Time series

Year Bata Apex

2011 2.44 2.88

2012 2.50 2.44

2013 2.24 2.09

2014 2.29 1.54

Bata has a stable Inventory turnover ratio but Apex has a decreasing inventory ratio which implies,

either apex is losing sales or has excess inventory.

Cross sectional


2014 2.29 1.54 1.91

Bata has a higher inventory turnover ratio, which means Bata turns its inventory into sales more

frequently.

2 . 4

4 2 . 8

8

2 . 5

2 . 4

4

2 . 2

4

2 . 0

9

2 . 2

9

1 . 5

4

0

2

4

BA T A A P E X

2011 2012 2013 2014

2 . 2

9

1 . 5

4 1 . 9

1

0

1

2

3

2 0 1 4

Bata Apex Average


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2.6. Average age of inventory: Average age of inventory ratio is the time a company takes to turn

its inventory into sales.

=365

Time series

Year Bata Apex

2011 149.56 126.83

2012 146.11 149.61

2013 162.89 174.51

2014 159.35 237.28

The higher a firm's average age of inventory, the greater its exposure to obsolescence risk. Bata has a

steady average age of inventory where average age of inventory of Apex has an increasing trend

which makes Apex more prone to obsolescence risk gradually every year or suggests that Apex is

losing sales.

Cross sectional


2014 159.36 237.28 198.32

As footwear industry has a higher rate of obsolescence risk, and Bata holds better position in 2014.

1 4 9 . 5

6

1 2 6 . 8

3

1 4 6 . 1

1

1 4 9 . 6

1

1 6 2 . 8

9

1 7 4 . 5

1

1 5 9 . 3

5

2 3 7 . 2

8

0

100

200

300

B A T A A P E X

2011 2012 2013 2014

1 5 9 . 3

6

2 3 7 . 2

8

1 9 8 . 3

2

0

100

200

300

2 0 1 4

Bata Apex Average


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2.7. Total asset turnover: It reveals how much revenue the company is generating from each

dollar's worth of assets -- everything from buildings and equipment to cash in the bank, accounts

receivable and inventories. If the company's asset turnover ratio is declining over time but revenue is

consistent or even increasing, it could be a sign that the company "overinvested" in assets. It might

mean the company added capacity in fixed assets -- more equipment or vehicles -- that isn't being

used. Or perhaps it has assets that are doing nothing, such as cash sitting in the bank or inventory that

isn't selling. On the other hand, if the ratio is increasing over time, it could mean the company is

simply becoming efficient, or it could mean it’s stretching its capacity to its limits and it needs to

invest to grow.

=

Time series

Year Bata Apex

2011 1.87 1.32

2012 1.86 1.19

2013 1.71 1.142014 1.65 0.94

Both company has a declining asset turnover ratio and increasing revenue which suggests that both

company overinvested in assets or their inventory is not selling like it did in the past.

Cross sectional


2014 1.65 0.94 1.29

Asset turnover ratio of Bata implies that it uses its assets more efficiently than Apex.

1 . 8

7

1 . 3

2 1 . 8

6

1 . 1

9

1 . 7

1

1 . 1

4

1 . 6

5

0 . 9

4

0

0.5

1

1.5

2

B A T A A P E X

2011 2012 2013 2014

1 . 6

5

0 . 9

4 1 . 2

9

0

0.51

1.5

2

2 0 1 4

Bata Apex Average


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2.8. Fixed asset turnover: The fixed asset turnover ratio compares net sales to net fixed assets. A

High ratio indicates that a business is: Doing an effective job of generating sales with a relatively

small amount of fixed assets. Outsourcing work to avoid investing in fixed assets. Selling off

excess fixed asset capacity.

A low ratio indicates that a business: Overinvested in fixed assets. Needs to issue new products to

revive its sales. Has made a large investment in fixed assets, with a time delay before the newassets start generating revenues.

=

Time series

Year Bata Apex

2011 7.79 5.03

2012 7.28 4.62

2013 7.53 5.08

2014 6.76 4.75

Fixed asset Turnover of Bata decreased, then rose and then decreased again. Fixed asset turnover of

Apex follows the same trend too. It implies that sales of both company is decreasing or their fixed

asset is increasing.

Cross sectional


2014 6.76 4.75 5.75

In 2014 Bata has a higher fixed asset turnover than Apex which means, Bata has higher sales

compared to fixed assets or lower fixed assets compared to sales. Bata is preferable.

7 . 7

9

5 . 0

3 7 . 2

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4 . 6

2

7 . 5

3

5 . 0

8 6 . 7

6

4 . 7

5

0

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4

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8

10

B A T A A P E X

2011 2012 2013 2014

6 . 7

6

4 . 7

5 5 . 7

5

0

5

10

2 0 1 4

Bata Apex Average


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3.Solvency Ratios

3.1. Debt ratio: Debt ratio is a solvency ratio that measures a firm's total liabilities as a percentage of

its total assets. In a sense, the debt ratio shows a company's ability to pay off its liabilities with its

assets. In other words, this shows how many assets the company must sell in order to pay off all of

its liabilities. This ratio measures the financial leverage of a company. Companies with higher levels

of liabilities compared with assets are considered highly leveraged and more risky for lenders. A

lower debt ratio usually implies a more stable business with the potential of longevity because a

company with lower ratio also has lower overall debt. Each industry has its own benchmarks for

debt, but .5 is reasonable ratio. Companies with higher debt ratios are better off looking to equity

financing to grow their operations.

=

Time series

Year Bata Apex

2011 56% 72%2012 53% 72%

2013 51% 74%

2014 48% 78%

Bata decreased its Debt ratio every year. On the other hand debt ratio of Apex has a increasing

tendency which implies, Bata is becoming less risky & Apex is becoming more risky for lenders.

Cross sectional


2014 48% 78% 63%

In 2014 Bata has a lower debt ratio than Apex. Lenders will prefer Bata for lending.

5 6 % 7

2 %

5 3 %

7 2 %

5 1 %

7 4 %

4 8 %

7 8 %

0%

50%

100%

B A T A A P E X

2011 2012 2013 2014

4 8

%

7 8 %

6 3 %

0%

20%

40%

60%

80%

100%

2 0 1 4

Bata Apex Average


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3.2. Debt equity ratio: A ratio of 1 or 1: 1 means that creditors and stockholders equally contribute

to the assets of the business.

A less than 1 ratio indicates that the portion of assets provided by stockholders is greater than the

portion of assets provided by creditors and a greater than 1 ratio indicates that the portion of assets

provided by creditors is greater than the portion of assets provided by stockholders.

Creditors usually like a low debt to equity ratio because a low ratio (less than 1) is the indication of

greater protection to their money. But stockholders like to get benefit from the funds provided by the

creditors therefore they would like a high debt to equity ratio.

− =

ℎ

Time series

Year Bata Apex

2011 1.27 2.54

2012 1.15 2.57

2013 1.04 2.842014 0.91 3.63

With decreasing debt-equity ratio Bata is becoming less risky & with increasing debt-equity ratio

Apex is becoming more risky.

Cross sectional


2014 0.91 3.63 2.27

In 2014, a debt-equity ratio of 3.63 makes apex very risky for creditors. So, creditors will prefer Bata

But stockholders may prefer Apex.

1 . 2

7

2 . 5

4

1 . 1

5

2 . 5

7

1 . 0

4

2 . 8

4

0 . 9

1

3 . 6

3

0

1

2

3

4

B A T A A P E X

2011 2012 2013 2014

0 . 9

1

3 . 6

3

2 . 2

7

0

1

2

3

4

2 0 1 4

Bata Apex Average


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3.3. Times interest earned: The times interest ratio is considered a solvency ratio because it

measures a firm's ability to make interest and debt service payments. Since these interest payments

are usually made on a long-term basis, they are often treated as an ongoing, fixed expense. As with

most fixed expenses, if the company can't make the payments, it could go bankrupt and cease to

exist. The times interest ratio is stated in numbers as opposed to a percentage. The ratio indicates

how many times a company could pay the interest with it’s before tax income, so obviously the

larger ratios are considered more favorable than smaller ratios. Creditors would favor a company

with a much higher times interest ratio because it shows the company can afford to pay its interest

payments when they come due.

=

= +

Time series

Year Bata Apex

2011 38.42 1.742012 219.76 1.64

2013 191.69 1.81

2014 206.60 1.56

Bata has a increasing trend of times interest earned while times interest earned of Apex is not

satisfactory. Which makes Apex more risky to lenders. Which also means Apex has a very high debt.

Cross sectional


2014 206.60 1.56 104.08

In 2014 Bata has a very high times interest earned ratio which makes Bata preferable to lenders.

3 8 . 4

2

1 . 7

4

2 1 9 . 7

6

1 . 6

4

1 9 1 . 6

9

1 . 8

1

2 0 6 . 6

1 . 5

6

0

50

100

150

200

250

B A T A A P E X

2011 2012 2013 2014

2 0 6 . 6

1 . 5

6

1 0 4 . 0

8

0

100

200

300

2 0 1 4

Bata Apex Average


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4. Profitability ratios

4.1. Gross profit margin: The ideal level of gross profit margin depends on the industries, how long

the business has been established and other factors. A company with a high gross margin ratios mean

that the company will have more money to pay operating expenses like salaries, utilities, and rent.

Since this ratio measures the profits from selling inventory, it also measures the percentage of sales

that can be used to help fund other parts of the business. High ratios can be achieved by two ways.

One way is to buy inventory very cheap. The second way is to sell products at a higher price.

=

Time series

Year Bata Apex

2011 0.36 0.14

2012 0.36 0.16

2013 0.38 0.16

2014 0.39 0.16

Both the companies have a increasing trend of gross profit margin which means both company is

achieving greater capability of paying operating expenses every year.

Cross sectional


2014 0.39 0.16 0.27

In 2014 Bata has much higher gross profit margin. Bata is preferable.

3 6 %

1 4 %

3 6 %

1 6 %

3 8 %

1 6 %

3 9 %

1 6 %

0%

20%

40%

60%

B A T A A P E X

2011 2012 2013 2014

3 9 %

1 6 %

2 7 %

0%

10%

20%

30%

40%

50%

2 0 1 4

Bata Apex Average


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4.2. Net profit margin: The profit margin ratio is a profitability ratio that measures the amount of

net income earned with each dollar of sales generated by comparing the net income and net sales of a

company. Creditors and investors use this ratio to measure how effectively a company can convert

sales into net income. Investors want to make sure profits are high enough to distribute dividends.

This ratio also indirectly measures how well a company manages its expenses relative to its net sales.

That is why companies strive to achieve higher ratios. They can do this by either generating more

revenues why keeping expenses constant or keep revenues constant and lower expenses.

Since most of the time generating additional revenues is much more difficult than cutting expenses,

managers generally tend to reduce spending budgets to improve their profit ratio.

=

Time series

Year Bata Apex

2011 0.09 0.03

2012 0.09 0.03

2013 0.10 0.02

2014 0.09 0.02

Both the companies have somewhat constant net profit margin. They can reduce expenses

To achieve higher net profit margin.

Cross sectional


2014 0.09 0.02 0.05

In 2014 Bata has significantly higher net profit margin which means Bata has more money to pay

dividends. So investors will prefer Bata.

9 %

3 %

9 %

3 %

1 0 %

2 %

9 %

2 %

0%

5%

10%

15%

B A T A A P E X

2011 2012 2013 2014

9 %

2 %

5 %

0%

5%

10%

2 0 1 4

Bata Apex Average


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4.3. Return on assets: Return on Assets (ROA) is an indicator of how profitable company's assets

are in generating profit. Return on Assets shows how many dollars of earnings result from each

dollar of assets the company controls. The higher return on assets is, the better, because the company

is earning more money on its assets.

A low return on assets compared with the industry average indicates inefficient use of company's

assets.

=

Time series

Year Bata Apex

2011 0.16 0.10

2012 0.17 0.12

2013 0.18 0.12

2014 0.14 0.11

Both company’s return on assets decreased in 2014 than 2013 which is a bad trend.

Cross sectional


2014 0.14 0.11 0.12

Bata has higher return on assets meaning it’s using its assets more efficiently to generate net profit.

1 6 %

1 0 %

1 7 %

1 2 %

1 8 %

1 2 % 1

4 %

1 1 %

0%

5%

10%

15%

20%

B A T A A P E X

2011 2012 2013 2014

1 4 %

1 1 %

1 2 %

0%

5%

10%

15%

2 0 1 4

Bata Apex Average


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4.4. Return on equity: Return on Equity shows how many dollars of earnings result from each

dollar of equity. ROE is an indicator of how effective management is at using equity financing to

fund operations and grow the company.

=

ℎ

Time series

Year Bata Apex

2011 0.37 0.13

2012 0.36 0.11

2013 0.36 0.11

2014 0.27 0.08

Both the company has decreasing trend of return on equity which means net income is decreasing for

both companies.

Cross sectional


2014 0.27 0.08 0.17

Bata is at a better position having higher return on equity ratio.

3 7 %

1 3 %

3 6 %

1 1 %

3 6 %

1 1 %

2 7 %

8 %

0%

10%

20%

30%

40%

B A T A A P E X

2011 2012 2013 2014

2 7 %

8 %

1 7 %

0%

10%

20%

30%

2 0 1 4

Bata Apex Average


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5. Market ratios:

5.1. EPS: Earnings per share (EPS) ratio measures how many dollars of net income have been

earned by each share of common stock. It is computed by dividing net income by the number of

shares of common stock outstanding during the period. It is a popular measure of overall

profitability of the company. EPS figure is very important for actual and potential common

stockholders because the payment of dividend and increase in the value of stock in future largely

depends on the earnings of the company. EPS is the most widely quoted and relied figure by

investors. A higher EPS is the sign of higher earnings, strong financial position and, therefore, a

reliable company to invest money.

=

Time series

Year Bata Apex

2011 42.44 23.20

2012 49.12 23.012013 59.44 23.61

2014 51.22 18.05

Both the company experienced a fall in EPS in 2014 which may indicate either bad economic

condition or both company had an increase in expenses.

Cross sectional


2014 51.22 18.05 34.63

In 2014 Bata has higher EPS which means Bata has stronger financial position than Apex and is

more reliable for investing.

4 2 . 4

4

2 3 . 2

4 9 . 1

2

2 3 . 0

1

5 9 . 4

4

2 3 . 6

1

5 1 . 2

2

1 8 . 0

5

0

20

40

60

80

B A T A A P E X

2011 2012 2013 2014

5 1 . 2

2

1

8 . 0

5 3

4 . 6

3

0

20

40

60

2 0 1 4

Bata Apex Average


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5.2. P/E ratio: The price earnings ratio, often called the P/E ratio or price to earnings ratio, is a

market prospect ratio that calculates the market value of a stock relative to its earnings by comparing

the market price per share by the earnings per share. In other words, the price earnings ratio shows

what the market is willing to pay for a stock based on its current earnings. Investors use this ratio to

decide what multiple of earnings a share is worth. In other words, how many times earnings they are

willing to pay. Investors often use this ratio to evaluate what a stock's fair market value should be by

predicting future earnings per share. Companies with higher future earnings are usually expected to

issue higher dividends.

A company with a high P/E ratio usually indicated positive future performance and investors are

willing to pay more for this company's shares. A company with a lower ratio, on the other hand, is

usually an indication of poor current and future performance. This could prove to be a poor

investment.

/ = ℎ

Time series

Year Bata Apex

2011 14.14 12.74

2012 10.91 10.04

2013 11.61 17.63

2014 22.88 24.57

After a fall in 2012 both the companies have seen increasing price-earnings ratio which means both

the company are expected to earn more and issue higher dividend than past.

Cross sectional


2014 22.88 24.57 23.72

1 4 . 1

4

1 2 . 7

4

1 0 . 9

1

1 0 . 0

4

1 1 . 6

1 1 7 . 6

3 2 2 . 8

8

2 4 . 5

7

0

10

20

30

B A T A A P E X

2011 2012 2013 2014

2 2 . 8

8

2 4 . 5

7

2 3 . 7

2

22

23

24

25

2 0 1 4

Bata Apex Average


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In 2014 Apex has higher price-earnings ratio than Bata which means Apex is a fast-growing

company and it’s expected to generate higher future income and issue higher dividend. So Apex is

preferable to investors than Bata.

5.3. DPS: Dividend per share ratio is self-explanatory. It tells how much dividend a company

provides to its investors for every share. Dividends per share may be used by individuals who are

evaluating various stocks to invest in and prefer companies who pay more dividends.

Time series

Year Bata Apex

2011 25.00 4.50

2012 27.50 5.00

2013 30.00 5.50

2014 28.00 5.50

After continuous increase Bata had a fall in DPS in 2014. Apex on the other hand issued a fairly

stable amount of dividend per share from 2011-14.

Cross sectional

Year Bata Apex Average2014 28.00 5.50 16.75

In year 2014 Bata issued Dividend per share much higher than Apex. So Bata is preferable.

2 5

4 . 5

2 7 . 5

5

3 0

5 . 5

2 8

5 . 5

0

10

20

30

40

B A T A A P E X

2011 2012 2013 2014

2 8

5 . 5

1 6 . 7

5

0

10

20

30

2 0 1 4

Bata Apex Average


21/21

21

Recommendation

All the Liquidity, Activity, Solvency, Profitability & Market ratios tell us

that among Bata & Apex, Bata is the more liquid, solvent, reliable, stable

and profitable company. It pays higher dividend than Apex. So investors

should invest in stocks of Bata.

What Apex can do to improve

1. Decrease its inventory.

2. Increase accounts receivable collection frequency.

3. Decrease its average payment period towards market average.4. Apex has an increasing average age of inventory, which should be decreased

towards market average.

5. Increase its sales to increase total asset turnover & fixed asset turnover.

6. Decrease liabilities or increase total assets to decrease debt ratio.

7. Decrease total liabilities or increase stockholders equity to bring down debt-

equity ratio to 1.

8. Increase sales and decrease expenses to achieve

higher EBIT so that times interest earned can be increased.

Higher gross profit margin, net profit margin, return on asset & return on

equity.

Documents

Comparative Ratio Analysis of Two Companies: Bata & Apex 2011-14