Turnover Case

Turnover of N5.98billion in 2012 represented a 31.44% growth from 2011 figure and 64.71% growth over two years. There is consistent Net Profit Growth over the years provided, growing from 2011 by 90.75% to N36million in 2012.

Returns on Capital Employed (ROCE) for 2012 rose to 71.87% from average of 41.99% the previous 2 years. While this is an impressive result, it is necessary to investigate the cause of the significant increase in returns.

The increase in ROCE can be explained from the Asset Turnover which is significantly high and this should indicate a situation of overtrading.

Quick Asset Ratio is low due to high proportion of the inventory in the current assets. However, the Inventory days is good.

Receivables Days is acceptably low ranging between 3 - 7 days with notable improvement over the years. Same situation applies to Payable Days ranging between 7 - 20 days.

An area of concern is the Interest Cover which indicates how easily a company can pay interest on outstanding debt. Interest expenses in 2011 is 60% of the EBIT which is considerably high. It is noticed that the company had no long-term liabilities, the interest expenses is more of Bank Overdraft.

Turnover of N5.98billion in 2012 represented a 31.44% growth from 2011 figure and 64.71% growth over two years. There is consistent Net Profit Growth over the years provided, growing from 2011 by 90.75% to N36million in 2012.

Returns on Capital Employed (ROCE) for 2012 rose to 71.87% from average of 41.99% the previous 2 years. While this is an impressive result, it is necessary to investigate the cause of the significant increase in returns.

The increase in ROCE can be explained from the Asset Turnover which is significantly high and this should indicate a situation of overtrading.

Quick Asset Ratio is low due to high proportion of the inventory in the current assets. However, the Inventory days is good.

Receivables Days is acceptably low ranging between 3 - 7 days with notable improvement over the years. Same situation applies to Payable Days ranging between 7 - 20 days.

An area of concern is the Interest Cover which indicates how easily a company can pay interest on outstanding debt. Interest expenses in 2011 is 60% of the EBIT which is considerably high. It is noticed that the company had no long-term liabilities, the interest expenses is more of Bank Overdraft.

Turnover of N5.98billion in 2012 represented a 31.44% growth from 2011 figure and 64.71% growth over two years. There is consistent Net Profit Growth over the years provided, growing from 2011 by 90.75% to N36million in 2012.

Returns on Capital Employed (ROCE) for 2012 rose to 71.87% from average of 41.99% the