O’zbekiston shampani

Calculation of asset turnover ratios

Inventory turnover is a financial ratio showing how many times a company has sold and replaced inventory during a given period. Inventory turnover is good when it is between 5 and 10. In our company it was 2.23and 2,81 in 2018 and 2020. In 2019 it was 1,79 which was the worst result. The term receivables turnover ratio refers to an accounting measure that quantifies a company's effectiveness in collecting its accounts receivable. It was around 4 in 2018 and 2020 which means, the accounts receivable have been collected about 4 times during that time period. Accounts payable turnover shows how many times a company pays off its accounts payable during a period. It declined from 2,15 to 1,65. The higher the accounts payable turnover ratio, the quicker the business is paying off its debt. The cash conversion cycle (CCC) – also known as the cash cycle – is a working capital metric which expresses how many days it takes a company to convert cash into inventory, and then back into cash via the sales process. Generally, the lower the number for the CCC, the better it is for the company. So according to the calculations, by the end of the given period company got the greatest result.


Calculation of financial leverage ratios

A debt ratio measures the amount of leverage used by a company in terms of total debt to total assets. From a pure risk perspective, debt ratios of 0.4 or lower are considered better, while a debt ratio of 0.6 or higher makes it more difficult to borrow money. So our company’s position is average. The debt-to-equity (D/E) ratio compares a company's total liabilities to its shareholder equity and can be used to evaluate how much leverage a company is using. Although it varies from industry to industry, a debt-to-equity ratio of around 2 or 2.5 is generally considered good. In this case, our company’s position is a bit bad. The interest coverage ratio is a debt and profitability ratio used to determine how easily a company can pay interest on its outstanding debt. Generally, an interest coverage ratio of at least two (2) is considered the minimum acceptable amount for a company that has solid, consistent revenues. Analysts prefer to see a coverage ratio of three (3) or better. Intuitively, a lower ratio indicates that less operating profits are available to meet interest payments and that the company is more vulnerable to volatile interest rates. Therefore, a higher interest coverage ratio indicates stronger financial health – the company is more capable of meeting interest obligations. Our company showed the highest result in 2018 at 4.89 and declined to 0,71. As it is mentioned ICR of at least 2 is acceptable as minimum. So company’s position in 2020 was not healthy.