Current ratio



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Current ratio – we can assess firms overall liquidity by comparing its CA to CL. In our case, CR increase from 0.6 to 1.4 is a good indicator, as a result of significant decrease in current liabilities. 0.6 in 2017 means company may have troubles covering their current liabilities.

Current Ratio = Current Assets / Current Liabilities
Quick ratio – if we want a more stringent test of the firms liquidity we can exclude inventory from the firms CA in the numerator of our liquidity measure. In our case, average of 0.42 for uzbek company indicates low rate of liquidity compared to Russian 1.46 average and thus have only 0.42$ to cover 1$ in current liabilities.

Quick Ratio = (Current Assets - Inventories) / Current Liabilities
Average collection period – measures how many days it takes the firm to collect its receivables by computing its average collection period. In our case, it decrease from 178 to 71 days is a very good indicator, since they were able to cut in half the amount of accounts receivables. But they still have to improve, compared to Russian 45 days. Means Russian company’s receivables are more liquid than Uzbek Company.

Average Collection Period = Accounts Receivable / (Annual Credit Sales/365)
Accounts receivable turnover – how many times AR are rolled over during a year. They could roll over their receivables only twice in 2017 and five times in 2018. Even they more than doubled the rate in 2018; indexes are relatively low compared to the Russians average of 8.


Accounts Receivable Turnover = Annual Credit Sales / Accounts Receivable

Inventory turnover –indicates how many times the company turnover its inventory during the year. In our case, due to high increase in inventories in 2018, we see a 0.6 points decline in 2018 year which is bad, especially compared to Russian 8 and 9. Such difference might occur because of wider spectrum of services Russians provide, so that they use more inventories.

Inventory Turnover = COGS / Inventories
Debt ratio – the ratio measures the percentage of the firm’s assets that financed using current plus long term liabilities. 0.6 In 2017 means that 60% of assets come from debts. Decrease to 0.46 is a good indicator; however, Russians have 0.25 on average. Thus, Uzbek Company used significantly more debt than Russian Company.

Debt Ratio = Total Liabilities / Total Assets


Times Interest Earned Ratio – looks at the firm’s ability to pay the interest expense on its debt. 300 times indicator shows us that company is not borrowing enough in terms of stocks. They can issue more stocks and thus decrease the index of ratio. Russian are same – not using their opportunity of borrowing, rate of 8000 is disgusting. More money in business – more profit

Times Interest Earned Ratio = EBIT / Interest Expense
Total asset turnover – shows that amount of sales generated per dollar invested in the firm’s assets and it measures how well firm’s assets managed. In our case, due to double decrease in total assets, we can see double increase in ratio index from 0.46 to 1.09. This means company generates 1.09 dollar in sales for every 1 dollar in total assets. They may be better, compared to Russian index of 2. Not enough efficiency.

Total Asset Turnover = Sales / Total Assets
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