Open AccessFinancial Ratios Impact on Financial Performance of Textile Industry a case
Author(s) -
Muhammad Fayyaz,
Agha Ammad Nabi
Publication year - 2016
Publication title -
journal of economic info
Language(s) - English
Resource type - Journals
eISSN - 2708-8448
pISSN - 2313-335X
DOI - 10.31580/jei.v3i2.88
Subject(s) - asset turnover , inventory turnover , market liquidity , business , debt to capital ratio , return on equity , solvency , financial ratio , current ratio , debt to equity ratio , debt ratio , finance , position (finance) , return on assets , asset (computer security) , current asset , equity ratio , debt , profitability index , computer science , population , demography , computer security , sociology , nonprobability sampling
The aim of performing this research is to find out financial ratios impact on financial performance of GATM and NML to evaluate which company is performing better.. This research was important because of the problems, they both are competitors and the investor should what are their positions and performance it is important for the companies too through which they can identify which ratios to be considered while evaluating financial performance. For the purpose of this research, I collected the data of 2 companies GATM and NML from Standard capital security website and from firm’s annual reports for the period starting from 2003 to 2017. Furthermore, I considered two measures of financial performance, which are return on asset. and return on equity. I also considered liquidity position which is measured by current ratio, quick ratio, total asset turnover, fixed asset turnover, inventory turnover) and solvency position by debt to equity debt to total asset and interest coverage ratio, which according to previous researches and conditional theories have adequate impact on financial performance. The findings of this research suggest that current ratio, quick ratio and inventory were the major determinant of liquidity and for no determinant has significant impact and the researches should consider other variable than studied for solvency. The result also shows that both companies are performing better but NML liquidity position is better than NML also both companies ROE and fixed asset turnover shows insignificant difference rest are significant.