Suryalakshmi Cotton Mills Ltd

Growth Ratio Summary

Growth Score : 2.00

The company's growth ratios are uniformly weak. This suggests that the company is struggling to expand its revenue, operating profit, earnings per share, assets, and net income. External factors such as market competition and economic conditions, or internal factors such as poor strategic decisions or operational inefficiencies may be the reason for the struggle. Without growth, the company may face challenges in attracting investors and maintaining its competitive position.

Financial Ratio Summary

Financial Score : 3.60

The financial ratios present a mixed scenario. While Capital Expenditure shows a score of 5, Adjusted Earnings Per Share (Adjusted EPS), Cash Earnings Per Share (Cash EPS), Book Value Per Share and Dividend Per Share (DPS) are low. High capital expenditures can lead to enhanced operational capabilities and revenue generation in the future. However, the low scores in other financial metrics suggest challenges in profitability and shareholder returns. Balancing investments with shareholder expectations is crucial for sustainable financial health.

Profitability Ratio Summary

Profitability Score : 2.00

The company's profitability metrics are uniformly weak. The low scores across all profitability ratios indicate significant challenges in generating profits from sales, capital employed, equity, and assets. This could be due to high costs, inefficient operations, or intense competition. Improving cost management, enhancing operational efficiency, and differentiating products are essential to boost profitability and achieve sustainable financial health. The textiles industry is highly competitive, and maintaining healthy margins is crucial.

Efficiency Ratio Summary

Efficiency Score : 4.67

The company shows mixed efficiency. While Days Sales in Inventory and Receivable Days score high and shows strong efficiency, Fixed Asset Turnover Ratio, Inventory Turnover Ratio, Receivables Turnover Ratio and Capital Turnover Ratio suggests potential challenges with asset utilization. The high Days Sales in Inventory and Receivable Days indicate effective inventory and credit management. However, lower asset turnover ratios may suggest that the company is not generating enough revenue from its assets, impacting overall efficiency. Balancing these factors is essential for improved performance.

Coverage Ratio Summary

Coverage Score : 2.00

The company's coverage ratios are concerning. The low scores suggest that the company may have difficulty meeting its interest and dividend obligations. A weak coverage ratio could lead to financial strain and limit the company's ability to invest in growth opportunities. Improving profitability and cash flow management are essential to strengthen coverage ratios and ensure financial stability. The textiles industry is capital intensive, and maintaining adequate coverage is critical for managing financial risk.

Solvency Ratio Summary

Solvency Score : 8.00

The company's solvency metrics present a mixed view. While Debt Ratio, Debt to Asset ratio and Debt to Equity Ratio shows strong solvency with a score of 5, the Equity Ratio indicates potential concerns. Strong solvency ratios typically suggest that the company has a manageable level of debt relative to its assets and equity. However, the weakness in Equity Ratio may indicate an increased risk if earnings decline or interest rates rise. Maintaining a balanced capital structure is vital to ensure long-term financial health.

Liquidity Ratio Summary

Liquidity Score : 2.00

The company's liquidity position is concerning. As per the weighted average calculation methodology, with all liquidity ratios resulting in a score of 1, it suggests a struggle to meet short-term obligations using its current assets. This could be due to challenges in converting assets to cash or managing current liabilities effectively. While low levels of liquid assets might free up capital for longer-term investments, it also increases the risk of financial distress if immediate payments are required. It is important to closely monitor cash flows and working capital management to mitigate potential liquidity crises.