Financial Analysis of Agl Limited

gal has a ongoing balance of less than 2 and less than tit in 2012 substance it does not have a satisfactory amount of current asset to cover its current liabilities. However, when it comes to 2012, both current ratio and quick ratio has a positive breakment showing gal did not improve its short-term liquidity by stocking high level of inventory nevertheless really change magnituded its level of cash and receivables. On the other hand, the operating(a) cash flow ratio of congius has reduced in 2012 meanings the return of ability to generate cash from operation.The increased amount of cash yet decrease amount of ability to generate cash reveals that GAL increase its amount of cash by financing activities like air of sh ars and borrow. This action mechanism makes Debt and coverage There are five ratios measuring the debt and coverage of a company. They are three debt ratios, Liabilities to Equity ratio, Debt to Equity Ratio and Capital social organization Leverage, Inter est Coverage and Operating Cash Flow Ratio. All debt ratios of GAL have a sudden and great increase in 2012.It indicates that GAL increase its cash mainly by borrowing rather than issue share. This practice calling debt financing can get tax bank discount which is more beneficial than equity financing. The companys interest coverage has dropped significantly discloses the wane of ability to pay interest due to the great amount of borrowing. However, when compared to PAP, the debt ratios of GAL still are not as great as that of PAP and GAL has higher interest coverage. This shows GAL is not in a very bad situation in borrowing.Efficiency The ability of GAL has diminish compared to last two year showing by the remover ratio much(prenominal) as Account Receivable, Inventory and Fixed Asset turnover. Nevertheless, the turnover rank of GAL are still greater than PAP and that of PAP are at the same time decrease. This may expose the fact that the readiness of the industry is lower in 2012. Overall, GAL has a very paltry performance in 2012. Although this may be due to the low efficiency of the industry, the main reason is the low profitability of GAL together with the Brobdingnagian borrowing. The fact that GAL did not make the best use of the borrowing is brought to light.