Financial Health Analysis of a Company: A Comprehensive Review

Financial Soundness

Financial soundness is not at a satisfactory level. It is riskier compared to the previous year. The short-term debt, reflected in the debt-to-equity ratio, is higher than the previous year. For sound financial health, these ratios should have decreased.

Ability to Pay

The company's ability to manage short-term debts and immediate payments is weak. While the cash ratio and average collection days have slightly improved, indicating a favorable cash cycle, the overall ability to pay remains mediocre. The company demonstrates good punctuality but needs to improve its guarantees to enhance its ability to pay.

Profitability

The company's profitability has declined. Both Global ROA and ROE are worse than the previous year, indicating that the company is not effectively utilizing shareholder investments. This signifies a poor profit/earning capacity and a lack of improvement.

Operating ROA, a measure of the company's performance in its core business operations, has also decreased, indicating a concerning trend.

Operating Margin

The operating margin has significantly declined from 9.50% to 3.47%, indicating that the company is generating lower profits per product sold. This substantial decrease raises significant concerns about the company's efficiency and profitability.

General Conclusion

Financial Position

The company's financial position is risky. Higher debt ratios compared to the previous year necessitate immediate attention to improve financial soundness. While punctuality remains a positive aspect, the overall financial equilibrium has weakened.

Economic Performance

The economic performance of the company is concerning. Global ROA, ROE, and operating ROA have all declined significantly, falling below industry averages. The declining operating margin further emphasizes the challenges faced by the company in its economic area.

Commercial Performance

Increased expenses, despite higher revenue, indicate an imbalance in the company's commercial performance. The lower net profit compared to the previous year, resulting in losses, raises concerns about the company's overall financial health.

Overall Assessment and Recommendations

The company is in a precarious position and requires immediate action to address its financial, operational, and commercial challenges. The decline in performance across various areas necessitates a comprehensive strategy to mitigate risks and ensure sustainability. Failure to address these issues could lead to more severe consequences for the company's future.