Assignment #1 Tri Pack Film Limited: Analysis of Solvency Ratios
Assignment #1 Tri Pack Film Limited: Analysis of Solvency Ratios
Submitted To:
Sir Hafiz Imran
Submitted By:
Mohammad Usman
MB09036
MBA 4th (Morning)
“The ability of a company to pay its long term debt or obligations is called
solvency”
Years involved:
Base year 2009
Items included:
Profit
Interest
Debt
Equity
Total asset
Intangible assets
Analytical table:
Equity 12.20% ↑
Equity ratio 0.40 0.35 Favourable T.asset 2.59% ↓
The solvency result of company Tri pack films limited is showing highly
favourable trend as compared to base year. Company’s periodical payment paying ability and
original debts paying ability is going better. The major reasons of solvency growth are increasing
EBIT 18%, decreasing interest 3.67%, total debt decreasing 10.68%, and equity increasing
12.20%. increasing tangible networth 12.47%.
Capital structure:
Company is more equity oriented company and this trend toward the equti orientation is
becoming stronger as compared to base year in current year. Company Long term debt 6.3% ↓
and Equity % 12.20% ↑ as compared to base year due to company’s overall solvency is going to
better. But company should not more equity oriented and should maintain a suitable level for so
that company could take benefit of tax shield and its EPS will also increase.