Inventory turnover
This relationship expresses the frequency with which average level of inventory investment is turned over through operations. The higher the inventory turnover the larger the amount of profit, the smaller the amount of capital tied up in inventory and the more current the merchandise stock. Moreover, a firm with a high turnover has a great competitive advantage as it can afford to sell its merchandise at a lower price because increased sales volume may yield a larger total profit even though the margin of profit unit is slightly less.

Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory

Ratio                               2001                2000              1999               1998           1997     
Inventory turnover      3.34 Times       3.07 Times      3.04 Times      2.59 Times   2.59 Times

Analysis shows a continuous improvement of inventory turnover through five years from 1997 to 2001. Here we found that the level of inventory is increasing day by day as well as the turnover is also increasing. It happens because the increasing rate of sales is higher than the rate of increase in inventory.

Normally when inventory turnover increases we think that the stock of inventory is going to be finished but in this case the level of inventory has not decreased and thus we can guess that the firm will not face any inventory problem. But one thing is important that they are holding much more inventory, which has tied up the cash balance.

Accounts Payable turnover
The accounts payable turnover indicates ratio of accounts payable compare with sales of a firm. This ratio indicates the rapidity of accounts payable to be turned into cash. It measures the tendency of a firm’s policy whether stretch payable or not.

Accounts Payable turnover = Sales / Accounts Payable

Ratio                                                2001                   2000                 1999                   1998                   1997       
Accounts Payable turnover      751.64 Times       228.68 Times      232.56 Times     256.13 Times        198.78 Times

Analysis shows that there is no consistency in Accounts payable turnover. In 1999 and 2000 it decreases from 1998 but there is a huge increment of this turnover in 2001, it means the firm maintains a low Accounts payable. So we can say that the firm pays their accounts payable immediately. As a result there is a low balance of cash.

One thing is important that a firm can earn money by stretching account payable because they don’t have to pay interest for that. Thus the way they can use cost free fund.

Accounts Payable turnover in days

Accounts Payable turnover in days shows the number of days within which the firm pays their liability to their creditors. The more days means the company is stretching payable and the less days means the company is not holding their liability.

Accounts Payable turnover in days = 360 / Accounts Payable turnover

Ratio                                                       2001              2000             1999            1998           1997      
Accounts Payable turnover in days      .47 Days       1.57 Days      1.54 Days     1.40 Days      1.81 Days

From this analysis we get that there is a continuous increment of this ratio from 1998 to 2000.But in 2001 the ratio falls because in that year the firm pays a huge payable. From this we can say that they have stretched payable till 2000 and in 2001 they have changed their policy and tried to pay the payable as early as possible to decrease current liability.

Fixed asset turnover

A similar measure of usage, but one, which concentrates on the productive capacity, as measured by fixed assets, indicates how successful the company is in generating sales from fixed assets. It measures how efficiently the companies are using fixed asset in generating sales.

Fixed asset turnover = Sales / Net fixed asset

Ratio                                2001            2000              1999          1998              1997  
Fixed asset turnover     .89 Times       .78 Times      .93 Times     .84 Times      .99Times

From the analysis we see that the turn over is the turnover is sometime increasing and sometime it is decreasing. The ratio has increased in 2001 compare with 2000. This has happened because sales have increased more than 11% on the other hand fixed asset has decreased.
By this analysis we can say that management has able to use fixed asset efficiently. Thus the way they have increased their sales by decreasing the fixed asset.

Total asset turnover

Total assets turnover indicates how well a company has used its fixed and current assets to generate sales. It is the most asset measure ratio. Such ratio is probably most useful as an indication of trends over of years. There is no particular value, which is too high or too low, but a sudden change would prompt the observer to ask questions. In these criteria a high ratio means the company is achieving more profit.

Total asset turnover = Sales / Total asset

Ratio                                 2001              2000              1999             1998               1997 
Total asset turnover     .71 Times       .64 Times          .73 Times     .65 Times       .73 Times

There is an uneven trend of total asset turnover over 5 years from 19997 to 2001. Here we find that the ratio has increased in 2001 compare with the year 2001. This increase has happened because the sales have increased at a higher rate than the rate of increase in total asset.