British Petroleum - Assignment Example

University of Canberra College ACCOUNTING FOR MANAGERS Assignment Coversheet Topic Analysis of financial statement of British Petroleum which includes Trend Analysis and Ratio Analysis for the year 2008 to 2011 Declaration It is certified that the assignment is true and has not been copied and is an original work produced by me. Group Members Name ID Number Signature Table of Contents Contents Page No. 1) Introduction 3 2) Trend Analysis 3 3) Financial Ratio Analysis 6 a. Profitability Ratios 7 b. Asset Efficiency Ratios 8 c. Liquidity Ratios 8 d. Capital Structure Ratios 10 e. Market Performance Ratios 10 4) Conclusion 20 5) Reference 21 Introduction The paper looks to discuss British Petroleum which is one of the pioneers in the petrochemical industry and exports petrol and other petrochemical products to all around the world. It is the third largest energy company which has its head quarters in London, United Kingdom. The success of the organization is largely attributed due to continuous innovation and development in the industry. This report thereby analyzes the Trend Analysis and the Financial Ratio Analysis for BP for the period 2008 to 2011. The report discusses the different ratios which include Profitability Ratios, Asset Efficiency Ratios, Liquidity Ratios, Capital Structure Ratios and Marketing Performance Ratio. The understanding of the ratio will have its role in decision making and will help the different users to improve the overall efficiency of decision making. The entire analysis will provide different direction and information based on which useful decisions will be taken regarding the future prospect and the present working condition of the organization. The report thereby analyzes the manner in which the performance of BP has changed by analyzing the financial statement for 4 years from 2008 to 2011 and identifying the different areas which will further help to improve the performance in the future. Trend Analysis Trend Analysis is a process which aims at analyzing the changes and brings forward the pattern that has been used to generate trade for the business (Birt, 2010). The comparison helps to look at and understand the performance over a loner period of time. The comparison of the financial performance for BP for 2008 to 2011 and has been shown in figures to represent the following. The trend analysis shows a continuous growth in the volume of sales which has been matched by an increase in profits except for the year 2010 where the business incurred a loss. The same has been shown by the change in the profit analysis which has continuously changed and fluctuated thereby highlighting the manner in which the profit has undergone changes and the same has been reflected through the trend analysis. Trend Analysis for BP for 2008 to 2011 Figures in $’000 2011 (in millions) 2010 (in millions) 2009 (in millions) 2008 (in millions) Sales Revenue 386463 308928 246138 367053 EBIT 39817 (3702) 25124 34283 Profit after Tax 26097 (3324) 16759 21666 Trend Analysis Sales Revenue 105.28 84.16 67.05 100 EBIT 116 (10.79) 73.28 100 Profit after Tax 120.45 (15.34) 77.35 100 Graphical Representation The above graph shows the trend analysis for BP for a period 2008 to 2011 for sales revenue, EBIT, profit after tax and shows fluctuations for all the year showing high fluctuations that the business is undergoing. BP Cash Flow Statement for 2008 to 2011 2008 $ M 2009 $ M 2010 $ M 2011 $ M Cash from Operating Activities 38095 27716 13616 22154 Cash from Investing Activities (22767) (18133) (3960) (26633) Cash from Financing Activities (10509) (9551) 840 482 Currency Differentiation (184) 110 (279) (492) Increase in cash & cash Equivalent 4635 142 10217 (4489) Cash & cash Equivalent at the beginning of the year 3562 8197 8339 18556 Cash & cash Equivalent at the end of the year 8197 8339 18556 14067 Source: Information from BP 2008, 2009, 2010, 2011, Annual Reports. Financial Ratio Analysis Ratio 2010 2009 2008 2007 Profitability Ratios Return on Equity (ROE) 23.52% 16.41% -3.46% 23.2% Return on Assets (ROA) 15.02% 10.64% -1.35% 13.58% Gross Profit Margin 14.54% 16.64% 3.23% 14.29% Profit Margin 9.34% 10.2% -1.19% 10.3% Cash flow to sales revenue ratio 10.37% 11.26% 4.4% 5.73% Asset Ratios Asset turnover ratio 1.6 times 1.04 times 1.13 times 1.31 times Inventory turnover (days) 19.46 days 40.21 days 32.01 days 28.27 days Debtors turnover (days) 8.46 days 43.79 days 43.18 days 41.10 days Liquidity Ratios Current ratio 0.95 times 1.14 times 1.08 times 1.06 times Quick asset ratio 0.71 times 0.25 times 0.76 times 0.75 times Cash flow ratio 0.54 times 0.46 times 0.16 times 0.26 times Capital structure Ratios Debt to equity ratio 160.54% 183.92% 131.08% 147.79 % Debt ratio 61.61% 64.77% 56.72% 57.88% Equity ratio 38.39% 35.23% 43.28% 43.03% Interest coverage ratio 31.95 times -3.16 times 22.63 times 22.16 times Debt coverage ratio 4.34 times 6.79 times 2.68 times 1.74 times Market Performance Ratios Net tangible asset backing(NTAB) per share 3.63/share 4.04/share 3.61/share 4.05/share Earning per share 112.59 cents/share 88.49 cents/share (19.81) cents/share 135.93 cents/share Operating cash flow per share 170 cents/share 124 cents/share 61 cents/share 99 cents/share Dividends per share 55.05 cents/share 56 cents/share 14 cents/share 28 cents/share Ratio Analysis Ratio analysis aims at finding out the relationship between the different objects like sales, profits, revenue, and cost and so on where the relationship is expressed either in percentage form or ratio to identify the manner in which decisions are influenced. The ratio analysis here looks to conduct an analysis through five different ratios, which are Profitability Ratios, Assets Efficiency Ratios, Liquidity Ratios, Capital Structure Ratios and Market Performance Ratios. Profitability Ratios Profitability ratios help to understand the manner in which the organization is able to generate profits from carrying out their normal operations (Eljelly, 2004). This ratio helps to determine the efficiency to use assets and will look to work on different ratios like return on equity, return on assets, gross profit margin, profit margin and cash flow to sales revenue ratio. The profitability for BP has increased in 2011 after a drastic fall in 2010 where it turned negative. The reason for the changes could be the financial crisis which might have impacted the business and the performance is slowly recovering Return on Equity and Return on Assets have also seen a drop in the year 2010 which is entirely due to the loss which the business has generated. This has made the ROA to be (1.35%) in 2010 and ROE to be (3.46%) in 2010 which shows a sharp decrease due to the loss. On the other years both ROA and ROE has improved showing sound business performance on different parameters. A look at the net profit margin shows the same results which highlights that apart from 2010 where the net profit margin was -1.19% meaning a loss all the other years have witnessed a continuous growth in the bottom lines showing better performance The gross profit margin shows a continuous profit for all the year except in 2010 where there was a dip but still the profits from the direct activities of the business existed. The fact that the business is able to make profits from the direct business prospects ensures that the investors will be attracted to invest in the company The cash flow ratio to sales a continuous fall which is a worry as it has decreased from 10.37% in 2008 to 5.73% in 2011 showing that the business is unable to generate sufficient liquidity from the increase in revenue and needs to aim at improving the same Asset Efficiency Ratios Asset efficiency ratio helps to understand the manner in which an organization manages its current and non current assets and liabilities and the manner in which it contributes towards the sales of the organization. This ratio includes the assets turnover ratio, inventory turnover and debtor’s turnover (Saleem & Rehman, 2011). The analysis of the asset turnover ratio for BP shows consistency as the asset turnover is always more than 1 stating that the organization has revolved its assets more than once. The ratio has decreased in 2010 but at the other year it has shown a consistency and is above 1.3. This shows efficiency and highlights the proper use of assets for all the year. A look at the debtors turnover ratio shows that debtors is revolved around 8 times in a year. This brings to the fact that the money from the market is collected within a period of 1.5 months reducing the chances of bad debts and ensuring that the organization is able to maintain liquidity within the system. The inventory turnover ratio further highlights that the inventory maintained is around 30 days apart in 2009 where it increased to above 40 days but was then reduced back to 32 days in 2010. This ensures that the business has inventory which will be required over a shorter period of time and abstains from investing heavily in this direction. This will thereby ensure that the business reduces the chances of the inventory becoming obsolete and will be able to use the different resources in the most effective manner. Liquidity ratios Liquidity is the ability of the business to meet its short term obligations out of the short term assets and helps to determine the manner in which the business is able to maintain the required liquidity within the working system. The liquidity is examined through the three rations which are as Current ratio – This ratio determines the ability of the business to meet its short term obligations from its short term assets Quick asset ratio – This ratio determines the ability of the business to meet its short term obligations from its short term assets but inventories and receivables are removed as converting receivable and inventory into liquidity cash might consume more time Cash flow ratio – This ratio helps to identify the ability of the business to meet its current obligations from the operating cash flows which the business is able to generate in that particular year The current ratio for BP shows that apart from 2008 BP has a current ratio above 1 and in 2008 the ratio was 0.95 times. This suggests that apart from 2008 BP has sufficient liquid assets which will enable them to pay their short term liabilities. The ratio for 2009 is 1.14 times, 2010 is 1.08 times and 2011 is 1.06 times. This clearly demonstrates that the liquidity position is just sufficient to meet the short term liabilities and will help to reduce the chances of reducing liquidity crisis. The quick ratio which is calculated after removing the inventories and receivable shows that ratio is ¾ times the current liabilities position within the organization. This highlights that there is a dip from the current ratio which was 1 and the dip is ¼ showing that the business has a reduced liquidity to meet its daily expenses. This thereby signifies the fact that the quick ratio shows that the business has a lower liquidity position and need to focus on improving the liquidity to be able to function effectively (Padachi, 2006). The cash flow ratio shows that the best performance for BP was achieved during 2008 when it was 0.54 times whereas it continuously decreased and felt to 0.46 times in 2009 and then 0.16 times in 2010 and finally 0.26 times in 2011. This clearly highlights that the business hasn’t been able to generate liquidity and cash flow from their operating activities in comparison to the current liabilities which thereby has an effect on the overall decision making for the organization. It needs to improve its position to be able to ensure better liquidity and has to work on different areas to ensure better effectiveness in liquidity (Deloof, 2003). Capital structure ratios Capital structure is also known as gearing ratio and helps to determine whether the business has used debt or equity financing for their business. This ratio helps to provide important information relating to the long term sustainability of the business and helps to determine the manner in which the business becomes viable (Antony, 2004). Capital structure ratios consist by debt to equity ratio, debt ratio, equity ratio, interest coverage ratio and debt coverage ratio. The description of the different capital structure ratio is provided below as Capital structure Ratios 2011 2010 2009 2008 Debt to equity ratio 160.54% 183.92% 131.08% 147.79 % Debt ratio 61.61% 64.77% 56.72% 57.88% Equity ratio 38.39% 35.23% 43.28% 43.03% Interest coverage ratio 31.95 times -3.16 times 22.63 times 22.16 times Debt coverage ratio 4.34 times 6.79 times 2.68 times 1.74 times Market performance ratios Market Performance ratio helps to analyze the ratios which helps to provide useful information in relation to the changes that is witnessed in the market due to changes in share price or issue of shares or other factors which have a role in determining the manner in which the share price has been affected. Net tangible asset backing, earning per share, dividend per share, dividend payout ratio, operating cash flow per share and price earnings ratio are some of the ratios calculated in this direction. This area shows that BP has witnessed a change in the share price which fluctuates depending on the performance of the organization and the manner decisions are taken within the organization. The asset backing has a role in determining the manner in which decisions are taken as it is seen to fluctuate from 2008 to 2011 highlighting the impact it has been able to create in the share prices and the relevance effect it has on the overall market prices. Profitability Analysis Return on Equity (ROE) Formula: x100 2008= 21666 / 92109 x 100 = 23.52% 2009= 16759 / 102113 x 100 = 16.41% 2010=  (3324) / 95891 x 100 = 3.46% 2011= 26097 / 112482 x 100 = 23.20% Return on Assets (ROA) Formula: x100 2008 = 34283 / 228238 x 100 = 15.02% 2009 = 25124 / 235968 x100 = 10.64% 2010 = (3702)/ 272262 x 100 = 1.35% 2011 =39817 / 293068  x100= 13.58% Gross Profit Margin Formula: x100 2008 = 53377 / 367053 x 100 = 14.54% 2009= 40973 / 246138 x 100 = 16.64% 2010=10005 / 308928 x 100 = 3.23% 2011=55227 / 386463 x 100 = 14.29% Profit Margin Formula: x100 2008 = 34283 / 367053 x 100 = 9.34% 2009 = 25124 / 246138 x100 = 10.20% 2010 = (3702) / 308928 x100 = 1.19% 2011= 39817 / 386463 x100 = 10.30% Cash Flow to Sales Revenue Ratio Formula: x100 2008 = 38095 / 367053 x100 = 10.37% 2009= 27716 / 246138 x100 = 11.26% 2010= 13616 / 308928 x100= 4.40% 2011= 22154 / 386463 x100 = 5.73% Assets Efficiency Analysis 2008 Asset Turnover Ratio Formula: Sales Revenue / Average Total Assets = X times 367053 / 228238 = 1.60 times Days Inventory and Days Debtors Ratio Days Inventory Formula: Average Inventory / Cost of Sales * 365 = X days 16821 / 315409 * 365 = 19.46 days (approx.) Days Debtors Formula: Average Accounts Receivable / Sales Revenue * 365 = X days 8510 / 367053 * 365 = 8.46 days (approx.) Times Inventory Turnover Formula: Cost of Sales / Average Inventory = X times 315409 / 16821 = 18.75 times Times Debtors Turnover Formula: Sales Revenue / Average Accounts Receivable = X times 367053 / 8510 = 43.13 times 2009 Asset Turnover Ratio Formula: Sales Revenue / Average Total Assets = X times 246138 / 235968 = 1.04 times Days Inventory and Days Debtors Ratio Days Inventory Formula: Average Inventory / Cost of Sales * 365 = X days 22605 / 205165 *365 = 40.21 days(approx.) Days Debtors Formula: Average Accounts Receivable / Sales Revenue * 365 = X days 29531 / 246138 * 365 = 43.79 days(approx.) Times Inventory Turnover Formula: Cost of Sales / Average Inventory = X times 205165 / 22605 = 9.07times Times Debtors Turnover Formula: Sales Revenue / Average Accounts Receivable = X times 246138 / 29531 = 8.33times 2010 Asset Turnover Ratio Formula: Sales Revenue / Average Total Assets = X times 308928 / 272262 = 1.13 times Days Inventory and Days Debtors Ratio Days Inventory Formula: Average Inventory / Cost of Sales *365 = X days 26,218 / 298,923 * 365 = 32.01days (approx.) Days Debtors Formula: Average Accounts Receivable / Sales Revenue*365 = X days 36,549 / 308,928 *365 = 43.18days (approx.) Times Inventory Turnover Formula: Cost of Sales / Average Inventory = X times 298,923 / 26,218 = 11.40 times Times Debtors Turnover Formula: Sales Revenue / Average Accounts Receivable = X times 308,928 / 36,549 = 8.45 times 2011 Asset Turnover Ratio Formula: Sales Revenue / Average Total Assets = X times 386,463 / 293,068 = 1.31 times Days Inventory and Days Debtors Ratio Days Inventory Formula: Average Inventory / Cost of Sales * 365 = X days 25,661 / 331,236 * 365 = 28.27days (approx.) Days Debtors Formula: Average Accounts Receivable / Sales Revenue * 365 = X days 43,526 / 386,463 *365 = 41.10days (approx.) Times Inventory Turnover Formula: Cost of Sales / Average Inventory = X times 331,236 / 25,661 = 12.90 times Times Debtors Turnover Formula: Sales Revenue / Average Accounts Receivable = X times 386,463 / 43,526 = 8.87times Capital Structure Analysis 2008 Figures in (in Million $) Capital Structure Ratios - Debt to Equity Ratio Formula: Total Liabilities/Total Equity*100 = X% 136,129 / 92,109 * 100 =147.79 % Debt Ratio Formula: Total Liabilities/Total Assets*100 = X% 136,129 / 235,968 * 100 = 57.68% Equity Ratio Formula: Total Equity/Total Assets*100 = X% 92,109 / 235,968 * 100 = 39.03% Interest Servicing Ratio Interest Coverage Ratio Formula: EBIT/Net Finance Costs = X times 34,283 / 1,547 =22.16times Debt Coverage Ratio Debt Coverage Ratio Formula: Non-Current Liabilities/Net Cash flows provided by operating Activities = X times 66,336 / 38,095 = 1.74times 2009 Figures in (in Million $) Capital Structure Ratios - Debt to Equity Ratio Formula: Total Liabilities/Total Equity*100 = X% 133,855 / 102,113 * 100 = 131.08% Debt Ratio Formula: Total Liabilities/Total Assets*100 = X% 133,855 / 235,968 * 100 = 56.72% Equity Ratio Formula: Total Equity/Total Assets*100 = X% 102,113 / 235,968 * 100 = 43.27% Interest Servicing Ratio Interest Coverage Ratio Formula: EBIT/Net Finance Costs = X times 25,124 / 1,110 = 22.63times Debt Coverage Ratio Debt Coverage Ratio Formula: Non-Current Liabilities/Net Cash flows provided by operating Activities = X times 74,535 / 27,716 =2.68times 2010 Figures in (in Million $) Capital Structure Ratios - Debt to Equity Ratio Formula: Total Liabilities/Total Equity*100 = X% 176,371 / 95,891 * 100 = 183.92 % Debt Ratio Formula: Total Liabilities/Total Assets*100 = X% 176,371 / 272,262 *100 = 64.77% Equity Ratio Formula: Total Equity/Total Assets*100 = X% 95,891 / 272,262 * 100 = 35.22% Interest Servicing Ratio Interest Coverage Ratio Formula: EBIT/Net Finance Costs = X times (3702) / 1,170 = -3.16 times Debt Coverage Ratio Debt Coverage Ratio Formula: Non-Current Liabilities/Net Cash flows provided by operating Activities = X times 92,492 / 13,616 = 6.79 times 2011 Figures in (in Million $) Capital Structure Ratios - Debt to Equity Ratio Formula: Total Liabilities/Total Equity*100 = X% 180,586 / 112,482 *100 = 160.54% Debt Ratio Formula: Total Liabilities/Total Assets*100 = X% 180,586 / 293,068 *100 = 61.61% Equity Ratio Formula: Total Equity/Total Assets*100 = X% 112,482 / 293,068 * 100 = 38.38% Interest Servicing Ratio Interest Coverage Ratio Formula: EBIT/Net Finance Costs = X times 39,817 / 1,246 = 31.95 times Debt Coverage Ratio Debt Coverage Ratio Formula: Non-Current Liabilities/Net Cash flows provided by operating Activities = X times 96,268 / 22,154 = 4.34 times Liquidity Analysis 2008 Current Ratio = Current Assets / Current Liabilities = 66,384 / 69,793 = 0.95 times. Quick Asset Ratio = (Current assets-Inventory) / Current Liabilities = (66,384 -16,821) / 69,793 = 0.71times. Cash Flow Ratio = Net Cash Flows from Operating Activities / Current Liabilities = 38,095 / 69,793 = 0.54 times. 2009 Current Ratio = Current Assets / Current Liabilities = 67,653 / 59,320 = 1.14 times. Quick Asset Ratio = (Current assets-Inventory) / Current Liabilities = (67,653 – 22,605) / 59,320 = 0.75 times. Cash Flow Ratio = Net Cash Flows from Operating Activities / Current Liabilities = 27,716 / 59,320 = 0.46 times. 2010 Current Ratio = Current Assets / Current Liabilities 89,725 / 82,832 = 1.08times. Quick Asset Ratio = (Current assets-Inventory) / Current Liabilities = (89,725 – 26,218) / 82,832 = 0.76times. Cash Flow Ratio = Net Cash Flows from Operating Activities / Current Liabilities = 13,616 / 82,832 = 0.16times. 2011 Current Ratio = Current Assets / Current Liabilities = 89,164 / 83,780 = 1.06times. Quick Asset Ratio = (Current assets-Inventory) / Current Liabilities = (89,164 – 25,661) / 83,780 = 0.75times. Cash Flow Ratio = Net Cash Flows from Operating Activities / Current Liabilities = 22,154 / 83,780 = 0.26times. Market Performance Analysis Year 2008 Year 2009 Year 2010 Year 2011 Net tangible asset backing(NTAB) per share 3.63/share 4.04/share 3.61/share 4.05/share Earning per share 112.59 cents/share 88.49 cents/share (19.81) cents/share 135.93 cents/share Operating cash flow per share 170 cents/share 124 cents/share 61 cents/share 99 cents/share Dividends per share 55.05 cents/share 56 cents/share 14 cents/share 28 cents/share Net tangible asset backing (NTAB) per share = Ordinary shareholders’ equity-Intangible assets = x cents/share Number of ordinary shares on issue at year-end Year 2008 =$ 91303m-$ 10260m = 3.63/share 22311397567 shares Year 2009 =$101613m-$ 11548m = 4.04/share 22311397567 shares Year 2010 =$ 94987m-$ 14298m = 3.61/share 22311397567 shares Year 2011 = $ 111465m-$ 21102m = 4.05/share 22311397567 shares The net tangible assets per share highlights that the net tangible asset backing per share has changed every year and was at $3.63 in 2008 to $4.04 in 2009 and then decreased slightly to $3.61 in 2010 and finally increased to $4.05 in 2011. This shows that the organization has a high proportion of assets to back their shares and highlights better prospect for the organization in the future. Earnings per share = Profit available to ordinary shareholders = x cents/share Weighted number of ordinary shares on issue Year 2008 = 112.59 cents/share Year 2009 = 88.49 cents/share Year 2010 = (19.81) cents/share Year 2011 = 135.93 cents/share The earnings per share shows a negative figure in 2010 as it stood at (19.81) which was entirely due to the fact that the business incurred a loss. The other years 2008 had 112 cents, 2009 had 88 cents and 2011 had 136 cents stating that the earnings on each share has continuously increased all the year Operating cash flow per share = Net cash flow operating activities-Preference dividends = x cents/share Weighted number of ordinary shares on issue Year 2008 =$ 38095 -$ 0 =170 cents/share 22311397567 shares Year 2009 =$ 27716 -$ 0 = 124 cents/share 22311397567 shares Year 2010 =$ 13616 -$ 0 = 61 cents/share 22311397567 shares Year 2011 = $ 22154 -$ 0 = 99 cents/share 22311397567 shares The operating cash flow highlights the dividend which is available to the shareholders and is calculated based on the manner in which the operating activities are carried out. The analysis for BP shows a continuous decrease from 170 cents in 2008 to 124 cents in 2009 and 61 cents in 2010. This has then increased to 99 cents in 2011 and need to improve their operating activities so that net cash flow increases which will ensure better returns for the shareholders. Dividends per share =Dividends paid to ordinary shareholders in the current reporting period = x cents/share Weighted number of ordinary shares on issue Year 2008 = 55.05 cents/share Year 2009 = 56 cents/share Year 2010 = 14 cents/share Year 2011 = 28 cents/share The dividend per share which is distributed to the shareholders out of the profit for the business shows an increase in 2009 from 2008 but a fall in 2010 due to loss incurred by the organization. In the next year i.e. 2011 again an increase is witnessed due to increase profits which have been passed to the shareholders. Conclusions The financial statement analysis which looks at evaluating the performance of BP shows that in 2010 the organization incurred losses due to global financial condition which has affected their business and created problems to continue their normal business operations. The trend analysis shows a continuous growth in the volume of sales which has been matched by an increase in profits except for the year 2010 where the business incurred a loss. The same has been shown by the change in the profit analysis which has continuously changed and fluctuated. The different analysis of the ratios shows that BP has shown efficiency in generating profits which has thereby increased their profitability ratios apart for the year 2010 where they incurred a loss. Return on Equity and Return on Assets have also seen a drop in the year 2010 which is entirely due to the loss which the business has generated. This has made the ROA to be (1.35%) in 2010 and ROE to be (3.46%) in 2010 which shows a sharp decrease due to the loss. On the other years both ROA and ROE has improved showing sound business performance on different parameters. In a similar manner the analysis of the asset turnover ratio for BP shows consistency as the asset turnover is always more than 1 stating that the organization has revolved its assets more than once. The ratio has decreased in 2010 but at the other year it has shown a consistency and is above 1.3. The current ratio for BP shows that apart from 2008 BP has a current ratio above 1 and in 2008 the ratio was 0.95 times. This suggests that apart from 2008 BP has sufficient liquid assets which will enable them to pay their short term liabilities. The ratio for 2009 is 1.14 times, 2010 is 1.08 times and 2011 is 1.06 times. This clearly demonstrates that the liquidity position is just sufficient to meet the short term liabilities and will help to reduce the chances of reducing liquidity crisis. The same has been reflected through the manner in which the different market efficiency ratios have gained efficiency and looks to ensure that the different market conditions are better met thereby helping the market share of prices to grow. References Antony, T. 2004. Thin Capitalization: Issues on the Gearing Ratio. Journal on Australian Taxation, 7 (1), 39-57 Deloof, M. 2003. Does Working Capital Management Affect Profitability of Belgian Firms? Journal of Business Finance & Accounting, 30(3&4), 573-587. Eljelly, A. 2004. “Liquidity-Profitability Tradeoff: An empirical Investigation in an Emerging Market”, International Journal of Commerce & Management, 14(2), 48 - 61 Padachi, K. 2006. Trends in working capital management and its impact on firms’ performance: an analysis of Mauritian small manufacturing firms. International Review of Business Research Papers, 2(2), 45-58. Saleem, Q. & Rehman, R. 2011. Impacts of Liquidity Ratios on Profitability. Interdisciplinary Journal of Research in Business, 1 (7), 95-98 Read More