Assessing the Financial Statement (Ratios) of Anglogold-Ashanti Limited, Ghana

Abstract

This study assessed the financial position of Anglogold –Ashanti ltd, Ghana by conducting various financial ratio analyses. The study used time series data for a period of 7 years (2008/09 to 2013/14) of Anglogold Ashanti Limited. The data was analysed using standard tool ratio analysis. This was applied to evaluating the financial performance. Among the ratios used are the Liquidity ratio, current or acid test ration, profitability ratio, gross margin, return on equity, debt to equity. Tables were used in the data presentation. The study findings revealed that both current and the quick ratios has a fluctuating trend of continues increase for the study period (2009-2011), that is (1.68, 1.93, 1.33, 1.77, 0.53, 0.53) and (0.90, 0.89, 0.62, 1.06, 0.65, 0.67 0.84). Also, the higher the ratio the more solvent the business is. Although, the company’s ratio was high it did not always imply that there was solvency but also indicated that the company was holding excess liquid funds. The quick ratio was also in a fluctuating trend throughout the period 2008 – 14. The company liquidity position was not far from the normal standard; to some extent it was satisfactory. The total assets turnover ratio also indicated an increasing trend from the year 2008 – 14(0.56, 0.62, 0.73, 0.54, 0.56, 0.49 and 0.39. Based on the findings, the study concluded that, the company’s overall position is not at a good position, particularly the last year under review due to decreased profit level from the previous year. It is better for the organization not to diversify the funds to different sectors in the present market scenario. The study recommended the need for the company to increase its sales by more promotions and by quick movements of the finished goods.