Evaluation of Operational Performance - A Case Study on Summit Power Limited (SPL)

Abstract

Evaluating performance through ratio analysis is a sin-qua-non for sustainable growth and measuring future risk of liquidation of a manufacturing company. The current study is an attempt to evaluate the status of the financial performance of Summit Power Limited (SPL) through liquidity, profitability and productivity position of SPL. The study found that the financial performance in terms of liquidity and profitability is considered to be above satisfactory level. In case of activity ratio accounts receivables turnover indicates satisfactory which means the policy and management for collecting credit from customers is efficient. Inventory turnover ratio indicates the worse that means the stock is not rapidly turned over. Total asset turnover ratio is not satisfactory which means inefficient utilization of investment in generating more revenue. The study also depicted that SPL's long term solvency position in terms of debt to total asset ratio was not satisfactory which means SPL carried higher debt and had been incurring a heavy burden of interest and risk during 2004 to 2012. The value of Z also indicates the financial soundness and less risk of bankruptcy of SPL. The study suggest some policy implications for future growth and development of SPL like; introduction of modern technologies and research and development, modern marketing techniques to boost up revenue, suitable pricing policy and the like.