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Words 888

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Current ratio

Current ratio compares the current assets and the current liabilities in a company. The higher the ratio the better the performance.

Total limited. in 2008- 1.24 in 2009-1.12

This states that total in 2008 has a higher ratio than its next year. This shows that their liability has increased.

Kenya oil company limited.

In 2008- 1.30

In 2009- 1.30 Here it can be stated that in both years the company drew with the ratios.

Quick ratio- the best ratio is 1:1. anything below this level requires further analysis of receivables to understand how the company turns them to cash. The quick ratio for Kenya oil are closer to each other rather than total where one is higher that the other.

Total 0.89 (2008) and 0.63(2009)

Kenya oil 0.63(2008) and 0.62(2009).

Efficiency ratios

Asset turnover- this is how a company is using its assets. Total and Kenya oils liabilities are increasing faster than the assets arising therefore the ratio is falling. Both companies should control their liabilities.

Inventory turn over ratio

This is how fast a company sells its inventory over a financial period. The higher the ratio, the faster the turnover. This shows good company performance. Kenya oil has a better inventory turnover than Total. Since Kenya oil has a higher sales turnover volume. It takes less time to sell the oil than Total.

Profitability Ratios

Net Profit Ratio:

The net profit ratio tells us the amount of net profit of turnover a business has earned after taking account of the cost of sales, the administration costs, the selling and distributions costs and all other costs, the net profit is the profit that is left, out of which they will pay interest, tax, dividends and all the other expenses. Total Kenya got 1.58 million in 2008 and 1.50 million in 2009, this shows a reduction in the net profits they made. While Kenya Oil...

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