Inventory Turnover of Centamin Plc - Essay Example

It is the only mining gold company in the country. The resources of the company have grown by 11 times since the year 2000 (Centamin, 2013). The common stocks of the company are traded on the London Stock Exchange under the symbol CEY and it is also traded on the Toronto Stock Exchange under the symbol CET. The value of CEY common stocks as of February 22, 2013, is $54 (Yahoo, 2013). The company has offices in London, Egypt, and Australia. The majority of the firm’s employees are located in Egypt.

The total revenue of Centamin Plc in fiscal year 2011 was $340.4 million (Annual Report: Centamin, 2011). The firm’s revenues increase by 183% in comparison with the previous year. In 2011 the net income of Centamin Plc was $177.79 million. The profitability of the company is outstanding. The firm’s gross profit in 2011 was 58.8%, while its net margin was 52.27%. The net margin is a measure of the absolute profitability of a company. The firm’s earnings per share (EPS) in 2011 was $16.68. EPS is a financial metric that tends to affect the market price per share (Garrison & Noreen, 2003). A high EPS ratio is a desirable outcome. The total assets and total equity of the company as of December 31, 2011 were $834.52 million and $806.22 million respectively. The return on assets of the company in 2011 was 21.33%, while its return on equity metric was 22.08%. Both financial metrics are outstanding illustrating that the company is generating good revenues from both its assets and equity.

The current ratio of the company is 10.34. The current ratio is a solvency ratio that measures the ability of a company to pay off its current obligations. The formula to calculate the current ratio is current assets divided by current liabilities. The company’s current ratio is outstanding because a current ratio is good if is above the 1.0 threshold. Another solvency ratio is working capital. Working capital shows the ability of a company to pay its current liabilities solely with its current assets. The working capital of the firm in 2011 was $239.89 million. The inventory turnover ratio of the company in 2011 was 2.01. The inventory turnover metric shows how many times a company can sell its entire inventory during a fiscal year (Investopedia, 2013). The debt-to-equity ratio of Centamic Plc in 2011 was 0.04. The firm has a very low amount of debt which is a positive factor. Based on the low debt, great solvency, and outstanding profitability I would recommend an investor purchase common stocks of Centamin Plc.