Inventory turnover

Inventory turnover is a measure of the number of times inventory is sold or used in a given time
period such as one year. It is a good indicator of inventory quality (whether the inventory is
obsolete or not), efficient buying practices, and inventory management .

Desco

Year 2016 2015 2014 2013 2012 2011

Ratio 3.934522606 6.9036271 10.781494 8.3939489 4.5659347 2.240224

Interpretation

Inventory turnover ratio is important because gross profit is earned each time inventory is turned
over. The inventory turnover of Desco 2.24 times in 2011, 4.565 in 2012 , 8.39 in 2013 , 10.78 in
2014 followed by a sharp decreased to 6.90 in 2015 , 3.93 in 2016. The rise in 2011-2014 is
probably due to the rise in the demand of electricity .

power grid

Year 2016 2015 2014 2013 2012 2011

ratio 8.943468849 8.496704 7.1109115 2.845013 2.73868 3.317422

Interpretation

Inventory turnover ratio is important because gross profit is earned each time inventory is
turned over. The inventory turnover Desco 3.31 times in 2011,2.73 in 2012 , 2.84 in 2013 , 7.11
in 2014 , .8.49 in 2015 ,8.94 in 2016 and was a decreased in 2012 . The rise in 2013-2016 is
probably due to the rise in the demand of electricity .

Analysis
Desco, the inventory turnover was increased from 2011to 2014 . but have a sharped decreased
in 2015 and 2016 . The inventory turnover of both the companies is quite different . we can say
that the performance power grid is better in 2013 to 2016 where as desco was good from 2011
to 2014 but in 2015 and 2016 it was decreased and wasnot stable . so after comparing its clear
power grid is in a better condition than desco in terms of inventory turnover .

Days sales in inventory

The days sales of inventory value, or DSI, is a financial measure of a company's performance
that gives investors an idea of how long it takes a company to turn its inventory (including goods
that are a work in progress, if applicable) into sales. Generally, a lower (shorter) DSI is preferred,
but it is important to note that the average DSI varies from one industry to another.

Desco

Year 2016 2015 2014 2013 2012 2011

Ratio 92.76856091 52.870758 33.854306 43.483706 79.93982 162.9302

Interpretation
Desco took 162.93 days in 2011, 79.94 days in 2012 , 43.48 in 2013 , 33.84 in 2014 , to convert
its inventory into sales, followed by 52.87 days in 2015 and then 92.768 days in 2016. The rise
in 2016 is maybe because Desco got new contract to supply electricity in 2016.

Power grid
2016 2015 2014 2013 2012 2011
40.81190488 42.95784 51.329566 128.2947 133.2759 110.0252

Interpretation
Power grid took 110.02 days in 2011, 133.27 days in 2012 , 128.29 in 2013 , 51.33 in 2014 , to
convert its inventory into sales, followed by 42.95 days in 2015 and then 40.81 days in 2016.
The decrease in 2013-2016 is maybe because Power grid doesn’t have that much contract in
those years.
Analysis

The DSI of desco is 162.93 days in 2011, 79.94 days in 2012 , 43.48 in 2013 , 33.84 in 2014 ,
to convert its inventory into sales, followed by 52.87 days in 2015 and then 92.768 days in 2016
. Whereas Power grid DSI is 110.02 days in 2011, 133.27 days in 2012 , 128.29 in 2013 , 51.33
in 2014 , to convert its inventory into sales, followed by 42.95 days in 2015 and then 40.81 days
in 2016 .So in recent condition , we can say in terms of DSI, DESCO Is in a better position in
2015 and 2016 .

Total asset turnover

Asset turnover ratio is the ratio of the value of a company’s sales or revenues generated
relative to the value of its assets. The Asset Turnover ratio can often be used as an indicator of
the efficiency with which a company is deploying its assets in generating revenue.
Desco
Year 2016 2015 2014 2013 2012 2011
Ratio 0.712967866 0.7255667 0.698327 0.656917 0.4985246 0.425658

Interpretation

The total asset turnover of Desco Was .0425 in 2011,.498 in 2012 , .6569 in 2013 , .6983 in
2014 followed by .7255 in 2015 and then .71296 in 2016. Though there is little bit fall in
2016but from 2011 to 2015 performance was good and company was deploying its assets in
generating revenue.

Power grid
2016 2015 2014 2013 2012 2011
0.092209675 0.076863 0.074579 0.072431 0.080109 0.083957

Interpretation

The total asset turnover of power grid Was .0839 in 2011,.0801 in 2012 , .0724 in 2013 , .0745
in 2014 followed by .0768 in 2015 and then .092209 in 2016. Though there is a fall in 2012 but
in other years ratio was stable that mean the company is deploying its assets in generating
revenue .

Analysis
The total asset turnover of power grid Was .0839 in 2011,.0801 in 2012 , .0724 in 2013 , .0745
in 2014 followed by .0768 in 2015 and then .092209 in 2016 Whereas, the total asset turnover of
DESCO Was .0425 in 2011,.498 in 2012 , .6569 in 2013 , .6983 in 2014 followed by .7255 in
2015 and then .71296 in 2016. So, it can be derived that in terms of total asset turnover of
DESCO, is in a better position than because it generated more sales in relation to its assets in all
the consecutive year.