Eveready East Africa Limited is a Kenya-based company engaged in manufacturing and selling of Eveready dry cells D size batteries in East Africa, and trading in an assortment of imported Eveready and Energizer flashlights and batteries, Schick razors and accessories, and TURBO car batteries.
Eveready announced its full year results for the year ended 30 September 2015. Revenues reduced by 6.9% to KES 1.132Bn. Operating profit reduced by a significant 78.34% to stand at KES 11.872Mn. Loss before taxation improved to KES 98.912Mn compared to KES 248.014Mn the previous year. Losses made by the company were clearly as a result of failing to manage costs. Finance costs went up by 84.3%. The total comprehensive profit for the year was KES 587.8Mn, this arose as a result of a revaluation of their property in Nakuru KES 627Mn, note that this is an accounting adjustment.
On conducting a simple ratio analysis we found out that the company is struggling in terms of liquidity and seem to be relying heavily on bank overdrafts. Eveready has a current ratio (current assets/current liability) of 0.9. In stripping out inventories and coming up with the quick ratio (Current assets – inventories/current liabilities) we get 0.34. The current ratio is a measure of a company’s ability to meet its short term obligations if the figure is above 1, it means that it can meet those short term obligations. In the case for Eveready this is serious challenge going forward.
According to the company going forward it will further invest in two additional product lines in FY16 positioning itself on a ‘path to growth and recovery.’
