Current ratio decreases slightly from 1.05 to 1.02, also it’s much lower than the ideal ration 2:1. It indicates that the firm’s ability to cover its short term obligations is weak and is decreasing.

Quick ratio is also lower than the ideal ratio which is 1:1, and it decreases to 0.9 compared to 0.97 of the previous year. It shows that the firm doesn’t have good ability to generate cash on short notice to meet its current obligation.
Overall the liquidity of the company is not good.

Efficiency

Inventory holding period expands from 10 days to 17 days. It means that it takes longer time to sell the products. But considering the company is a service  company, which doesn’t need much inventory, so this won’t be a big problem.
Receivables collection period expands from 50 days to 53 days, which implies that it takes the firm more time to receive the payment from customers, but the change is not big.

Payables payment period reduced slightly from 42 days to 40 days and it show that the firm spends less time to pay the suppliers.

The cash operating cycle changes from 18 days to30 days. It takes the firm more time to receive the cash inflow after outlay on inventory.

The company had preformed less well than the previous year.

Q2

Return on capital employed increased from 16.3% to 18.72% and its above the industry average. It shows the company has good ability to generate profit using the resources.

However, its Gross profit margin falls from 30% to 24.46% and it is lower than the average,35.23%, of almost half(44%). It implies that the company does not have good ability to control the Cost of goods sold.

Net profit margin increased from 3.9% to 4.87% and beyond the average 4.73%. Considering the Gross profit is not ideal, the company may perform well to control the operating expenses and financial costs.

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Current ratio increased slightly from 2.1:1 to 2.2:1. It is higher than the average 1.9:1 and close to the ideal ratio. It indicates that the company has good ability to cover its short-term obligation.

Although the quick ration drops from 1.52:1 to 1.47:1, it is still higher than the industry average. Therefore it can be concluded that the company has adequate cash to meet its current obligation. However, it may holds too much cash and hence impede its efficiency.

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The Inventory holding period is shortened from 27 days to 25 days and Lower than the average of 35days. It shows the fast speed of company to sell their inventory. But it also indicates that the company could be running out of stock thus loss profitability. It could also be caused by inefficient suppliers.

Receivables collection period remains 40 days and lower than the average of 52 days. It takes shorter time for customers to pay the invoice of their products and the company can receive the income quicker. Nevertheless, the credit policy is tend to be rigorous and may hamper the sales for that reason.

Payables payment period drops from 37 days to 32 days and noticeably lower than the average 49 days. It implies that the company pays the suppliers quick and it may benefited from good credit rating and the early payment discount. But at the same time the company has less cash.

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Gearing increases from 25.75% to 27.5% but it is still an acceptable ratio and lower than the average 32.71%. It indicates that the company has good control of its debt finance to resources in the business. And they have less risk of future insolvency and more flexibility to management.

Efficiency: 

The IHP is increasing, meaning that they are holding their inventory for longer times. This might cause extra expenses for stocking, and reduce the operating profit for the year. 

The RCP is also increasing, meaning that they are collecting their receivables more slowly. This might cause some trouble of their cash flow, and probably they should be evaluating the credit of their customers. 

The PPP is decreasing, meaning they are paying their payables quicker. This might add some credit for the company, but it might result in less cash in hand, causing less return on investment. The company might be seeking for benefits from early payment discounts
Q2 
 A ROCE value indicates that the company can invest more of its profits back into the company to benefit shareholders.

The decline of Gross profit margin indicates that the income of the 

enterprise after paying the direct operating costs decreases, and the profitability decreases.
 An increase in Net profit margin indicates that the company has become more efficient at converting sales into actual profits. 
A company with a current ratio of 2:1, meaning that current assets are twice as large as current liabilities, and a ratio above 1.0 indicates that the company is financially stable and able to pay current debts and 

invoices.
a quick ratio higher than one indicates higher liquidity and means you have more than enough liquid assets to cover your current obligations. ‍ 

Inventory holding period decrease indicates that the company is able 

to turn its inventory into sales more quickly 

Payables payment period decrease indicates that the company is paying its bills relatively quickly 

A Gearing ratio between 25% - 50% is considered normal, and an increase in this ratio indicates that a company is more financially leveraged and more vulnerable to economic downturns and business 

cycles. 

To sum up, the company's financial situation is good compared to the 

industry average, and its profitability has increased compared to last 

year, and its financial situation is still stable

 

GPM：Compared with 2018, the GPM in 2019 has dropped significantly, and it has been lower than the industry average for two consecutive years, indicating that the company's ability to control costs is weak.it means that the company cannot retain more sales revenue.

 

NPM:the company ‘s profits and the rest of the revenue goes to cover cost of production, operating expenses and taxes had increased from 2018to 2019,it meansThe company's ability to control operating costs has increased.

 

Current ratio: it means it is more liquid and in a better position to pay of liabilities，it means it is more liquid and in a better position to pay of liabilities

 

quick ratio:the The company's quick ratio is close to 1:1, which is an ideal state and represents the company,it means The company can make good use of cash to achieve the company's current operating goals.

 

ihp:the The IHP is very short, and the company sells goods quickly, but it is lower than the industry average. It may be that the company does not have enough inventory.

 

receivable collection period:The company's collection cycle is lower than the industry average, indicating that the company's credit management system is very mature and the collection efficiency is very high.

 

Ppp:The creditors of the company like the company because they pay back quickly, but they may not have enough cash on hand.

 

Gearing:The company does not have much debt, and their debt level is lower than the industry average, indicating that the company is less likely to go bankrupt and has a lower debt risk