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Financial Ratios Analysis Comparative Study Between Aramex & Agility

January 1

2016 Nermeen Asfour Tawfiq Azar Noor Ghanameh

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Table of Contents

Table of figures ................................................................................................................................ 3

Table of tables ................................................................................................................................. 4

Executive Summary ......................................................................................................................... 5

About Aramex .................................................................................................................................. 6

About Agility .................................................................................................................................... 7

Financial Ratios Analysis .................................................................................................................. 8

Liquidity Ratios ............................................................................................................................ 8

Current Ratios .......................................................................................................................... 8

Quick Ratio/ Acid Test Ratio .................................................................................................... 9

Cash Ratio .............................................................................................................................. 10

Leverage Ratio ........................................................................................................................... 11

Total liabilities to assets ........................................................................................................ 11

Long-term debt ratio ............................................................................................................. 12

Total debt to equity ratio ...................................................................................................... 13

Long term debt to equity ratio .............................................................................................. 14

Equity Multiplier .................................................................................................................... 15

Profitability Ratios ..................................................................................................................... 16

Gross Profit Margin ............................................................................................................... 16

Operating Profit Margin ........................................................................................................ 17

Net Profit Margin ................................................................................................................... 18

EBITDA Margin ....................................................................................................................... 19

Return on Assets .................................................................................................................... 20

Return on Equity .................................................................................................................... 21

Efficiency Ratios ......................................................................................................................... 22

Inventory Turnover ................................................................................................................ 22

Accounts Receivables Turnover and Average Collection Period ........................................... 22

Total Asset Turnover ............................................................................................................. 23

Stocks/Shares Ratios ................................................................................................................. 24

Stock price @ 31 Dec and Book Value ................................................................................... 24

Earnings Per Share EPS .......................................................................................................... 25

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Price/ Earnings Ratio ............................................................................................................. 26

Conclusion ..................................................................................................................................... 27

References ..................................................................................................................................... 29

Appendences ................................................................................................................................. 29

Table of figures Figure 1 - Current Ration Trend (2010 - 2014) ................................................................................ 8

Figure 2 - Quick Ratio Trend (2010 - 2014) ..................................................................................... 9

Figure 3 - Cash Ratio Trend (2010 - 2014) ..................................................................................... 10

Figure 4 - Total liabilities to assets ratio trend (2010 – 2014) ....................................................... 11

Figure 5 - Long-term debt ration trend (2010-2014) .................................................................... 12

Figure 6 - Total debt to equity ratio trend (2010 - 2014) .............................................................. 13

Figure 7 - Long term debt to equity ratio trend (2010-2014) ....................................................... 14

Figure 8 - Equity multiplier trend (2010-2014).............................................................................. 15

Figure 9 - Gross profit margin trends (2010-2014)........................................................................ 16

Figure 10 - Operating profit margin trend (2010-2014) ................................................................ 17

Figure 11- Net profit margin trend (2010-2014) ........................................................................... 18

Figure 12 - EBTIDA margin trend (2010-2014) .............................................................................. 19

Figure 13- Return on assets ratio trend (2010-2014) .................................................................... 20

Figure 14 - Return on equity trend (2010-2014) ........................................................................... 21

Figure 15 - Acc. receivables TO & Collection period trend (2010-2014) ....................................... 22

Figure 16- Total assets turnover trend (2010-2014) ..................................................................... 23

Figure 17- Stock prices Vs. Book values trend (2010-2014) .......................................................... 24

Figure 18 - Earning per share trend (2010-2014) .......................................................................... 25

Figure 19 - Price/ earnings ratio trend (2010-2014)...................................................................... 26

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Table of tables Table 1 - Current Ratio Historical Data (2010 – 2014) .................................................................... 8

Table 2 - Quick (Acid-Test) Ratio Historical Data (2010 – 2-14) ...................................................... 9

Table 3 - Cash Ratio Historical Data (2010 - 2014) ........................................................................ 10

Table 4 - Total liabilities to assets ratio historical data (2010 - 2014) ........................................... 11

Table 5 - Long-term debt ratio historical data (2010-2014) .......................................................... 12

Table 6 - Total debt to equity ratio historical data (2010 - 2014) ................................................. 13

Table 7 - Long term debt to equity ratio historical data (2010-2014) ........................................... 14

Table 8 - Equity multiplier historical data (2010-2014) ................................................................. 15

Table 9- Gross profit margin historical data (2010-2014) ............................................................. 16

Table 10 - Operating profit margin historical data (2010-2014) ................................................... 17

Table 11 - Net profit margin historical data (2010-2014) ............................................................. 18

Table 12 - EBITDA margin historical data (2010-2014) ................................................................. 19

Table 13 - Return on assets ratio historical data (2010-2014) ...................................................... 20

Table 14 - Return on equity historical data (2010-2014) .............................................................. 21

Table 15 - Acc. receivables TO & Avg collection period historical data (2010-2014) .................... 22

Table 16 - Total assets turnover historical data (2010-2014) ....................................................... 23

Table 17- Stock price and book value historical data (2010-2014) ............................................... 24

Table 18- Earnings per share historical data (2010-2014) ............................................................ 25

Table 19- Price/earnings ratio historical data (2010-2014)........................................................... 26

Table 20 - Overall assessment table .............................................................................................. 27

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Executive Summary This report provides an analysis and evaluation of the financial performance for two leading

logistical companies in the Middle East; Aramex and Agility over the period of 5 years between

2010 - 2014.

The financial analysis is done using financial ratios including liquidity, leverage, profitability,

efficiency and, finally, Stock/share ratios. These ratios are then used to build a judgment of each

of the company’s financial performance compared to historical results for the period 2010 –

2014, and at the same time, comparing the performance to existing international standards, and

Industry standards.

The financial analysis in general has shown better performance for Aramex over Agility when it

comes to liquidity and profitability yet, Agility have a better performance when it comes to

leverage ratios and taking advantage of low costs financing debts, and while Aramex have

achieved some reasonable numbers in the efficient management of its assets and equity, Agility

seems to have a better valuation of stocks from investors’ perspectives.

Both Aramex and Agility are considered appealing for loaners and they both should consider

taking advantage of low financing costs, However, Agility have more work to be done to

enhance its profitability and the better management of its available resources.

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About Aramex Aramex is an international express, mail delivery and logistics services company based in Dubai,

United Arab Emirates (UAE). The company was founded by Jordanian Fadi Ghandour and Bill

Kingson in 1982 with offices in Amman and New York. Aramex has approximately 13,800

employees in 54 countries and a network consisting of 40 independent express companies. The

main services of the company include supply chain solutions outsourcing, warehousing and

freight forwarding and e-commerce solution (shop and ship)

In January 1997; Aramex was listed on the NASDAQ stock exchange to become the first Arab-

based company to trade its shares on an American stock exchange. Aramex's valuation was $24

million and the IPO raised $7 million.In 2002, the company was de-listed from NASDAQ and

returned to private ownership; after the majority of the company was acquired by Abraaj

Capital, the first private equity firm in the Middle East.

Aramex went public on the Dubai Financial Market in February 2005. The IPO raised $270

million.[2] The company's revenue increased 23% over 2004 and net income increased 56% that

year

With regards to its business model; Aramex is considered to be a Light-Asset company, which

means that Aramex tends to rent its heavy assets including plans, offices and trucks. This model

has a number of advantages on the company, including higher flexibility and ability to adapt to

changing business and customer needs without major restructuring, and investing larger

amounts of money in developing its internal human capital.

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About Agility Agility is a publicly traded global logistics company headquartered in Kuwait. It provides freight

forwarding, transportation, warehousing and supply chain management services to businesses,

governments, international institutions and relief agencies worldwide. Agility has more than

20,000 employees and 500 offices in 100 countries.

Agility shares have been traded on the Kuwait Stock Exchange since 1984 and the Dubai

Financial Market since 2006. Its estimated 14,000 shareholders include private and public

institutions, along with individual investors. National Real Estate Co. and Kuwait’s Public

Institution for Social Security are two of Agility’s largest institutional investors

Agility began as a state-owned Kuwaiti company established in 1979 as Public Warehousing Co.

(PWC) and was privatized in 1997. After privatization, Agility pursued a strategy of investment

and expansion in the Middle East, Asia, Africa and Latin America, where many of its more

established competitors had yet to set up.

By 2004, Agility, then still PWC, was the largest logistics provider in the Middle East. In 2006, the

company unified its services under the new name of Agility with the brand slogan “A New

Logistics Leader.”

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0

0.5

1

1.5

2

2.5

3

2010 2011 2012 2013 2014

Current Ratio

Aramex Agility Industry Standard

Financial Ratios Analysis For the purpose of conducting the Financial Analysis, three types of Benchmarking will be used:

benchmarking using historical data, benchmarking using international standards, and

benchmarking using industry standards.

Liquidity Ratios Ratios covered in this section are used to show the ability of each company to meet its short-

term obligations, i.e. to show the cash levels of the company and its ability to turn other assets

into cash to pay off liabilities and other current obligations.

Current Ratios

This ratio is studied as the primary measure

of a company’s liquidity. Both companies are

maintaining a Current Ratio higher than 1,

which means that both companies have

enough current assets to cover their short-

term obligations and at the same time not

tying up resources in working capital of the

organization that may instead be put into

more profitable uses elsewhere. However,

compared to the international standard of 2;

Aramex could be considered to be more on

the safe side in covering its short term

obligations.

No clear trend could be observed for Aramex or Agility, both keeping a Current Ratio of around

2 and 1.2, respectively, in the time period 2010 and 2014.

Year Aramex Agility

2010 2.6 1.32

2011 1.95 1.19

2012 1.87 1.2

2013 2.22 1.19

2014 1.89 1.11

Avg (3 Yrs) 1.99 1.17

Avg (5 Yrs) 2.1 1.2

Industry 1.01

Table 1 - Current Ratio Historical Data (2010 – 2014)

Figure 1 - Current Ration Trend (2010 - 2014)

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Quick Ratio/ Acid Test Ratio

Quick ratio is a measure of a company's

ability to settle its current liabilities on a

very short notice. It can be studied as a

more reliable measure of liquidity.

However, inventory does not constitute

a large amount of the current assets for

both companies due to the nature of

their operations, and this can be

demonstrated from the exact values of

Current and Quick Ratios for Aramex,

and very close values of the same ratios

for Agility. Thus, this ratio is not very

relevant for the nature of the companies operation.

Figure 2 - Quick Ratio Trend (2010 - 2014)

0

0.5

1

1.5

2

2.5

3

2010 2011 2012 2013 2014

Quick Ratio

Aramex Agility Industry

Year Aramex Agility

2010 2.6 1.29

2011 1.95 1.16

2012 1.87 1.16

2013 2.22 1.16

2014 1.89 1.07

Avg (3 Yrs) 1.99 1.13

Avg (5 Yrs) 2.1 1.17

Industry 0.39

Table 2 - Quick (Acid-Test) Ratio Historical Data (2010 – 2-14)

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Cash Ratio

The cash ratio reflects the companies high

ability to meet its current obligations

directly by cash or cash equivalents, might

be a good indicator that are safe guarding

companies from short term threats, yet it

can’t considered an indicator that reflect

the overall healthy state for companies and

hence the international standard is being

conservative by settling at 1:1 ratio. For

Aramex, the cash ratio has been fluctuating

between 0.59 and 1.37 which is considered

more satisfactory when compared to

Agility’s cash ratio which has not exceeded

0.44.

Figure 3 - Cash Ratio Trend (2010 - 2014)

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

2010 2011 2012 2013 2014

Cash Ratio

Aramex Agility

Year Aramex Agility

2010 1.37 0.44

2011 0.62 0.28

2012 0.59 0.34

2013 1.05 0.37

2014 0.78 0.30

Avg (3 Yrs) 0.81 0.33

Avg (5 Yrs) 0.88 0.35

Industry N/A

Table 3 - Cash Ratio Historical Data (2010 - 2014)

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0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

2010 2011 2012 2013 2014

Total liabilities to assets ratio

Aramex Agility

Leverage Ratio Ratios covered in this section are used to evaluate both companies’ ability to sustain operations

indefinitely by its ability to pay its long-term obligations.

Total liabilities to assets

Figures show that Agility is maintaining a

steady level of this ratio, where on average

37% of its assets are made of liabilities, and

this is higher than the values achieved by

Aramex, which indicates that Aramex is less

dependent on debts than Agility. However,

we can also notice a trend for Aramex

which has grown more reliance on loans

through the last five years.

Year Aramex Agility

2010 21.0% 38.3%

2011 23.9% 35.8%

2012 24.6% 36.5%

2013 28.8% 36.5%

2014 31.7% 37.3%

Avg (3 Yrs) 28.4% 36.8%

Avg (5 Yrs) 26.0% 36.9%

Industry N/A

Table 4 - Total liabilities to assets ratio historical data (2010 - 2014)

Figure 4 - Total liabilities to assets ratio trend (2010 – 2014)

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Long-term debt ratio

The long term debt ratio reflects to which

extent a company’s is using a long term

debts. For Aramex, the long term debt ratio

indicated a very low dependency on longer

term debts except for 2013 in which an

unforeseen spike has taken place to reach

out to 5.6%, however, this spike does not

reflect any issues of substance since

Aramex’s long term ratio doesn’t axceed an

average of 1.4% (for the last 5 years) which

is still way underneath the logistics industry

standard of 4.0%. The low dependency on

long term debts might be explained by the

high cash availability and profit margin which allows Aramex to finance its own operations

avoiding financing costs.

The long term ratio for Agility, on the other hand, shows a higher dependency on long term

debts. Although, this tendency is not considered risky when compared to the industry standard

and in the same manner this might also be explained by the lower cash availability and profit

margins when compared with Aramex.

Figure 5 - Long-term debt ration trend (2010-2014)

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

2010 2011 2012 2013 2014

Long-term debt ratio

Aramex Agility Industry Standard

Year Aramex Agility

2010 0.3% 4.0%

2011 0.4% 1.7%

2012 0.5% 3.0%

2013 5.6% 2.6%

2014 0.2% 1.8%

Avg (3 Yrs) 2.1% 2.5%

Avg (5 Yrs) 1.4% 2.6%

Industry 4.01%

Table 5 - Long-term debt ratio historical data (2010-2014)

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0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

2010 2011 2012 2013 2014

Total debt to equity ratio

Aramex Agility

Total debt to equity ratio

The total debt to equity ratio indicates the

proportion of equity financed by debts, this

ratio suggests to extremes between 0% and

100%, the lower it gets near the 0% would

rather indicates that the company is missing

the chance for low cost financing through

debts since interest expenses causes a

reduction on taxes expenses and the higher

it gets near 100% the more the financial risk

a company is facing and since no

international standard for this ratio, an

optimized ratio would depends on the

company’s type and industry type.

Tracing Aramex’s debt to equity ratio through the last five years shows a increasing trend which

indicates that Aramex is making more and more use from the low financing cost, and since the

ratio is still in the lower end of the ration (under 50%) it might indicates a better financing

management rather than approaching the risk level.

On the other hand, the total debt to equity ratio for Agility has hit 62.1% in 2010 which might be

an alarming percentage and hence the four following years have showed a tendency to better

optimize this ratio.

In general, the comparison between Aramex and Agility when it comes to the total debt to

equity ratio might give more credit to Agility than to Aramex considering a better utilization of

low cost financing and perhaps more credit to Aramex in avoiding risks associated with growing

this ratio.

Year Aramex Agility

2010 26.6% 62.1%

2011 31.5% 55.7%

2012 32.7% 57.5%

2013 40.4% 57.5%

2014 46.5% 59.4%

Avg (3 Yrs) 39.9% 58.1%

Avg (5 Yrs) 35.5% 58.4%

Industry N/A

Table 6 - Total debt to equity ratio historical data (2010 - 2014)

Figure 6 - Total debt to equity ratio trend (2010 - 2014)

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0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

2010 2011 2012 2013 2014

Long term debt to equity ratio

Aramex Agility

Long term debt to equity ratio

Long term debts to equity ratio refer to the

portion of equity financed by the long term

debts in specific out of the total debts.

The ratio span between 0% and 100% can

assess the reliance on long term debts, the

higher it goes the more risk a company is

taking.

Despite the fact that Agility shows a higher

tendency to finance equity from long term

debt than Aramex does, both companies are

considered very much in the safe side and way

from being in the risk zone.

When putting this ratio in comparison with the total debt to equity ratio, we can see that both

companies tend to finance its activities from liabilities other than long term debts and are

mostly short term rather than long term, and considering that both companies have high

solvency, it can be said that both Aramex and Agility are two companies that avoid risks.

It might also be appropriate to say that financing through long term debts would be a good

approach to consider to lower taxes expenses and enhancing the net income.

Year Aramex Agility

2010 0.4% 6.5%

2011 0.5% 2.7%

2012 0.6% 4.7%

2013 6.0% 4.1%

2014 4.4% 2.9%

Avg (3 Yrs) 3.7% 3.9%

Avg (5 Yrs) 2.4% 4.2%

Industry N/A

Table 7 - Long term debt to equity ratio historical data (2010-2014)

Figure 7 - Long term debt to equity ratio trend (2010-2014)

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0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2010 2011 2012 2013 2014

Equity multiplier

Aramex Agility

Equity Multiplier

Similar to the total Debt to Equity ratio;

Aramex is showing lower values for the

Equity Multiplier ratio than Agility, and this

indicates that Aramex is less dependent on

debt financing and that more assets are

funded by shareholders than from creditors

(loans). However, the positive trend that

Aramex is showing, compared to the steady

level for Agility, indicates that Aramex is

increasingly depending on debts to fund its

assets. The lack of an industry standard to

benchmark against would only allow for a

conclusion that support the previous

assumptions which says that both companies are away from the risk zones with more credit

given to Aramex than to Agility.

Year Aramex Agility

2010 1.27 1.62

2011 1.31 1.56

2012 1.33 1.57

2013 1.40 1.58

2014 1.46 1.59

Avg (3 Yrs) 1.40 1.58

Avg (5 Yrs) 1.36 1.58

Industry N/A

Table 8 - Equity multiplier historical data (2010-2014)

Figure 8 - Equity multiplier trend (2010-2014)

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Profitability Ratios Ratios covered in this section are used to show how well each of the companies is using its

assets to generate profits.

Gross Profit Margin

Both Aramex and Agility have been

maintaining almost steady Gross Profit

margins throughout the period from 2010 -

2014.This is attributable to the almost

steady level of sales and the cost of

revenues the two companies had in the

period 2010 – 2014.

By comparing the two companies, it can be

seen that Aramex is more profitable in

selling its services than Agility, where

Aramex has been maintaining a Gross profit

margin of around 53%, while Agility has

been maintaining around 28% for the same ratio. This means that Aramex is having a higher

percentage of its sales available for funding other part of the business.

Figure 9 - Gross profit margin trends (2010-2014)

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

2010 2011 2012 2013 2014

Gross Profit Margin

Aramex Agility Industry Standard

Year Aramex Agility

2010 53.8% 30.4%

2011 52.6% 28.1%

2012 53.6% 26.1%

2013 54.2% 28.1%

2014 54.9% 28.9%

Avg (3 Yrs) 54.2% 27.7%

Avg (5 Yrs) 53.8% 28.3%

Industry 58.4%

Table 9- Gross profit margin historical data (2010-2014)

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0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

2010 2011 2012 2013 2014

Operating Profit Margin

Aramex Agility Industry Standard

Operating Profit Margin

Again, both companies are maintaining

almost stable levels of Operational Profit

margins during the period 2010 – 2014. The

average for Aramex and Agility for the

period is 10.2% and 3.3%, respectively.

Comparing these two values indicates that

Aramex is substantially generating more

revenues from operational activities,

meaning that it is more stable and has more

sustainable operating activities than Agility.

This is also an indication that Aramex has a

higher proportion of revenues available to

cover non-operating costs like interest

expense.

However, values for this ratio for both companies are low, and especially for Agility, where the

values it achieved for the period 2010 – 2014 are alarmingly low, and this may be an issue in

case Agility needs external loans and/or investments.

Year Aramex Agility

2010 10.4% 4.2%

2011 9.90% 1.4%

2012 9.60% 2.8%

2013 10.5% 3.8%

2014 10.5% 3.4%

Avg (3 Yrs) 10.2% 3.3%

Avg (5 Yrs) 10.2% 3.1%

Industry 10.04%

Table 10 - Operating profit margin historical data (2010-2014)

Figure 10 - Operating profit margin trend (2010-2014)

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0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

2010 2011 2012 2013 2014

Net Profit Margin

Aramex Agility Industry Standard

Net Profit Margin

Agility is showing a positive trend in its net

profit margin, this is attributable mainly to

reduced expenses such as directors’

remuneration, interest expense and

improvements in non-operating income.

Aramex, on the other hand, is showing a

very slight reductions taking place to its net

profit margin. However, comparing this

trend to the industry standard would reveal

that Aramex is doing a very good job

through achieving net profits even higher

than the industry standard while Agility is

under-performing

Accordingly, we can say that Aramex is more effective in converting sales into net income, and is

more efficient in running its operations.

Year Aramex Agility

2010 10.4% 1.5%

2011 9.40% 2.3%

2012 8.70% 2.9%

2013 9.50% 3.9%

2014 9.50% 4.3%

Avg (3 Yrs) 9.20% 3.7%

Avg (5 Yrs) 9.50% 3.0%

Industry 7.43%

Table 11 - Net profit margin historical data (2010-2014)

Figure 11- Net profit margin trend (2010-2014)

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0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

2010 2011 2012 2013 2014

EBTIDA Margin

Aramex Agility Industry Standard

EBITDA Margin

The earnings before interest, tax,

depreciation and amortization expenses

margin is an interesting figure to look at

since it can clearly highlight the difference

between the business models of these two

logistic companies.

Aramex is a achieving about double what

Agility is achieving for this margin and this

can be referred to the fact that Aramex is a

very light-asset company which is

significantly reduces the depreciation and

amortization expenses and adding to that is

the very low taxes that Aramex is paying compared to Agility which might be referred the each

country’s regulations related to the income tax. This might also explain Agility’s higher tendency

to finance its activities from debts in attempt to reduce taxes.

However, when comparing the two companies’ performance against the industry standard

Aramex seems very close which might be considered as an assurance that Aramex strategy is

more effective than that of Agility.

Year Aramex Agility

2010 13.3% 5.3%

2011 12.2% 5.9%

2012 11.9% 5.9%

2013 13.0% 6.9%

2014 12.8% 7.4%

Avg (3 Yrs) 12.6% 6.8%

Avg (5 Yrs) 12.7% 6.3%

Industry 13.28%

Table 12 - EBITDA margin historical data (2010-2014)

Figure 12 - EBTIDA margin trend (2010-2014)

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0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

2010 2011 2012 2013 2014

Return on Assets

Aramex Agility Industry Standard

Return on Assets

Agility is showing a positive trend for its

Return on Assets ratio, and this is the result

of the increase the company is showing in

its net income, since its assets for the

period is almost fixed. This positive trend is

an indication that the company is becoming

more efficient in managing its asset to

produce profits and in converting its

investments in assets into profits. Aramex,

on the other hand, have a significantly

higher return on assets despite the fact that

there was no clear tendency obtained

during this five years time. It is clear that

Aramex have a better ability to manage its assets to produce profits

Comparing this to the industry standard would show that Aramex is doing very good by

achieving a higher return on assets in average while Agility would need a tremendous effort to

be performed in managing their assets.

Year Aramex Agility

2010 10.0% 1.6%

2011 9.70% 2.2%

2012 10.0% 2.8%

2013 10.6% 3.8%

2014 10.8% 4.0%

Avg (3 Yrs) 10.6% 3.5%

Avg (5 Yrs) 10.2% 2.9%

Industry 8.88%

Table 13 - Return on assets ratio historical data (2010-2014)

Figure 13- Return on assets ratio trend (2010-2014)

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0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

50.00%

2010 2011 2012 2013 2014

Return on Equity

Aramex Agility Industry Standard

Return on Equity

In general, both companies are showing

positive trends for this ratio, which is a sign

that both companies are improving their

effectiveness in using the money invested

by the shareholders in funding operations

and growing the company and their

efficiency in using this money to generate

income.

By comparing the results of the two

companies, it can be seen that Aramex is

showing higher values, which mean higher

effectiveness and efficiency in managing the

shareholders money in generating income.

However, when compared to the industry standard both companies are showing a very low

performance that might be either to less ability to transform equity investment into income or

both companies have a massively big equity compared to its net income which seems as better

explanation in this context since both companies’ income margins was very close to the industry

standard (especially Aramex).

Year Aramex Agility

2010 11.3% 2.7%

2011 11.1% 3.0%

2012 11.9% 3.8%

2013 13.1% 5.2%

2014 14.5% 5.6%

Avg (3 Yrs) 13.2% 4.8%

Avg (5 Yrs) 12.4% 4.0%

Industry 44.45%

Table 14 - Return on equity historical data (2010-2014)

Figure 14 - Return on equity trend (2010-2014)

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0

10

20

30

40

50

60

70

80

0

2

4

6

8

10

12

2010 2011 2012 2013 2014

Acc. Receivables TO & Collection Period

Aramex(Coll. Per.) Agility(Coll. Per.)

Industry Standard (Coll. Per.) Aramex

Agility Industry Standard

Efficiency Ratios Ratios covered in this section are used to show how well each of the companies is utilizing its

assets to generate income.

Inventory Turnover

Due to the nature of the two companies’ business, this ratio is irrelevant/not applicable.

Accounts Receivables Turnover and Average Collection Period

Both companies are not showing any

clear trends for this ratio; and both are

achieving almost the same results. On

average, it is taking Aramex around 67

days to collect its receivables, and 70

days for Agility to do the same. Hence,

the figures reflect that both companies

are almost at the same level of

efficiency in collecting the receivables

and have similar quality of the credit

sales they have.

However and when comparing these

results to the industry standard (32.71

days), it can be seen that both

companies would need to work better on enhancing their receivables’ collection methods.

Year Aramex Agility

TO Period TO Period

2010 5.5 66.3 5.5 66.3

2011 5.1 71.6 4.8 76.0

2012 5.3 68.9 5.2 70.2

2013 5.5 66.3 5.4 67.6

2014 5.3 68.9 5.0 73.0

Avg (3 Yrs) 5.38 67.8 5.19 70.3

Avg (5 Yrs) 5.35 68.22 5.17 70.6

Industry 11.16 32.71

Table 15 - Acc. receivables TO & Avg collection period historical data (2010-2014)

Figure 15 - Acc. receivables TO & Collection period trend (2010-2014)

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0

0.2

0.4

0.6

0.8

1

1.2

1.4

2010 2011 2012 2013 2014

Total Assets Turnover

Aramex Agility Industry Standard

Total Asset Turnover

Looking at the results achieved by both

companies for this ratio, we see that

Aramex is achieving a slight positive trend

for its total assets turnover ratio. Agility, on

the other hand, is achieving a slight

negative trend, indicating a slight draw back

in its effectiveness in using its assets for

generating sales.

On the other hand, the industry standard

suggests that both companies would need

to work better to enhance their assets

utilization in generating revenue

Year Aramex Agility

2010 1.0 1.1

2011 1.0 1.0

2012 1.1 1.0

2013 1.1 1.0

2014 1.1 0.9

Avg (3 Yrs) 1.13 0.97

Avg (5 Yrs) 1.08 0.98

Industry 1.19

Table 16 - Total assets turnover historical data (2010-2014)

Figure 16- Total assets turnover trend (2010-2014)

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0

0.5

1

1.5

2

2.5

3

3.5

2010 2011 2012 2013 2014

Stock Prices Vs. Book Values

Aramex B.V Agility B.V Aramex S.P Agility S.P

Stocks/Shares Ratios Ratios covered in this section give an idea about what investors in each company should expect

to receive from their investment.

Stock price @ 31 Dec and Book Value

Both Aramex and Agility figures are

showing increased stock price

(except for the year 2011).

Regarding Book values; Aramex has

shown slight improvements

throughout the period, which is an

indication of improved historical

performance. Agility has shown a

steady level of its stock book value;

an indication of a steady historical

performance.

However, results show that

Aramex’s stock price has always

been higher than its book value for the period 2010 – 2014, which means Aramex’s stocks are

overvalued and this reflects positive perception of the company’s performance and good future

expectations.

On the other hand, and for the same period, Agility is showing stock prices that are always

below the book value of the stock, which means that the stocks are undervalued, and this could

be an indication of poor investors’ perception and low future expectations of the company’s

performance. However, the two values have come very close in 2014, indicating improved

perception of the company and its performance.

Year Aramex Agility

Stock Price

Book Value

Stock Price

Book Value

2010 2.07 1.23 0.5 0.80

2011 1.8 1.30 0.37 0.78

2012 2.0 1.40 0.51 0.79

2013 2.98 1.45 0.71 0.78

2014 3.1 1.50 0.77 0.79

Avg (3 Yrs) 3.04 1.40 0.74 0.79

Avg (5 Yrs) 2.47 1.40 0.57 0.79

Industry N/A

Table 17- Stock price and book value historical data (2010-2014)

Figure 17- Stock prices Vs. Book values trend (2010-2014)

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0

0.05

0.1

0.15

0.2

0.25

2010 2011 2012 2013 2014

Earning per Share

Aramex Agility

Earnings Per Share EPS

Both companies are showing increased

Earnings per share, indicating improved

profitability on a shareholder basis.

However, Aramex results show higher

values than Agility, meaning that Aramex is

more profitable, and more profits are

available to distribute to shareholders.

Higher earnings per share ratio often makes

the stock price of a company rise, which is

the case for both Aramex and Agility, where

(except for the second year), have

increasing stock prices. This is a positive

indicator for both companies as investors can expect to have.

Year Aramex Agility

2010 0.139 0.025

2011 0.144 0.027

2012 0.167 0.032

2013 0.190 0.044

2014 0.217 0.046

Avg (3 Yrs) 0.204 0.045

Avg (5 Yrs) 0.180 0.035

Industry N/A

Table 18- Earnings per share historical data (2010-2014)

Figure 18 - Earning per share trend (2010-2014)

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0

5

10

15

20

25

30

2010 2011 2012 2013 2014

Price/ Earnings Ratio

Aramex Agility Industry Standard

Price/ Earnings Ratio

The price earnings ratio reflects investors

willingness to invest in a company for each 1

unit of earnings, and in this comparative

context between Aramex and Agility it is

obtainable that Agility have a higher P/E

ratio that might be referred to a better

perception from investors or due to a

smaller earning per share while on the other

hand Aramex have less P/E ratio that

indicates Aramex’s superior performance in

terms of earning per share and a more

conservative perception from investors’

preventing them from paying more for unit

of earning.

However, comparing this to the industry standard would show that both companies are way

below what investors would usually pay for each 1 unit of earning

Year Aramex Agility

2010 14.9 20.1

2011 12.5 13.7

2012 12.0 15.8

2013 15.7 16.0

2014 14.3 16.6

Avg (3 Yrs) 14.0 16.3

Avg (5 Yrs) 13.9 16.5

Industry 25.11

Table 19- Price/earnings ratio historical data (2010-2014)

Figure 19 - Price/ earnings ratio trend (2010-2014)

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Conclusion Table 20 - Overall assessment table

Financial Ratio International Standard1

Industry Standard2

Aramex Agility

Value Remark Value Remark Liquidity Ratios Current Ratio 2.0 1.01 2.1 Good 1.20 Satisfactory Quick Ratio 1.0 0.39 2.1 Good 1.17 Good Cash Ratio 0.2 N/A 0.88 N/A 0.35 N/A Leverage Ratios Total liabilities to assets 60.0% N/A 26.0% N/A 36.9% N/A Long-term debt ratio N/A 4.01% 1.4% Bad 2.6% Bad Total debt to equity N/A N/A 35.5% N/A 58.4% N/A Long term debt to equity N/A N/A 2.4% N/A 4.2% N/A Equity multiplier N/A N/A 1.36 N/A 1.58 N/A Profitability Ratios Gross profit margin N/A 58.42% 53.8% Satisfactory 28.3% Bad Operating profit margin N/A 10.04% 10.2% Good 3.1% Bad Net profit margin N/A 7.43% 9.5% Good 3.0% Bad EBITDA margin N/A 13.28% 12.7% Satisfactory 6.3% Bad Return on assets N/A 8.88% 10.2% Good 2.9% Bad Return on equity 12.0% 44.45% 12.4% Bad 4.0% Bad Efficiency Ratios Inventory TO N/A 89.92 N/A N/A 73.94 Satisfactory Acc. Receivables TO N/A 11.16 5.35 Bad 5.17 Bad Acc. Receivables collection period

N/A 32.71 68.25 Bad 70.75 Bad

Total assets TO N/A 1.19 1.08 Satisfactory 0.98 Satisfactory

1 http://www.readyratios.com/

2 http://csimarket.com/Industry/Industry_Data.php?ind=1101

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Financial Ratio International Standard

Industry Standard

Aramex Agility

Value Remark Value Remark Stocks Ratios Stock price N/A N/A 2.47 N/A 0.572 N/A ESP N/A N/A 0.18 N/A 0.035 N/A Book Value N/A N/A 1.4 N/A 0.79 N/A P/E N/A 25.11 13.9 Bad 16.5 Bad

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References http://www.readyratios.com/

http://csimarket.com/Industry/Industry_Data.php?ind=1101

Agility Annual Reports (2010-2014)

Aramex Annual Reports (2010-2014)

Appendences Agility Annual Reports (2010-2014)

Aramex Annual Reports (2010-2014)

Ratio Analysis excel Spreadsheet (Agility)

Ratio Analysis excel Spreadsheet (Aramex)