Debt ratio comparison of ACME
and ACI
70
60
Debt Ratio
50
40
30
20
10
0
2021
2020
2019
Year
ACME
ACI
Times Interest earned comparison
of ACME and ACI
14
12
TIE Ratio
10
8
6
4
2
0
2021
2020
2019
Year
ACME
ACI
Debt Ratio
The desirable debt ratio for any firm is under
50%, as this is the indication of less than 50%
of assets being bought with a loan. The graph
displays the movement in debt ratio of
ACME from around 48% to 51% and
declining slightly towards 50%. Whereas, the
debt ratio of ACI is seen to noticeably higher.
It is also on its way to a declination, as seen
at 64% in 2019, going through 65% and
finally on 60% in 2021. ACI needs to reduce
their debt ratio as this ratio is used by
creditors/banks to decide whether to give out
loans or not. ACME’s debt ratio has also
risen since 2019 but it is still at a better
position when compared to ACI.
Times Interest Earned Ratio
The higher the TIE ratio the easier it is to pay
off the interest expense. In the case of
ACME, a rather consistent TIE ratio is seen,
from 2.37 to 2.35 which means that in 2021
the operating profit was 2.37 times the
interest expense. In the case of ACI however
an impressive rise in the TIE ratio is seen,
going from 2.5 to 12. This is a very
significant rise and is a probable result of its
operating profit almost doubling in 2021
compared to 2019. It went from Tk 1.6 billion
in 2019 to Tk 3.5 billion in 2021.
Price earningd ratio comparison of
ACI and ACME
60
P/E Ratio
50
40
30
20
10
0
2021
2020
2019
Название оси
ACME
ACI
Market Book Ratio comparison of
ACI and ACME
1,8
1,6
M/B Ratio
1,4
1,2
1
0,8
0,6
0,4
0,2
0
2021
2020
2019
Year
ACME
ACI
Price Earnings Ratio
This ratio determines, whether stocks are
overvalued or undervalued. In the case of
ACME, we see a steady growth throughout
the three years which is a result of its stock
prices increasing from 64 to 93 within the
three years. This stock as of 2021 is slightly
overvalued, and is not very sustainable. A
massive dip can be seen in the P/E ratio of
ACI, with its steepest decline from 2019 to
2020 and still a quite noticeable declination
from 2020 to 2021, with its stock price going
from 135 to 147. This along with the
significant increase in EPS from 2.6 in 2019
to 36 in 2021 indicates that this is a fairly
valued stock which is sustainable.
Market Book Ratio
This ratio similarly is an indicator of the
value of stock. We see a consistent growth in
the ratio of ACME. As mentioned earlier its
stock price had increased within the three
years, that along with the book value also
increasing form $86 in 2019 to $95 in 2021
makes it a fairly valued, sustainable stock.
However, in the case of ACI a sharp fall is
seen from 2020 to 2021 even though the stock
price was increasing, this is a result of the
book value growing robustly from 90 in 2020
to 300 in 2021. This disproportionate growth
caused the sharp decline. Although, both
stock price and M/B value are increasing,
making a fairly valued stock also.