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The report brings out a discussion on the mastermind limited with an aim to analyse its financial statements. This financial analysis is conducted with an aim to create a source of information for both internal as well as external stakeholders. This financial analysis creates transparency in the financial statements. Furthermore, as a financial analysis, the report has used ratio analysis for the examination to ensure how the company has performed in all the criteria. The ratio analysis examines the annual report on the basis of four criteria such as liquidity, profitability, capital structure, and efficiency. The report has demonstrates at least two- three ratios to know the actual impact of each criteria on company`s operations and stakeholders.

Ratio Analysis

Ratio analysis is a technique through which financial statements are analysed and reviewed. This tool is helpful for the stakeholder to take their decision regards their investment. Internal stakeholders will have to undertake the financial performance whether they have been performing well or not (Gibson, 2016). For the analysis, this report will come up with the demonstration of four criteria such as profitability, liquidity, efficiency, and capital structure ratio (Ahmed, 2018). The analysis for mastermind limited is for recent two years. Mastermind limited deals in real estate development based in NewYork. The organisation manages nearly 2 million square feet of real estate where it is committed in founding traditions and community awareness by providing affordable opportunities to business, service firms, community based and business (Wiang, Zhao, and Hong, 2019).

Profitability ratio-

This ratio will analyse the ability of the company to generate the amount of returns generated by total sales (Robinson, 2020). To demonstrate the situation of profitability, mastermind limited uses net profit ratio, gross profit ratio, return on equity, return on capital employed, and return on assets. The ideal ratio for profitability is 15-20 percent (Campbell, Adduzio, Downes, and Utke, 2019).

Profitability ratio

It analyses that net profit ratio for mastermind limited is 10 percent in 2018 and negative 2 percent, which represents that the company has suffered losses in 2019. This shows that the company`s net sales and non-operating profits are exposed to several risks as being reflected in net profit ratios (Karaömer, and Özbirecikli, 2019).

Gross profit ratio generates 24 percent of profits in 2018 and 15 percent in 2019. The average for the industry is 12-14 percent and the data for 2018 and 2019 says that the company is efficient enough while incurring higher sales with higher gross profits (Gibson, 2016).

Return n equity represents the net profit generated by using equity funds, which is 67 percent in 2018 and loss to shareholders of nearly 23 percent in 2019. Return on equity states that company has been returning distributable profits at considerable level. On the other hand, the company is not able to get maximum return for the shareholders (Arif, Jannat, and Anwar, 2016).

Return on total assets is estimated at 37 percent for 2018 and loss of 8 percent for 2019. Return on total assets considers how efficiently the company has contributed 37 percent of the returns for the company (Karaömer, and Özbirecikli, 2019). On the other hand, loss of 8 percent signifies that the assets are not at all utilised properly which indicates that the company does not contribute to any profits through total assets. Return on capital employed is estimated at .5 in 2018 and 1 percent in 2019. Negative profitability will occur when organisation’s operating expenses exceed the income from services (Karaömer, and Özbirecikli, 2019). This is purely a bad indication for Mastermind limited for the organisation, which has occurred because of economic recession. This shows that mastermind limited is not able to generate value to the shareholders, which leads to bad economic conditions. It has been occurred because of increasing production costs and lowering profit margin. Due to crisis and global recession in real estate industry, it is seen that country`s increasing external risks (Sultana, 2018).

Efficiency ratio-

The efficiency ratio is useful to analyse the how efficiency the organisation utilises all the assets and the liabilities efficiently. The most prominent ratio used for the analysis includes receivable turnover, and sales turnover (Gahlot, Singhal, and Kendre, 2019).

Efficiency Ratio





Accounts Receivable Turnover

Sales/Average accounts Receivable



Working Capital Turnover

Sales/ average Working Capital



Fixed Assets Turnover

Sales / Average fixed assets



Total assets Turnover

Sale/Average Total Assets



This ratio is used to analyse how efficiently one can manage the accounts receivables. The ideal ratio for management of account receivables is 15 days. The ratio for account receivable is 53 days for 2018 and 31 days for 2019. It is important to note that excessive account receivable is also not useful but as far the real estate industry is concerned, the number of times of transferring and paying bills receivable will remain increased.

Other prominent ratio for analysis will include total asset turnover, working capital turnover, and fixed asset turnover. It analyses that the company generates 5 percent of fixed asset turnover for 2018, and 4 percent of return for 2019. This percentage indicates that the company is not sufficient in using fixed assets while generating net profits. The average working capital ratio indicates that it is quite pathetic for 2019 to maintain its liquidity (Sowndarya, and Chitra, 2020).

Liquidity ratio-

This ratio is used to analyse the performance of the company by examining how efficiently it manages its liquidity position. Most prominent ratio used is current ratio, which shows how efficiently company pays off its current liabilities with the availability of current assets. The ideal ratio for current ratio is 2:1 (Easton, and Sommers, 2018).

Liquidity ratio

Current ratio is the criteria through which the company decides whether it is able to pay off its current liabilities. The current ratio for Mastermind limited, which decides current ratio for 2018, is 1.54 and for 2019, it is .62. Although in 2018, the company come up with efficient liquidity in 2018. Furthermore, in 2019, the company does not have appropriate liquidity as the current assets are quite low as compared to current liabilities. Therefore, there is a need to improve current ratio to improve the liquidity ratio (Dicle, and Meyer, 2018).

Capital structure ratio-

This ratio signifies that whether the company is able to maintain its capital structure. Furthermore, the ideal ratio for debt-equity ratio is 2:1 (Grimm, and Blazovich, 2016).

Capital Gearing Ratio





Capital Gearng

(Long term +Short term)/(equity capital Profit)




Here, mastermind limited is efficient enough to maintain capital gearing for the organisation as during 2018; the company maintains .77 debt proportion of total capital. On the other hand, for 2019, the company has been incurring 1.4 of debt in total capital. The company has been maintaining considerable debt-equity proportion, which

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