After taking a look at above tables, we can find that inventory turnover has increased slightly as compared to previous year, but it is very much low as compared to Robert Wiseman’s. This much increase can be welcomed as with reasonable increase in inventory a company can afford to look at its positive side as it can bring down the working capital, holding and opportunity cost.Dairy Crest is in much better position than Robert Wiseman Now, receivables ratio has increased from 34. 47 days to 40.

17 days, whereas the current figure for Robert Wiseman is 25.30 days, which is clearly better. Ideally a company taking around 30 days is doing an ideal job; however, it usually gets extended to 60 days. Moreover, this figure can get greatly influenced by a few large customers who pay very slow or very fast for that matter. So, it is not much of a worry.

Payables ratio has decreased from 25. 07 to 19. 60 in 2006-07, whereas, for Robert Wiseman, it is higher, equal to 31. 45 days, which has increased from the previous year. Ideally it is better to have this ratio a bit higher as the finance can be used in business.

However, it should not be stretched to a point where it starts hurting the credibility of the company. If a business starts taking around 100 days on average to pay back, then it can cause some problems relative to the goodwill of the group. However, even if Dairy Crest is not doing badly, still we can say that Robert Wiseman has outperformed them in this regard. Now, turning our attention towards Asset Turnover Ratio, it is apparent that it has dipped from 2. 27 to 1. 67 for Dairy Crest. It has dipped for Robert Wiseman as well, still they have it higher at 3.

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78 in 2006-07.Dip in this ratio can be a cause of worry for any company. But here it can be seen in the balance sheet that a humongous rise in the value of goodwill and intangible assets, which was caused by the acquisition of two businesses during the year, has brought this ratio down. So, not much relevance should be given to this ratio in the available scenario. The first ratio to consider while analyzing liquidity is current ratio, which we can see in the above graphs, has gone down to 1. 04 from 1. 57 in 2006.For Robert Wiseman it is more or less constant, dipping to 0.

73 from 0.76, but still Dairy Crest is in a better position than Robert Wiseman. However, it is important to take further look at the acid test ratio. The acid test ratio has also gone down from 0. 71 to 0. 58 in 2007, whereas, again for Robert Wiseman it’s nearly constant, falling from 0. 66 to 0.

64. This should not be a happy situation for Dairy Crest Group. However, if we go deeper, it can be witnessed in the balance sheet of the group that the current liabilities have risen alarmingly, which has brought the quick ratio down and the reason behind the rise is a 364 day loan equaling 100.

1m for financing a part of the acquisition of a company- St. Hubert, which took place in the financial year 2006-07. Some very fruitful results can be expected from this investment, in the long-term. So, quick ratio should not give much of a head ache to the management of the group as the acquisition was a progressive step into the future. Despite the liquidity position looking thin at the present moment of time, the group can afford to believe that the issue is just temporary and they would be in a much better position in the near future.The gearing ratio of dairy crest is almost constant being 56. 80% in 2006 and dipping a bit in 2007 to 56. 20%, whereas, Robert Wiseman’s gearing ratio stands at 15.

21 in 2007. It shows that Dairy crest is running quite high on gearing, which can give their competitor a competitive advantage over them in terms of credibility in the market. However, it would be a well known fact that dairy crest has acquired two businesses, which is the prime cause of rise in long-term borrowings, ultimately increasing gearing ratio.

So, the situation actually should not be as bad as it seems.But, a high debt has increased the finance charges as well, which can be a reason for low interest cover by Dairy Crest. Though interest cover ratio for dairy crest has risen from 3. 47 in 2006 to 4. 36 in 2007, yet Robert Wiseman is much better placed with interest cover of 30.

74 times in 2007, which is a bit less than their last year’s figure of 33. 55 times. But still they have totally outperformed Dairy Crest in this. Dairy Crest’ interest cover would get better if exceptional items are ignored in the calculation as 10. 8m was added in cost of sales as exceptional item.