The efficiency ratios have been analysed in three parts. Firstly, considering the fixed asset turnover ratio, it can be said that there was improvement in the performance of the company in 2012, but there has been gradual fall over the next three years. The fixed asset turnover has been maintained over the five year period with no growth. This does not mean that there is no growth in sales, but the sales have grown with same rate as that of fixed assets. In other words, if there is growth in assets, the trend in fixed asset turnover may be acceptable.
The inventory turnover ratio of the company witnessed almost no change in the first three years. An insight into this ratio shows that, in the last three years, the company has ensured that low level of inventory is maintained. Such low inventory level certainly improves the cash flow of the company. However, it has to be ensured that certain level of inventory is maintained so that sales are not impacted. In the present, case inventory levels have reduced by almost one third in ratio with the cost of goods sold. Thus, it can be said that the inventory is being used or sales have increased in comparison to the growth in inventory. It will be a challenge for the company to maintain the same ratio. This is because the inventory maintained in prior years has been used up, so such inventory will not be available in future and thus the inventory turnover may come down.