Morepen Laboratories Key Ratios

The decline in ROE from 21.79% in FY2022 to 5.93% in FY2023 indicates a significant downturn in profitability, as seen in a drop in PAT margin and reflected in lower net profits against relatively stable sales.Asset turnover has shown a decrease, particularly in FY2023, suggesting that the company is less efficient in generating sales from its assets, which heavily contributed to the declining ROE.Despite slight leverage improvements, the overall trend suggests that profitability is the primary driver of the recent declines in ROE.

Inventory days peaked in FY2023, signaling potential issues with inventory management leading to increased holding costs during that year.Receivable days also increased significantly in FY2023, indicating difficulties in collecting debts which can strain cash flow.Although payable days have risen, the overall cash conversion cycle has exhibited improvement by FY2025, suggesting better working capital management overall.

ROE and ROCE have noticeably declined leading up to FY2023, suggesting that both equity and capital efficiency are under pressure, primarily due to historically low profitability.On the other hand, ROA remains higher relative to ROE and ROCE, indicating that the company's overall asset base is generating more effective returns even as equity returns falter. This suggests good utilization of assets despite falling profitability.The dominance of ROA indicates that asset efficiency is more consistent, but the shrinking of both ROE and ROCE calls for a strategic reassessment of equity and capital deployment.