Shareholders seem pleased Amir Marketing and Investments in Agriculture Limited (TLV:AMRK) released a strong earnings report last week, and our analysis of the report indicates that the strong profit numbers were supported by a solid revenue base.
Check out our latest analysis for Amir Marketing and Agriculture Investments
Focus on Amir’s investment in marketing and agricultural profits
One key financial metric used to measure how well a company is converting profits into free cash flow (FCF) is IncidenceTo find the accrual ratio, first subtract the FCF from the profits for the period and then divide that number by the average operating assets for the period. This ratio tells you how much a company’s profits exceed its FCF.
So, it’s considered a good thing when a company’s accumulation ratio is negative, and a bad thing when the accumulation ratio is positive. This doesn’t mean you should worry if the accumulation ratio is positive, but it’s worth noting if the accumulation ratio is fairly high. In particular, there is some academic evidence that suggests that, generally speaking, a high accumulation ratio is a bad sign for short-term profits.
Ameer Marketing & Investments In Agriculture’s accrual ratio for the year to March 2024 is -0.14, which suggests that its free cash flow has outpaced its statutory profits by a fair amount. In fact, over the last twelve months, the company reported free cash flow of ₹87m, well above the ₹29.9m it reported as profit. Ameer Marketing & Investments In Agriculture’s free cash flow has improved over the past year, which is generally a good thing.
Notes: Investors are always advised to check the strength of their balance sheet, and you can click here to see our balance sheet analysis of Amir Marketing and Investments in Agriculture.
Our View on Amir Marketing and Investing in Agriculture Profit Performance
Amir Marketing & Investments In Agriculture’s profitability is solid and, as mentioned above, it indicates strong free cash flow. For this reason, we believe Amir Marketing & Investments In Agriculture’s earnings power is at least as good as it appears, if not better. It’s also positive that the company has improved from a loss last year to the point where it can post a profit this year. The purpose of this article is to assess how reliable statutory profits are to reflect the company’s potential, but there is much more to consider. With this in mind, if you want to analyse the company further, it is important to know about the risks involved. Amir Marketing & Investments In Agriculture is 3 Warning Signs in Investment Analysis And one of them is important…
In this note, we’ve only looked at one factor that sheds light on the nature of Amir Marketing & Investments in Agriculture’s profits. But if you can focus on the finer details, there’s a lot more to discover. Some consider a high return on equity to be a good sign of a quality business. It may take a little digging, but free This collection of companies boasting high return on equity, or this list of significant insider holdings, can be useful.
Valuation is complicated, but we can help make it simple.
To find out if Amir Marketing and Investments Agriculture is overvalued or undervalued, check out our comprehensive analysis. Fair value estimates, risks and warnings, dividends, insider trading, financial strength.
View your free analysis
Have feedback about this article? Concerns about the content? contact Please contact us directly. Or email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We use only unbiased methodologies to provide commentary based on historical data and analyst forecasts, and our articles are not intended as financial advice. It is not a recommendation to buy or sell stocks, and does not take into account your objectives, or your financial situation. We seek to provide long-term focused analysis driven by fundamental data. Note that our analysis may not take into account the latest price sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned.
