Hikma is not in a very secure financial position. Improvements in every area of the company are needed if the company is, in the first instance, to survive and then grow. The key areas of reform are the liquidity of the company and the quantity and quality of working capital, profitability, and financial stability. Management must address these areas simultaneously if the company is to overcome its present poor record.
It must be remembered that this analysis is limited: a greater depth of understanding and evaluation can only occur with utilisation of other resources such as comparisons with budget forecasts and the statement of changes in financial position. Only after this process can a full appreciation of the company’s current situation and possible future occur.
At this point the company does not have strong future prospects in the areas of profitability, liquidity or stability if it continues on its current path. Investors should be concerned with current rates of return and management and creditors should be concerned with the liquidity of the company as indicated in the ratio analysis.