SUMMARY OF RATIO ANALYSES

Type of Ratio

Formula Values in Php 20AA20BB

Ratio Analysis

A. Liquidity Ratio

1. Current ratio 100,000/3925094,500/45,000

2.55:12.10:1

Firm’s ability to meet short-term obligations

45,000/3925043200/45000

1.15:1.96:1

Firm’s ability to meet sudden and immediate demands on current assets. Quick assets = cash, marketable securities, accounts receivable, net

Type of Ratio

Formula Values in Php 20AA20BB

Ratio Analysis

B. Activity Ratio

1. Inventory turnover

300,000/25,000200,000/25,000

12 times8 times

Number of times the merchandise inventory was sold and replenished during the period

2. Days of sales in inventory

Number of days in a period/Inventory turnover

365/12365/8

30.22 days45.63 days

Number of days inventory is sold, from date acquired

3. Accounts receivable turnover

200,000/20,000 10 times Number of times receivables have been realized in sales

4. Average collection period

Number of days in year/Receivable turnover

360/10 36 days Average number of days it takes to collect receivables

Type of Ratio

Formula Values in Php 20AA20BB

Ratio Analysis

5. Asset turnover

a. Fixed asset turnover

200,000/67,500 2.96 How effectively fixed assets have been utilized to generate sales revenue

b. Total assets turnover

200,000/187,250 1.07 Ability of the firm generating revenues; a measure of investment efficiency

C. Leverage Ratios

1. Equity to debt ratio

100,750/99,25079,500/95,000

1.02.84

Shows the relationship between investors contributions and debt of the firm

Type of Ratio

Formula Values in Php 20AA20BB

Ratio Analysis

2. Debt ratio 99,250/200,00095,000/174,500

.50

.54Proportion of assets provided by creditors

D. Profitability Ratios

1. Gross profit margin

180,000/300,000100,000/200,000

60%50%

Gross profit percentage on sales to recover operating expenses

2. Operating profit margin

Earnings (before interest and taxes) / Sales

55,000/300,00040,000/200,000

.18

.20Operating profit percentage per peso of sales

3. Net profit margin

Net profit (earnings after interest and taxes) / Sales

35,750/300,00026,000/200,000

.12

.13Profit percentage per peso of sales

Type of Ratio

Formula Values in Php 20AA20BB

Ratio Analysis

4. Return on assets

Net profit (earning after interest and taxes) / average total assets

26,000/187,250 14% Overall assets productivity

5. Return on equity

26,000/90,125 29% Rate of net income earned based on owner’s equity

MARKET VALUESA firms’s value is related to what an investor will pay for its

stock. If demand for the stock increases, then its price will also increase, wherein its increase in share price can be tied to expectation of increased in future earnings. Some of the tools that determine share prices are book value and earnings per share.

Book value is the basis for the fairly determining the worth of the assets in relation to a holder’s share, upon liquidation of the firm.

Earnings per share aims to identify the valid earnings per share value, by looking at trends over time or the earnings of other companies in the same industry.