Financial Ratio Analyses and Implications to

Management
Liquidity/Short-term Solvency

2. For Inventory
a. Inventory Turnover
(2012) =

1. Current Ratio
(2012) =

87,269,017
46,933,052

= 185.94%

b. Average Sale Period

(2012) =

18,791,460+17,397,937+ 26,674,596
46,933,052

= 133.94%

201,103,613
(62,043,951+68,484,743) 2

4. Total Asset Turnover

(2012) =

201,103,613
(155,800,263+181,071,570) 2

119.39%

7.91 times
b. Days Sales in Average Receivable

(2012) =

7.91
365

Debt-Utilization (Leverage) Ratios

1. Debt to Equity Ratio

= 46.14 days

308.74 %

1. For Accounts Receivable

a. Accounts Receivable Turnover

201,103,613
(24,153,028+26,674,596) 2

7.57
365
= 48.22 days

3. Fixed Asset Turnover

(2012) =

Asset Utilization Liquidity Analysis

(2012) =

= 7.57

times

2. Acid Test Ratio/quick ratio/liquidity ratio

(2012) =

126,651,931
(15,716,715+17,747,413) 2

(2012) =

59,591,364
121,480,206

= 49.05%

2. Debt Ratio
(2012) =

59,591,364
181,071,570

Liquidity and Solvency

= 32.91%

It can be seen in the analysis using the horizontal

method that there has been an increase in the companys
current assets and current liabilities. Furthermore, the
increase in the current assets is far greater than the
increase in current liabilities. The increase in currents
assets is largely attributable to the available for sale
securities, short term financial assets and other assets. It
can also be noticed that even if a large part of the liabilities
were decreased it did not greatly affected the current
assets which shows that the company was able to utilize
their assets and liabilities in order to extinguish their debt
and in particular using also debt to pay another debt

3. Number of Times Interest Earned

(2012) =

29,915,017

Profitability Ratios
1. Gross Profit Ratios
(2012) =

74,451,682
201,103,613

= 37.02%

It should also be noted that non-current assets

particularly property plant and equipment takes a large
part of assets. Also, the current assets is made up of
mainly cash receivables and inventory. The trading
receivables is higher than the inventory which indicates
that the company should develop a strategy for collection
as also can be seen that the company collects roughly
every 46 days.

2. Profit Margin
(2012) =

23,845,285
201,103,613

= 11.86%

3. Return on Assets
(2012) =

23,845,285
(155,800,263+181,071,570) 2

14.16%

Stability or Long-Term Financial Position

4. Return on Equity
(2012) =
21.41%

23,845,285
(101,313,630+121,480,206) 2

The growth of total liabilities is lower than that of the

total equity. It can also be noticed that the percentage of
equity in comparison to liabilities is greater. This growth
and coverage is accountable to the increase in retained
earnings.

This analysis shows that the companys assets were

financed mainly by the owners than borrowings. If this
manner of managing the company is maintained and the
company depends more in owners investment, this would
be a good base for the long term standing of the company.

Operating Efficiency and Profitability

As can be seen in the Horizontal analysis, the growth
of the sales revenue is greater than the growth of the cost
of goods sold. This may mean that the company is
employing a price high enough to cover the cost of
producing the product. Although this is the case the
company must still watch out for price changes as this
determines the demand of customers for the product. It
can also be noticed that the percentage of the gross profit
is larger than that of last year which is favourable for the
company.
The non-operating income decreased noticeably
which is unfavourable and favourable at the same time. It

is unfavourable in a sense that the company has loss in

their source of other income and favourable in a sense that
it may have been the reason for the decrease in the other
operating expenses. The selling and administrative
expenses increased which may be a sign that the company
is not that efficient in controlling their expenses or a sign
that they have invested in managing their administration.
In general the company is profitable supported by the
increase in Income