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Financial Analysis
Working Capital
It measures both the company’s efficiency and its short-term financial health.
Table Working Capital
2019 2020 2021 2022 2023 202
The highest working capital resulted from the 6-year projected information is on
the year 2024, Php456,398.50; and the higher the working capital is, the more current assets
are available for operations.
LIQUIDITY RATIOS:
Current Ratio
It indicated the extent to which the current liabilities are covered by those assets
expected to be converted to cash in the future.
Table Current Ratio
2019 2020 2021 2022 2023 2024
The highest current ratio resulted from the 6-year projected information is 6.08 on
the year 2019. For 5 years, as can be noticed on the table above, there are enough current
assets available to cover the current obligations of the business.
Quick Ratio
It measures the firm’s liquidity by using the more liquid types of current assets to pay-off
short term obligations.
Table Quick Ratio
2019 2020 2021 2022 2023 202
The highest quick ratio from the 5-year projected information provided is 5.78 on the year
2019. The liquidity position of the business is highly liquid as the years pass, that
the business can meet its maturing obligations.
The highest total asset turnover for 2024 is .93 times, and is continually increasing
starting from year 2019. The business utilized its assets well through its increased
profit every year.
The fixed asset turnover for 2019 is .32 times, and is continually increasing for the
next 5 years. The highest fixed asset turnover is on the year 2024, 1.23 times and is
one of the indications that the business utilizes the fixed assets well through its
increasing sales.
The first year of the business resulted to the lowest debt ratio, .01 which is the most
favorable among the debt ratios shown within the 6-year projected results. The
second, third fourth, fifth and sixth year ratio are still favorable; which denotes that
the business only have those computed percentages of debt as part of its total assets.
PROFITABILITY RATIOS:
Gross Profit Ratio ?????
It shows the relationship between gross profit and total net sales and is a popular
tool to evaluate the operational performance of the business.
Table Gross Profit Ratio
For the years 2019-2024, it shows that the gross profit ratio of the business is
increasing. The trend of the business’ earnings suggest a positive investment quality
inspite of the increasing percentage for the first five years of the business.
For the year 2019-2024, the net profit margin ratio is slowly increasing from -10%
to 17%.
The operating expense margin for the year 2019 to 2024 is slowly decreasing from
110% to 75% which is a good indicator that the business is being managed
efficiently and that less of the business’ income is covering operational costs.
Return on Total Asset
It measures how well the management utilizes its assets to generate profit. The
higher the return, the more efficient the management employs its assets.
Table Return on Total Asset
2019 2020 2021 2022 2023
The highest return on asset is on the year 2024, 17% which is from the return of
negative 3% in the year 2019.
Return on Equity
It determines how much profit a firm generates for every amount in capital. The higher the
ratio percentage, the more effective the management is in utilizing its equity base
that will lead to a better return for its investors.
Table Return on Equity
2019 2020 2021 2022 2023 2024
The highest return on equity is on the year 2024, 18% which is from the return of negative
3% in the year 2019.
1 0.9061 126,639.25
2 0.8248 199,994.70
3 0.7491 237,756.58
4 0.6803 237,707.15
5 0.6178 246
6 0.5611
Total PV of Future Annual Cash
Inflows
Initial Outflows
5. Profitability Index
It is the ratio that compares the present value of net cash flows to the project’s investment.
It gauges the firm’s use of capital; the higher the index the more efficient is the
capital investment.