ANALYSIS OF FINANCIAL

STATEMENT
LIQUIDITY RATIOS

 CURRENT RATIO 2007 2008 2009 2010

(C.A/C.L) .83 0.98 1.10 1.29
Increases Increase increase

Why increase / decrease…?

In 2008 the company’s current assets increases from
In 2009 company’s current assets increases from 33048to 39870& its current
liabilities decreases from 33640 to 36083
In 2010 company reduce current assets but it make itself efficient by reducing its
current liabilities more than current assets (ref: 2010 bal sheet)

 QUICK RATIO 2007 2008 2009 2010

(C.A-INVENTORY / C.L) .61 .70 .87 1.0
increases Increase Increase

Why increase / decrease…?

In 2008 the company’s current assets increases
In 2009 company’s current assets increases & its current liabilities decreases.
In 2010 company reduce current assets but it make itself efficient by reducing its
current liabilities more than current assets (ref: 2010 bal sheet)

ASSET MANAGEMENT RATIOS

 INVENTORY TURNOVER RATIO:

(Sales/inventory)
2007 2008 2009 2010
4.9 11.76 13.9 13.8
increases Increase decrease

Why increase / decrease…?

In 2009 company sales decrease from 109908 to 107618 and its inventory decrease
from9342 to 7734(ref:bal sheet 2010)
In 2010 company increase sales from 107618 to 109722 and also increase inventory from
7734 to 7925
 RECIVEABLE COLLECTION PERIOD
(A/R / SALE x 365)

2007 2008 2009

2010
. 52 43 41
40 .
increases Decrease Decrease

Why increase / decrease…?

In 2009 company’s receivable collection periods decreases from 43 days to 41days.
In 2010 company’s receivables decreases (12083)
Company has also increases its sales.

PAYABLES DAYS RATIO 2007 2008 2009 2010

(A/P / PURCHASE x 365) 115 97 105 100

Increases Decrease

Why increase / decrease…?

In 2009 company’s payables collection periods increases from 97 days to 105 days.
In 2010 company’s payables increases (12592)
Company has also increases its purchases.

 TOTAL ASSETS TURNOVER RATIO 2007 2008 2009 2010

(SALES / TOTAL ASSESTS) .94 1 0.9 0.98

Increases Decreases Increase

Why increase / decrease…?

In 2009 company’s use the 1 times of total assets for sale 107618.
In 2010 company’s fixed assets decreases (21483)
Company has also increases its sales (109722).

DEBT MANAGEMENT RATIOS

 DEBT TO ASSET RAIO:

(Total liability/Total assets) 2007 2008 2009 2010
53 % 48% 51% 44%
decreases Increase decrease

Why increase /decrease……?

In 2009 company total liabilities increase from 51299 to 57285
In 2010 company total liabilities decrease from 57285 to 49043

 DEBT TO EQUITY RATIO:

(Total liabilities/Total equity) 2007 2008 2009 2010
1.11 0.93 1.06 0.73
decreases Increase decrease

Why increase / decrease…..?

In 2009 total liabilities increase from 33640 to 36083 & total equity decrease from 54916
to 53631
In 2010 total liabilities decrease from 57285 to 49043 & total equity increase from 53631
to 62598

 TIME INTEREST:
(EBIT/Interest expense) 2007 2008 2009 2010
16.40 12.5 19.7 19.1
decreases Increase decrease

Why increase/decrease……?
In 2009 company increase EBIT from 15676 to15699 &interest expense decrease from
1247 to 794
In 2009 company increase EBIT from $15699 to16194 &interest expense decrease from
794 to 847
 PROFITABILITY RATIOS

 GROSS PROFIT MARGIN ON SALE 2007 2008 2009 2010

(G.P / SALE X 100) 58% 56 % 58% 58.2 %

Increases Increase

Why increase / decrease…?

In 2009 company’s GP was 56 % for total sale (107618).
In 2010 company’s GP increases (63873)
Company has also increases its sales (109722).

 EARNING POWER RATIO 2007 2008 2009 2010

(EBIT / TOTAL ASSETS X 100) 14.7% 14% 14.5%

Decreases Increase

Why increase / decrease…?

In 2009 company’s EBIT Increases due to the increase of total assets.
In 2010 company’s assets increases (111641)
Somehow the company maintains its BEP ratio.

 ROA (RETURNS ON ASSETS) 2007 2008 2009 2010

(NET INCOME / TOTAL ASSETS) 10% 16.9% 9.4% 30%

increases Decreases Increase

Why increase / decrease…?
In 2009 company’s Increases its total assets.
In 2010 company’s assets increase (111641) and its liabilities are also increase.

 ROE (RETURNS ON EQUITY) 2007 2008 2009 2010

(NET INCOME / TOTAL EQUITY) 21% 33% 19% 54%

increases Decreases Increase

Why increase / decrease…?

In 2009 company’s Increases its total assets. So equity was less use for income.
In 2010 company’s equity increase (162598) and its liabilities are also increase. So equity
was more use for net income.

 NET PROFIT MARGIN

(Net income/sales x100) 2007 2008 2009 2010
11% 16.4% 9.6% 31%
increases Decrease increase

Why increase/decrease…..?
In 2009 sales decrease from109908 to107618 & net profit decrease from 18039 to
$10428
In 2010 sales increase from$107618 to109722 & net profit increase from 10428 to 34233

DU POINT EQUATION

 ROA (RETURNS ON ASSETS)

ROA= PROFIT MARGIN x ASSET TURNOVER RATIO

Profit margin = N.I / SALE

Asset turnover ratio = sales / t. assets
 ROA = NET INCOME / TOTAL ASSEST

2007 2008 2009 2010

10% 16.9% 9.4% 30%

increases Decreases Increase

Why increase / decrease…?

In 2009 company’s Increases its total assets.
In 2010 company’s assets increase (111641) and its liabilities are also increase.

 ROE (RETURNS ON EQUITY)

ROE = PM x ASSET TURNOVER x EQUITY MULTIPLIER

2007 2008 2009 2010

21% (33% 19% 54%

Increases Decreases Increase

Why increase / decrease…?

In 2009 company’s Increases its total assets. So equity was less use for income.
In 2010 company’s equity increase (162598) and its liabilities are also increase. So equity
was more use for net income.