Accounting in Decision Making Process - Essay Example

Content Executive Summary 2 Introduction 3 Financial Analysis 3 Liquidity ratio 4 Capital Structure ratio 6 Profitability Ratios 8 Asset Efficiency Ratios 12 Market Performance Ratio 16 Findings 18 Conclusion 19 Recommendations 19 Limitations 20 References 21 Appendix 23 Executive Summary Super Cheap Auto Group Ltd and ARB Corporation Ltd have been performing on similar business model and have been successful as retail players. Their market has grown which is reflected by the growth in sales. There is even scope for the company to move further as this sector is showing improvement. The financial analysis also highlights some important fact related to liquidity and capital structure. The findings shows the positives and negatives of both based on financial analysis. The ratios like liquidity ensures to find liquidity and the capital financed by the company are demonstrated by capital structure ratios. The efficiency ratio indicates the area where Super Cheap Auto Group Ltd needs to work to stay ahead of ARB Corporation Ltd. The capital market ratio indicates the companies which are favoured by shareholders and also help to look into the future prospects of the company. The recommendations highlights areas where both the companies need to improve which will help them face competition and help in proper strategy execution. The analysis shows that Super Cheap Auto Group Ltd performance has improved drastically in 2009. It still needs to work on certain areas to stay ahead of ARB Corporation Ltd as the company has shown stability and Super Cheap Auto Group Ltd need to inculcate those so that it is able to withstand competition and capture a bigger market. Introduction Super Cheap Auto Group Ltd is a company and has a huge presence and deals in “auto parts and accessories, tools and equipments and other fishing parts”. (Super Cheap Auto Group Ltd, 2010) The fact that the company deals in so many products and huge reach has given a wide market. The company has a presence Australia and New Zealand and with the wholesale and retail of bicycle has helped them grow their business. ARB Corporation Ltd is also a manufacturing giant. The company deals in “manufacturing of motor vehicle accessories and also its distribution”. (ARB Corporation Ltd, 2010) The wide range of product and dispersion has made it a huge success. The company with their policy to satisfy customers has grown and is able to capture a good market in Australia, US and Thailand. The policy of the company is paying reap benefits and is set for a growth in the market. The financial statement of both the companies reveals so. Even the share prices shows improvement. With more consumers moving towards supermarkets gives an opportunity to expand in overseas. Financial Analysis Financial analysis is very important for all business. Analyzing the statement helps in “planning, budgeting, monitoring, forecasting and improving the financial performance by taking vital decision”. (Micro Strategy, 2010) Proper analysing helps a long way to “understand the financial health”. (Micro Strategy, 2010) It helps to identify trends and compare with competitors and industry to gain advantage. The following is the ratios for Super Cheap Auto Group Ltd and ARB Corporation Ltd. Liquidity Ratios This ratio plays an important part and helps “to identify the firms ability to meet its short term obligations and plays a huge role in the performance”. (Financial Modelling Guide, 2010) The ratios for Super Cheap Auto Group Ltd and ARB Corporation Ltd are Current Ratio: “It measures the ability to pay the short term liabilities out of short term assets”. (Financial Modelling Guide, 2010) This ratio helps creditors, suppliers and investor to identify the liquid position. It is calculated as “Current Assets / Current Liabilities”. Super Cheap Auto Group Ltd The ratio shows that Super Cheap Auto Group Ltd has a ratio of 1.55 in 2009 as compared to 1.39 in 2008. The ratio has shown improvement but Super Cheap Auto Group Ltd needs to take steps to improve it and ensure that the ratio grows above 2. Super Cheap Auto Group Ltd needs to take measures so that safety of short term investment improves. ARB Corporation Ltd The ratio shows that ARB Corporation Ltd has a ratio of 2.42 in 2009 as compared to 1.78 in 2008. The ratio has shown improvement and ARB Corporation Ltd needs to continue in the same manner to ensure that the funds on creditors and short term investors are safe. Comparison The ratio shows that ARB Corporation Ltd has a better liquidity position as compared to Super Cheap Auto Group Ltd. Super Cheap Auto Group Ltd need to improve the ratio as it is a concern as the short term obligations are higher. This might make investors and suppliers stay away. ARB Corporation Ltd on the other hand is in a better position and needs to continue in the same manner. When we consider the two companies together it shows that ARB Corporation Ltd has better policies and strategies as compared to Super Cheap Auto Group Ltd. Quick Ratio: It is also known as acid test ratio. “It measures the ability of the firm to meet its short term obligation when inventories are removed as inventories take some time to be converted into cash”. (Financial Modelling Guide, 2010) It is calculated as “(Current Assets – Inventories) / Current Liabilities”. Super Cheap Auto Group Ltd The ratio shows that Super Cheap Auto Group Ltd has a ratio of 0.25 in 2009 as compared to 0.18 in 2008. The ratio has shown improvement but Super Cheap Auto Group Ltd needs to take immediate steps to improve it as the company is facing serious short term crisis when stocks are kept out. Super Cheap Auto Group Ltd needs to ensure to take the ratio around 1 so that funds become safe. ARB Corporation Ltd The ratio shows that ARB Corporation Ltd has a ratio of 1.13 in 2009 as compared to 0.85 in 2008. The ratio has shown improvement and ARB Corporation Ltd needs to continue in the same manner as it is ensuring that the company is able to still meet its short term obligation despite depending on stocks which itself is volatile. Comparison The ratio also indicates that ARB Corporation Ltd is better positioned as compared to Super Cheap Auto Group Ltd. The ratio indicates the inefficiency of the company to meet its immediate debt. Super Cheap Auto Group Ltd need to improve this as it is a concern and presenting a bleak picture. The ratio when compared to current ratio also indicates huge inventories. Since, both the companies deal in products where the inventory has to be high so having a low ratio is predictable. Still, both the companies especially Super Cheap Auto Group Ltd need to improve it so that it presents a better picture. Capital Structure Ratio This ratio is of prime importance and provides relevant information about the company. “It identifies how much of the firm’s assets are financed through debt and includes long term debt”. (Transtutor, 2010) The ratios which help to determine it are as Debt to Equity Ratio: “It determines the proportion of long term debt in relation to the shareholders fund and long term debt”. (Transtutor, 2010) This ratio helps to identify the financial soundness. It is calculated as “Long Term Debts / Equity X 100”. Super Cheap Auto Group Ltd The ratio shows that Super Cheap Auto Group Ltd has a ratio of 0.59 in 2009 as compared to 0.52 in 2008. The company has shown slight improvement and by having a mix of debt and equity the company is able to save on tax. ARB Corporation Ltd The ratio shows that ARB Corporation Ltd has a ratio of 0.0047 in 2009 as compared to 0.0146 in 2008. It shows the company has very little debt which is a concern. This is making the company pay extra as income tax which could have been saved if the company had a mix of debt and equity. Comparison The ratio indicates soundness on the part of Super Cheap Auto Group Ltd. It shows that the company has a scope for more investment through debts. This is a good sign and shows the company has a space for future projects. ARB Corporation Ltd has reduced its debt a lot by paying off is a worry and needs to raise it so that it can save on taxes. ARB Corporation Ltd need to ensure that it keeps with the industry standard. As both the companies work in a type of market where to grow large debt is needed so the ratio seems to be sound for Super Cheap Auto Group Ltd but ARB Corporation Ltd needs desperate measures to improve it. Profitability Ratios Profitability ratios form a very vital part of financial analysis. This ratios help to understand the profit which can be attributed to the different factors which work in tandem to achieve the desired results. Comparing it with the previous years and the competitors’ helps to evaluate the shortcomings, and shows area which needs to be improved. The profitability ratios are as follows Gross Profit Margin: “It is defined as the profit generated after deducting cost of goods sold and before the indirect expenses are accounted for and considers only the direct expenses”. (Kennon, 2010) Gross profit helps to find out the actual profit that is attributed directly to the product. It is calculated as– “Gross Profit / Sales X 100”. Super Cheap Auto Group Ltd The ratio shows that Super Cheap Auto Group Ltd has a ratio of 41.94% in 2009 as compared to 40.43% in 2008. The ratio shows growth which is a good sign. The company needs to perform similarly to ensure more earnings. ARB Corporation Ltd The ratio shows that ARB Corporation Ltd has a ratio of 51.66% in 2009 as compared to 47.39% in 2008. The ratio shows growth which is a good sign. The company needs to perform similarly to ensure more earnings. Comparison The ratio indicates consistency for Super Cheap Auto Group Ltd and ARB Corporation Ltd. ARB Corporation Ltd has a higher gross profit indicating soundness in manufacturing process. It also shows that the strategies are well managed. Super Cheap Auto Group Ltd on the other hand has shown improvement but still needs to improve to match its competitor. Net Profit Margin: “It is defined as the profit generated per dollar of sales and is calculated after all the direct and indirect expense has been considered”. (Kennon, 2010) Organisations prefer this to be high. It is calculated as “Earning before Interest and taxes (EBIT) / Sales X 100”. Super Cheap Auto Group Ltd The ratio shows that Super Cheap Auto Group Ltd has a ratio of 5.05% in 2009 as compared to 5.14% in 2008. The ratio shows low earning and is a concern especially when we compare to the gross profit signifying high indirect cost. The management needs to take steps to bring it down. ARB Corporation Ltd The ratio shows that ARB Corporation Ltd has a ratio of 16.47 % in 2009 as compared to 16.43 % in 2008. The ratio shows growth which is a good sign. The company needs to perform similarly to ensure more earnings. It also shows efficiency to maintain the indirect cost Comparison The ratio indicates soundness for ARB Corporation Ltd. It is seen that the net profit has decreased for Super Cheap Auto Group Ltd. This is a worrying factor and reflects inefficiency to maintain the indirect expense. When we compare it to the gross profit margin it shows a huge dip signifying the amount of indirect expenses like marketing, distribution and other expenses the company incurs. The ratio for ARB Corporation Ltd has improved signifying better management and control of cost. When we look at the broader picture it shows that Super Cheap Auto Group Ltd despite having a higher gross profit has a lower net profit showing the amount of indirect cost incurred. It signifies improper management and strategies to cut cost is required. Return on Assets: “It is defined as the amount of profit generated for per dollar of asset”. (Joseph, 2010) It helps to identify whether the assets are utilized properly or underutilized. It is calculated as “Earning before Interest and Taxes (EBIT) / Average assets X 100). Super Cheap Auto Group Ltd The ratio shows that Super Cheap Auto Group Ltd has a ratio of 7.34% in 2009 as compared to 6.7% in 2008. The ratio shows improvement and the company needs to increase its profits so that the returns rises for them. ARB Corporation Ltd The ratio shows that ARB Corporation Ltd has a ratio of 18.76 % in 2009 as compared to 17.21 % in 2008. The ratio shows growth which is a good sign. The company needs to perform similarly to ensure more earnings. It will result in even higher return signifying better use of assets. Comparison Here we see that the return on assets for both Super Cheap Auto Group Ltd and ARB Corporation Ltd have improved in 2009 as compared to 2008. The worrying factor for Super Cheap Auto Group Ltd is that their assets are underutilized. This has resulted in having more assets that warranted. ARB Corporation Ltd on the other hand has a better return showing proper utilization of assets. The other important part to note is that such players have huge assets which results in the ratio being lower. Still, on an overall basis we see that Super Cheap Auto Group Ltd need to improve their return as it is have very heavy assets and needs to improve it as compared to the competitors. Return on Equity: “It is defined as the profit earned as compared to the equity shareholders i.e. earning per dollar of equity”. (Joseph, 2010) It is calculated as “Net Profit available to ordinary shareholders / Average Equity (excluding minority interest and preference capital) X 100”. Super Cheap Auto Group Ltd The ratio shows that Super Cheap Auto Group Ltd has a ratio of 20.55% in 2009 as compared to 19% in 2008. The ratio shows improvement and the company needs to increase its profits so that the returns rises for them. This will make the equity shareholder confident in the policies of the company and will help the price of shares to rise. ARB Corporation Ltd The ratio shows that ARB Corporation Ltd has a ratio of 24.88 % in 2009 as compared to 15.28 % in 2008. The ratio has shown a dip which is a not a sign. Still, this is not a worry as the change is minimal. The company needs to perform similarly to ensure more earnings. It will result in even higher return signifying better return for shareholders. Comparison We see that ARB Corporation Ltd has a very high return on equity as compared to Super Cheap Auto Group Ltd. The return for Super Cheap Auto Group Ltd has improved but is far beyond ARB Corporation Ltd. This is a worrying factor and shows the strategies and policies implemented hasn’t been successful. The return is very low which might lead to shareholders moving out to other companies or investing in risk free securities. Super Cheap Auto Group Ltd needs to take urgent steps to improve it. Asset Efficiency Ratios Operating ratios forms a very important part as it helps to “show the efficiency of the management and also indicates the company’s efficiency to manage its capital”. (Joseph, 2010) this ratios help to find the efficiency when it comes to turnover. The following ratio helps to calculate the operating efficiency. They are as Asset Turnover Ratio: It is defined as “the total sales generated per revenue of assets”. (Joseph, 2010) It is calculated as “Sales Revenue / Average Total Assets”. Super Cheap Auto Group Ltd The ratio shows that Super Cheap Auto Group Ltd has a ratio of 1.9 in 2009 as compared to 1.86 in 2008. The company has shown slight improvement and is consistent. It also demonstrates that the assets have been used well and the company needs to continue similarly. ARB Corporation Ltd The ratio shows that ARB Corporation Ltd has a ratio of 1.59 in 2009 as compared to 1.5 in 2008. It shows the company has improved and utilized its assets better. Similar strategies need to be taken up to ensure that similar results come up. Comparison Super Cheap Auto Group Ltd has been able to use its assets better in 2009. This has made the ratio to improve. Super Cheap Auto Group Ltd and ARB Corporation Ltd on the other hand show soundness in the use of assets. It needs to continue similarly. ARB Corporation Ltd on the other hand needs to improve this ratio and look towards matching Super Cheap Auto Group Ltd and ARB Corporation Ltd. Receivable Turnover Ratio: “It is defined as the number of times the company is able to recover the dues from the customer”. (Kennon, 2010) The higher it is the better it is. It is calculated as “Credit Sales / Average Receivable”. The ratio for both the companies are Super Cheap Auto Group Ltd The ratio shows that Super Cheap Auto Group Ltd has a ratio of 33.02 in 2009 as compared to 37.01 in 2008. The company has shown slight decrease but is not a worry. The company needs to ensure similar strategies so that the debtor are revolved continuously reducing the chances of bad debts. ARB Corporation Ltd The ratio shows that ARB Corporation Ltd has a ratio of 6.87 in 2009 as compared to 6.09 in 2008. It shows the company has improved and revolved its debtor better. Similar strategies need to be taken up so that chances of bad debts reduce. Comparison Here we see that Super Cheap Auto Group Ltd has a very good rate and it recovers its chances of bad debts to be less. Super Cheap Auto Group Ltd and ARB Corporation Ltd have shown consistency and is a good sign. ARB Corporation Ltd on the other hand has a poor receivable rate compared to Super Cheap Auto Group Ltd. Payable Turnover Ratio: “It is defined as the number of times the creditor is paid in the year and companies generally prefer to maintain it good so that reputation is good”. (Kennon, 2010) It is calculated as “Cost of good sold / Average payable”. Super Cheap Auto Group Ltd The ratio shows that Super Cheap Auto Group Ltd has a ratio of 4.12 in 2009 as compared to 4.67 in 2008. The company has shown slight decrease but is not a worry. The company needs to ensure similar strategies so that the creditors are revolved continuously thereby paying them on time resulting in good brand name. ARB Corporation Ltd The ratio shows that ARB Corporation Ltd has a ratio of 7.65 in 2009 as compared to 6.83 in 2008. It shows the company has improved and revolved its creditors better. Similar strategies need to be taken up so that the company is able to get the required materials easily from the suppliers. Comparison It is seen that ARB Corporation Ltd has improved its turnover ratio drastically. This is a good sign and shows that the reputation has improved with the suppliers and also ensures steady supplies. Super Cheap Auto Group Ltd has a good ratio and is consistent signifying soundness in policy. Both the companies are ensuring that the ratio is good and reckons a good future. Inventory Turnover Ratio: “It is defined as the number of times inventory is rolled over during a year”. (Joseph, 2010) Companies prefer it to be high. It is calculated as “Cost of Goods Sold / Average Inventory”. Super Cheap Auto Group Ltd The ratio shows that Super Cheap Auto Group Ltd has a ratio of 3.05 in 2009 as compared to 4.04 in 2008. The company has shown slight decrease and is a concern. The company needs to ensure strategies to improve it as it is resulting in a lot of capital being blocked in inventories. ARB Corporation Ltd The ratio shows that ARB Corporation Ltd has a ratio of 3.84 in 2009 as compared to 3.81 in 2008. It shows the company has performed consistently and is a good sign. It also shows that the inventory has been revolved well and the company has a plan in mind. Comparison The above ratio indicates that Super Cheap Auto Group Ltd has revolved its inventory more compared to ARB Corporation Ltd. Super Cheap Auto Group Ltd has also been consistent and shows proper management. This is a sign of a good company but it needs to be replicated so that the inventory levels come down. This will ensure less money in inventory and help to ensure that the funds are not blocked. ARB Corporation Ltd need to improve it and match Super Cheap Auto Group Ltd. Market Performance Ratio This ratios help to find the shareholders confidence in the company. This ratio helps to find the prediction the shareholders have and company’s performance is also reflected here. A company having sound capital market ratios ensures that people prefer this companies and this is seen by the growth in share prices. The ratios which will help to find the capital market are as follows Earnings per Share: “It is defined as the profit attributed to the equity shareholders”. (Joseph, 2010) It is calculated as “Net profit available to ordinary shareholders / weighted number of ordinary shares on issue”. Super Cheap Auto Group Ltd The ratio shows that Super Cheap Auto Group Ltd has a ratio of 30.2 cents in 2009 as compared to 24.2 cents in 2008. The company has shown improvement and is a good sign. It shows that the earning has increased for the shareholders and the company needs to continue similarly to achieve better results. ARB Corporation Ltd The ratio shows that ARB Corporation Ltd has a ratio of 33.86 cents in 2009 as compared to 28.36 cents in 2008. It shows the company has performed consistently and is a good sign. It shows that the earning has grown and similar strategies need to be worked upon in the future to improve the earnings. Comparison The above ratio indicates soundness on the part of both the companies. ARB Corporation Ltd has a higher earning per share indicating that the shareholders are getting a good return. The return for Super Cheap Auto Group Ltd and ARB Corporation Ltd has increased in 2009 as compared to 2008 which shows that the profit has grown. The overall result for both the giants seems sound and is a good prospect to invest. Findings The liquidity position especially the current ratio is sound for ARB Corporation Ltd and Super Cheap Auto Group Ltd needs to improve it. Both the companies due to the nature of business have a huge inventory which are affecting the quick ratio but is according to industry standards. Still Super Cheap Auto Group Ltd needs to take steps to improve it The long term debt ratios is sound for Super Cheap Auto Group Ltd and have the scope to take loan for further development but ARB Corporation Ltd needs to improve it The companies have used their short term debt to finance long term assets is a worrying factor and steps needs to be taken. Super Cheap Auto Group Ltd profit has improved in 2009 as compared to 2008 but it needs to reduce its indirect expenses so that it stays ahead of ARB Corporation Ltd The operating ratio especially the receivable and payable turnover ratio for Super Cheap Auto Group Ltd has shown tremendous improvement but it needs to still work on it so that it is able to perform at par with ARB Corporation Ltd The financial analysis shows that Super Cheap Auto Group Ltd performance has improved in 2009 as compared to 2008. Super Cheap Auto Group Ltd need to improve its strategies and management so that it can stand better that ARB Corporation Ltd who have been performing on a consistent basis. Conclusion Super Cheap Auto Group Ltd and ARB Corporation Ltd both have been performing on similar lines and have been successful. The financial statement even highlights similar facts. Both the companies can improve with better strategy. The financial ratios of both the companies show some demarcating things and also highlight the different strategies taken by each. This even highlights that companies similar in nature use different strategies and improve their performance. Both this companies have room for improvement and with the growth this sector is showing it gives them opportunity to capture a good market and grow. Recommendations Super Cheap Auto Group Ltd needs to improve its current ratio and quick ratio so that it reflects soundness in its policies and strategies Both the companies need to reduce the amount held in inventories as it is high leading to a lot of money being invested Both the companies need to take more debt especially long term so that they are able to save on the taxes Super Cheap Auto Group Ltd needs to improve its operating ratios so that it can match its competitor Super Cheap Auto Group Ltd needs to reduce its indirect cost, improve efficiency, bring down assets and improve their management ARB Corporation Ltd need to improve the inventory turnover ratio Super Cheap Auto Group Ltd need to ensure that to stay ahead of competition it comes with new projects which helps them to utilize their assets properly and ensure better efficiency Limitations Inflation and changes in price has not been accounted for which might be misleading Historical cost has been considered which might not be true in the present scenario as value changes with time Changes in technology for production, distribution, marketing has not been accounted for which might give different result References Financial Modelling Guide, (2010), “Liquidity ratios”, retrieved on August 31, 2010 from http://www.financialmodelingguide.com/financial-ratios/liquidity-ratios/ Joseph K, (2010), “Analyzing an income statement: Return on Assets”, about.com guide, The New York Times Company Joseph K, (2010), “Analyzing an income statement: Return on Equity”, about.com guide, The New York Times Company Joseph K, (2010), “Analyzing an income statement: Inventory Turnover”, about.com guide, The New York Times Company Kennon J, (2010), “Analyzing an income statement: Gross Profit”, about.com guide, The New York Times Company Kennon J, (2010), “Analyzing an income statement: Net Profit Margin”, about.com guide, The New York Times Company Kennon J, (2010), “Analyzing an income statement: Receivable Turnover”, about.com guide, The New York Times Company Micro Strategy, (2010), “Financial Analysis”, retrieved on August 30, 2010 from http://www.microstrategy.com/financial-analysis/ Transtutor, (2010), “Capital Structure Ratios”, retrieved on August 30, 2010 from http://www.transtutors.com/finance-homework-help/dividend-decisions-and-tools-of-financial-planning/Capital-Structure-Ratios.aspx Super Cheap Auto Group Ltd Website, (2010), retrieved on August 29, 2010 from http://www.supercheapautogroup.com.au/ ARB Corporation Ltd Website, (2010), retrieved on August 29, 2010 from http://www.arb.com.au/ Appendix 1. Calculation of Ratio for Super Cheap Auto Group Ltd Ratios Formula 2009 2008 Current Ratio Current Assets / Current Liabilities 264744 / 170864 = 1.55 221966 / 159275 = 1.39 Quick Ratio (Current Assets – Inventories) / Current Liabilities (264744 - 222821) / 170864 = 0.25 (221966 - 193975) / 159275 = 0.18 Debt to Equity Ratio Long Term Debts / Equity 92000 / 156354 = 0.59 71016 / 135761 = 0.52 Gross Profit Margin Gross Profit / Sales * 100 347838 / 829306 *100 = 41.94% 289358 / 715657 * 100 = 40.43% Net Profit Margin Net Profit / Sales * 100 41886 / 829306 *100 = 5.05% 36806 / 715657 * 100 = 5.14% Return on Assets Net Income / Total Assets * 100 32135 / 437771 * 100 = 7.34% 25800 / 385156 * 100 = 6.7% Return on Equity Net Income / Equity * 100 32135 / 156354 * 100 = 20.55% 25800 / 135761 * 100 = 19% Receivable Turnover Ratio Sales / Average Receivable 829306/ 25113 = 33.02 715657/ 19282 = 37.11 Payable Turnover Ratio Cost of Goods Sold / Average Payable 481468/116623 = 4.12 426299 / 91205 = 4.67 Inventory Turnover Ratio Cost of Goods Sold / Average Inventory 481468 / 222821 = 2.16 426299 / 193975 = 2.2 Earning per Share Net Income / Outstanding shares 30.2 cents (given in financial statement) 24.2 cents (given in financial statement) Interest Coverage Ratio EBIT / Net Finance Expenses 41886 / 13749 = 3.05 36806 / 9116 = 4.04 Asset Turnover Ratio Sales Revenue / Average Total Assets 829306 / 437771 = 1.9 715657 / 385156 = 1.86 2. Calculation of Ratio for ARB Corporation Ltd Ratios Formula 2009 2008 Current Ratio Current Assets / Current Liabilities 66935 / 27648 = 2.42 62966 / 35294 = 1.78 Quick Ratio (Current Assets – Inventories) / Current Liabilities (66935 - 35638) / 27648 = 1.13 (62966 - 33031) / 35294 = 0.85 Debt to Equity Ratio Long Term Debts / Equity 441 / 92039 = 0.0047 1139 / 77727 = 0.0146 Gross Profit Margin Gross Profit / Sales * 100 98750 / 191154 *100 = 51.66% 81327 / 171603 * 100 = 47.39% Net Profit Margin Net Profit / Sales * 100 31477 / 191154 *100 = 16.47% 27508 / 171603 * 100 = 16.03% Return on Assets Net Income / Total Assets * 100 22539 / 120128 * 100 = 18.76% 19647 / 114160 * 100 = 17.21% Return on Equity Net Income / Equity * 100 22539 / 92039 * 100 = 24.48% 19647 / 77727 * 100 = 25.28% Receivable Turnover Ratio Sales / Average Receivable 191154 / 27815 = 6.87 171603 / 28174 = 6.09 Payable Turnover Ratio Cost of Goods Sold / Average Payable 136871 / 17882 = 7.65 125976 / 18442 = 6.83 Inventory Turnover Ratio Cost of Goods Sold / Average Inventory 136871 / 35638 = 3.84 125976 / 33031 = 3.81 Earning per Share Net Income / Outstanding shares 33.86 cents (given in financial statement) 29.52 cents (given in financial statement) Interest Coverage Ratio EBIT / Net Finance Expenses 31477 / 524 = 60.07 27508 / 970 = 28.36 Asset Turnover Ratio Sales Revenue / Average Total Assets 191154 / 120128 = 1.59 171603 / 114160 = 1.5 Read More