country
$20 Bonus + 25% OFF
Securing Higher Grades Costing Your Pocket? Book Your Assignment at The Lowest Price Now!

Financial Statement Analysis: Profitability Ratios

tag 148 Downloads6 Pages / 1,267 Words tag Add in library Click this icon and make it bookmark in your library to refer it later. GOT IT

Question:

Describe about the Financial Statement Analysis?
 
 

Answer:

Total Assets

The total assets of the company have been stable over the years. It has been in the range of 135000 million USD, over the 5 years range with +/- 10%. This indicates a strong network and control over the assets. Year 2013 has shown the highest figure in 4 years period.

Asset Structure

Looking at the asset structure of the company it can be said that it has maintained a strong asset structure, with majority of the investment (More than 80%) in Non Current Assets. Of this Goodwill forms 50% of the Total Non-Current Assets, and has been rising due to the growing popularity of the company. However investment in cash has been too low and for the years 2011 and 2010, the same was exceptionally low. The same needs to be ensured to be kept at optimum levels so as to ensure a proper liquidity position.

 

Liability and Equity Growth

The Liability growth has been in a abnormal trend. Initially the same was falling indicating a good signal. However, in the year 2013 it has increased a lot as compared to other years. Hence the same must be controlled. Similar trend was seen in Equity Growth as well. In the term of 5 years it was the lowest in 2010. As regards the retained earnings are concerned the same is increasing in a very steady manner over the years, and in the 5 year period the same has grown substantially. The same has grown from $ 57,309 m to $ 80,197 m in this period. This is the result of the exception profitable performance of the company.

Income Statement

Net Sales – The sales of the company are growing in a reasonable fashion. In all the years of the period under review the same is growing and has been in a steady fashion.

Cost of Goods – The cost of goods sold of the company are reasonably low. This is the reason for the strong financial position and the good profitability of the concern. It has been at around 50% of the sales.

Gross Profits – Since the Cost of Goods Sold has been low, the Gross Profit has also been very high and has been at around 50% of the sales. For some years the GP was more than 50% as well.

General Expenses – The other general expenses of the company has also been quite stable over the period under review. It has been at 50% of the Gross profit and most importantly it is under control and has been maintained at that level.

EBT – Income before taxes have been quite good. It is more than 15% for all the years. It was however, seen that in 2012 the same has fallen. However, for the year 2013 the company reviewed and it has been made at a good levels.

Net Income – considering the net income levels the company has not been much good in this year. Over the years this figure has shown to be falling as compared to the sales. This is a serious matter to be considered by the management and before making any investment decision.

Share Outstanding – The share outstanding has also remained in somewhat stable manner, indicating that not many issues have been made in shares arena.

Depreciation and Amortisation – The depreciation and amortization expenses of the company are not in a single trend. For some of the years the same has fallen while in some it has been in huge levels. In 2013 it was however at a much low levels.

Taxes – Looking at the figures it can be seen that the tax expenses of the company are falling over the period. It is a very good indication of profitability, as in a way the unproductive expenses are reducing and the company is retaining the maximum for its own growth and development.

 

Cash Flow Statement

Net Cash from Operating Activities – The cash flows from operating activities has been in a line. It has been at around $ 14000 m. The year 2010 had shown exception results and in that year the cash flow was the highest.

Net Cash from Investing Activities – No trend can be fitted to this item of the company financial statement. However, there is one similarity that in all the years under the review the same has been in the investment arena, and has been negative. The year 2010 had lowest investment figures while in 2013 there was exceptional and was highest.

Net Cash from Financial Activities – The cash flow form Financial Activities have been negative. This has remained so for all the years. This indicates that the capital has been liquidating and the company is able to repay its debts. In the year 2010 this repayment was maximum and in 2013 the lowest.

Net Change in Cash – Net changes in cash have been fluctuating. In 2010 there was a negative cash flow while in all the other years the same was some-what of a profitable nature.

Free Cash Flow – The overall free cash flows have been positive with the year 2010 being the highest generating year.

Ratio

Liquidity Ratio

Current ratio – For the years under the review the company has maintained the current ratio at around 0.8 level. However, this low level of Current Ratio is a signal of poor profitability. A current ratio of 2 is ideal. This low ratio can create liquidity crisis.

Quick ratio – The quick ratio has also been at around 0.4-0.5. This low figures, i.e. lower than 1 can be a matter of concern in the years to come.

 

Asset Management Ratio

Days Sales Outstanding (DSO) – The average sale outstanding days has been around 28 days. Considering the industry average the same is ok , and is an indication of better management of receivables.

Fixed Asset Turnover – This ratio has been maintained at 4 steadily showing that the company has been utilizing the assets in an optimum manner in all the years.

Total Asset Turnover – This ratio has also been quite stable and at 0.60. However considering the industry trend it seems to be a bit low, and must be at around 0.8

Inventory Turnover – This ratio has been at around 6 times, indicating that the company is revolving its inventory in an optimum manner and is not piling up much stock. This indicates good inventory management at the company.              

Debt Management Ratios

Debt Ratio – The Debt ratio of the concern is considerably low and it has also been discussed earlier that the company has a primary focus on equity component more than the debt.

Times Interest Earned – The number of times interest earned has been fluctuating. It has been from 16-25. This is a poor signal of the company’s debt management fund.

 

Profitability Ratios

Profit Margins – The company has been in good profitability and has given profit figures for more than 10% in each year. The same was 16%, and the highest in 2009. From then the ratio is declining.

Return on Assets – The return on assets has been maintained at around 8%-10%. This shows that the company has optimally utilized the total assets of the concern.

Return on Equity – The return in equity has been at a quite good ratio, and has been more than 15% for all the years. This indicates that the company is well using the funds of the investor.

 

Other Data

Tax rate – The effective tax rate of the company has been around 25%. For the year 2011 and 2013 it was near 20%. This is a proper signal and an indication of good fiscal structure of the organization.

Download Sample

Get 100% money back after download, simply upload your unique content* of similar no. of pages or more. We verify your content and once successfully verified 100% value credited to your wallet within 7 days.

Upload Unique Document

Document Under Evaluation

Get Credits into Your Wallet

*The content must not be available online or in our existing Database to qualify as unique.

Cite This Work

To export a reference to this article please select a referencing stye below:

My Assignment Help. (2016). Financial Statement Analysis: Profitability Ratios. Retrieved from https://myassignmenthelp.com/free-samples/financial-statement-analysis-profitability-ratios.

"Financial Statement Analysis: Profitability Ratios." My Assignment Help, 2016, https://myassignmenthelp.com/free-samples/financial-statement-analysis-profitability-ratios.

My Assignment Help (2016) Financial Statement Analysis: Profitability Ratios [Online]. Available from: https://myassignmenthelp.com/free-samples/financial-statement-analysis-profitability-ratios
[Accessed 12 July 2020].

My Assignment Help. 'Financial Statement Analysis: Profitability Ratios' (My Assignment Help, 2016) <https://myassignmenthelp.com/free-samples/financial-statement-analysis-profitability-ratios> accessed 12 July 2020.

My Assignment Help. Financial Statement Analysis: Profitability Ratios [Internet]. My Assignment Help. 2016 [cited 12 July 2020]. Available from: https://myassignmenthelp.com/free-samples/financial-statement-analysis-profitability-ratios.


At MyAssignmenthelp.com, we are committed to deliver quality assignment assistance in the fastest way possible. To make our service delivery fast, we have hired subject matter experts to work on different subject specific assignments. We have hired experts who owe in-depth knowledge in their respective subjects. As per their expertise, they provide geography assignment help, Physics assignment help, Strategic assignment help, history assignment help, art architecture assignment help and assistance with other subjects as well.

Latest Finance Samples

BE314 Financial Modelling

Download : 0 | Pages : 10
  • Course Code: BE314
  • University: University Of Essex
  • Country: United Kingdom

Answers: Introduction One of the major responsibilities of the Agri-Food and Veterinary Authority of India is to supervise and coordinate the production of all the imported agricultural productions of India. Thus, the director of the company is interested to identify and analyse the issues that are related to the economy of rice. Nine major rice brands have been considered for the study. The brands of rice are stored in stores of New Delhi an...

Read More arrow

BAO5534 Business Finance

Download : 0 | Pages : 9
  • Course Code: BAO5534
  • University: Victoria University
  • Country: Australia

Answers: Introduction The managers of the entity are accountable for the conduct of the business operations in a manner that leads to the wealth maximization of the shareholders as well as the consideration of the interests of the other stakeholder groups within the business entity. Further to note, that business conduct within an organisation involves undertaking of varied strategic decisions in the areas of the operating, investing and fina...

Read More arrow Tags: Australia 34 Business finance Victoria University 

FIN 200 Business Finance And Group Assignment

Download : 0 | Pages : 9
  • Course Code: FIN 200
  • University: University Of Phoenix
  • Country: United States

Answer: 1.1 Depicting the monthly payment: Particulars Value Loan amount  $ 20,000,000 Tenure 120 Interest rate 0.67% Monthly payment  $ 242,655 1.2 Depicting how much is the first payment interest: Particulars Value Loan amount  $ 20,000,000 Interest rate 0.67% First payment is interest  $ ...

Read More arrow

HI5002: Finance For Business Analyse

Download : 0 | Pages : 7

Answer: Introduction  In this report, financial analysis of Lefroy exploration limited has been taken into consideration. There are several financial analysis tools that have been taken to analysis the performance of company such as ratio analysis, bottom up analysis and share price movement analysis. This financial analysis of Lefroy exploration limited will help in evaluating the business performance of company. It will help investors ...

Read More arrow

MAA250 Ethics And Financial Services Assessment

Download : 0 | Pages : 9
  • Course Code: MAA250
  • University: Deakin Business School
  • Country: Australia

Answer: Introduction: Directors and management contributes the man power into the bank and in return, they expect from the company monitory and non monetary items such as salary, incentive, bonus and sweat shares. Shareholders: Shareholders of CBA contribute the money and the funds in the organization for the operations and new projects of the company and in return, they expect dividends from the company. Dividends of shareholder depend on ...

Read More arrow Tags: Australia Murdoch Management University of New South Wales Humanities 
Next
watch

Save Time & improve Grade

Just share Requriment and get customize Solution.

question
We will use e-mail only for:

arrow Communication regarding your orders

arrow To send you invoices, and other billing info

arrow To provide you with information of offers and other benefits

1,360,163

Orders

4.9/5

Overall Rating

5,081

Experts

Our Amazing Features

delivery

On Time Delivery

Our writers make sure that all orders are submitted, prior to the deadline.

work

Plagiarism Free Work

Using reliable plagiarism detection software, Turnitin.com.We only provide customized 100 percent original papers.

time

24 X 7 Live Help

Feel free to contact our assignment writing services any time via phone, email or live chat.

subject

Services For All Subjects

Our writers can provide you professional writing assistance on any subject at any level.

price

Best Price Guarantee

Our best price guarantee ensures that the features we offer cannot be matched by any of the competitors.

Our Experts

Assignment writing guide
student rating student rating student rating student rating student rating 5/5

203 Order Completed

97% Response Time

Richard Alpert

PhD in Psychology

London, United Kingdom

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

2632 Order Completed

100% Response Time

Albert Ambrosio

MSc in Nursing

London, United Kingdom

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 4/5

3076 Order Completed

99% Response Time

Emily Wei

Doctor of Philosophy (Ph.D) in Civil Engineering

Singapore, Singapore

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

1896 Order Completed

95% Response Time

Herman Berens

MSc in Psychology

London, United Kingdom

Hire Me

FREE Tools

plagiarism

Plagiarism Checker

Get all your documents checked for plagiarism or duplicacy with us.

essay

Essay Typer

Get different kinds of essays typed in minutes with clicks.

edit

GPA Calculator

Calculate your semester grades and cumulative GPa with our GPA Calculator.

referencing

Chemical Equation Balancer

Balance any chemical equation in minutes just by entering the formula.

calculator

Word Counter & Page Calculator

Calculate the number of words and number of pages of all your academic documents.

Refer Just 5 Friends to Earn More than $2000

Check your estimated earning as per your ability

1

1

1

Your Approx Earning

Live Review

Our Mission Client Satisfaction

I was skeptical about this site at first.i am happy that I could trust them with. my assignment. They work as they promise. It was a good paper. Thank you so much. I would be using then again

flag

User Id: 432175 - 12 Jul 2020

Australia

student rating student rating student rating student rating student rating

the assignment work, I get from here is perfect. great work and very co-operative staff.

flag

User Id: 449032 - 11 Jul 2020

Australia

student rating student rating student rating student rating student rating

It is a well-done solution. Grammatically correct written . It might be an analysis graded over 7. Delivered before the deadline. Thank you.

flag

User Id: 431986 - 11 Jul 2020

Australia

student rating student rating student rating student rating student rating

Great work, i will for sure use your service again. Great APA format and references. Thank you very much.

flag

User Id: 81173 - 11 Jul 2020

Australia

student rating student rating student rating student rating student rating
callback request mobile
Have any Query?