This document analyzes various financial ratios for a business between 2012 and 2013. It finds that the return on equity and gross profit margin decreased slightly, while the net profit margin increased slightly. Selling expenses decreased as a percentage of sales from 11.5% to 9.8%, while general and financial expenses increased slightly. The working capital ratio improved from 1.45 to 1.59, indicating better ability to cover current liabilities, though it remains below the minimum requirement of 2. The total debt ratio decreased from 56.8% to 56.3% but remains above the maximum limit of 50%. Inventory and debtor turnover ratios increased slightly, while the interest coverage ratio improved from 11.6 to 11.7 times and meets

1. Ratio Analysis on the Business based on the year 2012-2013
Profitability ratios 2012 2013
Return on Equity
(ROE) ratio
Net Profit
Average O/E
x 100%
=
5465
14842
x 100%
= 36.8%
Net Profit
Average O/E
x 100%
=
5586
15652
x 100%
= 36.7%
Net Profit Margin
(NPM) ratio
Net Profit
Net Sales
x 100%
=
5465
27567
x 100%
= 19.8%
Net Profit
Net Sales
x 100%
=
5586
28106
x 100%
= 19.9%
Gross Profit
Margin (GPM)
ratio
Gross Profit
Net Sales
x 100%
=
8605
27567
x 100%
= 31.22%
Gross Profit
Net Sales
x 100%
=
8764
28106
x 100%
= 31.20%
Selling Expense
ratio (SER)
Total Selling Expense
Net Sales
x 100%
=
3167
27567
x 100%
= 11.5%
Total Selling Expense
Net Sales
x 100%
=
2674
28106
x 100%
= 9.8%
General Expense
ratio (GER)
Total General Expense
Net Sales
x 100%
=
6966
27567
x 100%
= 25.27%
Total General Expense
Net Sales
x 100%
=
7121
28106
x 100%
= 25.34%
Financial Expense
ratio (FER)
Total Financial Expense
Net Sales
x 100%
=
3850
27567
x 100%
= 14.0%
Total Financial Expense
Net Sales
x 100%
=
4043
28106
x 100%
= 14.4%

2. Profitability Ratios Interpretation
ROE
During the 2012-2013 period, the Return of Equity (ROE) has decreased
from 36.8% to 36.7% .This means that the owner is getting slightly less
return from the capital than last year.
NPM
During the 2012-2013 period, the Net Profit Margin (NPM) has increased
from 19.8% to 19.9%. This means that the business is getting better at
controlling its overall expenses.
GPM
During the 2012-2013 period, the Gross Profit Margin (GPM) has decreased
from 31.22% to 31.20%. This means that the business ability to control cost
of goods sold has slightly worsened.
SER
During the 2012-2013 period, the Selling Expense Ratio has decreased from
11.5% to 9.8%. This means that the business is getting better at controlling
selling expenses.
GER
During the 2012-2013 period, the General Expense Ratio has increased from
25.27% to 25.34%. This means that the business ability to control its general
expenses has worsened.
FER
During the 2012-2013 period, the Financial Expense Ratio has increased
from 14.0% to 14.4%. Thus means that the business ability to control its
financial expenses has worsened.

3. Financial
Stability ratios
2012 2013
Working
Capital ratio
(WCR)
Total Current Asset
Total Current Liabilities
=
4922
3403
= 1.45 : 1
Total Current Asset
Total Current Liabilities
=
5050
3170
= 1.59 : 1
Total Debt
ratio (TDR)
Total Liabilities
Total Asset
x 100%
=
20093
35386
x 100%
= 56.8%
Total Liabilities
Total Asset
x 100%
=
20617
36626
x 100%
= 56.3%
Inventory
Turnover ratio
(ITR)
365 days ÷
Cost of Good Sold
Average Inventory
= 365 days ÷
16751
119
= 2.59 days
365 days ÷
Cost of Good Sold
Average Inventory
= 365 days ÷
17203
123
= 2.61 days
Debtor
Turnover ratio
(DTR)
365 days ÷
Credit Sales
Average Debtors
= 365 days ÷
1375
1355
= 359.7 days
365 days ÷
Credit Sales
Average Debtors
= 365 days ÷
1320
1348
= 372.7 days
Interest
Coverage Ratio
(ICR)
Interest Expense + Net Profit
Interest Expense
=
517+5465
517
= 11.6 times
Interest Expense + Net Profit
Interest Expense
=
522+5586
522
= 11.7 times

4. Financial Stability Ratios Interpretation
WER
During the 2012-2013 period, the Working Capital Ratio has increased from
1.45: 1 to 1.59: 1. This means that the business ability to pay current
liabilities with current assets is getting better. In addition, it does not satisfy
the minimum requirement of 2: 1.
TDR
During the 2012-2013 period, the Total Debt Ratio has decreased from 56.8%
to 56.3%. This means that the business overall liabilities has reduced. In
addition, it is still over 50% maximum limit.
ITR
During the 2012-2013 period, the Inventory Turnover Ratio has increased
from 2.59 days to 2.61 days. This means that the business is selling its
products at a slightly slower rate.
DTR
During the 2012-2013 period, the Debtor Turnover Ratio has increased from
359.7days to 372.7days. This means that the business is getting slower in
collecting debts.
ICR
During the 2012-2013 period, the Interest Coverage Ratio has increased
from 11.6 times to 11.7 times. This means that the business ability to pay its
interest expenses has become slightly better. In addition, the business
satisfies the minimum requirement of 5 times.