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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%
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.
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
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.

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Account assignment ratio calculation

  • 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.