Exercise for eport folio
- 1. ProfitabilityRatios 2013 2014 Interpretation Returnon Equity 18.5% 7155 30200 + 35600 2 × 100% = 21.7% Duringthe 2013-2014 period. the business'ROEincreased from18.5% to 21.7%. this meansthe ownerisgetting more returnfrom hiscapital Netprofitmargin 6.7% 7155 72970 × 100% = 9.8% Duringthe 2013- 14 periodthe business'NPMhasincreased from6.7% to 9.8%. thismeans the businessisgettingbetterat controllingitsexpenses. Gross Profitmargin 34% 23360 72970 × 100% =32% Duringthe 2013-14 periodthe business'GPMhas decreased from34% to 32%. thismeans that the businessisgetting worse at controllingitsCOGS expenses. SellingExp.Ratio 16.5 9920 72970 × 100% = 13.5% Duringthe 2013-14 periodthe business'SERhas decreased from16.5% to 13.5%. this meansthat the businessis gettingbetteratcontrollingits SER expenses. General Exp.Ratio 8.8% 4535 72970 ×100% =6.2% Duringthe 2013-14 periodthe business'GERhas decreased from8.8% to 6.2% . thismeans that the businessisgetting betterat controllingitsGER expenses Financial Exp.Ratio 2% 1750 72970 × 100% =2.4% Duringthe 2013-14 periodthe business'FERhas increased from2% to 2.4% . thismeans that the businessisgetting worse at controllingitsFER expenses.
- 2. StabilityRatios 2013 2014 interpretation Workingcapital 1.03:1 8875 10420 = 0.85: 1 Duringthe 2013-14 periodthe business'WCfrom1.03:1 to 0.85:1. thismeansthat the businessabilitytopaditscurrent liabilityisgettingworse. in additionitdoesnotsatisfythe minimumrequirementto2:1 total debt 80.2% 58420 94020 =62.1% Duringthe 2013-14 periodthe business'TDRhas decreasedfrom 80.2% to 62.1%. thismeansthat the businesstotal debthas decrease.inadditionthe business still exceedsthe maximumlimitof 50% stock turnover 29.2days 365 ÷ 49610 3755 + 3440 2 =26.5days Duringthe 2013-14 periodthe business'STRhas decreasedfrom 29.2days to 26.5 days.thismeans that the businessisgettingfaster at sellingtheirgood debtorturnover 24.8 days 365 ÷ 36485 5490 + 4760 2 51.3days Duringthe 2013-14 periodthe business'DTRincreasedfrom 24.8days to 51.3 days.thismeans that the businessisgettingslower at collectingitsdebt interestcoverage 2.5 times 1750 + 7155 1750 = 5.1 Duringthe 2013-14 periodthe business'ICRincreasedfrom2.5 timesto5.1 times.thismeansthat the businessabilitytopayits interesthasbecome better.in additionitsatisfythe minimum requirementof 5 times