Actual Actual TS: Time-Series

Ratios
2016 2017 CS: Cross-Sectional
Current ratio 1.10 1.56 TS: Increasing
Quick ratio 0.25 0.24 TS: Stable
Cash ratio 0.04 0.05 TS: Stable
Net Working Capital 99.41 433.7 TS: Increasing
Inventory Turnover 2.07 1.90 TS: Deteriorating
Average Collection Period 24.28 23.52 TS: Deteriorating
Total Asset Turnover 0.84 0.18 TS: Deteriorating
Debt ratio 0.88 TS:
Debt-Equity Ratio 7.59 TS:
Times Interest Earned 0.70 TS:
2016

LIQUIDITY RATIOS

1. Current Ratio = Current Assets ÷ Current Liabilities

= 1145.29 ÷ 1045.88
= 1.095049

It evaluates the ability of a company to pay short-term obligations using current assets
(cash, marketable securities, current receivables, inventory, and prepayments).

2. Acid Test Ratio = ( Current Assets – Inventory ) ÷ Current Liabilities

= (1145.29 - 885.01) ÷1045.88
=0.248862

Also known as "quick ratio", it measures the ability of a company to pay short-term
obligations using the more liquid types of current assets or "quick assets" (cash,
marketable securities, and current receivables).

3. Cash Ratio = ( Cash + Marketable Securities ) ÷ Current Liabilities

= (47.2 + 0) ÷1045.88
= 0.04512946

It measures the ability of a company to pay its current liabilities using cash and
marketable securities. Marketable securities are short-term debt instruments that are as
good as cash.

4. Net Working Capital = Current Assets - Current Liabilities

=1145.29 - 1045.88
=99.41

Determines if a company can meet its current obligations with its current assets; and how
much excess or deficiency there is.

ACTIVITY RATIOS

1. Inventory Turnover = Cost of Sales ÷ Average Inventory

= 1788.27 ÷ [(836.58 + 885.01) ÷ 2]
=2.077463
Represents the number of times inventory is sold and replaced. Take note that some
authors use Sales in lieu of Cost of Sales in the above formula. A high ratio indicates that
the company is efficient in managing its inventories.
 2. Days Inventory Outstanding = 360 ÷ Inventory Turnover
= 360 ÷ 2.08
= 174.76

It is also known as “Inventory Turnover in days”. It represents the number of days

inventory sits in the warehouse.

3. Average Collection Period = Accounts Receivable ÷ ( Annual Sales ÷ 365)

=151.3÷ (2274.09÷ 365)
=24.28422

Evaluates credit and collection policies

4. Total Asset Turnover = Net Sales ÷ Total Assets

=2274.09 ÷ 2706.39
=0.840267

It measures overall efficiency of a company in generating sales using its assets. The
formula is similar to ROA, except that net sales are used instead of net income.

DEBT RATIOS

1. Debt Ratio = Total Liabilities ÷ Total Assets

= 2391.38 ÷ 2706.39
= 0.88

It measures the portion of company assets that is financed by debt (obligations to third parties).
Debt ratio can also be computed using the formula: 1 minus Equity Ratio.

2. Debt-Equity Ratio = Total Liabilities ÷ Total Equity

= 2391.38 ÷ 315.01
= 7.59

It evaluates the capital structure of a company. A D/E ratio of more than 1 implies that the
company is a leveraged firm; less than 1 implies that it is a conservative one.

3. Times Interest Earned = EBIT ÷ Interest Expense

= 68.92 ÷ 99.07
= 0.70

It measures the number of times interest expense is converted to income, and if the company can
pay its interest expense using the profits generated. EBIT is earnings before interest and taxes.
PROFITABILITY RATIOS

1. Gross Profit Margin

2. Operating Profit Margin
3. Net Profit Margin
4. Earnings Per Share
5. Return on Total Asset
6. Return on Equity

MARKET RATIOS

1. Price/Earnings (P/E) Ratio

2017

LIQUIDITY RATIOS

1. Current Ratio = Current Assets ÷ Current Liabilities

= 1,206.3 ÷ 772.6
= 1.56

It evaluates the ability of a company to pay short-term obligations using current assets (cash,
marketable securities, current receivables, inventory, and prepayments).

2. Acid Test Ratio = Quick Assets ÷ Current Liabilities

= 182.72 ÷ 772.6
= 0.24

Also known as "quick ratio", it measures the ability of a company to pay short-term obligations
using the more liquid types of current assets or "quick assets" (cash, marketable securities, and
current receivables).

3. Cash Ratio = (Cash + Marketable Securities) ÷ Current Liabilities

= 37.57 ÷ 772.6
= 0.05

It measures the ability of a company to pay its current liabilities using cash and marketable
securities. Marketable securities are short-term debt instruments that are as good as cash.

4. Net Working Capital = Current Assets – Current Liabilities

= 1206.3 – 772.6
= 433.7

Determines if a company can meet its current obligations with its current assets; and how much
excess or deficiency there is.

ACTIVITY RATIOS

1. Inventory Turnover = Cost of Sales ÷ Average Inventory

= 1757.89 ÷ ((885.01 + 961.24) ÷2)
= 1.90

Represents the number of times inventory is sold and replaced. Take note that some authors use
Sales in lieu of Cost of Sales in the above formula. A high ratio indicates that the company is
efficient in managing its inventories.
2. Days Inventory Outstanding = 360 ÷ Inventory Turnover
= 360 ÷ 1.90
= 189.47

It is also known as “Inventory Turnover in days”. It represents the number of days inventory sits
in the warehouse.

3. Average Collection Period = Accounts Receivable ÷ (Annual Sales ÷ 365)

= 145.15 ÷ (2252.78 ÷ 365)
= 23.52

Evaluates credit and collection policies

4. Total Asset Turnover = Net Sales ÷ Total Assets

= 494.89 ÷ 2757.15
= 0.18

It measures overall efficiency of a company in generating sales using its assets. The formula is
similar to ROA, except that net sales are used instead of net income.

DEBT RATIOS

1. Debt Ratio = Total Liabilities ÷ Total Assets

It measures the portion of company assets that is financed by debt (obligations to third parties).
Debt ratio can also be computed using the formula: 1 minus Equity Ratio.

2. Debt-Equity Ratio = Total Liabilities ÷ Total Equity

It evaluates the capital structure of a company. A D/E ratio of more than 1 implies that the
company is a leveraged firm; less than 1 implies that it is a conservative one.

3. Times Interest Earned = EBIT ÷ Interest Expense

It measures the number of times interest expense is converted to income, and if the company can
pay its interest expense using the profits generated. EBIT is earnings before interest and taxes.

PROFITABILITY RATIOS

1. Gross Profit Margin

2. Operating Profit Margin
 3. Net Profit Margin
4. Earnings Per Share
5. Return on Total Asset
6. Return on Equity

MARKET RATIOS

2. Price/Earnings (P/E) Ratio