ABBOTT MEDICINE COMPANY

Liquidity Ratios :
(i) Current Ratio
(ii) Quick (Acid-Test) Ratio

(i) Current Ratio :

Formula =Total Liquid Assests/Total Current Debts
2015 =

2014 =

2013 =

Interpretation : .

(2) Quick Ratio :

Formula= Current Assets-Inventory/Current Liabilities

2015 =

2014 =

2013 =
Interpretation:
Activity Ratios:
(i) Inventory Turnover
(ii) Average Collection Period
(iii) Average Payment Period
(iv) Total Assets Turnover
(i) Inventory Turnover:
Formula = Cost of goods sold/Inventory
2015 =

2014 =

2013 =

(ii) Average Collection Period :

Formula: Accounts Receivable/Average Sales Per Day
2015 =

2014 =

2013 =

(iii) Average Payment Period :

Formula= Accounts Payable/Average Purchases Per day

2015 =

2014 =

2013 =

(iv) Total Assets Turnover:

Formula = Sales / Total Assets
2015 =
 2014 =

2013 =
Interpretation: In year 2013 there is high inventory
turnover.So,its assests are used m0re in 2013.

Debt Ratios:
(i) Debt Ratio
(ii) Times Interest Earned Ratio
(iii) Fixed Payment Coverage Ratio

(i) Debt Ratio:

Formula = Total Liabilities / Total Assets
2015 =

2014 =

2013 =
Interpretation: In year 2015,there is high debt ratio so
company has greater degree of indebtedness in 2015.
(ii) Times Interest Earned Ratio:
Formula = Earning Before Interest and Tax/Taxes
2015 =

2014 =

2013 =

(iii) Fixed Payment Coverage Ratio :

Formula = Earning before interest and taxes+Lease payments/
 interest+lease payments+ {(Principal payments+preferred stock dividend)*[1/(1-0.29)]}

Profitability Ratios:
(i) Gross Profit Margin
(ii) Operating Profit Margin
(iii) Net Profit Margin
(iv) Earnings Per Share
(v) Return on Total Assets
(vi) Return on Common Equity

(i) Gross Profit Margin:

Formula = Sales –Cost of goods sold/Sales
2015 =

2014 =

2013 =
Interpretation: The percentage of gross profit margin is high in
2015 so this year was very profitable as compared to previous two.
(ii) Operating Profit Margin:
Formula = Operating Profit /Sales
2015 =
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2014 =
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2013 =
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(iii) Net Profit Margin:
Formula = Earnings available for common stockholders/sales
2015 =
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2014 =
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2013 =
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(iv) Earning Per Share :
Formula = Earning available for common stockholders/
Number of shares of common stock holders outstanding
2015 =
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2014 =
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2013 =
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(v) Return on Total Assets:
Formula= Earning available for common stockholders/Total assets
2015 =
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2014 =
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2013 =
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(vi) Return on Common Equity :
Formula = Earning Available for common stock holders/common stock
Equity
2015 =
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2014 =
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2013 =
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Market Ratios:
(i) Price/Earning (P/E) Ratio
(ii) Market/Book (M/B) Ratio

(i) Price/Earning (P/E) Ratio:

Formula=Market price per share of common stock/Earning per share

2015 =

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2014 =
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2013 =
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(ii) Market Book (M/B) Ratio:

Formula = Market price per share of common stock/
 Book value per share of common stock
2015 =
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2014 =
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2013 =
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