ROCE 2008

ROCE= PBIT × 100

CAPITAL EMPLOYED

Capital employed= total assets-current liablities

= 43507-2333

= 41174

Roce= 38183 × 100

41174

Roce= 92.73%

Roce 2009

Roce=pbit × 100

Capital employed

Capital employed=total assets-current liablities

=60337-4307

=56030

Roce= 52501 × 100

56030

roce= 93.70%

ROCE 2010

Roce= pbit × 100

Capital employed

Capital employed= 79771-6042

=73729

Roce=66819.76 × 100

73729

= 90.62%

Rona 2008

Rona=pbit × 100

Capital employed(inc longterm loans)

Capital employed= total assets-current liablities(inc longterm loans)

=43507-2333

=41174

Rona=38183 × 100

41174

= 92.73%

Rona 2009

Capital employed= 60337-4307

=56030

Rona=52501 × 100

56030

= 93.70%

Rona 2010

Capital employed= 79771-9033

= 70738

Rona=66819.76 × 100

70738

=94.46%

Rota 2008

Rota= pbit × 100

Total assets

Total assets= current assets + fixed assets

Total assets= 43507

Rota= 38183 × 100

43507

= 87.76%

Rota 2009

Total assets= 60337

Rota=52501 × 100

60337

= 87.01%

Rota 2010

Total assets= 79771

Rota= 66819.76 × 100

79771

= 83.76%

Asset turn over 2008

Asset turnover = sales

Net assets

Net assest = total assets-total libalities

= 43507-2333

= 41174

= 381828.2632

41174

= 0.93%

Asset turnover 2009

Asset turnover= sales

Net assets

= 601379.515

56030

= 10.73%

Asset turnover 2010

Asset turnover= sales

Net assets

= 830476.5

70738

= 11.74%

Netprofit margin 2008

Netprofit margin= pbit × 100

Sales

= 66819.76 × 100

381828.2632

= 17.49%

Netprofit margin 2009

Netprofit margin= pbit × 100

Sales

= 52501 × 100

601379.515

= 8.73

Netprofit margin 2010

Netprofit margin= pbit × 100

Sales

Netprofit margin= 66819.76 × 100

830476.5

= 8.04

Gross profit margin 2008

Gross profit margin = gross profit × 100

Sales

= 76366 × 100

381828.2632

= 20.00%

Gross profit margin 2009

Gross profit margin = gross profit × 100

Sales

= 100230 × 100

601379.515

= 16.66%

Gross profit margin 2010

Gross profit margin = gross profit × 100

Sales

= 124094 × 100

830476.5

= 14.94%

Gross profit markup 2008

Gross profit markup= gross profit × 100

Cost of sale

= 76366 × 100

305462.6106

= 25%

Gross profit markup 2009

Gross profit markup= gross profit × 100

Cost of sale

= 100230 × 100

501149.596

= 20%

Gross profit markup 2010

Gross profit markup= gross profit × 100

Cost of sale

= 124094 × 100

706382.3

= 17.56%

Current ratio 2008

Current ratio = current assets

Current liablities

= 40845

2333

= 17.50%

Current ratio 2009

Current ratio = current assets

Current liablities

= 57555

4307

= 13.36%

Current ratio 2010

Current ratio = current assets

Current liablities

= 76750

6042

= 12.70%

Acid test ratio/ liquid ratio 2008

Asset test ratio = current assets-stock

Current liablities

= 40097

2333

= 17.19%

Acid test ratio/ liquid ratio 2009

Asset test ratio = current assets-stock

Current liablities

= 56060

4307

= 13.02

Acid test ratio/ liquid ratio 2010

Asset test ratio = current assets-stock

Current liablities

= 73759

6042

= 12.21%

Debtor ratio 2008

Debtor ratio = trade debtor × 365

Total credit sale

= 1495 × 365

381828.2632

= 1.429 days

Debtor day 2009

Debtor ratio = trade debtor × 365

Total credit sale

= 3140 × 365

601379.515

= 1.905 days

Debtor day 2010

Debtor ratio = trade debtor × 365

Total credit sale

= 7178 × 365

830476.5

= 3.15 days

Creditors day 2008

Creditors days= trade creditors × 365

Total purchase

= 1675 × 365

305462.6106

= 2.0 days

Creditors day 2009

Creditors days= trade creditors × 365

Total purchase

= 3350 × 365

501149.596

= 2.43 days

Creditors day 2010

Creditors days= trade creditors × 365

Total purchase

= 4965 × 365

706382.3

= 2.56 days

Stock turnover ratio 2008

Stock turnover = cost of sale

Stock

= 305462.6106

748

= 408.37

Stock turnover 2009

Stock turnover = cost of sale

Stock

= 501149.596

1495

= 335.21

Stock turnover 2010

Stock turnover = cost of sale

Stock

= 706382.3

2991

= 236.17

Stock turnover ratio(in days) 2008

Stock turnover(indays) = stock × 365

Cost of sale

= 748 × 365

305462.6106

= 0.89 days

Stock turnover ratio(in days) 2009

Stock turnover(indays) = stock × 365

Cost of sale

= 1495 × 365

501149.596

= 1.088 days

Stock turnover ratio(in days) 2010

Stock turnover(indays) = stock × 365

Cost of sale

= 2991 × 365

7063823

= 1.55 days

Gearing ratio 2010

Gr = all longterm loans + normal overdrafts × 100

Capital reserves or share holders fundor ordinary share+reserve

= 2991 × 100

70738

= 4.22%

For the year 2008 and 2009 the gearing ration will be zero.

Activity ratio 2008

Activity ratio = debtors × 365

Creditors

= 1495 × 365

1675

= 325.77 days

Activity ratio 2009

Activity ratio = debtors × 365

Creditors

= 3140 × 365

3350

= 342 days

Activity ratio 2010

Activity ratio = debtors × 365

Creditors

= 7178 × 365

4965

= 527.6 days

Cash operating cycle 2008

C o c = debtors day + inventory held days - creditors day

C o c = 1.429 + 0.89 -2.0

C o c = 0.32 days

Cash operating cycle 2009

C o c = debtors day + inventory held days - creditors day

C o c = 1.905 + 1.088 - 2.43

C o c = 0.56 days

Cash operating cycle 2010

C o c = debtors day + inventory held days - creditors day

C o c = 3.15 +1.55 + 2.56

C o c = 2.140 days

Working capital to sales 2008

Working capital = working capital

Sales revenue

Working capital = current assets - current liablities

= 40845 - 2333

= 38512

= 38512

381828.2632

= 0.10 × 100

= 10.08%

Working capital to sales ratio 2009

Working capital = working capital

Sales revenue

Working capital = current assets - current liablities

= 57555 - 4307

= 53248

= 53248

601379.515

= 0.085 × 100

= 8.85%

Working capital to sales ratio 2010

Working capital = working capital

Sales revenue

Working capital = current assets - current liablities

= 76750 - 6042

= 70708

= 70708

830476.5

= 0.085 × 100 = 8.51%

Introduction

Ratio analysis is a tool used by individuals to conduct a quantitative analysis of information in a company's financial statement. “the relationship of one item to another expressed in simple mathematical form is called ratio”(kennedy and macmillan). Raios are calculated from current year numbers and are then compared to previous year,other companies or even the economy to judge the performance of the company. Ratio analysis of financial statements is a study of relationship among various financial factors in a business as disclosed by a single set of statements and a study of trend of these factors are shown in a series of statement. There are four types of ratio analysis 1. investors ratio 2. analysis of management performance 3. liquidity ratio 4.gearing ratio.

Roce.

A border measures the return on shareholder's equity in the ratio which measures the performance of a company as a whole in using all sources of long term finance. Roce is often seen as a measure of management effincy. This ratio is a measure of how well the longterm finance is being used to generate operating profit. Roce formula is :

ROCE= PBIT × 100

CAPITAL EMPLOYED

A roce of 15% suggests that the firm uses everyone pound of capital to generate profit of 15p.

Rota

Calculating the return on total assets is another variation on measuring how well the assets of the business are used to generate operating profit before deducting interest and tax. Its formula is:

Rota= pbit × 100

Total assets

Gross profit margin

The gross profit margin concentrates on cost of making goods and services ready for sale. Small changes in this ratio can be highly significant. There tends to be a view that there is a normal value for the industry or for the product that may be used as a benchmark against which to measure a company's performance. Its formula is:

Gross profit margin = gross profit × 100

Current ratio

The current ratio indicates the extend to which short term assets area avialable to meet short term liablities. Companies which generate cash on a daily basis such as retail stores can therfore operate a lower current ratio. Manufacturing businesses which have to hold substantial stocks would operate on a higher current ratio. Its formula is:

Current ratio = current assets

Current liablities

Acid test ratio

In the crises where the short term creditors are demanding payment the possibility of selling stock to raise cash may be unrealistic. The acid test ratio takes a closer look at the liquid assets of the current ratio omitting the stocks. Its formula is:

Asset test ratio = current assets-stock

Current liablities

Stock holding period

The stock holding period measures the average period during which stocks of goods are held before being sold or used in the operations of the business. It is usually expressed in days which is why the figure of 365 appears in the formula.stock days measures the same thing as stock turnover but it calculated in a way that puts it on a more similar basis to debtors days and creditors day. Stock days is a useful number because it makes easier to see how changes in stock days, debtors day and creditors day combine to change the working capital ratio. Its formula is:

stock × 365

Cost of sale

Debtors day

The debtors collection period measures the average period of credit allowed to credit customers. An increase in this measure would indicate that a company is building up cash flow problem although an attempt to decrease the period of credit allowed might deter customers and cause them to seek a competitor who gives a longer period of credit. Its formula is:

Debtor ratio = trade debtor × 365

Total credit sale

Creditors day

It measures the average period of credit taken from supplier of goods and services an increse In this measure could indicate that the company is taking longer to pay supplier has allowed a longer period to pay. Its formula is:

Creditors days= trade creditors × 365

Total purchase

Gearing ratio

It measured the proposition of share capital to loan capital. A high gearing ration suggests high proposition of loans to share capital. Gearing ratio is important in looking at a firms capital structure and the impact of interst rate changes. From the balance sheet prospactive the gearing measures considers the relative proportions of longterm loans and equity in the long term financing of business. Its formula is:

Gr = all longterm loans + normal overdrafts × 100

Capital reserves or share holders fundor ordinary share+reserve

Working capital

It shows the stocks purchased on credit then sold to customers who eventually pay cash. The cash is used to pay suppliers and the cycle starts again. It represents the long term financing needed to cover current assets that are not matched by current liabilities

Activity ratio

An indicator of how rapidely a firm converts accounts into cash or sales. In general the sooner the management can convert assets into sales or cash the more efficent the form is running. Its formula is

Activity ratio = debtors × 365

Creditors

Gross profit markup

Gross profit margin is a bit different from gross profit mark up.gross profit margin refers to a companys profit as a percentage of its total revenue. Mark up is more informal it is usually used to refer to the difference,say, a whole seller and retail price. For example if you manufacture an office chair sell them to dealer for 50 pounds each and the dealer sell them for 70 pounds each so this 20 pound is a mark up. Its formaula is

Gross profit markup= gross profit × 100

Cost of sale

Asset turnover

Asset turn over measures the effincy with which a company is utilizing its assets to generat the sales. Is formula is

Asset turnover = sales

Net assets

Net profit margin

The net profit margin ratio tells us the amount of net profit per one pound of turnover a business has earned. This is after taking amount of the cost of sale, the administration cost, selling and distribution cost and all other costs the net profit is left. Out of which they will pay interst and tax and so on. Its formula is:

Netprofit margin= pbit × 100

Source: ChinaStones - http://china-stones.info/free-essays/accounting/quantitative-analysis-of-information-a-company.php



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