Liquidity Analysis:

Liquidity Ratios are financial metrics that measure a companys ability to pay its short-term debt
obligations. These ratios are an important indicator of a companys financial health. Liquidity
Ratios compares a companys most liquid assets or those that are equally converted into cash to
its short term liability. The higher the values of the ratio, the more likely the company is able to
cover its short term debts. Lower liquidity ratios should be a warning sign to investors, because it
suggest the company may have trouble meeting its short-term obligations and struggle to fund its
long-term operations. The most common types of Liquidity Ratio used are Current Ratio and
Quick Ratio.
Current Ratio =

Quick Ratio =

Current Assets
Current Liabilities
Current AssetsInventory
Current Liabilities

Table 1 Shows Liquidity Ratios:

Year

Current

Current

Inventory

Current

Quick

Assets

Liabilities

($)

Ratio

Ratio

1,475,421
1,739,394
1,901,435
2,031,559
2,233,973

1.308
1.363
1.354
1.314
1.331

1.190
1.214
1.202
1.159
1.166

($)
($)
2010
16,294,622
12,453,763
2011
15,829,630
11,610,115
2012
16,960282
12,525,872
2013
17,194,196
13,081,517
2014
17,985,729
13,510,217
Sample Calculation for year 2010

16,294,622
12,453,763

Current Ratio =

= 1.308
Quick Ratio =

16,294,6221,475,421
12,453,763

= 1.190

Liquidity Ratios
1.4

1.36

1.35

1.35

1.33

1.31

1.31
1.3
1.25
1.2

1.21

1.2

1.19

1.16

1.17

1.15
1.1
1.05

2010

2011

2012
Current Ratio

2013

2014

Column1

The values for Current Ratio and Quick Ratio fluctuated. All the Ratios was above 1 which
suggested that GHL is more likely to cover its short-term debts and maybe fund its long term
operations. In 2011 the Liquidity Ratios was the highest even though the values for Current Asset
and Current Liability for 2014 is the highest, it yielded a smaller value for the Liquidity Ratios.
For many businesses, these ratios are the difference between holding their heads above water and
sinking.

Profitability Analysis:
Before investing in a company, you may ask yourself; (1) How is the company being run? (2) Is
it generating profits? (3) Is the performance getting better or worse? (4) How does it compare to
its peers? The answer to all these questions lies in analysing various Profitability Ratios.
Profitability Ratios measures the profit generating ability of a company relative to sales, assets
and equity. These ratios present an efficient way to judge a companys individual performance. It
is also a good way to compare a company with its competitors relative to an industry bench
mark. There are three common Profitability Ratios commonly used. These are the Return on
Equity (ROE), Return on Assets (ROA) and Net Profit Margin (NPM).
Return on Equity =

Net Profit after Tax

Shareholders Equity

Return on Assets =

Net Profit after Tax

Total Assets

Net Profit Margin =

Net Profit after Tax

Revenue

Table 2 Shows Profitability Ratios:

Year

Net

Shareholders

Total

Revenue

ROE

ROA

NPM

Profit

Equity

Assets

($)

after

($)

($)

3,039,000

20,987,79

5,522,00

0.144

0.0208

0.0792

3,155,000

5
21,502,61

0
4,231,00

0.147

0.0216

0.110

0
4,299,00

0.0929

0.0134

0.070

Tax
2010
2011

($)
437,116
464,735

2012

300,816

3,239,000

7
22,453,71

2013

-136,938

3,097,000

7
22,057,40

0
4,678,00

-0.0442

-0.00621

-0.0293

2014

364,685

2,933,000

4
22,576,92

0
4,837,00

0.124

0.0162

0.0754

Sample Calculation for 2010

Return on Equity =

437,116
3,039,000

Return on Assets =

437,116
20,987,795

Net Profit Margin =

437,116
5,522,000

Profitability Ratios
0.2
0.15
0.1
0.05
0

2010

2011

2012

2013

2014

-0.05
-0.1
ROE

ROA

NPM

Profitability Ratios can provide insight into the financial health and performance of a company
from a different angle. For example ROE represents how much profit a company generates with
the money shareholders invested, while ROA is a reflection of the earnings generated from the
Total Assets or resources a company has. Profitability Ratios are just numbers when seen in
isolation, but these numbers give meaningful information when analysed in comparison to a
companys peers or seen against a companys past ratios. From 2010 to 2011 the values for the
Profitability Ratios increased and from 2011 to 2012 it decreased. But in 2013 the Profitability
Ratios was negative because there was a loss instead of a profit for the Net Profit after Tax.
However, in 2014 GHL picked up again and began to make a profit.

Activity Analysis:
Companies will typically try to turn their production into cash or sales as fast as possible because
this will generally lead to higher revenues. Such ratios are frequently used when performing
fundamental analysis on different companies. The total assets turnover ratio and the fixed assets
turnover ratio are popular examples of activity ratios used widely across most industries.
Total Assets Turnover =

Fixed Assets Turnover =

Revenue
Total Assets

Revenue
Assets

Table 3 Shows Activity Ratios:

Year

2010
2011
2012
2013
2014

Revenue

Total Assets

Fixed Assets

Total Assets

Fixed Assets

($)

($)

($)

Turnover

Turnover

5,522,000
4,231,000
4,299,000
4,678,000
4,837,000

20,987,795
21,502,617
22,453,717
22,057,404
22,576,926

509,744
501,275
489,886
520,232
536,670

0.263
0.197
0.191
0.212
0.214

10.833
8.442
8.776
8.992
9.013

Sample Calculation for year 2010

Total Assets Turnover =

5,522,000
20,987,795

= 0.263

Fixed Assets Turnover =

5,522,000
509,744

= 10.833

Activity Ratios
12

10.83

10

9.01

8.99

8.78

8.44
8
6
4
2
0.26
0

2010

0.2

0.19

2011

2012

Total Assets Turnover

0.21
2013

0.21
2014

Column1

The values for the Activity Ratio fluctuated. In the year 2010 GHL yielded the highest value for
Fixed Assets Turnover and Total Assets Turnover. A higher value for the Activity ratio is
preferable since it suggests it suggest that the company is using its assets efficiently to make
money. A lower value for the Activity ratio may convince a company to try other methods to help
maximize the efficiency of its assets.

Capital Structure Analysis:

Capital Structure is the combination of the debt and equity a company uses to finance its longterm operations and growth. For publicly traded companies common stock is by far the most
utilized form of capital and usually comprises the majority of stock ownership of a company.
Capital structure allows analysts to identify the optimal value of the cost of capital of a company
based on the proportion of equity and debt issued. Cost of capital is the rate of return that
investors and bondholders of a certain company expect for their investments. The Capital
Structure Ratios used are the Debt Ratio and the Equity Multiplier.

Debt Ratio =

Total Liabilities
Shareholders Equity

Equity Multiplier =

Total Assets
Shareholders Equity

Table 4 Shows Capital Structure Ratios:

Year

2010
2011
2012
2013
2014

Total

Shareholders

Total Assets

Liabilities

Equity

($)

($)
17,857,471
18,308,346
19,255,460
19,161,076
19,620,708

($)
3,039,000
3,155,000
3,239,000
3,097,000
2,933,000

20,987,795
21,502,617
22,453,717
22,057,404
22,576,926

Debt Ratio

Equity
Multiplier

5.876
5.803
5.945
6.187
6.690

6.906
6.815
6.932
7.122
7.698

Sample Calculation for year 2010

Debt Ratio =

17,857,471
3,039,000

= 5.876

Equity Multiplier =

20,987,795
3,039,000

= 6.906

Capital Structure Ratios

9
7.7

8
6.91

7
6

5.88

6.93

6.82
5.8

7.12
6.19

5.95

6.69

5
4
3
2
1
0

2010

2011

2012
Debt Ratio

Column1

2013

2014

The values for Capital Structure Ratio fluctuated, 2014 having the highest Capital Structure
Ratio. The debt ratio is a measure of a companys financial leverage. For example, if two
companies go to purchase a loan the bank is most likely to approve the company with the smaller
debt ratio. The equity multiplier is a straightforward ratio used to measure a companys financial
leverage. When a company purchases major assets it can finance those purchases by incurring
debt or issuing stock. A high equity multiplier indicates the company has been using more debt
than equity to finance its asset purchases.