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1. Liquidity Ratios

they fall due.

A. Current Ratios

The current ratio is called working capital ratio or banks ratios measures the

number of times the current liabilities could be paid with the available current assets.

Liabilities

The table shows that the current ratio is decreasing which means that as the

time goes by, the percentage of change is higher on current liabilities than the

percentage change in current assets. The Current ratios also shows that the values

are more than 1 which means the company can pay its liabilities with its current

assets.

Quick ratio or liquidity ratio measures the ability of a company to use its near cash

or quick assets to extinguish or retire its current liabilities immediately.

The table shows that the company has enough quick assets to cover the

current liabilities throughout the 5 year forecast. Also, it can be seen that as the

time goes by, the percentage change of current liabilities is higher than the

percentage change of quick assets thats why the quick test ratio is decreasing.

C. Cash Ratio

It measures the ability of a business to pay its current obligation as they come due

using cash.

The table shows that the values of cash ratio are more than one which

means that the company will be able to pay its current liabilities using cash

throughout the 5 year forecast.

2. ASSET MANAGEMENT RATIO

Managing the assets will help the firm avoid borrowing funds to finance operations.

The table shows how fast the collections from accounts receivable would

be throughout the 5 year forecast. It can be seen that from its second year, the

ARturnover is increasing.

B. Inventory Turnover

It measures the number of times inventory is sold or used in a time period such as

a year.

The table shows how fast inventory would be converted into sales in the 5

year forecast.It can be seen that from the second year, the Inventory turnover will

increase in the succeeding years by a very little increase.

3. SOLVENCY RATIO

Solvency refers to the ability to pay all its debts, whether such liabilities are

current or non-current. It is therefore somewhat similar to liquidity, except that solvency involves

a longer-time horizon.

The total assets of the business firm are provided by the owners and creditors. The

larger the amount provided by owners, the lesser the risk is assured by creditors. To determine

the amount provided by creditors relative to that provided by the owners, the debt-equity ratio is

computed by expressing liabilities as percentage of total owners equity.

DEBT-EQUITY RATIO=TOTAL LIABILITIES/TOTAL OWNERS EQUITY

for every 1php provided by the owners for the 5-year forecast.

B. Debt Ratio

The debt ration indicates the percentage of total assets provided by creditors.

DEBT RATIO= TOTAL LIABILITIES/TOTAL ASSETS

The table shows that the creditors provided a very small portion for the

total assets. It also shows that the ratio is rising which means that as the time goes

by, creditors are having an increase in the portion of the total assets.

C. Equity Ratio

The equity ratio indicates the percentage of total assets provided by the owners.

This ratio is actually the compliment of the debt ratio, and therefore can be calculated by

subtracting the debt ratio from 100%.

The table shows that the values are very high which means that the percentage

provided by the owners created almost all the total assets. The forecast also shows that as

the times goes by, there is a little percentage decrease shown in the 5 year forecast.

4. PROFITABILITY RATIO

Profitability can be measures in absolute peso terms, like net income or in terms

of ratios. When we express profit as ratio, we actually relate profit to the amount of the

investment acquired or used in generating such return.

A. Return on Sales

The table shows that the return on sales have small values but throughout the 5

year forecast, the values are increasing which means that the company is having a bigger

return on sales as the times goes by.

Gross Profit Margin is the gross profit earned on sales and how much of each sale

is available to cover operating expenses.

The table shows that the gross profit margin is increasing as the time goes

by. It means that the sales are able to cover the operating expenses more in the

succeeding years.

Operating Profit Margin measures how out of every sales of the business keeps in

earnings.

Sales 1,817,857.14 1,800,892.86 2,013,392.86 2,187,500 2,382,142.86

Margin

The table shows that the operating profit margin is increasing in the 5-year

forecast which suggests that as the time goes by, the profit generation will be more

efficient.

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