COMPUTATION AND INTERPRETATIONS OF FINANCIAL RATIOS

2020
FIANACIAL RATIOS Formula Computations Ratio Interpretations
ACTIVITY / EFFICIENCY / ASSET MANAGEMENT RATIO
Measure the value of equity in a company by analyzing its overall debt picture.
1. 1. Inventory Turnover-
Within 360 days, the firm
is used to show the length Cost of Goods Sold /
₱ 775,284 / ₱ 16,445 47.14 x converts its inventory to cash
of time a firm can convert Inventory
47.14 times
its inventory to cash
2. 2. Average Age of
Within 7.64 days, the firm
Inventory – Average 360/Inventory 7.64
360 days/47.14 x can convert its inventories
number of days’ sales in Turnover days
into cash
inventory
3. 3. Total Asset Turnover
–is used to measure the
Each peso of the total asset
firm’s efficiency in using Sales / Total Assets ₱ 1,292,140 / ₱ 723,476.75 ₱ 1.79
generates ₱ 1.79 of sales
all its assets to generate
sales.
4. 4. Fixed Asset Turnover
– is used measure the
Sales / Net Fixed Each peso of the fixed asset
firm’s efficiency in using ₱ 1,292,140 / ₱ 673,743.74 ₱ 1.92
Assets generates ₱ 1.92 of sales
its fixed or earning assets
to generate sales
FINANCIAL LEVERAGE RATIO
Measure the value of equity in a company by analyzing its overall debt picture.
1. Asset-to-Equity Ratio -
It means that for every peso
indicates the relationship Total Assets / Total
₱ 1.00 of equity, the company has
of the total assets of the Partner’s Equity ₱ 723,476.75 / ₱ 723,476.75
₱ 1.00 of assets.
firm to the part owned by
partners (aka,
owner's equity).
PROFITABILITY RATIO
Shows the combined effects of liquidity asset management and debt management on operating results.
1. Gross Profit Margin – It indicates that the company
measures the percentage of made a gross income of
(Sales – Cost of (₱ 1,292,140 – ₱ 775,284) /
each peso sales remaining 40% ₱ 0.40 from every peso of
Sales) / Sales ₱ 1,292,140
after the firm has paid for total sales, after paying off its
its goods. Cost of Goods Sold.
2. Operating Profit
Margin – measures the
percentage of each peso It indicates that the company
sales remaining after all Operating Profit / made ₱ 0.14 of operating
₱ 176,395.07 / ₱ 1,292,140 14%
costs and expenses other Sales profit from every peso of total
than interest, taxes, and sales achieved.
preferred stock dividends
are deducted.
3. Net Profit Margin -
measures the proportion of
It indicates that the company
sales that is available to the
made ₱ 0.10 of net profit from
firm’s owners after Net Income / Sales ₱ 123,476.55 / ₱ 1,292,140 10%
every peso of total sales
deducting all costs and
achieved.
expenses including interest
and taxes.
4. Return on Total Assets
– measures the
It means that the company can
management’s Net Income / Total
₱ 123,476.55 / ₱ 723,476.75 17% generate a 17% return on total
effectiveness in generating Assets
assets
profits with its available
assets.
 5. Return on Investment -
measure of profitability
It means that the company can
that calculates how many Net Income /
₱ 123,476.55 / ₱ 723,476.75 17% generate a 17% return on
pesos of profit a company Partners’ Equity
investment.
generates with each peso of
partners' equity.

2021
FIANACIAL RATIOS Formula Computations Ratio Interpretations
ACTIVITY / EFFICIENCY / ASSET MANAGEMENT RATIO
Measure the value of equity in a company by analyzing its overall debt picture.
5. 1. Inventory Turnover-
Within 360 days, the firm
is used to show the length Cost of Goods Sold /
₱ 798,318 / ₱ 16,445 48.54 x converts its inventory to cash
of time a firm can convert Inventory
48.54 times
its inventory to cash
6. 2. Average Age of
Within 7.42 days, the firm
Inventory – Average 360/Inventory 7.42
360 days/48.54 x can convert its inventories
number of days’ sales in Turnover days
into cash
inventory
7. 3. Total Asset Turnover
–is used to measure the
Each peso of the total asset
firm’s efficiency in using Sales / Total Assets ₱ 1,330,530 / ₱ 657,702.70 ₱ 2.02
generates ₱ 2.02 of sales
all its assets to generate
sales.
8. 4. Fixed Asset Turnover
– is used measure the
Sales / Net Fixed Each peso of the fixed asset
firm’s efficiency in using ₱ 1,330,530 / ₱ 589,177.37 ₱ 2.26
Assets generates ₱ 2.26 of sales
its fixed or earning assets
to generate sales
FINANCIAL LEVERAGE RATIO
Measure the value of equity in a company by analyzing its overall debt picture.
1. Asset-to-Equity Ratio -
indicates the relationship
It means that for every peso
of the total assets of the Total Assets / Total ₱ 657,702.70 / ₱ 657,702.70
₱ 1.00 of equity, the company has
firm to the part owned by Partner’s Equity
₱ 1.00 of assets.
partners (aka,
owner's equity).
PROFITABILITY RATIO
Shows the combined effects of liquidity asset management and debt management on operating results.
1. Gross Profit Margin – It indicates that the company
measures the percentage of made a gross income of
(Sales – Cost of (₱ 1,330,530 – ₱ 798,318) /
each peso sales remaining 40% ₱ 0.40 from every peso of
Sales) / Sales ₱ 1,330,530
after the firm has paid for total sales, after paying off its
its goods. Cost of Goods Sold.
2. Operating Profit
Margin – measures the
percentage of each peso It indicates that the company
sales remaining after all Operating Profit / made ₱ 0.14 of operating
₱ 191,751.07 / P1,330,530 14%
costs and expenses other Sales profit from every peso of total
than interest, taxes, and sales achieved.
preferred stock dividends
are deducted.
3. Net Profit Margin -
measures the proportion of
It indicates that the company
sales that is available to the
made ₱ 0.10 of net profit from
firm’s owners after Net Income / Sales ₱ 134,225.75 / ₱ 1,330,530 10%
every peso of total sales
deducting all costs and
achieved.
expenses including interest
and taxes.
 4. Return on Total Assets
– measures the
It means that the company can
management’s Net Income / Total
₱ 134,225.75 / ₱ 657,702.70 20% generate a 20% return on total
effectiveness in generating Assets
assets
profits with its available
assets.
5. Return on Investment -
measure of profitability
It means that the company can
that calculates how many Net Income /
₱ 134,225.75 / ₱ 657,702.70 20% generate a 20% return on
pesos of profit a company Partners’ Equity
investment.
generates with each peso of
partners' equity.

2022
FIANACIAL RATIOS Formula Computations Ratio Interpretations
ACTIVITY / EFFICIENCY / ASSET MANAGEMENT RATIO
Measure the value of equity in a company by analyzing its overall debt picture.
9. 1. Inventory Turnover-
Within 360 days, the firm
is used to show the length Cost of Goods Sold /
₱ 821,382 / ₱ 16,445 49.95 x converts its inventory to cash
of time a firm can convert Inventory
49.95 times
its inventory to cash
2. Average Age of
Within 7.21 days, the firm
Inventory – Average 360/Inventory 7.21
360 days/49.95 x can convert its inventories
number of days’ sales in Turnover days
into cash
inventory
3. Total Asset Turnover
Each peso of the total asset
–is used to measure the Sales / Total Assets ₱ 1,368,970 / ₱ 602,691.85 ₱ 2.27
generates ₱ 2.27 of sales
firm’s efficiency in using
 all its assets to generate
sales.
4. Fixed Asset Turnover
– is used measure the
Sales / Net Fixed Each peso of the fixed asset
firm’s efficiency in using ₱ 1,368,970 / ₱ 506,647 ₱ 2.70
Assets generates ₱ 2.70 of sales
its fixed or earning assets
to generate sales
FINANCIAL LEVERAGE RATIO
Measure the value of equity in a company by analyzing its overall debt picture.
1. Asset-to-Equity Ratio -
indicates the relationship
It means that for every peso
of the total assets of the Total Assets / Total ₱ 602,691.85 / ₱ 602,691.85
₱ 1.00 of equity, the company has
firm to the part owned by Partner’s Equity
₱1.00 of assets.
partners (aka,
owner's equity).
PROFITABILITY RATIO
Shows the combined effects of liquidity asset management and debt management on operating results.
1. Gross Profit Margin – It indicates that the company
measures the percentage of made a gross income of P0.40
(Sales – Cost of (₱ 1,368,970 – ₱ 821,382) /
each peso sales remaining 40% from every peso of total sales,
Sales) / Sales ₱ 1,368,970
after the firm has paid for after paying off its Cost of
its goods. Goods Sold.
2. Operating Profit
Margin – measures the
percentage of each peso It indicates that the company
sales remaining after all Operating Profit / made P0.15 of operating
₱ 207,127.07 / ₱ 1,368,970 15%
costs and expenses other Sales profit from every peso of total
than interest, taxes, and sales achieved.
preferred stock dividends
are deducted.
 3. Net Profit Margin -
measures the proportion of
It indicates that the company
sales that is available to the
made P0.11 of net profit from
firm’s owners after Net Income / Sales ₱ 144,988.95 / ₱ 1,368,970 11%
every peso of total sales
deducting all costs and
achieved.
expenses including interest
and taxes.
4. Return on Total Assets
– measures the
It means that the company can
management’s Net Income / Total
₱ 144,988.95 / ₱ 602,691.85 24% generate a 24% return on total
effectiveness in generating Assets
assets
profits with its available
assets.
5. Return on Investment -
measure of profitability
It means that the company can
that calculates how many Net Income /
₱ 144,988.95 / ₱ 602,691.85 24% generate a 24% return on
pesos of profit a company Partners’ Equity
Investment.
generates with each peso of
partners' equity.

2023
FIANACIAL RATIOS Formula Computations Ratio Interpretations
ACTIVITY / EFFICIENCY / ASSET MANAGEMENT RATIO
Measure the value of equity in a company by analyzing its overall debt picture.
10. 1. Inventory Turnover-
Within 360 days, the firm
is used to show the length Cost of Goods Sold /
₱ 844,416 / ₱ 16,445 51.35 x converts its inventory to cash
of time a firm can convert Inventory
51.35 times
its inventory to cash
 2. Average Age of
Within 7.01 days, the firm
Inventory – Average 360/Inventory 7.01
360 days/51.35 x can convert its inventories
number of days’ sales in Turnover days
into cash
inventory
3. Total Asset Turnover
–is used to measure the
Each peso of the total asset
firm’s efficiency in using Sales / Total Assets ₱ 1,407,360/ ₱ 558,430.20 ₱ 2.52
generates ₱ 2.52 of sales
all its assets to generate
sales.
4. Fixed Asset Turnover
– is used measure the
Sales / Net Fixed Each peso of the fixed asset
firm’s efficiency in using ₱ 1,407,360/ ₱ 422,080.63 ₱ 3.33
Assets generates ₱ 3.33 of sales
its fixed or earning assets
to generate sales
FINANCIAL LEVERAGE RATIO
Measure the value of equity in a company by analyzing its overall debt picture.
1. Asset-to-Equity Ratio -
indicates the relationship
It means that for every peso
of the total assets of the Total Assets / Total ₱ 558,430.20/ ₱ 558,430.20
₱ 1.00 of equity, the company has
firm to the part owned by Partner’s Equity
₱1.00 of assets.
partners (aka,
owner's equity).
PROFITABILITY RATIO
Shows the combined effects of liquidity asset management and debt management on operating results.
1. Gross Profit Margin – It indicates that the company
measures the percentage of made a gross income of P0.40
(Sales – Cost of ₱ 1,407,360– ₱ 844,416) /
each peso sales remaining 40% from every peso of total sales,
Sales) / Sales ₱ 1,407,360
after the firm has paid for after paying off its Cost of
its goods. Goods Sold.
2. Operating Profit
Margin – measures the
percentage of each peso It indicates that the company
sales remaining after all Operating Profit / made P0.1581 of operating
₱ 222,483.07/ ₱ 1,407,360 15.81%
costs and expenses other Sales profit from every peso of total
than interest, taxes, and sales achieved.
preferred stock dividends
are deducted.
3. Net Profit Margin -
measures the proportion of
It indicates that the company
sales that is available to the
made P0.1106 of net profit
firm’s owners after Net Income / Sales ₱ 155,738.15 / ₱ 1,407,360 11.07%
from every peso of total sales
deducting all costs and
achieved.
expenses including interest
and taxes.
4. Return on Total Assets Net Income / Total ₱ 155,738.15 / ₱ 558,430.20 27.89% It means that the company can
– measures the Assets generate a 27.89% return on
management’s total assets
effectiveness in generating
profits with its available
assets.
5. Return on Investment - Net Income / ₱ 155,738.15 / ₱ 558,430.20 27.89% It means that the company can
measure of profitability Partners’ Equity generate a 27.89% return on
that calculates how many investment.
pesos of profit a company
generates with each peso of
partners' equity.
 2024
FIANACIAL RATIOS Formula Computations Ratio Interpretations
ACTIVITY / EFFICIENCY / ASSET MANAGEMENT RATIO
Measure the value of equity in a company by analyzing its overall debt picture.
11. 1. Inventory Turnover-
Within 360 days, the firm
is used to show the length Cost of Goods Sold /
₱ 867,480 / ₱ 16,445 52.75 x converts its inventory to cash
of time a firm can convert Inventory
52.75 times
its inventory to cash
2. Average Age of
Within 6.82 days, the firm
Inventory – Average 360/Inventory 6.82
360 days/52.75 x can convert its inventories
number of days’ sales in Turnover days
into cash
inventory
3. Total Asset Turnover
–is used to measure the
Each peso of the total asset
firm’s efficiency in using Sales / Total Assets ₱ 1,445,800/ ₱ 524,931.75 ₱ 2.75
generates ₱ 2.75 of sales
all its assets to generate
sales.
4. Fixed Asset Turnover
– is used measure the
Sales / Net Fixed Each peso of the fixed asset
firm’s efficiency in using ₱ 1,445,800/ ₱ 400,758.26 ₱ 3.61
Assets generates ₱ 3.61 of sales
its fixed or earning assets
to generate sales
FINANCIAL LEVERAGE RATIO
Measure the value of equity in a company by analyzing its overall debt picture.
1. Asset-to-Equity Ratio -
indicates the relationship
It means that for every peso
of the total assets of the Total Assets / Total ₱ 524,931.75/ ₱ 524,931.75
₱ 1.00 of equity, the company has
firm to the part owned by Partner’s Equity
₱1.00 of assets.
partners (aka,
owner's equity).
PROFITABILITY RATIO
Shows the combined effects of liquidity asset management and debt management on operating results.
1. Gross Profit Margin –
measures the percentage of
each peso sales remaining
after the firm has paid for
its goods.
2. Operating Profit
Margin – measures the
percentage of each peso
sales remaining after all
costs and expenses other
than interest, taxes, and
preferred stock dividends
are deducted.
3. Net Profit Margin -
measures the proportion of
sales that is available to the
firm’s owners after
deducting all costs and
expenses including interest
and taxes.
4. Return on Total Assets
– measures the
management’s
effectiveness in generating
profits with its available
assets.
5. Return on Investment -
measure of profitability
that calculates how many
It indicates that the company
made a gross income of P0.40
(Sales – Cost of ₱ 1,445,800 - ₱ 867,480) /
40% from every peso of total sales,
Sales) / Sales ₱ 1,445,800
after paying off its Cost of
Goods Sold.
It indicates that the company
Operating Profit / made P0.1645 of operating
₱ 237,859.07/ ₱ 1,445,800 16.45%
Sales profit from every peso of total
sales achieved.
It indicates that the company
made P0.1152 of net profit
Net Income / Sales ₱ 166,501.35 / ₱ 1,445,800 11.52%
from every peso of total sales
achieved.
Net Income / Total ₱ 166,501.35 / ₱ 524,931.75 31.72% It means that the company can
Assets generate a 31.72% return on
total assets
Net Income / ₱ 166,501.35 / ₱ 524,931.75 31.72% It means that the company can
Partners’ Equity generate a 31.72% return on
investment.
pesos of profit a company
generates with each peso of
partners' equity.