RATIOS 2017 2018 2019 INDUSTRY

AVE.
LIQUIDITY RATIOS
1. CURRENT 1.1 x
RATIOS
2. QUICK, OR ACID 0.5 x
RATIO
ASSET MANANGEMENT RATIOS
3. INVENTORY TURNOVER 0.4 x
RATIOS
4. DAYS SALES 180
OUTSTANDING
5. FIXED ASSET TURNOVER 0.2 x
RATIO
6. TOTAL ASSETS TURNOVER 0.1 x
RATIO
DEBT MANAGEMENT RATIOS
7. TOTAL DEBT TOTAL 66.4 %
CAPITAL
8. TIMES-INTEREST-EARNED 1.5 x
RATIO
PROFITABILITY RATIOS
9. OPERATING 34.77%
MARGIN
10. PROFIT 14.79%
MARGIN
11. RETURN ON TOTAL 2.86 %
ASSETS
12. RETURN ON COMMON 8.5%
EQUITY
13. RETURN ON INVESTED 13.56%
CAPITAL
14. BASIC EARNING 2.86%
POWER(BEP) RATIO
MARKET VALUE RATIOS
15. PROCE/EARNINGS 0.042 x
RATIO
16. MARKET/ BOOK 6.29x
 RATIO
17 ENTERPRISE VALUE/EBITDA 30.19x
RATIO

ANALYSIS OF FINANCIAL STATEMENT RATIOS

[2018] [HERE YOU WILL DESCRIBE THE RESULTS OF THE RATIOS] SHOW A
SIMPLIFIED FORM OF YOUR SOLUTION HERE]

1. CURRENT RATIO
a. A current ratio of 1 or above is considered good. For the year 2018, the current
ratio is equal to 1.0 x. The ratio is 1.1, it means a company's quick assets are equal
to its current liabilities. The company should not have trouble paying short-term
debts.

Solution: Current Ratio = Current Assets / Current Liabilities

Current Ratio = 2,248,696,544 / 2,019,084,259

Current Ratio = 1.1 x

2. QUICK, OR ACID RATIO

a. The acid test ratio is less than one, it means the business do not have enough
liquid assets to pay off their debts. If the difference between the acid ratio and the
current ratio is large, it means that the company is relying too much on inventory.
Solution: Acid Ratio = (Current Assets – Inventories) / Current Liabilities
Acid Ratio = (2,248,696,544 - 1,065,222,927) / 2,019,084,259
Acid Ratio = 0.5 x
3. INVENTORY TURNOVER RATIO
a. The inventory turnover ratio is only 0.4, which means that the company is holding
too much inventory. Excess inventory is unproductive and represents an
investment with a low or zero rate of return.

Solution: Inv. Turnover Ratio = Sales / Inventories

 Inv. Turnover Ratio = 483,648,528 / 1,065,222,927

Inv. Turnover Ratio = 0.4 x

4. DAYS SALES OUTSTANDING

a. The days sales outstanding is 180 days, it indicates that the company CAGAYAN
DE ORO GATEWAY CORP customers are not paying their bills on time. This
affects the funds of the company that could be used to reduce bank loans. Late-
paying customers often default, so their receivables may end up as bad debts that
can never be collected.

Solution: Days Sales Outstanding = Receivables / Average sales per day

Days Sales Outstanding = Receivables / (Annual sales / 365)

Days Sales Outstanding = 560,066,513 / (1,136,767,674 / 365)

Days Sales Outstanding = 179.8 or 180 days

5. FIXED ASSET TURNOVER RATIO

a. The fixed asset turnover ratio is 0.2, it means that the company is not using its
fixed assets as intensively as other firms in the industry.

Solution: Fixed Asset Turnover Ratio = Sales / Net Fixed Assets

Fixed Asset Turnover Ratio = 483,648,528 / 1,972,291,115

Fixed Asset Turnover Ratio = 0.2 x

6. TOTAL ASSETS TURNOVER RATIO

a. The ratio is only 0.1, which indicates that it is not generating enough sales given
its total assets.

Solution: Total Assets Turnover Ratio = Sales / Total assets

Total Assets Turnover Ratio = 483,648,528 / 5,871,709,289

Total Assets Turnover Ratio = 0.1 x

7. TOTAL DEBT TO TOTAL CAPITAL

 a. The total debt to total capital is 66.4 % this indicates that if the company needs to
borrow a money, creditors will lend the firm more money.

Solution: Total debt to Total capital = Total debt / (Total debt + Equity)

Total debt to Total capital = 3,899,418,174 / 5,871,709,289

Total debt to Total capital = 66.4 %

8. TIMES-INTEREST-EARNED RATIO
a. The times-interest-earned ratio is 1.5, this indicates that the company is covering
its interest charges by a much lower margin of safety that the average firm in the
industry.

Solution: Times-interest-earned (TIE) ratio = EBIT / Interest charges

Times-interest-earned ratio = 168,141,156 / 109,980,475

Times-interest-earned ratio = 1.52x

9. OPERATING MARGIN
a. The operating margin is 34.77% which indicates that the operating costs are low

Solution: Operating Margin = EBIT / Sales

Operating Margin = 168,141,156 / 483,648,528

Operating Margin = 34.77 %

10. PROFITMARGIN
a. The profit margin is 14.79% this indicates that the profit the company is good.

Solution: Profit margin= Net income/ Sales

Profit Margin = 168,141,156 / 1,136,767,674

Profit Margin = 14.79%

11. RETURN ON TOTAL ASSETS

 a. The ROA is 2.86%, this is low compared to its average. A low ROA can result
from conscious decision to use a great deal of debt, in which case high interest
expenses will cause net income to be relatively low.

Solution: ROA = Net Income / Total Assets

ROA = 168,141,156 / 5,871,709,289

ROA = 2.86 %

12. RETURN ON COMMON EQUITY

a. Stockholders expect to earn a return on their money, and this ratio tells how well
they are doing in an accounting sense. The result is 8.5% which is below the
industry average, but not as far below as the return on total assets.

Solution: Return on Common Equity = Net Income / Common Equity

Return on Common Equity = 168,141,156 / 1,972,291,115

Return on Common Equity = 8.5%

13. RETURN ON INVESTED CAPITAL

a. The return on invested capital ratio presents how well a company is using its
money to generate returns. The return on invested capital is 13.56%.

Solution: Return on Invested Capital = EBIT (1 – T) / Total Invested Capital

Return on Invested Capital = 168,141,156 / 1,239,590,000

Return on Invested Capital = 13.56%

14. BASIC EARNING POWER(BEP) RATIO

a. This ratio shows the raw earning power of the firm’s assets before the influence
of taxes and debt, and it is useful when comparing firms with different debt and
tax situations.
 Solution: Basic Earning Power Ratio = EBIT / Total Assets

Basic Earning Power Ratio = 168,141,156/ 5,871,709,289

Basic Earning Power Ratio = 2.86%

15. PROCE/EARNINGS RATIO

a. P/E ratio is below its industry average; so, company is regarded as being
relatively risky, as having poor growth prospects, or both.

Solution: P/E Ratio = Price per share/Earnings per share

PERS = Total Dividends / Shares Outstanding (39,649,943/ 1,239,590,000) = 0.032

EPS= Net Income – Dividends Pref) / Outstanding Shares

EPS =(168,141,156 -1,115,631,000) / 1,239,590,000 = 0.764

P/E Ratio = 0.032 / 0.764

P/E Ratio = 0.042 x

16. MARKET/ BOOKRATIO

a. The ratio of a stock’s market price to its book value gives another indication of
how investors regard the company. Companies that are well regarded by investors
— which means low risk and high growth—have high M/B ratios.

Solution: Book Value Per Share = Common equity / Shares Outstanding

PPS = 1.00

BVPS = Total Equity / Outstanding Common Share

(1,972,291,115 / 86,768,000+ 37,191,000) = 15.91

Book Value Per Share = 6.29x

17. ENTERPRISE VALUE/EBITDA RATIO
a. EV/EBITDA ratio looks at the relative market value of all the company’s key
financial claims.

Solution: EVR = Market value of equity +Market value of total debt + Market value
of other financial claims -(Cash and equivalents)

EV = Debt – cash + market value

EV = 3,899,418,174 - 62,613,411 + 1,239,590,000

EV = 5,076,394,763 / 168,141,156 = 30.19x

DUPONT EQUATION

DPE= Net Income / Common Equity

DPE = 168,141,156 / 1,972,291,115 = 0.085 or 8.53%