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There are differents users of financial statements. Financial statement analysis can be used by managers,
equity investors, creditors, regulators, labor unions, employees, the public and potential investors and
creditors.
Financial statement analysis is definitely used by management for monitoring performance and for
identifying strategies to further improve the company’s operations.
For this chapter, the following financial ratios will be discussed:
1. Profitability ratios
2. Efficiency ratios
3. Liquidity ratios
4. Leverage ratios
Profitability Ratios
The following ratios are used to measure the profitability of a company.
1. Return on Equity (ROE)
2. Return on assets (ROA)
3. Gross Profit Margin
4. Operating profit margin
5. Net profit Margin
Net sales 52 501 085 47 345 223 42 174 283 38 340 257 35 336 643
Cost of Sales 41 954 730 37 988 628 33 980 174 31 439 011 29 329 413
Gross Profit 10 546 355 9 356 595 8 194 109 6 901 246 6 007 229
Operating Expenses 6 497 659 6 196 804 5 393 621 4 926 723 4 505 422
Operating Income 4 048 696 3 159 791 2 800 488 1 974 523 1 501 807
Interest Expense 250 000 250 000 250 000 450 000 300 000
Income before taxes 3 798 696 2 909 791 2 550 488 1 524 523 1 201 807
Taxes 1 139 609 872 937 765 146 457 357 360 542
Net Income 2 659 087 2 036 854 1 785 342 1 067 166 841 265
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