Financial state analysis

Limited Liability Company “Silpo-Food”

(1) Profitability

Gross Profit Margin EBIT Margin

Gross Profit Margin has increased over the last three years. As there were minor fluctuations in
costs of goods sold, the Gross Profit Margin increased due to the Revenue increases

EBIT margin ratio results are alarming. For 2021 and 2022 incurred losses, as a result of its
operating activities. EBIT margin in 2020 was extremely low.

Other profit indicators calculations are irrelevant, as a company experienced losses in all other
categories
Structure of expenses

2022

5% COGS
3%
4%
Retail exp.

23% Administrative exp.

Financial exp.
65%
Other exp.

2021

4% COGS
0%
3% Retail exp.
24%
Administrative exp.

Financial exp.
69%
Other exp.

2020

2% COGS
3%

2% Retail exp.
23%
Administrative exp.

Financial exp.
70%
Other exp.
(2) Leverage
Leverage analysis

Debt-to-assets ratio has exceeded 1 for the past three years, which indicates that liabilities
exceed assets.

Debt-to-capital ratio is a bit higher than a Debt-to-assets ratio, as it includes only interest-
bearing liabilities in the capital. As it is even higher than D/A ratio, it obviously exceeds the
recommended norm of < 1

Debt-to-equity and debt-to-EBITDA ratios are both negative, which indicates that the owner’s
equity and Operating income have remained negative. Their calculation is, therefore irrelevant.

Overall, the leverage analysis shows an alarming situation.

- The company’s assets are financed mostly at cost of liabilities.

- Operating income has remained negative, generating more debt.

- the equity deficit has been accumulating, especially rapidly

increasing during the last reporting period.

(3) Liquidity

In the liquidity aspect, results are lower than the recommended norm as well.

A current ratio between 1.5 and 3 is generally considered good, while, the given
results show a ratio lower than 1, meaning that current assets do not cover current
liabilities. Moreover, it is steadily decreasing.

Quick ratio is much lower than norm as well. Generally, a Quick Ratio of 1.0 or greater
is considered adequate to ensure a company's ability to pay its current obligations. A
value of less than 1.0 signals a problem in meeting short-term obligations.

As for Cash ratio, a ratio above 1 is generally favored, while a ratio under 0.5 is
considered risky as the entity has twice as much short-term debt compared to cash.
Cash ratio has been extremely low for the past three years.
Capital structure

2022

Current assets
15%
21% Non-current assets

Current liabilities
28%
Non current
liabilities

36%

2021

Current assets

17% 19% Non-current assets

Current liabilities

29% Non current

liabilities

35%

2020

Current assets

20% Non-current assets

24%

Current liabilities

Non current
25%
liabilities

31%

Diagrams show a steady decrease in assets – both current and non-current.

Aging schedule of receivable accounts

Aging schedule of accounts payable

Looking at the aging schedule of receivable/payable accounts, we can see that

expected receivables account for 6.9% of accounts payable within or less than 1 year,
which indicates low liquidity. The company might experience difficulties with paying
off its short-term debt.

The good tendency is that the fraction of past-due receivables is around 2.5 lower in
the current period than in the previous accounting period.
Structure of accounts receivable aging

2022 2021

to be paid 17% to be paid

12%
9% past-due_30 2% past-due_30
days 4% days
7% past-due_30- past-due_30-
90 days 90 days
past-due_< past-due_< 90
72% 77%
90 days days