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# PROFITABILITY RATIO

YEAR 2014 2015

## Net Profit Margin 0.0673% 0.0711%

It is shown above that the calculation of P 0.0673 Net Profit Margin for the year
2014 and P 0.0711 Net Profit Margin for the year 2015 are the amount of profit
accumulated in every peso after all expenses are paid.
PROFITABILITY RATIO
B. RETURN ON EQUITY
YEAR 2014 2015

## NET INCOME P 17, 940, 000 P 183, 840, 000

BOOK VALUE OF
EQUITY P 79, 474, 000 P 808, 861, 000

## RETURN ON EQUITY P 0.2257 P 0. 2272

It is shown above that the result of 22.57% for the year 2014 and 22.72% for
the year 2015 is the percentage measuring the amount of return on money of
investor.
ASSET TURNOVER RATIO
YEAR 2015

## AVERAGE TOTAL SALES P275, 646,000

ASSET TURNOVER P 0. 94
Average total assets for 2014 (beginning) and 2015 (ending) is:
P282, 239,000 + P269, 053,000 = P 551,292,000
P 551,292,000/2 = P275, 646,000

Based on the given data, Meralcos asset turnover for 2015 is 0.94.
Meaning for every peso in assets, Meralco only generated 0.94 cents.
CURRENT RATIO
YEAR 2014 2015

## CURRENT RATIO 1.34 1.02

It is shown above that the resulting current ratio of 2014 is 1.34 and 1.02 for
the year 2015 which signifies that the firm continues to meet it short- term
obligations because the value of the current ratio is above 1.
OPERATING CASH FLOW RATIO
YEAR 2014 2015

CASH FLOW FROM OPERATIONS P 37, 495, 000 P 41, 683, 000

## OPERATING CASH FLOW RATIO 0.45 0.45

The above operating cash flow ratio for both 2014 and 2015 signifies that the
company generated P 0.45 from operations for every one peso in current
liabilities. Meralcos current liabilities are not covered by the cash generated
from its operations because the value of the operating cash flow ratio is
below 1.
DEBT TO EQUITY RATIO
YEAR 2014 2015

## DEBT TO EQUITY 2.39 2.49

RATIO
It is shown above that the resulting debt to equity ratio of 2014 is 2.39 which
indicate that more creditor financing is used than investor financing. For the
year of 2015, it is 2.49 which shows that the company uses more debt to
finance its assets which is relative to the amount of value represented in
shareholders equity.