RATIO

ANALYSIS
PROFITABILITY RATIOS
BASIC FINANCE
 RATIO ANALYSIS
 Ratio analysis is a quantitative method of gaining
insight into a company's liquidity, operational
efficiency, and profitability by studying its financial
statements such as the balance sheet and income
statement. Ratio analysis is a cornerstone of
fundamental equity analysis.
 PROFITABILITY RATIO
Profitability ratios are a class of financial metrics that are used
to assess a business's ability to generate earnings relative to its
revenue, operating costs, balance sheet assets, or shareholders'
equity over time, using data from a specific point in time.
Profitability ratios show how efficiently a company generates
profit and value for shareholders.
PILIPINAS SHELL PETROLEUM
CORPORATION
◦It is a downstream
oil refining and
marketing business
operation in the
Philippines.
 Return on assets (ROA) is an

ROA indicator of how profitable a company

is relative to its total assets. ROA gives
RETURN ON ASSETS a manager, investor, or analyst an idea
as to how efficient a company's
management is at using its assets to
generate earnings. Return on assets is
displayed as a percentage.
FORMULA
 SOLUTION
ROA = Operating Income
Average Total Assets

◦2016
◦
ROA = Operating Income = ₱ 7,456,321 = 0.1094625090751171 X 100 =
10.95%
◦ Average Total Assets ₱ 68,117,578

◦2015
◦ROA = Operating Income = ₱ 6,372,902 = 0.962397772168176 X 100 = 9.62%
◦ Average Total Assets ₱ 66,219,002
 RETURN ON SALES (ROS) IS A RATIO

ROS
USED TO EVALUATE A COMPANY'S
OPERATIONAL EFFICIENCY. THIS
MEASURE PROVIDES INSIGHT INTO HOW
MUCH PROFIT IS BEING PRODUCED PER
RETURN ON SALES
DOLLAR OF SALES. AN INCREASING ROS
INDICATES THAT A COMPANY IS
GROWING MORE EFFICIENTLY, WHILE A
DECREASING ROS COULD SIGNAL
IMPENDING FINANCIAL TROUBLES. ROS
IS VERY CLOSELY RELATED TO A FIRM'S
OPERATING PROFIT MARGIN.
FORMULA
 SOLUTION
ROS= Income
Net Sales

◦2016
◦
ROS = Income = ₱ 7,147,233 = 0.108277221493765 X 100 = 10.83%
◦ Net Sales ₱ 66,008,648

◦2015
◦
ROS = Income = ₱ 5,558,054 = 0.067243347984974 X 100 = 6.72%
◦ Net Sales ₱ 82,655,819
 Return on Owner’s Investment (ROI)

ROI is a performance measure used to

evaluate the efficiency of an
RETURN ON OWNER’S investment or compare the efficiency
INVESTMENT of a number of different investments.
ROI tries to directly measure the
amount of return on a particular
investment, relative to the
investment’s cost.
FORMULA
 SOLUTION
ROI = Income or Profit
After Income Tax

◦2016
◦
ROI = Income or Profit = ₱ 7,147,233 = 1.40909281788281 X 100 = 140.90%
◦ After Income Tax ₱ 5,072,223

◦2015
◦ROI = Income or Profit = ₱ 5,558,054 = 1.40263585978623 X 100 = 140.26%
◦ After Income Tax ₱ 3,962,578
 The computed data shows the result of the company’s performance
in the past years. In the Return on Assets, the computed ROA for 2015
is 9.62%, and for 2016 is 10.95%. It shows the percentage of assets
that is used to generate profits. And it increases. In the Return on
Sales, it shows how efficient the company's operation. The computed
value on 2015 is 6.72%, and 2016 which is 10.83%, it increases also.
Lastly is the Return on Owners' Investment, it shows that they are
doing great with their investments. The computed value are in 2015
140.26%, and 140.90% for 2016. It shows that the company is doing
well yet they need to have more improvement but they are gaining
based on the computed value in the past year.

SUMMARY
PROFITABILI 2015 2016
TY
RATIO
9.62%
ROA 10.95%

6.72%
ROS 10.83%

140.26%
ROI 140.90%
* The Return on Assets increased from 2015 to 2016 by 1.33%.
It shows that the assets have been squeezed some profits.

* The Return on Sales increased by 4.11% from 2015 to 2016.

Meaning, there is an increase in sales and the company is
getting enough profit from the sales.

* The Return On Investments increased from 2015 to 2016 by

0.64% which means that it does not affect the company that
much

CONCLUSION
 As a financial management student, we
recommend that the owner must continue the
strategy that they are doing, because as we can
see on the previous year they gain more now.

RECOMMENDATION
 GROUP 2
ASINAS, RIZELLE ANNE A. FUENTES, CHERRY MAE JOY A.
BALAONG, ROSE MARIE F. PASCASIO, SPENCER JOHN L.