Ratio Analysis Usefulness

1. Profitability
2. Liquidity
3. Turnover
4. Efficiency
5. Leverage (Solvency)

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 ROSA
Balance Sheet 31 December 20X2
( in millions Rp )

Current Assets Current Liabilites

Cash/Bank 50 Trade Payables 160
Marketable Securities 150 Tax Payables 130
Accounts Recv. 200 Other Payables 10
Inventory 300 Total CL 300
Total CA 700 Long Term Debt 700
Fixed Assets Equity
FA (gross) 1.800 Common Stock 600
Accum. deprc. 500 Rtnd. Earnings 400
FA (net) 1.300 1.000

TOTAL ASSETS 2.000 TOTAL LIAB. & EQ.

2.000

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 ROSA
INCOME STATEMENT
Jan 1st - Dec 31st 20X2
(million Rp)

Net Sales 3.000

Cost of Goods Sold 2.580
Gross Profit 420
Operating Expenses
Selling expenses 22
Gen.Admn. expenses 168 190
Operating Profit 230
Other Income 15
Earning Before Interest & Tax 245
Interest (LT-debt) 45
Earning Before Tax 200
Tax 80
Net Income 120
3
Profitability Ratio
1. Profit Margin on Sales:
Operating Profit 230
= = 7,7 %
Net Sales 3.000

4
Profitability Ratio

2. Return on Investment:
Operating Profit 230
= = 11,5 % Invested Capital 2.000

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Profitability Ratio

3. Return on Equity:
Net Profit 120
= = 12,0 %
Shareholder’s eq. 1.000

6
Efficiency Ratio

1. Cost of Goods Sold ratio:

COGS 2.580
= = 86 %
Net Sales 3.000

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Efficiency Ratio

2. Selling Expenses ratio:

Selling Expenses 22
= = 0,7 %
Net Sales 3.000

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Efficiency Ratio

3. General and Administrative Expenses ratio:

GA Expenses 168
= = 5,6 %
Net Sales 3.000

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Efficiency Ratio

4. COGS and Operating Expenses ratio:

COGS & Op. Exp 2.580 + 190
= = 92,3 %
Net Sales 3.000

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Efficiency Ratio

5. Interest Expense ratio:

Interests 45
= = 1,5 %
Net Sales 3.000

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Liquidity Ratio

1. Current ratio:
Currents Assets 700
= = 2,3 x
Current Liabilities 300

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Liquidity Ratio

2. Quick ratio:
Curr.Asts- Invent. 700 - 300
= = 1,3 x
Current Liabilities 300

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Liquidity Ratio

3. Cash ratio:
Cash and banks 50
= = 0,17 x
Current Liabilities 300

14
Turnover Ratio

1. Assets turnover:
Sales 3.000
= = 1,5 x
Invested Capital 2.000

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Turnover Ratio

2. Gross Working Capital turnover:

Sales 3.000
= = 4,29 x
Current Assets 700

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Turnover Ratio

3. Net Working Capital turnover:

Sales 3.000
= = 7,5 x
Curr.Ast - C.Liab. 700 - 300

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Turnover Ratio

4. Inventory turnover:
COGS 2.580
= = 8,6 x
Inventory 300

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Turnover Ratio

5. Day Oustanding Sales :

Acc.Recv. 200
X 365 days = X 365 = 25 days
Credit Sales 3.000

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Solvency Ratios

1. Debt to Total Assets:

Total debt 1.000
= = 50 %
Total assets 2.000

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Solvency Ratios

2. Debt to Equity ratio:

Long Term Debt 700
= = 70 %
Shareholders eq. 1.000

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Solvency Ratios

3. Times Interest Earned ratio:

Interest 45
= = 19,6 %
Operating Profit 230

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 ROI
INVENTORY

NET +
SALES CURRENT
RECEIVABLE
ASSETS
ASSETS
TURNOVER . +
+
.
INVESTED
CAPITAL
CASH
FIXED

ROI
ASSETS COST OF
GOODS
X SOLD
NET
SALES
+
OPERATING
SELLING

PROFIT MARGIN
PROFIT
- EXPENSES

ON TOTAL COGS +
SALES . SELLING & GENERAL
EXPENSES
NET OPERATING EXP.
.
SALES
+
ADMINST.
EXPENSES

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 ROI
394.3
INVENTORY

2,877.1 346.0
1.43 NET 1,436.7 +
SALES CURRENT
RECEIVABLE
2,378.7 ASSETS
ASSETS 1,333
TURNOVER . + 693.4
2,015 +
20.11%
.
INVESTED
CAPITAL 578.2
CASH
654.1
1.26 FIXED
1,882.4 ASSETS COST OF 2,232.3

ROI X 549.3
2,877.1
GODDS
SOLD 1,694.5
23.27% 405.2 NET
SALES
+
14.09% OPERATING 2,378.7 SELLING 70.3

PROFIT MARGIN
PROFIT

438.0
- EXPENSES
80.1
ON TOTAL COGS 2,471.8 +
SALES . SELLING & GENERAL 169.1
2,877.1 EXPENSES
NET OPERATING EXP. 166
18.42% .
SALES
1,940.7
+
2,378.7 ADMINST.
EXPENSES

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Terima Kasih

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