Financial Ratio Analysis

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Comparative Income Statement

Ratio Analysis & Findings

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 OUR TEAM

SGS 808 & 776 – Revenue Growth Rate

SGS 684 & 636 – Gross Profit Margin
SGS 674 & 765 – Net Profit Margin
SGS 715 & 637 – Earning Before Interest & Taxes
SGS 700 & 701 – Earnings Before Interest, Depreciation, and Amortization
EMP Co., Ltd. Comparative Income Statement
For the year ended 31/12/2020 31/12/2021 31/12/2022
Revenue 251,521.43 296,861.84 315,812.12
Cost of Goods Sold 168,519.36 193,642.98 202,918.76
Gross Profit 83,002.07 103,218.86 112,893.36
GP Margin % 33% 35% 36%
Operating Expenditures
Selling & Distribution Expenses -8,429.40 -14,973.33 -15,567.06
General & Administration Expenses -16,002.53 -18,492.54 -17,175.78
Depreciation
Operating Profit (EBIT) 58,570.14 69,753.00 80,150.51
EBIT Margin % 23% 23% 25%
Other Income/(Expenses) 4,500.00 6,500.00 7,500.00
Other Income/(Expenses)
Interest Income/(Expenses)
Different on Foreign Exchange -9,120.00 -9,589.00 -5,672.00
PPE Disposal Gain - 1,500.00 -
Finance Cost -2,500.00 -1,500.00 -5,000.00
Profit/(Loss) before Taxation 51,450.14 66,664.00 76,978.51
Income Tax Expenses -8,746.52 -11,332.88 -13,086.35

Unrealised Exchange Gain/(Loss) - - -

Total Comprehensive Income 42,703.62 55,332.12 63,892.17
Net Margin % 17% 19% 20%
Depreciation 12,041.94 12,080.11 19,525.90
EBITDA 70,612.08 81,833.11 99,676.41
EBITDA Margin % 28% 28% 32%
Revenue Growth Rate
Why Analyze Revenue Growth Rate

• To measure business growth

• To improve business valuation
• To pot anomalies in revenue flow and take corrective action
• To gain insights into the effectiveness of marketing campaigns, customer retention initiatives &
product enhancements
Revenue Growth Rate
D ATA - D R I V E N B A R C H A R T
0.19
325000

0.17
275000
0.15

225000 0.13

0.11
175000
0.09

125000 0.07

0.05
75000
0.03

25000
0.01

2020 2021 2022 2020 2021 2022

Revenue 251521.4 296861.8 315812.1
Revenue Growth 0 0.18 0.06
What is Gross Profit
Margin?
Gross profit margin is a measure of how much profit a company makes
from its product sales after subtracting the cost of goods sold. It shows
the financial health of a company and how efficiently manages its
production cost.
Components of Gross Profit
Margin

Revenue Cost of Goods Sold Gross Profit

Total income generated The direct costs incurred The difference between
from sales, services, or in producing the goods revenue and cost of goods
other sources. sold by a company. sold.
 Gross Profit Margin

325,000.00

275,000.00

225,000.00

175,000.00

125,000.00

75,000.00

25,000.00

31/12/2020 33% 31/12/2021 35% 31/12/2022 36%

Revenue 251521.428571429 296861.842105263 315812.121212121
Cost of Goods Sold 168519.357142857 193642.979605263 202918.762242424
Gross Profit 83002.0714285714 103218.8625 112893.358969697
GP Margin % 33% 35% 36%

Revenue Cost of Goods Sold Gross Profit GP Margin %

Earnings Before
Interest and Taxes

EBIT margin is the profitability ratio which is used to measure that how far the business is
able to manage its operations efficiently and effectively.

Why analyze the EBIT margin

• Essentially, the EBIT margin gives an indication of how well a company is managing its
operation costs and is often used by investors and analysts to compare the operational
efficiency of different companies in the same industry.

EBIT = Revenue – COGS – Operating Expenses

OR

EBIT = Net income + Interest + Taxes

EBIT Margin Ratio
D ATA - D R I V E N B A R C H A R T
325000
225,000.00

275000

175,000.00
225000

175000 125,000.00

125000
75,000.00

75000

25,000.00
25000

2020 2021 2022 2020 2021 2022

Revenue 251521.4 296861.8 315812.1
Cost of Goods Sold 168519 193643 202919
Selling & Distribution Exp 8429 14973 15567
General & Administration Exp 16003 18493 17176
EBIT 58570.4 69752.8 80150.1
EBIT % 0.232864479920993 0.234967247385821 0.253790465913117
Earnings Before Interest, Depreciation,
and Amortization
* W hy A n a l y z e E B I T DA M a r g i n

- Analyzing the EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) ratio is important
because it provides a clearer picture of a company's operating performance by excluding non-operating
expenses. This metric helps assess a company's ability to generate operating income and cash flow,
offering insights into its operational efficiency and financial health.
 EMP Company Limited
EBITDA Margin Ratio

325,000 Revenue
Revenue

275,000
Revenue

225,000

175,000

125,000
EBITDA
EBITDA EBIT
75,000 EBITDA EBIT
EBIT

25,000 D&A Exp

D&A Exp D&A Exp
28% 28% 32%
12/31/2020 12/31/2021 12/31/2022
Revenue 251,521 296,862 315,812
EBIT 58,570 69,753 80,151
D&A Exp 12041.9444444444 12080.1111111111 19525.9
EBITDA 70612.0837373016 81833.1068413743 99676.4146848485
EBITDA Margin % 28% 28% 32%

Revenue EBIT D&A Exp EBITDA EBITDA Margin %

 EBITDA Margin Analysis Explanation

Profit & Loss appears that the EBIDA (Earnings Before Interest, Depreciation, and Amortization) Margin Ratio has shown some positive trends over the three
consecutive years:

1. 2020
• EBIDA Margin Ratio: 28%
• The company achieved a healthy EBIDA Margin Ratio of 28% in 2020, indicating that 28% of its revenue was converted into EBIDA before accounting for
interest, depreciation, and amortization expenses. This suggests efficient operational performance and cost management during that year.

2. 2021
• EBIDA Margin Ratio: 28%
• The consistency in the EBIDA Margin Ratio at 28% in 2021 suggests that the company was able to maintain its operational efficiency and control costs
effectively. While the ratio did not show improvement, the fact that it remained stable is generally a positive sign.

3. 2022
• EBIDA Margin Ratio: 32%
• The EBIDA Margin Ratio increased to 32% in 2022, indicating an improvement in the company's ability to generate earnings before accounting for certain
financial factors. This increase could be attributed to various factors such as increased revenue, improved cost management, or more efficient operations.

In summary, the company's EBIDA Margin Ratio showed a positive trajectory, with a notable improvement from 28% in 2021 to 32% in 2022. This suggests that the
company has been successful in enhancing its operational efficiency and profitability over the analyzed period.
Net Profit Margin
Introduction & Definition
● Net Profit Margin is a financial ratio used to calculate the
percentage of profit a company produces from its total revenue.

● Profit Margin is an important profitability ratio used by the

management, financial analysts and investors to know how much
profit the company against the sales made and is calculate by
dividing the profits generated during the period by the sales .
 Net Profit Margin Calculation

• For example, a company has $200,000 in sales and $50,000 in monthly net income.

• Net profit margin = $50,000 / $200,000*100 = 25%

• This means that a company has $0.25 of net income for every dollar of sales.

• Profit Margin measures how successful a company has been at the business of marking a profit on each dollar sales. It is
one of the most essential financial ratios.

• Net margin includes all the factors that influence profitability whether under management control or not. The higher the
ratio, the more effective a company is at cost control.

• Compared with industry average, it tells investors how well the management and operations of a company are
performing against its competitors. Compared with different industries, it tells investors which industries are relatively
more profitable than others. Net profit margin analysis is also used among many common methods for business
valuation.
Thank You!