Interpretation of financial statement Essay Example | Topics and Well Written Essays - 1000 words

Interpretation of financial statement - Essay Example60% (2010) = (17,250,000) / 53,580,000 = 32.19% Debt to Equity proportionality Debt to Equity Ratio = Total Debt / Total Equity (2011) = (33,760,000) / 37,160,000 = 90.85% (2010) = (17,250,000) / 36,330,000 = 47.48% Interest Cover (TIE) Interest Cover = (Earnings before Interest and Taxes + Interest Expense) / Interest Expense (2011) = (12,920,000+ 2,000,000) / 2,000,000 = 7.46x (2010) = (16,905,000 + 1,700,000) / 1,700,000 = 10.94x gainfulness Ratios Gross Profit valuation account Gross Profit Margin = Gross Profit / Sales (2011) = 25,800,000 / 61,000,000 = 42.30% (2010) = 33,980,000 / 73,200,000 = 46.42% Operating Profit Margin Operating Profit Margin = Operating Profit / Sales (2011) = 14,920,000 / 61,000,000 = 24.46% (2010) = 18,605,000 / 73,200,000 = 25.42% Net Profit Margin Net Profit Margin = Net Profit / Sales (2011) = 7,320,000 / 61,000,000 = 12.00% (2010) = 9,578,000 / 73,200,000 = 13.08% throw on Assets requite on A ssets = Net Profit / Total Assets (2011) = 7,320,000 / 70,920,000 = 10.32% (2010) = 9,578,000 / 53,580,000 = 17.88% Return on Equity Return on Equity = Net Profit / Total Equity (2011) = 7,320,000 / 37,160,000 = 19.70% (2010) = 9,578,000 / 36,330,000 = 26.36% Return on Capital Employed (ROCE) Return on Capital Employed = (Earnings before Interest and Taxes/Capital Employed)* (2011) = 14,920,000/55,160,000 = 27.05% (2010) = 18,605,000/47,330,000 = 39.31% * Capital Employed = Total Assets Current Liabilities food market RATIOS Earnings per Share Earnings per Share = Net Profit / (Average no. of Outstanding shares) (2011) = 7,320,000 / (20,000,000) = ?0.37 (2010) = 9,578,000 / (18,000,000) =?0.53 Book Value per Share Book Value per Share = greens Equity / (Average no. of Outstanding shares) (2011) = 37,160,000 / (20,000,000) = ?1.86 (2010) = 36,330,000/ (18,000,000) =... BLS Ltd., manufacturer and supplier of customized furniture and fittings in the UK construction market has expand ed its opeproportionns in newer markets in recent times. The beau mondes performance improved significantly up till 2010 as the new management which took over in 1996 made strong decisions and adopted an cuddle based on quality and perseverance. However, analysis of the keep companys financial ratios suggests that its financial performance has deteriorated considerably during the last year.Liquidity Ratios The flow ratio of the company is in force(p) acceptable at 1.27. However this ratio has declined from 2.54 to 1.27. This is a worrying sign for the company as it implies that the company is just about covering its current assets with its current liabilities. In other words, the company is finding it much more difficult to meet its short term obligations now than a year ago (Besley et al. 2008). As a result, the working capital of the company has also decreased by a significant margin. Consequently, BLS Ltd.s liquidity position has also worsened. The decrease in Quick/Acid Tes t Ratio from 1.36 to 0.68 is also quite alarming. This ratio is obtained by removing inventories from the equation which are considered to be the least liquid of all assets. This ratio implies that the company is covering just around 68% of its liabilities. The chief reason for these changes is the increase in current liabilities by more than 100% as the company has expanded its activities.