IV. Conclusion: Based on your findings on ratio analysis and interpretation, what conclusion can you make? V. Recommendations:- What recommendations can you give to the company with regards to your findings?- What recommendations can you give to the investor with regards to your findings? (2016) S)3. Findings: Analysis and InterpretationA Liquidity: Current Ratio, Quick Ratio• Current Ratio = teCurre ne(2016)- 1.08:1(2015)=Interpretation: In both years Shell's current assets ware lw,compared to current liabilities, they needed to increase thercurrent assets to meet short term requirement.• Quick RatioCarrent dt-luterCurrend Lianies(2016) - 0.87:1S1.4(2015)= 0.95:1Interpretation: In both years quick ratio ware less than standard(1:1). It means the company is using its current assetscorrectlyB.Leverage : Debt to Total Assets Ratio, Debt to Equity Ratiohart-term Det + lang-t be)• Debt to Total Assets Ration(2016)Tetal Aa- =0.55:1(2015)-- 0.53:1Interpretation: In both years, it shows a low ratio, whichindicates less financial risk and a stronger equity position.• Debt to Equity Rationngterm e shertterm BeeFaal Sharehaldere Eqity(2016)= 1.17:1(2015).72-1.13:1Interpretation: In both years, it shows a high ratio, whichindicates more debt than owners' fund.• Gross Profit Ratio tratia 100(2016) Ax100 - 136.08(2015) x 100 - 119.17Interpretation: The company's ability to generate income as acompany to expenses and other costs associated with thegeneration of income in a particular period.• Net Profit Ratio-rafitafterTer x 100Sales(2016) x 100 = S52.92(2015) x 100 = 119.17175.00• Operating Profit Ratio n atx 100Sale(2016)x 100 - 63.66(2015)-16.231ex 100 = 50.88Sres ProfeGross Profit MarginTetal Revene(2016) x 100 - 10.02(2015) x 100 - 1131• Net Profit Marginn ProfitTet x 100(2016)ZAx 100 - 4.0732,(2015) x 100 - 4.21 ROCE .PBIT• Return Of Capital Employed (ROCE)=х 100Capital Employed• Capital Employed=Company's Equity+ Non-Current Liabilities(2016)-44292000+601000=44893000x 100=41.03(2015) =38870,000+6729,000=45599,000ROCE=16233,000 x 100=35.5945599000• Return On Equity=ereholder EquityNet Income1602,00010000000(2015):14,175,00010000000=1,41Interpretation: The higher the ratio, the better, because theshareholders get more profit.Interpretation: Capital employed; the higher the ratio, the moreefficient the management and utilization of capital employed.C.Profitability: Based on Sales, based on Investment and basedon Market Ratios• Earnings Per Share (EPS)=160022000 -0.160Net ProfitNo. of Shares(2016)=1000000014,175,000(2015)==0.142100000000Interpretation: Indicates that company making less profit fromoperations, and it will give the investor less an indicate of futuregrowth in profit and price of share.

Ratio analysis is the one used to evaluate the company's financial performance in the current and…

IV. Conclusion: Based on your findings on ratio analysis and interpretation, what conclusion can you make? V. Recommendations: - What recommendations can you give to the company with regards to your findings? - What recommendations can you give to the investor with regards to your findings?

IV. Conclusion: Based on your findings on ratio analysis and interpretation, what conclusion can you make? V. Recommendations: - What recommendations can you give to the company with regards to your findings? - What recommendations can you give to the investor with regards to your findings?

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter5: Evaluating Operating And Financial Performance

Section: Chapter Questions

Problem 2EP

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