Horizontal Analysis

Assets 2019 2020

Cash and Cash Equivalent 400.00 600.00
Trade and other receivable 2,600.00 2,900.00
Inventories 1,200.00 1,000.00
Long term investments 2,000.00 2,200.00
Property Plant and Equipment 4,000.00 4,400.00
Other Assets - 400.00
Total Assets 10,200.00 11,500.00

Liabilities and Equity

Trade and other payables 3,000.00 3,500.00
bonds payable 2,500.00 400.00
discount on bonds payable - 20.00 - 18.00
ordinary shares 3,100.00 3,200.00
share premium 2,000.00 2,200.00
retained earnings - 380.00 218.00
Total Liab and Equity 10,200.00 9,500.00
 Increase/(Decrease)
Peso Percentage
200.00 50% unfavorable Maximization of SH Wealth.
300.00 12% unfavorable Resources CASH CE
- 200.00 -17%
200.00 10%
400.00 10%
400.00 -

-
-
500.00 17%
- 2,100.00 -84%
2.00 -
100.00 3%
200.00 10%
598.00 -

% of Change = Amount of Change / Base Amount

Vertical Analysis
Tab Company Pon Company
Net Sales 200,000.00 100% 3,000.00
Cost of Goods Sold - 160,000.00 -80% - 1,000.00
Gross Profit 40,000.00 20%
Selling and admin expense - 10,000.00 -5% - 500.00
Interest Expense - 3,000.00 -2% - 200.00
Profit Before Income Tax 27,000.00 14% 1,300.00
Income Tax 10,800.00 5% 520.00
Net Income 16,200.00 8% 780.00
Pon Company
100%
-33%

-17%
-7%
43%
17%
26%
Profitability Ratios:

Ratio Formula

Return on Sales (ROS) Profit/Net Sales

Gross Profit Rate Gross Profit/Net Sales

Return on Total Assets (Profit/Interest Expense)/Ave total Assets

Return on Equity Profit/Average Shareholder's Equity

Operating Leverage Contribution Margin/EBIT

Sales
Variable Costs
Contribution Margin

Net income + Tax + Interest = EBIT

Times Preferred dividends earned Profit/Preferred dividends req't

 Purpose

Measures profit as a percentage of Sales

Measures gross profit as a percentage of Sales for the recovery of operating expenses

Overall asset profitability

Percentage of income derived for every equity

How many times profit will inc/dec in relation to changes in sales

xx
(xx)
xx

adequacy of current earnings to meet dividend payments

Liquidity Ratios

Asset turnover Net Sales/Ave total assets Measures the effectiveness of a

Current Asset Turnover Net Sales/Ave Current Assets reasonableness of amount of cu

Net working Capital Current assets - current liabilities

Current Ratio Current Assets / Current Liabilities

Quick asset ratio Cash, Receivables, Marketable Securities

(acid test ratio)
Quick Assets/Current Liabilities

Earnings per Share Net income-Preferred Dividends / Ave common shares outstanding
Common Shares
 Measures the effectiveness of asset utilization

reasonableness of amount of current asset.

Equity Common owners

Preferred Preferred/priority over the income

mmon shares outstanding

Growth Ratios

Price/Earnings Ratio Market Price per share/Earnings per share

Dividend Yield Ratio Dividend per share/Market Price per share

Dividend Payout Ratio Dividend per share/Earnings per share

Book value per share Shareholder's Equity/Average shares outstanding

Leverage Ratio

Debt to equity ratio Total Liabilities/Net Shareholders Equity

Debt Ratio Total Liabilities/Total Assets

Equity Ratio SHE/Total Assets

Equity Multiplier Total Assets/SHE

Times interest earned ratio EBIT/Interest expense

Financial Leverage ratio EBIT/(EBIT-interest-preferred dividends)