Financial Ratios(Farrukh)

Sr# Ratio Formula 2012 2011

1 Current Ratio 0.891 1.2185

(Current Assests)/(Current Liability)

2 Quick Ratio 0.8357 1.163

3 Debt-to-total Assets 35.14% 35.81%

4 Debt-to-equity 54.18% 55.78%

(𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑠𝑡𝑠−𝑆𝑡𝑜𝑐𝑘)/
5 (𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑡𝑦)
Long-term-debt to equity 17.44% 19.84%

6 Inventory turnover 133.06 124.3

7 Total Assets Turnover 1.76 1.583

(𝑇𝑜𝑡𝑎𝑙 𝐷𝑒𝑏𝑡)/(𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠)

Gross Profit Margin 70.82% 70.10%
8

9 Operating Profit Margin 7.94% 9.29%

10 Net Profit Margin 5.50% 6.43%

(𝑇𝑜𝑡𝑎𝑙 𝐷𝑒𝑏𝑡)/(𝑇𝑜𝑡𝑎𝑙 𝐸𝑞𝑢𝑖𝑡𝑦)

11 Return on Total Assets 9.69% 10.18%

12 Return on Equity 14.94% 15.86%

(𝐿𝑜𝑛𝑔 𝑡𝑒𝑟𝑚 𝑑𝑒𝑏𝑡)/(𝑇𝑜𝑡𝑎𝑙 𝐸𝑞𝑢𝑖𝑡𝑦)

13 Earning Per Share 3.08 2.75
14 Price Earning Ratio 𝑆𝑎𝑙𝑒𝑠/(𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝐹𝑖𝑛𝑖𝑠ℎ𝑒𝑑 𝐺𝑜𝑜𝑑𝑠) 2.116 2.3709

* Market price= $6.52 𝑆𝑎𝑙𝑒𝑠/(𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠)

 Growth Ratios 2012 2011
Sales 32.64% $1,040,530 $784,478
Profit 13.58% $57,275 $50,426
EPS 12% $3.08 $2.75
Sr# Names

1 Current Ratio

2 Quick Ratio

3 Debt to total assets

4 Debt to equity

5 Inventory turover

6 Total assets turnover

7 Gross profit margin

8 Net profit margin

9 Operating profit margin

10 Return on total assets

11 Return on equity

12 Earning per share

13 Price earning ratio

14 Growth Ratios
 Interpretation (Farrukh)
Explanation
Current ratio is ability to pay short term dues within a year. Normal range is 1.5-3:1, Best Buy
current ratio is below the normal range which means there current assets to pay of current liability is
lower. Current ratio has fallen as compare to 2011.
Quick ratio refers to how quickely our assets can turn into cash excluding the inventory, normal
range is greater than 1:1, but the calculation shows in 2011 it was better and was within the range
but in 2012 it falls below 1, which decreases ability to payback liabilities.
This ratio explains how much of assets being financed by creditors, and the calculation shows in
both year it remains almost same and it is only around 35%, which means majority of asssets are
owned by BWW and are not under debt.
It is important as it shows a measure of degree to which a company is financing its operation.
Calculation shows that in both yares more then 50% investment is from bank or other lending
institution not BWW own investors, which it is highly geared business.
Inventory turnover shows how many times company sales its inventory,calculation shows that in
both year they sold inventory many which is a good sign of BWW. But still it has decreased as
compared to 2011.

This ratio tells how efficeint company uses its assets to generate sales or revenue, the more it will be
the better it will be better for the company, in the case of BWW it has been increased which is good.
Gross profit margin shows how much gross profit being earned by the company from its sale, high
the percenatge, good for business. BWW gross profit margin was 70% in 2011 and it remained
steady which means BWW is genaerating good profit its sale after deduction cost of sales.
Net profit margin shows how much net profit being generated from the total sales, it should also
higer as possible, in case of BWW, it has been decreases as compare to 2011 which shows BWW
expenses has been icreased.
Operating profit margin is the ratio which tells how much earning being earned before intrest and
expense and what is the percenatge of that EBIT from sales, calculation shows that in 2012 it
decreased as compare to 2011.
Return on assests shows how effectively company is using its assets to generate income, in case of
BWW in 2011 they were in good position but in 2012 this percentage slightly decreaesd.
Return on equity shows how much company gets return from their investment, in case of BWW it
decreases by 1% which menas their profit been decreased which leads their shareholder return
decrease to 1% .
Earnimg per share shows how much a shareholder earns on one share, BWW earning per share
increases as compare to 2011 which is positive sign.
This ratio evaluate share current price relative to earning per share, in 2012 it decreases to some
decimal points which is not a big issue.
Sales, Profit and Earning per share increased in one year which meaans shareholders earned more
divideend.