Please help me analyse each of the ratios, that is the profitability, liquidity,

ID: 2527976 • Letter: P

Question

Please help me analyse each of the ratios, that is the profitability, liquidity, asset efficiency and gearing ratios of the 2 companies. Which is the strongest in each ratio category. Yowie Group Ltd is a subsidiary to the parent company ABT Ltd. First 4 spreadsheets are ratios for Yowie Group Ltd and the last 4 spreadsheets are for ABT Ltd.

G4 1 Ratio Calculations 2015 2016 2017 3 Profitability Ratios: 4 5 Return on Equity 6 Profit avail to owners 7 Average Equity 8 Answer -3,491,454 15,636,774 -9,962,212 34,178,414 29.15% 9,487,260 48,423,457 -19.59% -22.33% 10 Return on Assets: 11 Net profit (loss)/ 12 Average total assets 13 Answer: 14 15 Profit Margin 16 Net profit (loss) / 17 Sales Revenue (note used operating revenue) 18 Answer: 19 20 Gross Profit Margin 21 Gross profit / 22 Sales Revenue (note used operating revenue) 23 Answer. 24 3,491,454 17,128,820 -20.38% 9,962,212 37,026,748 -26.91% 9,487,260 52,063,016 -18.22% -3,491,454 2,631,651 -132.67% -9,962,212 17,354,660 -57.40% -9,487,260 25,319,320 -37.47% 1,410,232 2,631,651 8,945,269 17,354,660 13,893,187 25,319,320 55% 25 Cash Flow to Sales Ratio 26 Cash Flow from Operating Activities/ 27 Sales Revenue (note used operating revenue) 28 Answer: 29 7,826,019 2,631,651 -297.38% -178,214 17,354,660 -1.03% -6,593,787 25,319,320 -26.04% Profit Loss | Balance Sheet Cash Flow Revenue Expense Ratio Calculations P&L; ve ? : Ready O Type here to search

Explanation / Answer

Yowie Group Ltd

ROE-The company is in loss and negative ROE is fluctuating without any trend. Figures for 2017 has improved with respect to previous two years.

ROA-The company is in loss and negative ROA is fluctuating without any trend. Figures for 2017 has improved with respect to previous two years.

Profit Margin- Progressively improving over the three year period even though negative.

Gross Profit Margin- Positive and consistent over the three year period.

Operating Cash Flow to Sales ratio- Widely fluctuating reflects poor debtors management. Moreover company is incurring cash loss from its operations.

Debtors Turnover (days)- Widely fluctuating reflecting poor debtors management.

Debtors Turnover (times pa)- Widely fluctuating reflecting poor debtors management.

Current Ratio- Reflects consistent working capital management.

Quick Ratio-Reflects consistent working capital management.

Operating Cash Flow to Current Liabilities- Company is incurring cash loss which is a very alarming situation. The ratio fluctuates widely reflecting poor financial management.

Debt to Equity Ratio- Debt has decreased since 2015 which is a positive sign.

Debt to asset ratio- Debt has decreased since 2015 which is a positive sign.

Equity to Asset Ratio- This has improved which shows that assets are being increasingly financed by equity and less dependence on debt. This is a positibe sign.

Interest Coverage Ratio- Wide fluctuations due to widely varying EBIT. This reflects poor sales performance.

Debt Coverage Ratio- This shows that non current liabilities like long term debt is nil. This is a positive sign.

ABT Ltd.

ROE-The company is in loss but negative ROE is steadily improving. Figures for 2017 has improved drastically with respect to previous two years.

ROA-The company is in loss but negative ROA is steadily improving.. Figures for 2017 has improved drastically with respect to previous two years.