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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?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 Interpretation A Liquidity: Current Ratio, Quick Ratio • Current Ratio = te Curre ne (2016) - 1.08:1 (2015)= Interpretation: In both years Shell's current assets ware lw, compared to current liabilities, they needed to increase ther current assets to meet short term requirement. • Quick Ratio Carrent dt-luter Currend Lianies (2016) - 0.87:1 S1.4 (2015) = 0.95:1 Interpretation: In both years quick ratio ware less than standard (1:1). It means the company is using its current assets correctly B. Leverage : Debt to Total Assets Ratio, Debt to Equity Ratio hart-term Det + lang-t be) • Debt to Total Assets Ration (2016) Tetal A a - =0.55:1 (2015)- - 0.53:1 Interpretation: In both years, it shows a low ratio, which indicates less financial risk and a stronger equity position. • Debt to Equity Rationngterm e shertterm Bee Faal Sharehaldere Eqity (2016) = 1.17:1 (2015) .72 -1.13:1 Interpretation: In both years, it shows a high ratio, which indicates more debt than owners' fund. • Gross Profit Ratio tratia 100 (2016) Ax 100 - 136.08 (2015) x 100 - 119.17 Interpretation: The company's ability to generate income as a company to expenses and other costs associated with the generation of income in a particular period. • Net Profit Ratio-rafitafterTer x 100 Sales (2016) x 100 = S52.92 (2015) x 100 = 119.17 175.00 • Operating Profit Ratio n atx 100 Sale (2016) x 100 - 63.66 (2015)- 16.231e x 100 = 50.88 Sres Profe Gross Profit Margin Tetal Revene (2016) x 100 - 10.02 (2015) x 100 - 1131 • Net Profit Margin n Profit Tet x 100 (2016) ZAx 100 - 4.07 32, (2015) x 100 - 4.21
Transcribed Image Text:(2016) S) 3. Findings: Analysis and Interpretation A Liquidity: Current Ratio, Quick Ratio • Current Ratio = te Curre ne (2016) - 1.08:1 (2015)= Interpretation: In both years Shell's current assets ware lw, compared to current liabilities, they needed to increase ther current assets to meet short term requirement. • Quick Ratio Carrent dt-luter Currend Lianies (2016) - 0.87:1 S1.4 (2015) = 0.95:1 Interpretation: In both years quick ratio ware less than standard (1:1). It means the company is using its current assets correctly B. Leverage : Debt to Total Assets Ratio, Debt to Equity Ratio hart-term Det + lang-t be) • Debt to Total Assets Ration (2016) Tetal A a - =0.55:1 (2015)- - 0.53:1 Interpretation: In both years, it shows a low ratio, which indicates less financial risk and a stronger equity position. • Debt to Equity Rationngterm e shertterm Bee Faal Sharehaldere Eqity (2016) = 1.17:1 (2015) .72 -1.13:1 Interpretation: In both years, it shows a high ratio, which indicates more debt than owners' fund. • Gross Profit Ratio tratia 100 (2016) Ax 100 - 136.08 (2015) x 100 - 119.17 Interpretation: The company's ability to generate income as a company to expenses and other costs associated with the generation of income in a particular period. • Net Profit Ratio-rafitafterTer x 100 Sales (2016) x 100 = S52.92 (2015) x 100 = 119.17 175.00 • Operating Profit Ratio n atx 100 Sale (2016) x 100 - 63.66 (2015)- 16.231e x 100 = 50.88 Sres Profe Gross Profit Margin Tetal Revene (2016) x 100 - 10.02 (2015) x 100 - 1131 • Net Profit Margin n Profit Tet x 100 (2016) ZAx 100 - 4.07 32, (2015) x 100 - 4.21
ROCE . PBIT • Return Of Capital Employed (ROCE)= х 100 Capital Employed • Capital Employed=Company's Equity+ Non-Current Liabilities (2016)-44292000+601000=44893000 x 100=41.03 (2015) =38870,000+6729,000=45599,000 ROCE=16233,000 x 100=35.59 45599000 • Return On Equity=ereholder Equity Net Income 1602,000 10000000 (2015): 14,175,000 10000000 =1,41 Interpretation: The higher the ratio, the better, because the shareholders get more profit. Interpretation: Capital employed; the higher the ratio, the more efficient the management and utilization of capital employed. C. Profitability: Based on Sales, based on Investment and based on Market Ratios • Earnings Per Share (EPS)= 160022000 -0.160 Net Profit No. of Shares (2016)=10000000 14,175,000 (2015)= =0.142 100000000 Interpretation: Indicates that company making less profit from operations, and it will give the investor less an indicate of future growth in profit and price of share.
Transcribed Image Text:ROCE . PBIT • Return Of Capital Employed (ROCE)= х 100 Capital Employed • Capital Employed=Company's Equity+ Non-Current Liabilities (2016)-44292000+601000=44893000 x 100=41.03 (2015) =38870,000+6729,000=45599,000 ROCE=16233,000 x 100=35.59 45599000 • Return On Equity=ereholder Equity Net Income 1602,000 10000000 (2015): 14,175,000 10000000 =1,41 Interpretation: The higher the ratio, the better, because the shareholders get more profit. Interpretation: Capital employed; the higher the ratio, the more efficient the management and utilization of capital employed. C. Profitability: Based on Sales, based on Investment and based on Market Ratios • Earnings Per Share (EPS)= 160022000 -0.160 Net Profit No. of Shares (2016)=10000000 14,175,000 (2015)= =0.142 100000000 Interpretation: Indicates that company making less profit from operations, and it will give the investor less an indicate of future growth in profit and price of share.
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