chap 5 word.docx
-
Upload
leo-reuteras-morte-ii -
Category
Documents
-
view
240 -
download
0
description
Transcript of chap 5 word.docx
Analysis and Interpretation:
The current ratio measures the number of times that the current liabilities could be paid with the available current assets. On year 1, the
business has the current ratio of 11.84 which means that the business has 11.84 for every 1 peso of liability that makes the business liquid.
Analysis and Interpretation:
The debt-equity ratio measures the extent to the risk assumed by the creditors in terms of the contribution they have in the company's total
assets with that of the owners. The debt-equity ratio from year 1 to year 5 is low that means that the company is solvent and the creditors are
secured since it does not rely heaviy on outside financing.
Analysis and Interpretation:
The debt ratio presents what portion of the assets is provided by the creditors. The ratio from year 1 to year 5 is low which means that the
company is not relying on outside financing to finance its assets.
Analysis and Interpretation:
The equity ratio presents what portion of the asstes is provided by the owners. The ratio from year 1 to year 5 is impressive because
most of the assets is financed by the owners.
Analysis and Interpretation:
The return on sales measures the amount of income provided by the average peso sales. The ratio indicates that for every 1 peso of net
sale, the business earn 13.08%, 12.23%, 12.81%, 13.29%, and 13.75% from year 1 to yea 5. since the ratio from year 2 onwards is increasing every
year, the business is profitable.
Analysis and Interpretation:
The return on assets is a measure of operating efficiency. It indicates how well the firm's management has used the assets under its
control to generate income.
Analysis and Interpretation:
The return on equity measures the amount earned on the owner's investment. It determines how well the business is performing with the
investment contributed by its owners. The ration indicates that during the first year of operations, the investment of the owners will earn 108.90%
and thus a profitable investment.