Interpreting Financial Results
When analyzing a business, financial statements provide a detailed look into the company and the success or failure which lies within in. Financial ratios are calculated to determine these numbers and to identify other number related variables that have an impact on the company and those investing in the business. Once determined they offer information concerning the businesses return on investment and the ability of the business to pay its bills on time, as well as what their projected future earnings will be. The following depicts the financial status of ABC SDN. BHD with financial ratio analysis.
Financial Ratio Calculations …show more content…
-0.018% = $1,881,000/ ($32,175,990 - $32,209,990) $-34,000
Explanation: A return on investment ratio measures the businesses gain in comparison to cost and determines if it is headed in a favorable financial position. ABC SDN. BHD has a ROI of -0.18% currently, which as it is does not appear to be favorable for the firm.
Current Ratio = Current Assets/ Current Liabilities
ABC SDN. BHD Calculation:
1.43% = $29,307,990/ $20,539,890
Explanation: A current ratio is calculated in order to measure whether or not a company can successfully pay short term debt obligations. With a current ratio of 1.43%, ABC SDN.BHD has a healthy current ratio.
Assets Turnover Ratios
Total Asset Turnover
Total Asset Turnover = Net Sales/ Total Assets
ABC SDN.BHD Calculation:
3.78% = $121,777,000 /$32,175,990
Explanation: Asset turnover determines how much a company sells for each dollar worth of assets they own. ABC SDN.BHD has a total asset turnover ratio of 3.78%, which means they are selling 3.78% for every dollar’s worth of assets they own.