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Homework answers / question archive / 1) What is test of profitability? Give the  formula of the financial ratios under test of profitability

1) What is test of profitability? Give the  formula of the financial ratios under test of profitability

Accounting

1) What is test of profitability? Give the  formula of the financial ratios under test of profitability.

2. Using a 2-year financial statement (Balance sheet, income statement, cash flow statement)of the  Shell Philippines, assess the profitability of the company by using the financial ratios under the test of profitability.

 

Profitability ratios Formula Give 1 example, interpret the result
Gross Profit Ratio    
Net Profit Ratio    
Operating Cost Ratio    
Operating Profit Ratio    
Return on Investment Ratio    
Return on Capital Employed Ratio    
Earnings Per Share Ratio    
Dividend Pay Out Ratio    
Earning Per Equity Share    
Dividend Yield Ratio    
Price Earnings Ratio    
Net Profit to Net Worth Ratio    
Expense Ratio    
Return on Equity    
Return on sales    
Earnings per Share    
 Return on Assets     
Return on Deposits    

 

https://www.wsj.com/market-data/quotes/PH/SHLPH/financials/annual/income-statement

Income Statement of Shell Philippines    
Fiscal year is January-December. All values PHP Millions. 2020 2019
     
Sales/Revenue 156,952 218,403
Sales Growth -28.14% -0.21%
     
Cost of Goods Sold (COGS) incl. D&A 157,155 198,734
COGS excluding D&A 152,851 194,310
Depreciation & Amortization Expense 4,305 4,424
Depreciation 4,301 4,418
Amortization of Intangibles 3 5
COGS Growth -20.92% 0.38%
     
Gross Income -204 19,669
     
Gross Income Growth -101.03% -5.81%
     
Gross Profit Margin -0.13% -
     
SG&A Expense 9,922 10,729
Research & Development 186 235
Other SG&A 9,736 10,494
SGA Growth -7.52% -18.00%
     
Other Operating Expense 1 -
EBIT -10,126 8,940
     
Unusual Expense 11,108 164
     
Non Operating Income/Expense 436 1,056
     
Non-Operating Interest Income 6 2
Interest Expense 2,236 1,813
Interest Expense Growth 23.35% 182.61%
Gross Interest Expense 2,236 1,813
Pretax Income -23,028 8,021
     
Pretax Income Growth -387.09% 10.00%
     
Pretax Margin -14.67% -
     
Income Tax -6,846 2,400
     
Income Tax - Current Domestic 232 2,222
Income Tax - Deferred Domestic -7,077 178
     
Consolidated Net Income -16,183 5,621
     
Net Income -16,183 5,621
     
Net Income Growth -387.89% 10.73%
     
Net Margin -10.31% -
     
Net Income After Extraordinaries -16,183 5,621
     
Net Income Available to Common -16,183 5,621
     
EPS (Basic) -10.03 3.48
     
EPS (Basic) Growth -387.88% 10.73%
     
Basic Shares Outstanding 1,613 1,613
EPS (Diluted) -10.03 3.48
     
EPS (Diluted) Growth -387.89% 10.73%
     
Diluted Shares Outstanding 1,613 1,613
EBITDA -5,822 13,363
     
EBITDA Growth -143.56% 35.45%
     
EBITDA Margin -3.71% -
     
EBIT -10,126 8,940

 

Balance Sheet    
Assets    
     
Fiscal year is January-December. All values PHP Millions. 2020 2019
Cash & Short Term Investments 6,291 4,779
Cash Only 6,291 4,779
Short-Term Investments - -
Cash & Short Term Investments Growth 31.63% 7.27%
     
Cash & ST Investments / Total Assets 7.27% 4.64%
Total Accounts Receivable 11,738 15,960
Accounts Receivables, Net 8,751 12,313
Accounts Receivables, Gross 9,127 12,614
Bad Debt/Doubtful Accounts -376 -301
     
Other Receivables 2,988 3,648
Accounts Receivable Growth -26.45% 13.38%
     
Accounts Receivable Turnover 13.37 13.68
Inventories 10,016 25,423
Finished Goods 9,855 25,171
Raw Materials 162 252
Progress Payments & Other - -
Other Current Assets 1,857 1,308
Prepaid Expenses 1,510 989
Miscellaneous Current Assets 347 319
Total Current Assets 29,903 47,469
Net Property, Plant & Equipment 37,642 43,575
Property, Plant & Equipment - Gross 81,105 79,346
Machinery & Equipment 36,822 35,088
Construction in Progress 2,896 6,476
Transportation Equipment 99 112
Other Property, Plant & Equipment 26,781 25,021
Accumulated Depreciation 43,463 35,771
Machinery & Equipment 29,466 23,708
Transportation Equipment 96 108
Other Property, Plant & Equipment 13,901 11,956
Total Investments and Advances 622 615
LT Investment - Affiliate Companies 41 31
Other Long-Term Investments 581 584
Long-Term Note Receivable 5,427 4,420
Intangible Assets 1 103
Net Other Intangibles 1 103
Other Assets 6,722 6,614
Deferred Charges 6,722 6,578
Tangible Other Assets - 37
Total Assets 86,550 102,919
Assets - Total - Growth -15.90% 28.38%
     
Asset Turnover 1.66 -
Return On Average Assets -17.08% -
     
Liabilities & Shareholders' Equity    
All values PHP Millions. 2020 2019
ST Debt & Current Portion LT Debt 14,459 11,334
Short Term Debt 13,000 9,752
Current Portion of Long Term Debt 1,459 1,582
Accounts Payable 13,745 22,396
Accounts Payable Growth -38.63% 16.07%
     
Income Tax Payable - -
Other Current Liabilities 5,191 5,723
Dividends Payable 17 17
Accrued Payroll 287 -
Miscellaneous Current Liabilities 4,886 5,706
Total Current Liabilities 33,394 39,453
Current Ratio 0.9 1.2
Quick Ratio 0.6 0.56
Cash Ratio 0.19 0.12
Long-Term Debt 22,019 19,477
Long-Term Debt excl. Capitalized Leases 9,000 9,000
Non-Convertible Debt 9,000 9,000
Provision for Risks & Charges 4,014 2,171
Deferred Taxes -6,233 877
     
Deferred Taxes - Credit - 1,000
Deferred Taxes - Debit 6,233 123
Other Liabilities 3,491 990
Other Liabilities (excl. Deferred Income) 3,491 990
Total Liabilities 62,918 63,091
Total Liabilities / Total Assets 72.70% 61.30%
Common Equity (Total) 23,632 39,828
Common Stock Par/Carry Value 1,681 1,681
Additional Paid-In Capital/Capital Surplus 26,162 26,162
Retained Earnings -4,304 11,938
     
Unrealized Gain/Loss Marketable Securities 470 473
Other Appropriated Reserves 130 82
Treasury Stock -507 -507
     
Common Equity / Total Assets 27.30% 38.70%
Total Shareholders' Equity 23,632 39,828
Total Shareholders' Equity / Total Assets 27.30% 38.70%
Total Equity 23,632 39,828
Liabilities & Shareholders' Equity 86,550 102,919
Liabilities & Shareholders' Equity 86,550 102,919

 

Cash Flow Statement    
Operating Activities    
     
Fiscal year is January-December. All values PHP Millions. 2020 2019
Net Income before Extraordinaries -23,028 8,021
     
Net Income Growth -387.09% 10.00%
     
Depreciation, Depletion & Amortization 4,305 4,362
Depreciation and Depletion 4,301 4,356
Amortization of Intangible Assets 3 5
Other Funds 12,831 2,562
Funds from Operations -5,892 14,945
     
Changes in Working Capital 11,235 -8,879
     
Receivables 17,699 -10,255
     
Accounts Payable -6,331 1,471
     
Other Assets/Liabilities -133 -95
     
Net Operating Cash Flow 5,342 6,065
Net Operating Cash Flow Growth -11.92% -55.28%
     
Net Operating Cash Flow / Sales 3.40% 2.78%
Investing Activities    
All values PHP Millions. 2020 2019
Capital Expenditures -4,039 -4,728
     
Capital Expenditures (Fixed Assets) -4,039 -4,728
     
Capital Expenditures Growth 14.58% -19.92%
     
Capital Expenditures / Sales -2.57% -2.16%
     
Sale of Fixed Assets & Businesses 1 2
Other Uses - -233
     
Net Investing Cash Flow -4,037 -4,960
     
Net Investing Cash Flow Growth 18.60% -14.22%
     
Net Investing Cash Flow / Sales -2.57% -2.27%
     
Financing Activities    
All values PHP Millions. 2020 2019
Cash Dividends Paid - Total - -4,839
     
Common Dividends - -4,839
     
Change in Capital Stock - -
Sale of Common & Preferred Stock - -
Proceeds from Stock Options - -
Issuance/Reduction of Debt, Net 3,248 6,491
     
Change in Current Debt 3,248 6,491
     
Change in Long-Term Debt - -
     
Issuance of Long-Term Debt - -
Reduction in Long-Term Debt - -
     
Net Financing Cash Flow 206 -782
     
Net Financing Cash Flow Growth 126.37% 92.95%
     
Net Financing Cash Flow / Sales 0.13% -0.36%
     
Exchange Rate Effect 0 0
     
Net Change in Cash 1,512 324
     
Free Cash Flow 1,304 1,337
Free Cash Flow Growth -2.51% -86.10%
     
Free Cash Flow Yield 3.91% -

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