Assessing the various Financial Status Ratios

By September 8, 2017 General Studies

1.1 Capital Gearing Ratio

Capital Gearing Ratio ( % )

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Table 1. Table of Capital Gearing Ratio

Fig.1 Graph of Capital Gearing

1.2 Debt/equity Ratio

31/12/2008

31/12/2009

31/12/2010

Debt/equity ratio

1,78

1,71

1,73

Table 2. Table of Debt/equity Ratio

Fig.2 Graph of Debt/equity Ratio

This ratio is a step of Motor Oil ‘s fiscal purchase. The twelvemonth 2008, MOH had ˆ 1,78 of debt for every ˆ 1 of equity while on 2009 had ˆ 1,73 of debt for every ˆ1 of equity.

The debt/equity ratio seems instead low so the company is low leveraged and it is non high hazard for a bank to loan them.

1.3 Interest Cover Ratio ( times )

31/12/2008

31/12/2009

31/12/2010

Interest Cover Ratio

3,94

8,66

5,39

Table 3. Table of Interest Cover Ratio

Fig.3 Graph of Interest Cover Ratio

Interest screen ratio is a tool of mensurating a company ‘s ability to run into its debt duties.

The higher involvement screen ratio, the more financially stable the company is and the greater the safety border in the instance of gross revenues fluctuations and operating disbursals. Between the old ages 2008, 2009 and 2010 the higher ratio was in 2009 making 8,66 times. If that ratio drops to the scope of 2 or 3 indicates ground for concern.

This ratio is peculiarly of import for loaners of short-run debt to Motor Oil, since short-run debt is normally paid out of current operating gross.

2. Liquidity Ratios

2.1 Current or Working Capital Ratio

31/12/2008

31/12/2009

31/12/2010

Current or Working Capital Ratio

0,75

0,62

0,63

Table 4. Table of Current or Working Capital Ratio

Fig.4 Graph of Current or Working Capital Ratio

The current ratio indicates a company ‘s market liquidness and ability to pay back its short-run liabilities. A current ratio of 0.75 indicates that for every euro in current liabilities, the house has ˆ 0,75 in current assets. By and large, if current liabilities are higher than current assets, so that ratio is below 1, so the company may non be able to pay back its debitors.

On the other manus for some companies, values lower than 1 do non bespeak a serious job since they may hold good long-run chances and can be able to borrow against those chances to run into short-run duties.

Finally, there are types of concerns who manage to run with low values of current ratio and possibly Motor Oil is one of them since they do non look to hold any job at all.

2.2 Acid Test or Liquid Ratio

31/12/2008

31/12/2009

31/12/2010

Acid Test or Liquid Ratio

0,36

0,32

0,24

Table 5. Table of Acid Test or Liquid Ratio

Fig.5 Graph of Acid Test or Liquid Ratio

This ratio is familiar with current ratio but because of the exclusion of stock lists from the equation, the speedy ratio is a more blatant liquidness step than the current ratio.

Furthermore, because of the values of the ratio which are much lower of these of the current ratio ‘s possibly the Company ‘s current assets are extremely dependent on stock list.

The graph shows that the value is acquiring lower and lower every twelvemonth and that should be looked at with utmost cautiousness.

2.3 Quick Ratio

31/12/2008

31/12/2009

31/12/2010

Quick Ratio

1,35

1,30

1,23

Table 6. Table of Quick Ratio

Fig.6 Graph of Quick Ratio

This ratio is similar to current ratio but alternatively of current assets the entire assets are used as parts of the equation. That ratio besides indicates Motor Oil ‘s ability to pay back its debitors.

3. Profitability Ratios

3.1 Return on Equity ( ROE ) ( % )

31/12/2008

31/12/2009

31/12/2010

Tax return on Equity ( % ) ( ROE )

24,10

25,51

22,90

Table 7. Table of Return on Equity ( ROE )

Fig.7 Graph of Return on Equity ( ROE )

ROE ratio is a step of how efficient a company is at bring forthing net income by utilizing the money invested by the stockholders. As Fig 6 shows, even though in twelvemonth 2010 there was a lessening in ROE ratio in contrast with the two old old ages, the value itself stays in high per centum bespeaking that there was a good direction of financess.

3.2 Return on Assets ( ROA ) ( % )

31/12/2008

31/12/2009

31/12/2010

Tax return on Assetss ( ROA ) ( % )

6,28

6,01

4,37

Table 8. Table of Return on Assets ( ROA )

Fig.8 Graph of Return on Assets ( ROA )

Tax return on Assetss ratio is a step of how profitable Motor Oil is comparative to its entire assets or the resources it owns. Even though the regulation is that the higher the ROA the more profitable the company, that ratio followed a descending manner over the three last old ages as shown in Fig.6.

3.3 Net income Margin ( % )

31/12/2008

31/12/2009

31/12/2010

Net income Margin ( % )

3,51

5,64

4,41

Table 9. Table of Profit Margin

Fig.9 Graph of Profit Margin

Net income border is a ratio that measures how much income is kept in a company every bit compared to the entire gross. In 2009 Motor Oil had its highest net income border making up to 5,64 % . That means for every euro in gross the company kept 5,64 cents.

4. Use of Asset Ratios

4.1 Net Asset Turnover ( times )

31/12/2008

31/12/2009

31/12/2010

Net Asset Turnover ( times )

4,19

2,47

2,59

Table 10. Table of Net Asset Employee turnover

Fig.10 Graph of Net Asset Turnover

The net plus turnover ratio measures the ability of the company to utilize the net assets to bring forth gross revenues gross. In 2008 which MOH had the highest plus turnover ratio indicates that the company had been more effectual than the old ages 2009 and 2010.

This lessening in the ratio ‘s value may happen because of a job with one or more of the plus classs representing entire assets. So inventory, trade and other receivables need farther probe.

4.2 Stock Turnover ( times )

31/12/2008

31/12/2009

31/12/2010

Stock Turnover ( times )

20,83

13,42

8,75

Table 11. Table of Stock Turnover ( times )

Fig.11 Graph of Stock Turnover ( times )

This ratio suggests how many times Motor Oil ‘s stock list is sold and replaced during a given period. As shown in Figure 11 that ratio followed a descending manner over the three old ages from 20,83 in 2008 bead down to 8,75 in 2010. Stock turnover with value of 8,75 agencies that the company sells all of its stock list 8.75 times each twelvemonth.

The ruin in the ratio could be an incident occured by the rise in stock lists in 2009 and the enormous rise in 2010.It is possible that to go on because of the added sum of stock lists of the acquisition of Shell company.

4.3 Stock Turnover ( yearss )

31/12/2008

31/12/2009

31/12/2010

Stock Turnover ( yearss )

17,52

27,20

41,73

Table 12. Table of Stock Turnover ( yearss )

Fig.12 Graph of Stock Turnover ( times )

This ratio is similar to the old one, except it is utile to cipher the mean yearss to sell the stock list. So in the twelvemonth 2008 Motor Oil needed 17,52 yearss to travel through its stock list, in 2009 27,2 yearss and in 2010 the value was doubled making 41,73 yearss.

4.4 Debtor Turnover ( times )

31/12/2008

31/12/2009

31/12/2010

Debtor Turnover ( times )

29,00

15,53

19,08

Table 13. Table of Debtor Turnover ( times )

Fig.13 Graph of Debtor Turnover ( times )

Debtor turnover ratio indicates the figure of times the debitors are turned over a twelvemonth. High ratio means either that MOH runs on a hard currency footing or that its recognition extension and assemblage of histories receivable is efficient.

On the other manus a low ratio implies that MOH should re-evaluate its recognition policy. As shown in Fig.13 in the twelvemonth 2009 was the lowest value of the ratio but on 2010 the value starts lifting once more.

4.5 Debtor Turnover ( yearss )

31/12/2008

31/12/2009

31/12/2010

Debtor Turnover ( yearss )

12,66

23,50

19,13

Table 14. Table of Debtor Turnover ( yearss )

Fig.14 Graph of Debtor Turnover ( yearss )

This ratio presents debitor turnover in footings of yearss. Furthermore the ratio measures the quality of the company ‘s debitors. A short period aggregation like 19 or 24 yearss as these indicated in Fig.14 expresses proper payment by debitors.

4.6 Net income per Employee

31/12/2008

31/12/2009

31/12/2010

Net income per Employee ( ˆ )

102,02

115,52

123,55

Table 15. Net income per Employee

Fig.15 Profit per Employee

This ratio provides the information of how efficient the company uses its employees.

It is declarative that the ratio is higher every twelvemonth.

5. Investor Ratios

5.1 Net incomes per Share ( Euro )

31/12/2008

31/12/2009

31/12/2010

Net incomes per Share

( ˆ )

0,6839

0,7664

0,7427

Table 16. Net incomes per Share

Fig.16 Earnings per Share

Net incomes per portion ratio is the net income per each portion of a company ‘s stock. This ratio behaves as an index of Motor Oil ‘s profitableness.

5.2 Price/Earnings Ratio ( P/E )

31/12/2008

31/12/2009

31/12/2010

Price/Earnings Ratio ( P/E )

17,74

12,21

11,50

Table 17. Price/Earnings Ratio

Fig.17 Price/Earnings Ratio

The P/E ratio is used to find how much investors are willing to pay for a stock relation to the company ‘s net incomes. Higher P/E ratio means that investors are paying more for each unit of net income, so the stock is more expensive compared to one with a lower P/E ratio

5.3 Net incomes Yield ( % )

31/12/2008

31/12/2009

31/12/2010

Net incomes Yield ( % )

5,60

8,19

8,69

Table 18. Net incomes Yield ( % )

Fig.18 Earnings Yield ( % )

The net incomes output ratio is the opposite of the P/E ratio.

5.4 Dividend Output

31/12/2008

31/12/2009

31/12/2010

Dividend Output

7,85

7,48

3,33

Table 19. Dividend Output

Fig.19 Dividend Yield

Dividend output is a fiscal ratio that indicates how much a company pays in dividends each twelvemonth relation to its portion monetary value. As shown in Fig.19 the old ages 2008 and 2009 the value of the ratio was high and reasonably much on the same degree. In the twelvemonth 2010 was dramatically decreased to 3,33 and that happened because of the low value of the dividend paid to the investors. This could be an indicant that due to fiscal adversities the company decided to supply really low dividends.

However, the higher a dividend output is the more desirable among investors.

5.5 Dividend Cover ( times )

31/12/2008

31/12/2009

31/12/2010

Dividend Cover ( times )

1,14

1,10

2,97

Table 20. Dividend Cover ( times )

Fig.20 Dividend Cover ( times )

The dividend screen ratio tells us how easy a concern can pay its dividend from net incomes. A high dividend screen means that the company can easy afford to pay the dividend and a low value means that the concern might hold trouble paying a dividend.

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