|Profitability ratios||Gross margin||Gross Loss/net sales =(2059)/1362= 1.5117|
|Operating margin||Operating income/ net sales = 306/1362= 0.2247|
|Profit margin||Net profit/net sales = 1923/ 1362 = 1.4119|
|Return on equity (ROE)||Net income/average shareholder equity = 719/39.79 = 18.07|
|Return on investment||Net income /average total assets = 719/6036 = 0.119|
|Return on assets||Net income/ Total assets = 719/ 5413 = 0.1328|
|Return on Equity||Net income/net sales = 719 / 1362 = 0.5279|
|Return on capital||[EBIT(1 – Tax Rate)] /Invested capital = [1923(1-16) / 623 = 0.2058|
|Return on capital employed||EBIT / Capita; Employed = 1923/623 = 3.0866|
|Market ratios||Current ratio||Current assets / current liabilities = 3894/ 623= 6.2504|
|Acid-test ratio||[Current assets – (inventories + prepayments)] / current liabilities = [3894 – (150+859)]/623 = 4.6308|
|Cash ratio||Cash and marketable securities / current liabilities = 2885/623 = 4.6308|
|Operation cash flow ratio||Operating cash flow/ total debts = 2050/ 623 = 3.2905|
|Debt ratios (leveraging ratios)||Debt ratio||Total liabilities / total assets = 623 /6036 = 0.1032|
|Debt to equity ratio||Long term debt + value of leases / average shareholders’ equity = (0 + 5413)/5413 = 1|
|Long-term Debt to equity||Long term debt / total assets = 0 / 6036 = 0|
|Market ratios||Earnings per share||Net earnings / number of shares = 719 /|
|Payout ratio||Dividends/ earnings = 12082/ 719 = 16.8038|
|Dividend cover||Earnings per share / dividend per share = 1923/12082 = 01591|
These are ratios used to determine the efficiency of the company is using the resources to create profits. For AeroTech International Plc, the gross margin ratio was negative because a loss was registered during the financial year 2010. A gross margin of 1.5 and a profit margin of 1.4 was made during the financial year 2010. This indicates that the sales were few. As such, there is a need to improve sales management so that profits can be made from the operations of the company.
Return on equity was high (18.07), while the return on investment was low (0.119). This indicates that the company is making a few investment programs to promote the growth of the business. On the other hand, the company has acquired enough assets to facilitate business operations. This is indicated by the return on assets of 0.13. Also, the company has improved its equity because the equity ratio is high (0.53). Shareholders get a fair share of the profits made by the company. This is indicated by the return on the capital of 0.21.
The market ratios show that the company has maintained the current assets at a manageable level compared to current liabilities. The current ratio of the company is 6.25, and this shows that the company has minimized the number of current liabilities. On the other hand, the acid-test ratio indicates that the company has increased the number of current assets. The cash ratio indicates the cash and marketable securities have increased to a great extent. Also, the operating cash flow ratio shows that the company has maintained a low number of current liabilities.
The debt ratio expresses the number of debts that a company has in comparison to the assets owned by the company. A debt ratio of 0.10 is favorable because it indicates that the company can repay all debts, and maintain a high number of current assets. The company has not acquired any long term debts, and this is an indication that there is adequate liquidity.
The company has maintained higher returns to the shareholders by providing high payments for the capital invested. This is indicated by the high payout ratio. Also, the shareholders get a favorable share value. This shows that the company is willing to attract as many investors as possible so that a lot of resources can be available for investment.