Ratio Analysis for Gogo Motors and Swifty Motors

STRATEGIC
MANAGEMENT

TABLE OF CONTENTS
INTRODUCTION.....................................................................................................................................3
MAIN BODY.............................................................................................................................................3
Ratio Analysis.........................................................................................................................................3
Interpretation...........................................................................................................................................6
Suggestion...............................................................................................................................................6
CONCLUSION..........................................................................................................................................7
REFERENCES..........................................................................................................................................7

INTRODUCTION
Ratio analysis helps in facilitating comparison between two businesses regarding their
profitability, liquidity and efficiency position. This project shall be analyzing the financial
statements of two fictional companies one is Gogo Motors and the other is Swifty Motors. The
ratio analysis shall be showing the performance of both the businesses and based on that the
suggestions shall be provided to the potential investors of the business.
MAIN BODY
Ratio Analysis
a) Gogo Motors
GOGO MOTORS
S.N
O RATIOS FORMULA CALCULATIONS
2018 2019 2020
LIQUIDITY RATIOS
1 Current Ratio Current assets / Current liabilities
0.91556
1
0.88324
6
1.01268
9
Current assets 75293 74992 80924
Current liabilities 82237 84905 79910
2 Quick Ratio
(Current assets- Inventory) / Current
liabilities
0.79619
9 0.76078
0.88460
8
Current assets 75293 74992 80924
Inventory 9816 10398 10235
Current liabilities 82237 84905 79910
3
Net Working
Capital Ratio
(Current assets- Current liabilities) /
Total assets
-
0.03054
-
0.04347
0.00431
1
Current assets 75293 74992 80924
Current liabilities 82237 84905 79910
Total assets 227339 228037 235194

PROFITABILITY RATIOS
4
Gross Profit
Ratio Gross profit / Net sales*100 10% 10% 12%
Gross profit 14095 13972 15172
Net sales 147049 137237 122485
5 Net Profit Ratio Net profit / Net sales*100 5% 5% 5%
Net profit 8014 6732 6427
Net sales 147049 137237 122485
6
Return on
Capital
Employed
Net operating profit / Capital
employed*100 3% 4% 4%
Net operating profit 4445 5481 6634
Capital employed 145102 143132 155284
Total assets 227339 228037 235194
Current liabilities 82237 84905 79910
SOLVENCY RATIOS
7
Debt to Equity
Ratio Total debts / Total equities
4.85020
6
4.45647
5
4.22305
1
Total debts 188479 186245 190164
Total equities 38860 41792 45030
8 Equity Ratio Total equities / Total assets
0.17093
4
0.18326
9
0.19145
9
Total equities 38860 41792 45030
Total assets 227339 228037 235194
9 Debt Ratio Total debt / Total assets
0.82906
6
0.81673
1
0.80854
1
Total debt 188479 186245 190164
Total assets 227339 228037 235194
EFFICIENCY RATIOS