# Violet Chans Consultancy Pty Limited Ratio Analysis | Report

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## Violet Chans Consultancy Pty Limited Ratio Analysis | Report

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Violet Chan's Consultancy Pty LimitedRatio Analysis Report
IntroductionRatio analysis means evaluating the financial performance of the company using theaccounting ratios. There are mainly four categories of ratios such as profitability analysis,liquidity analysis, capital structure analysis and market performance analysis. Ratios can becalculated for current accounting period and can be compared with the ratios of previousaccounting period. In this report ratio analysis has been conducted of Violet Chan's ConsultancyPty Limited for year 2016.Ratio AnalysisThis part of report aims to provide the detailed analysis of the various ratios as below:Current Ratio: Current ratio means short term assets that company poses to pay the short termliabilities. The formula to calculate the current ratio is current assets divided by the currentliabilities. Current assets are those that can be converted into cash in very short period of timeand current liabilities means liabilities that are due in one year time period (Bull, 2007). Current assets: \$49,854.00 Current Liabilities: \$6,200.00Current ratio of company: Current assets /Current Liabilities = 8.04 timesCurrent ratio of the company is 8.04 times that indicates that liquidity position is very sound andit has around 8 times the assets to pay the current liabilities.Asset Turnover ratio: This ratio is calculated as total sales divided average total assets. Thisratio provides how many times the assets have been used to convert into the sales. This ratio isvery important for the management as it provides efficiency of the management to earn therevenue (Bull, 2007). Total sales: \$37,812.00 Average total assets: (\$47850+ \$63,654.00)/2 = \$ 55752.00Asset Turnover ratio: 0.68 timesLooking at the ratio result it can be said that company has not able to utilize the assets to earn themaximum sales revenue. So it can be said that efficiency of the company is very weak.

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