Analysis and Evaluation

Question 1

Profitability

Answer 1

Ability to earn profit.

Question 2

Stability

Answer 2

Ability to meet the long-term debts and continue its operation.

Question 3

Liquidity

Answer 3

Ability to meet the short-term debt.

Question 4

Efficiency

Answer 4

Ability to control the asset and liability.

Question 5

Gross Profit Margin

Answer 5

Gross Profit/Net Sales
Profitability & Higher the better (to improve, increase gross profit)

Question 6

Net Profit Margin

Answer 6

Net Profit/Net Sales
Profitability & Higher the better (to improve, increase net profit)

Question 7

Return on Assets

Answer 7

Net Profit/Average Total Assets
Profitability & Higher the better (increase net profit for improvement)

Question 8

Asset Turn Over

Answer 8

Net Sales/Average Total Assets
Profitability & Expressed in time per period & Higher the better (increase net sales)

Question 9

Return on Owner’s Investment

Answer 9

Net Profit/Average Total Assets
Profitability & higher the better (increase net profit)