Bey Brewery

Ratio Analysis

𝑇𝑜𝑡𝑎𝑙 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 2,479,695

1. 𝐶𝑈𝑅𝑅𝐸𝑁𝑇 𝑅𝐴𝑇𝐼𝑂 = = 1,690,154=1.47 to 1
𝑇𝑜𝑡𝑎𝑙 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

(This implies that the company has 1.47$ of current assets for every 1$ of current
liabilities)
𝐶𝑎𝑠ℎ+𝐴𝑐𝑐𝑜𝑢𝑛𝑡𝑠 𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒𝑠 440,865+893,865
2. 𝑄𝑈𝐼𝐶𝐾 𝑅𝐴𝑇𝐼𝑂 = = = 0.54 𝑡𝑜 1
𝑇𝑜𝑡𝑎𝑙 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 2,479,695

(This implies that the company has 0.54$ for every 1$ of current liabilities.)
3. 𝑊𝑂𝑅𝐾𝐼𝑁𝐺 𝐶𝐴𝑃𝐼𝑇𝐴𝐿 = 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 − 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 = 2,479,695 − 1,690,154 =
789,541
(This implies that the company has $ 789,541for distribution of resources for the current
year)
𝑊𝑜𝑟𝑘𝑖𝑛𝑔 𝐶𝑎𝑝𝑖𝑡𝑎𝑙 789,541
4. 𝑊𝑂𝑅𝐾𝐼𝑁𝐺 𝐶𝐴𝑃𝐼𝑇𝐴𝐿 𝑇𝑂 𝑇𝑂𝑇𝐴𝐿 𝐴𝑆𝑆𝐸𝑇𝑆 = = 4,605,269 = 17.14 %
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠

(This implies that the company is generating distribution of 17.14%)

𝑁𝑒𝑡 𝐶𝑟𝑒𝑑𝑖𝑡 𝑆𝑎𝑙𝑒𝑠 4,829,567
5. 𝐴𝐶𝐶𝑂𝑈𝑁𝑇𝑆 𝑅𝐸𝐶𝐸𝐼𝑉𝐴𝐵𝐿𝐸 𝑇𝑈𝑅𝑁𝑂𝑉𝐸𝑅 = = = 5.40 𝑡𝑖𝑚𝑒𝑠
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑇𝑟𝑎𝑑𝑒 893,865

(This implies that the velocity of collection for accounts receivable is 5.40 times.)
360 𝑑𝑎𝑦𝑠 360
6. 𝑁𝑈𝑀𝐵𝐸𝑅 𝑂𝐹 𝐷𝐴𝑌𝑆 𝑈𝑁𝐶𝑂𝐿𝐿𝐸𝐶𝑇𝐸𝐷 = 𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 = 5.40 = 66.67 𝑑𝑎𝑦𝑠

(The receivables takes 66.67 days to be converted to cash.)

𝐶𝑜𝑠𝑡 𝑂𝑓 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 2,794,587
7. 𝐼𝑁𝑉𝐸𝑁𝑇𝑂𝑅𝑌 𝑇𝑈𝑅𝑁𝑂𝑉𝐸𝑅 = 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑀𝑒𝑟𝑐ℎ𝑎𝑛𝑑𝑖𝑠𝑒 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 = = 18 𝑡𝑖𝑚𝑒𝑠
151,729

(This implies that during the year, inventory is used up to 18 times and is restored to its
original levels.)
360 𝑑𝑎𝑦𝑠 360 𝑑𝑎𝑦𝑠
8. 𝐷𝐴𝑌𝑆 𝑆𝑈𝑃𝑃𝐿𝑌 𝐼𝑁 𝐼𝑁𝑉𝐸𝑁𝑇𝑂𝑅𝑌 = 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 = 18.42 𝑡𝑖𝑚𝑒𝑠 = 20 𝑑𝑎𝑦𝑠

( The inventory is used up every 20 days on an average and is used restored to its original
levels.)
 𝐶𝑜𝑠𝑡 𝑜𝑓 𝑆𝑎𝑙𝑒𝑠+𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝐸𝑥𝑝𝑒𝑛𝑠𝑒𝑠
+𝐼𝑛𝑐𝑜𝑚𝑒 𝑇𝑎𝑥𝑒𝑠+𝑂𝑡ℎ𝑒𝑟 𝐸𝑥𝑝𝑒𝑛𝑠𝑒𝑠
9. 𝐶𝑈𝑅𝑅𝐸𝑁𝑇 𝐴𝑆𝑆𝐸𝑇𝑆 𝑇𝑈𝑅𝑁𝑂𝑉𝐸𝑅 = =
𝐴𝑣𝑒. 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠
2,794,587+1,005,173
+229,026+45,445
= 1.80 𝑡𝑖𝑚𝑒𝑠
2,263,223.5

(This implies that the movement and utilization of current resources to meet operating
requirements is 1.80 times)
𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠 4,829,567
10. 𝐴𝑆𝑆𝐸𝑇𝑆 𝑇𝑈𝑅𝑁𝑂𝑉𝐸𝑅 = 𝐴𝑣𝑒. = 4,222,635.5 = 1.14 𝑡𝑜 1
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠

(For every 1$ of Bey Company’s assets, the company is generating $1.14

𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 4,605,269
11. 𝐶𝐴𝑃𝐼𝑇𝐴𝐿 𝐼𝑁𝑇𝐸𝑁𝑆𝐼𝑇𝑌 𝑅𝐴𝑇𝐼𝑂 = = 4,829,567= 0.95 to 1
𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠

(For every $1 of Bey Company’s assets, the company is generating $9.95 sales)
𝑇𝑜𝑡𝑎𝑙 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑒𝑠 1,919,607
12. 𝐷𝐸𝐵𝑇 𝑅𝐴𝑇𝐼𝑂 = = 4,605,269 = 41.68 %
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠

(This implies that the proportion of all assets that are financed with debt is 42.68%)
𝑇𝑜𝑡𝑎𝑙 𝐸𝑞𝑢𝑖𝑡𝑦 2,685,662
13. 𝐸𝑄𝑈𝐼𝑇𝑌 𝑅𝐴𝑇𝐼𝑂 = = 4,605,269 = 58.32%
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠

( This implies that the proportion of assets provided by the owners is 58.32%.)
𝑇𝑜𝑡𝑎𝑙 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 1,919,607
14. 𝐷𝐸𝐵𝑇 𝑇𝑂 𝐸𝑄𝑈𝐼𝑇𝑌 𝑅𝐴𝑇𝐼𝑂 = = = 71%
𝑇𝑜𝑡𝑎𝑙 𝐸𝑞𝑢𝑖𝑡𝑦 2,685,662

(This implies that the relativity of debt to amounts of resources provided by owner is 71%)
𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 𝑏𝑒𝑓𝑜𝑟𝑒 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡
𝑎𝑛𝑑 𝑇𝑎𝑥𝑒𝑠 1,029,807
15. 𝑇𝐼𝑀𝐸𝑆 𝐼𝑁𝑇𝐸𝑅𝐸𝑆𝑇 𝐸𝐴𝑅𝑁𝐸𝐷 = = = 23 𝑡𝑖𝑚𝑒𝑠
𝐴𝑛𝑛𝑢𝑎𝑙 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐶ℎ𝑎𝑟𝑔𝑒𝑠 45,445

(This implies that interest expense is covered by operating profit at 23 times.)

𝐺𝑟𝑜𝑠𝑠 𝑃𝑟𝑜𝑓𝑖𝑡 2,304,980

16. 𝐺𝑅𝑂𝑆𝑆 𝑃𝑅𝑂𝐹𝐼𝑇 𝑀𝐴𝑅𝐺𝐼𝑁 = = 4,829,567 = 47.73%
𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠

(This implies that the company generates profit at 47.73% in terms of the cost goods sold.)
𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑃𝑟𝑜𝑓𝑖𝑡 1,029,807
17. 𝑂𝑃𝐸𝑅𝐴𝑇𝐼𝑁𝐺 𝑃𝑅𝑂𝐹𝐼𝑇 𝑀𝐴𝑅𝐺𝐼𝑁 = = 4,829,567 = 21.32%
𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠

(This implies that the company generates profit at 21.32% after consideration of
operating costs.)
𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 755,336
18. 𝑁𝐸𝑇 𝑃𝑅𝑂𝐹𝐼𝑇 𝑀𝐴𝑅𝐺𝐼𝑁 = = 4,829,567 = 15.64%
𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠

( After considering its expenses and revenues, the company generates profit at 15.64%)
𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 755,336
19. 𝑅𝐸𝑇𝑈𝑅𝑁 𝑂𝑁 𝐴𝑆𝑆𝐸𝑇𝑆 = 𝐴𝑣𝑒.𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 = 4,222,635.5 = 17.89%
 (The company is generating a return on total assets of 14.45%)
𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 755,336
20. 𝑅𝐸𝑇𝑈𝑅𝑁 𝑂𝑁 𝐸𝑄𝑈𝐼𝑇𝑌 = 𝐴𝑣𝑒.𝑂𝑟𝑑𝑖𝑛𝑎𝑟𝑦 𝐸𝑞𝑢𝑖𝑡𝑦 = 2,307,994 = 32.73%

(Return on Equity is 32.73%)

𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 755,336
21. 𝑅𝐴𝑇𝐸 𝑂𝐹 𝑅𝐸𝑇𝑈𝑅𝑁 𝑂𝑁 𝐴𝑉𝐸. 𝐶𝑈𝑅𝑅𝐸𝑁𝑇 𝐴𝑆𝑆𝐸𝑇𝑆 = 𝐴𝑣𝑒. = 2,263,223.5 =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠

33.37%
( The profitability of current assets invested is 33.37%)
22. 𝑅𝐴𝑇𝐸 𝑂𝐹 𝑅𝐸𝑇𝑈𝑅𝑁 𝑃𝐸𝑅 𝑇𝑈𝑅𝑁𝑂𝑉𝐸𝑅 𝑂𝐹 𝐶𝑈𝑅𝑅𝐸𝑁𝑇 𝐴𝑆𝑆𝐸𝑇𝑆 =
𝑅𝑎𝑡𝑒 𝑜𝑓 𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝐴𝑣𝑒.𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 33.37%
= 1.80 𝑡𝑖𝑚𝑒𝑠 = 18.54%
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟

( This implies that the profitability of each turnover of current assets is 18.54%)

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