Professional Documents
Culture Documents
It involves:
Objective:
Limitations:
Limitations:
Steps:
1.
2.
3.
4.
5.
Horizontal Analysis
Steps:
1.
2.
Horizontal Analysis
Example:
The
comparative financial
statements of Golden Garments,
Inc. are presented on the next
pages. Analyze and evaluate the
statements using the horizontal
analysis
Answers:
G
o
l
d
e
n
G
a
r
m
e
n
t
s
,
I
n
c
.
C
om
parD
ae
tic
ve
em
S
tba
tere3
m
e
n
t
o
f
F
i
n
a
n
c
i
a
l
P
o
s
i
t
i
o
n
1,2011and2010 Increase(D
e
c
r
e
a
s
e
)
2
0
1
1
2
0
1
0
A
m
o
u
n
t
%
A
s
s
e
t
s
C
urrC
en
tsh
A
ssets
a
7
0
,
3
9
2
6
8
,
2
5
0
2
,
1
4
2
A
c
c
o
u
n
t
s
R
e
c
e
i
v
a
b
l
e
(
n
e
t
)
2
1
8
,
5
4
9
1
8
4
,
9
7
8
IP
nrvee
n
t
o
r
y
2
2
3
,
2
4
2
1
9
7
,
0
9
7
Current
Year
Balance
Base
Year
Balance
= Difference
p
a
i
d
E
x
p
e
n
s
e
s
6
7
,
7
1
0
7
6
,
5
4
2
T
o
ta
la
C
u
rE
eq
ntuA
sm
se
tn
st70,392 - 579
,68,250
893 526,867= 2,142
P
rop
e
r
t
y
n
d
i
p
e
P
r
o
p
e
r
t
y
a
n
d
E
q
u
i
p
m
e
n
t
(
n
e
t
)
9
0
,
5
0
3
1
1
0
,
9
8
7
TotalA
ssets
670,396 637,854
L
i
a
b
i
l
i
t
i
e
s
a
n
d
E
q
u
i
t
y
C
urrA
en
tco
L
ia
b
ilP
itia
e
s
c
u
n
t
s
y
a
b
l
e
1
5
8
,
2
1
4
1
3
9
,
1
3
5
B
a
n
k
L
o
a
n
s
a
n
d
O
t
h
e
r
P
a
y
a
b
l
e
s
7
1
,
6
7
2
5
6
,
7
6
9
C
u
r
e
n
t
P
o
r
t
i
o
n
o
f
N
o
t
e
s
P
a
y
a
b
l
e
3
0
,
0
0
0
3
0
,
0
0
0
T
o
t
a
l
C
u
r
e
n
t
L
i
a
b
i
l
i
t
i
e
s
2
5
9
,
8
8
6
2
2
5
,
9
0
4
Long
-o
te
rm
L
ia
bb
illie
tie
s1%
N
t
e
s
P
a
y
a
(
1
)
1
3
9
,
0
0
0
1
6
9
,
0
0
0
T
o
t
a
l
L
i
a
b
i
l
i
t
i
e
s
3
9
8
,
8
8
6
3
9
4
,
9
0
4
E
qui8
ty
%
P
r
e
f
e
r
e
n
c
e
S
h
a
r
e
s
,
P
1
0
0
p
a
r
7
0
,
0
0
0
7
0
,
0
0
0
O
rd
irn
aP
ryre
S
hia
rm
es,P
1par
1
0
,,0
0
0
1
0
,,0
0
0
S
h
a
e
m
u
9
0
0
0
0
9
0
0
0
0
R
e
t
a
i
n
e
d
E
a
r
n
i
n
g
s
1
0
1
,
5
1
0
7
2
,
9
5
0
TotalE
quity
271,510 242,950
Answers:
G
o
l
d
e
n
G
a
r
m
e
n
t
s
,
I
n
c
.
C
om
parD
ae
tic
ve
em
S
tba
tere3
m
e
n
t
o
f
F
i
n
a
n
c
i
a
l
P
o
s
i
t
i
o
n
1,2011and2010 Increase(D
e
c
r
e
a
s
e
)
2
0
1
1
2
0
1
0
A
m
o
u
n
t
%
A
s
s
e
t
s
C
urrC
en
tsh
A
ssets
a
7
0
,
3
9
2
6
8
,
2
5
0
2
,
1
4
2
3
.
1
%
A
c
c
o
u
n
t
s
R
e
c
e
i
v
a
b
l
e
(
n
e
t
)
2
1
8
,
5
4
9
1
8
4
,
9
7
8
IP
nrvee
n
t
o
r
y
2
2
3
,
2
4
2
1
9
7
,
0
9
7
p
a
i
d
E
x
p
e
n
s
e
s
6
7
,
7
1
0
6
,
5
4
2
Difference
/7
Base
Year = %
T
o
t
a
l
C
u
r
e
n
t
A
s
s
e
t
s
5
7
9
,
8
9
3
5
2
6
,
8
6
7
P
rop
e
r
t
y
a
n
d
E
q
u
i
p
m
e
n
t
P
r
o
p
e
r
t
y
a
n
d
E
q
u
i
p
m
e
n
t
(
n
e
t
)
9
0
,
5
0
3
1
1
0
,
9
8
7
2,142
/ 68,250
TotalA
ssets
670,396 637,854= 3.1%
L
i
a
b
i
l
i
t
i
e
s
a
n
d
E
q
u
i
t
y
C
urrA
en
tco
L
ia
b
ilP
itia
e
s
c
u
n
t
s
y
a
b
l
e
1
5
8
,
2
1
4
1
3
9
,
1
3
5
B
a
n
k
L
o
a
n
s
a
n
d
O
t
h
e
r
P
a
y
a
b
l
e
s
7
1
,
6
7
2
5
6
,
7
6
9
C
u
r
e
n
t
P
o
r
t
i
o
n
o
f
N
o
t
e
s
P
a
y
a
b
l
e
3
0
,
0
0
0
3
0
,
0
0
0
T
o
t
a
l
C
u
r
e
n
t
L
i
a
b
i
l
i
t
i
e
s
2
5
9
,
8
8
6
2
2
5
,
9
0
4
Long
-o
te
rm
L
ia
bb
illie
tie
s1%
N
t
e
s
P
a
y
a
(
1
)
1
3
9
,
0
0
0
1
6
9
,
0
0
0
T
o
t
a
l
L
i
a
b
i
l
i
t
i
e
s
3
9
8
,
8
8
6
3
9
4
,
9
0
4
E
qui8
ty
%
P
r
e
f
e
r
e
n
c
e
S
h
a
r
e
s
,
P
1
0
0
p
a
r
7
0
,
0
0
0
7
0
,
0
0
0
O
rd
irn
aP
ryre
S
hia
rm
es,P
1par
1
0
,,0
0
0
1
0
,,0
0
0
S
h
a
e
m
u
9
0
0
0
0
9
0
0
0
0
R
e
t
a
i
n
e
d
E
a
r
n
i
n
g
s
1
0
1
,
5
1
0
7
2
,
9
5
0
TotalE
quity
271,510 242,950
Answers:
G
o
l
d
e
n
G
a
r
m
e
n
t
s
,
I
n
c
.
C
om
parD
ae
tic
ve
em
S
tba
tere3
m
e
n
t
o
f
F
i
n
a
n
c
i
a
l
P
o
s
i
t
i
o
n
1,2011and2010 Increase(D
e
c
r
e
a
s
e
)
2
0
1
1
2
0
1
0
A
m
o
u
n
t
%
A
s
s
e
t
s
C
urrC
en
tsh
A
ssets
a
7
0
,
3
9
2
6
8
,
2
5
0
2
,
1
4
2
3
.
1
%
A
c
c
o
u
n
t
s
R
e
c
e
i
v
a
b
l
e
(
n
e
t
)
2
1
8
,
5
4
9
1
8
4
,
9
7
8
3
3
,
5
7
1
1
8
.
1
%
IP
nrvee
n
t
o
r
y
2
2
3
,
2
4
2
1
9
7
,
0
9
7
2
6
,
1
4
5
1
3
.
3
%
p
a
i
d
E
x
p
e
n
s
e
s
6
7
,
7
1
0
7
6
,
5
4
2
(
8
,
8
3
2
)
1
1
.
5
%
T
o
ta
la
C
u
rE
eq
ntuA
sm
se
tn
st
579,893 526,867 53,026 10.1%
P
rop
e
r
t
y
n
d
i
p
e
P
r
o
p
e
r
t
y
a
n
d
E
q
u
i
p
m
e
n
t
(
n
e
t
)
9
0
,
5
0
3
1
1
0
,
9
8
7
(
2
0
,
4
8
4
)
1
8
.
5
%
TotalA
ssets
670,396 637,854 32,542 5.1%
L
i
a
b
i
l
i
t
i
e
s
a
n
d
E
q
u
i
t
y
C
urrA
en
tco
L
ia
b
ilP
itia
e
s
c
u
n
t
s
y
a
b
l
e
1
5
8
,
2
1
4
1
3
9
,
1
3
5
1
9
,
0
7
9
1
3
.
7
%
B
a
n
k
L
o
a
n
s
a
n
d
O
t
h
e
r
P
a
y
a
b
l
e
s
7
1
,
6
7
2
5
6
,
7
6
9
1
4
,
9
0
3
2
6
.
3
%
C
u
r
e
n
t
P
o
r
t
i
o
n
o
f
N
o
t
e
s
P
a
y
a
b
l
e
3
0
,
0
0
0
3
0
,
0
0
0
0
.
0
%
T
o
t
a
l
C
u
r
e
n
t
L
i
a
b
i
l
i
t
i
e
s
2
5
9
,
8
8
6
2
2
5
,
9
0
4
3
3
,
9
8
2
1
5
.
0
%
Long
-o
te
rm
L
ia
bb
illie
tie
s1%
N
t
e
s
P
a
y
a
(
1
)
1
3
9
,
0
0
0
1
6
9
,
0
0
0
(
3
0
,
0
0
0
)
1
7
.
8
%
T
o
t
a
l
L
i
a
b
i
l
i
t
i
e
s
3
9
8
,
8
8
6
3
9
4
,
9
0
4
3
,
9
8
2
1
.
0
%
E
qui8
ty
%
P
r
e
f
e
r
e
n
c
e
S
h
a
r
e
s
,
P
1
0
0
p
a
r
7
0
,
0
0
0
7
0
,
0
0
0
0
.
0
%
O
rd
irn
aP
ryre
S
hia
rm
es,P
1par
1
0
,,0
0
0
1
0
,,0
0
0
-- 0
..0
%
S
h
a
e
m
u
9
0
0
0
0
9
0
0
0
0
0
0
%
R
e
t
a
i
n
e
d
E
a
r
n
i
n
g
s
1
0
1
,
5
1
0
7
2
,
9
5
0
2
8
,
5
6
0
3
9
.
2
%
TotalE
quity
271,510 242,950 28,560 11.8%
Answers:
G
o
l
d
e
n
G
a
r
m
e
n
t
s
,
I
n
c
.
C
o
m
p
a
r
a
t
i
v
e
S
t
a
t
e
m
e
n
t
o
f
C
o
m
p
r
e
h
e
n
s
i
v
e
I
n
c
o
m
e
FortheYearsEndedD
ecem
ber31,2011and2010Increase(D
e
c
r
e
a
s
e
)
2
0
1
1
2
0
1
0
A
m
o
u
n
t
%
S
a
l
e
s
2
,
0
0
0
,
0
0
0
1
,
8
0
1
,
8
0
2
1
9
8
,
1
9
8
1
1
.
0
%
L
e
s
s
:
C
o
s
t
o
f
S
a
l
e
s
1
,
4
7
2
,
0
0
0
1
,
3
0
9
,
9
1
0
1
6
2
,
0
9
0
1
2
.
4
%
G
r
o
s
s
M
a
r
g
i
n
5
2
8
,
0
0
0
4
9
1
,
8
9
2
3
6
,
1
0
8
7
.
3
%
LessS
:O
p
e
r
a
t
i
n
g
E
x
p
e
n
s
e
s
e
l
i
n
g
2
4
8
,
0
0
0
2
3
0
,
0
0
0
1
8
,
0
0
0
7
.
8
%
A
d
m
i
n
i
s
t
r
a
t
i
v
e
1
3
8
,
0
0
0
1
4
2
,
0
0
0
(
4
,
0
0
0
)
2
.
8
%
T
o
t
a
l
O
p
e
r
a
t
i
n
g
E
x
p
e
n
s
e
s
3
8
6
,
0
0
0
3
7
2
,
0
0
0
1
4
,
0
0
0
3
.
8
%
O
p
e
r
a
t
i
n
g
I
n
c
o
m
e
1
4
2
,
0
0
0
1
1
9
,
8
9
2
2
2
,
1
0
8
1
8
.
4
%
IIn
tnceorm
esetB
E
x
p
e
n
s
e
s
2
7
,
9
0
7
2
9
,
2
7
0
(
1
,
3
6
3
)
4
.
7
%
e
f
o
r
e
T
a
x
e
s
1
1
4
,
0
9
3
9
0
,
6
2
2
2
3
,
4
7
1
2
5
.
9
%
IN
ne
ctoIm
e
T
a
x
e
s
(
3
5
%
)
3
9
,
9
3
3
3
1
,
7
1
8
8
,
2
1
5
2
5
.
9
%
ncom
e
74,160 58,904 15,256 25.9%
Trend Percentages
Steps:
1.
2.
3.
Vertical Analysis
Vertical Analysis
Conversion Procedures
a.
b.
Answers:
o
ld
etn
G
an
rm
efnF
tsin
,a
In
cc.ialP
C
om
parD
ae
tic
vG
e
S
t
a
e
m
e
t
o
n
o
s
i
t
i
o
n
em
ber31,2011and2010
2
0
1
1
2
0
1
0
A
s
s
e
t
s
C
urre
n
tsA
ssets
C
a
h
1
1
%
1
1
%
A
c
c
o
u
n
t
s
R
e
c
e
i
v
a
b
l
e
(
n
e
t
)
3
3
%
2
9
%
IP
nrvee
n
t
o
r
y
3
3
%
3
1
%
p
a
i
d
E
x
p
e
n
s
e
s
1
0
%
1
2
%
T
o
t
a
l
C
u
r
e
n
t
A
s
s
e
t
s
8
7
%
8
3
%
P
rop
erro
ty
arn
da
E
q
u
ip
m
e
n
tent(net)
P
p
e
t
y
n
d
E
q
u
i
p
m
1
3
%
1
7
%
TotalA
ssets
100% 100%
L
i
a
b
i
l
i
t
i
e
s
a
n
d
E
q
u
i
t
y
C
urre
n
t
L
i
a
b
i
l
i
t
i
e
s
A
c
c
o
u
n
t
s
P
a
y
a
b
l
e
2
4
%
2
2
%
B
a
n
k
L
o
a
n
s
a
n
d
O
t
h
e
r
P
a
y
a
b
l
e
s
1
1
%
9
%
C
u
r
e
n
t
P
o
r
t
i
o
n
o
f
N
o
t
e
s
P
a
y
a
b
l
e
4
%
5
%
T
o
ta
lC
uirae
n
titL
ia
bilities
39% 35%
Long
-N
toe
r
m
L
b
i
l
i
e
s
t
e
s
P
a
y
a
b
l
e
(
1
1
%
)
2
1
%
2
6
%
T
o
t
a
l
L
i
a
b
i
l
i
t
i
e
s
6
0
%
6
2
%
E
qui8
ty
%
P
r
e
f
e
r
e
n
c
e
S
h
a
r
e
s
,
P
1
0
0
p
a
r
1
0
%
1
1
%
O
rd
irn
aP
ryre
S
hia
rm
es,P
1par
1
%
2
%
S
h
a
e
m
u
1
3
%
1
4
%
R
e
t
a
i
n
e
d
E
a
r
n
i
n
g
s
1
5
%
1
1
%
TotalE
quity
40% 38%
Answers:
G
o
l
d
e
n
G
a
r
m
e
n
t
s
,
I
n
c
.
C
o
m
p
a
r
a
t
i
v
e
S
t
a
t
e
m
e
n
t
o
f
C
o
m
p
r
e
h
e
n
s
i
v
e
I
n
c
o
m
e
FortheYearsEndedD
ecem
ber31,2011and2010
2
0
1
1
2
0
1
0
S
a
l
e
s
1
0
0
%
1
0
0
%
L
e
s
s
:
C
o
s
t
o
f
S
a
l
e
s
7
4
%
7
3
%
G
r
o
s
s
M
a
r
g
i
n
2
6
%
2
7
%
LessS
:O
p
e
r
a
t
i
n
g
E
x
p
e
n
s
e
s
e
l
i
n
g
1
2
%
1
3
%
A
d
m
i
n
i
s
t
r
a
t
i
v
e
7
%
8
%
T
o
t
a
l
O
p
e
r
a
t
i
n
g
E
x
p
e
n
s
e
s
1
9
%
2
1
%
O
p
e
r
a
t
i
n
g
I
n
c
o
m
e
7
%
7
%
IIn
tnceorm
esetB
E
x
p
e
n
s
e
s
1
%
2
%
e
f
o
r
e
T
a
x
e
s
6
%
5
%
IN
ne
ctoIm
e
T
a
x
e
s
(
3
5
%
)
2
%
2
%
ncom
e
4% 3%
Balance Sheet
Income Statement
3.
Ratio
Activity Ratio
Debt Ratio
Profitability Ratio
Market Ratios
Liquidity Ratio
Current Ratio
Quick Ratio
Current Ratio
Formula:
Current Ratio =
Current Assets
Current Liabilities
Formula:
Net Working Capital = Current Assets - Current Liabilities
Formula:
Quick Ratio =
Activity Ratio
Formula:
Accounts Receivable Turnover =
Formula:
__ 360 days __
AR Turnover
Or
Ave. Collection Period =
Accounts Receivable
Average Sales Per Day*
Inventory Turnover
Formula:
Inventory Turnover =
Cost of Sales
Ave. Inventory
Formula:
Days Supply in Inventory =
Formula:
Accounts Payable Turnover =
__ Net Purchases __
Ave. Accounts Payable
Formula:
Ave. Payment Period =
__ 360 days __
AP Turnover
Or
Ave. Collection Period =
__ Accounts Payable__
Ave. Purchases Per Day*
Formula:
(Total) Asset Turnover =
__ Net Sales __
Ave. Total Asset
Formula:
Plant Assets Turnover =
Debt Ratio
Debt-to-Equity Ratio
Times Interest Earned Ratio
Fixed-Payment Coverage Ratio
Debt Ratio
Formula:
Debt Ratio =
__ Total Liabilities_ __
Total Assets
Formula:
Debt to Equity Ratio =
_ Total Liabilities __
Total Equity
Formula:
Times Interest Earned Ratio =
_ Operating Income/Profit* __
Interest Expense
Formula:
Fixed Payment Coverage Ratio =
Operating Income/Profit
____+ Lease Payments ___
Fixed Charges*
Profitability Ratio
Formula:
Gross Profit Margin =
__ Gross Profit_ __
Net Sales
Formula:
Operating Profit Margin =
__ Operating Profit_ __
Net Sales
Formula:
Net Profit Margin =
__ Net Profit_ __
Net Sales
Formula:
Net Income after Preference
Earnings Per Share = ______Dividend Requirement_ ____
No. of Ordinary Shares Outstanding
Return on Asset
Formula:
Return on Asset =
__ Net Income_ __
Ave. Total Asset
Or
Return on Asset =
Return on Equity
Formula:
Return on Equity =
__ Net Income_ __
Ave. Ordinary Equity
Or
Return on Equity = ROA X Financial Leverage Multiplier*
Market Ratio
Price/Earnings Ratio
Formula:
Price/Earnings Ratio =
Market/Book Ratio
Formula:
Market/Book Ratio =
Formula:
Dividend Yield Ratio =
Equity Ratio
Dividend Payout Ratio
Equity Ratio
Formula:
Equity Ratio =
_ Total Equity __
Total Assets
Formula:
Dividend Payout Ratio =
References