OBJECTIVE: To utilize financial ratios as a mechanism to evaluate a firms financial performance and identify areas for making decisions for improvement

REQUIREMENT: Financial Statement Analysis

Question

Refer to the following financial statements of Elisa Pvt Ltd. for 2020 and 2019:

Elisa Pvt Ltd

Balance Sheets

31st December (in millions)

	2020	2019
Assets Current assets Cash Acount receivable (net) Inventories Other current assets Total current assets Property (net) Other assets Total assets	SGD 460 1,188 1,132 247 3,027 3,281 5,593 SGD 11,901	SGD 444 1,190 1,056 225 2,915 3,128 5,804 SGD 11,847
Liabilities and Stockholders Equity Current liabilities Long-term liabilities Stockholders equity common Total liabilities and stockholders equity	SGD 3,313 6,826 1,762 SGD 11,901	SGD 3,184 6,509 2,154 SGD 11,847

Elisa Pvt Ltd

Income Statements

For the year ended 31st December (in millions)

	2020	2019
Net sales Cost of goods sold Gross profit Selling and administrative expenses Income from operations	SGD 13,198 7,750 5,448 3,472 1,976	SGD 12,397 7,108 5,289 3,299 1,990
Interest expense Other (income) expense, net Income before income taxes Income tax expense Net income	233 11 1,732 503 SGD 1,229	248 0 1,742 502 SGD 1,240

Required:

Analyze Elisa Pvt Ltd financial statement. Include the following ratios for 2020 and discuss your findings (2019 values are provided for comparison):

1. Current ratio (year 2019 0.92:1)
2. Inventory turnover (year 2019 7.2 times)
3. Debt to assets ratio (year 2019 82%)
4. Return on assets (year 2019 10.8%)
5. Profit margin (year 2019 10.0%)
6. Return on common stockholders equity (year 2019 56%)