COMSATS University Islamabad (Wah campus)
Financial Statement Analysis (MGT-537)
Financial Statement Analysis and Valuation
(ACC-556)
BBA-7 Semester
Assignment 02
Hamza Sajjad
Sp18-BBA-030
Q1. Take three years Balance sheets of your selected company. Calculate the
following ratios for your company for 3 years.
Liquidity Ratios
1. Current Ratio
2. Quick Ratio
3. Cash Ratio
After calculations, write your conclusion about the Ratios (vertical as well as
horizontal analysis)
Solution:
1. Current Ratio: Current Assets/ Current Liabilities
2. Quick Ratio: cash+ short term investment + trade debts + account
receivables/ Current Liabilities
3. Cash Ratio: Cash+ Cash Equivalent+ checking account+ market securities/
Current Liabilities
uidity Year 2017 Year 2018 Year 2019
atios
Current 38,283,045/36,934,189= 1.03 44,909,660/39,151,563= 1.15 55,887,591/
Ratio 49,135,424= 1.13
Quick (1795929+ 8188275+ 8803356+ 729,836+ (3,413,473+5,511
Ratio 5418748)/36,934,189= 0.655 9,109,671+9,066,639+7722469/39,1 +14,174,520
51,563 +9,412,251)/39,1
= 0.47 3= 0.5
Cash (1795929+ 8188275)/36934189= 0.27 729,836+7722469/39151563= 0.21 5,511,544+3,413
Ratio 39,151,563= 0.23
Conclusion vertical analysis (Individually, 2018,2019,2017):
Current Ratio value is 1.03 which is obtained by dividing current assets by current liabilities.
Quick ratio is obtained by subtracting current asset with inventory and dividing it by current liabilities
and answer is 0.656.
Cash Ratio is obtained by dividing the sum of Cash and cash equivalents with Current liabilities by which
answer is 0.2
Conclusion horizontal analysis (Current Ratio 2018-2019-2017):
In year 2017 current ratio is 1.03 which is less as compared to current ratio in year 2018 which is 1.15 due
to increase in Asset and liabilities in 2018. Similarly current asset value is 1.137 in year 2019 which is
higher than previous year 2017 because of increase in current asset and decrease in liabilities but less than
2018 past year
Conclusion horizontal analysis (Quick Ratio 2018-2019-2017):
In year 2018 Quick ratio is 0.46 which is less as compared to ratio in year 2019 which is 0.5. Similarly
value is 0.655 in year 2017 which is high as compared to future years.
Conclusion horizontal analysis (Cash Ratio 2018-2019-2017):
Value of Cash ratio in year 2018 is 0.21 which is less as compared to value in 2019 which is 0.23 and
there is an increase in value of year 2017 which is 0.273.
Q2. Take three years Income statement of your selected company. Calculate the
following ratios for your company for 3 years.
Profitability Ratios
1. Gross Profit Ratio
2. Operating Profit Ratio
3. Net profit Ratio
After calculations profitability ratios, draw a graph or chart of percentage
change in three years for all the three ratios. (In excel) and attach the graphical
results in your assignment.
1. Gross Profit Ratio: Gross Profit/net sales
2. Operating Profit ratio: Operating profit or income before taxes/net sales
3. Net Profit Ratio: Net profit or income after tax/ Net sales
Profitability Year 2017 Year 2018 Year 201
Ratios
1. Gross (23218588/77129343)*1 (35,316,447/109,196,586)*1 (39,539,888/
Profit 00= 30% 00= 121,354,758)*100
Ratio 32.3%
2. Operating (16664770/77129343)*1 (24,282,201/109,196,586)*1 (27,397,603/121,3
Profit 00= 21.6% 00= 00= 22.5%
Ratio 22.2%
3. Net profit (1813335/77129343)*10 (1741352/109196586)*100 (1115562/121,354
Ratio 0= 2.35% = 1.6% = 1%
VERTICAL ANALYSIS
Chart Title
35%
30%
25%
20%
15%
10%
5%
0%
Year 2017
1. Gross Profit Ratio 2. Operating Profit Ratio 3. Net profit Ratio
Chart Title
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
Year 2018
3. Net profit Ratio 3. Net profit Ratio
Chart Title
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
Year 2019
2. Operating Profit Ratio 2. Operating Profit Ratio
3. Net profit Ratio
HORIZONTAL ANALYSIS
Chart Title
33%
33%
32%
32%
31%
31%
30%
30%
29%
29%
1. Gross
Profit Ratio
Year 2017 Year 2018 Year 2019
Chart Title
22.60%
22.40%
22.20%
22.00%
21.80%
21.60%
21.40%
21.20%
21.00%
Year 2017 Year 2018 Year 2019
2. Operating Profit Ratio
3. Net profit Ratio
Year 2019
Year 2018
Year 2017
0.00% 0.50% 1.00% 1.50% 2.00% 2.50%
