Name: Bea Q.
Cataneo 22-31766
3rd Year Bs in Accounting Information System
Financial Statement Analysis for AB Normal Corporation
For the Years Ended December 31, 2022-2023
Liquidity Ratios
1. Current Ratio = Current Assets / Current Liabilities
2023: 778,750 / 862,508 = 0.90
2022: 729,200 / 871,706 = 0.84
Indicates a slight improvement in liquidity but still below the ideal 1:1 ratio.
2. Quick Ratio = (Current Assets - Inventory - Prepaid Expenses) / Current
Liabilities
2023: (778,750 - 346,000 - 25,000) / 862,508 = 0.47
2022: (729,200 - 355,000 - 31,000) / 871,706 = 0.39
An improvement in liquidity when excluding inventory, but still less than 1,
suggesting possible liquidity risk.
3. Working Capital to Total Assets = Net Working Capital / Total Assets
2023: (778,750 - 862,508) / 3,553,750 = -2.36%
2022: (729,200 - 871,706) / 3,754,200 = -3.80%
Negative working capital indicates possible liquidity constraints.
4. Defensive Interval Ratio = (Cash + Receivables + Marketable Securities) / Daily
Operating Expenses
2023: (54,500 + 278,250 + 75,000) / (1,020,922 / 365) = 71.07 days
2022: (53,200 + 215,000 + 75,000) / (819,493 / 365) = 69.75 days
Slight improvement, indicating better ability to cover expenses with liquid assets.
Activity Ratios
5. Receivable Turnover = Sales / Trade and Other Receivables
2023: 5,563,303 / 278,250 = 20.00
2022: 5,175,166 / 215,000 = 24.09
Slight decrease suggests longer collection periods.
6. Average Collection Period = 365 / Receivable Turnover
2023: 365 / 20.00 = 18.25 days
2022: 365 / 24.09 = 15.15 days
Customers take longer to pay in 2023 compared to 2022.
7. Inventory Turnover = Cost of Sales / Inventory
2023: 3,894,312 / 346,000 = 11.26
2022: 4,036,629 / 355,000 = 11.37
Consistent inventory turnover across both years.
8. Average Days in Inventory = 365 / Inventory Turnover
2023: 365 / 11.26 = 32.42 days
2022: 365 / 11.37 = 32.10 days
Inventory turnover remains stable.
9. Net Working Capital Ratio = Net Working Capital / Total Liabilities
2023: (778,750 - 862,508) / 1,712,508 = -4.89%
2022: (729,200 - 871,706) / 1,871,706 = -7.60%
Slight improvement, but still negative indicating tight liquidity.
10. Current Asset Turnover = Sales / Current Assets
2023: 5,563,303 / 778,750 = 7.14
2022: 5,175,166 / 729,200 = 7.10
Efficient use of current assets.
11. Payable Turnover = Cost of Sales / Trade and Other Payables
2023: 3,894,312 / 755,000 = 5.16
2022: 4,036,629 / 789,250 = 5.12
Consistent payment cycle for suppliers.
12. Operating Cycle = Average Collection Period + Average Days in Inventory
2023: 18.25 + 32.42 = 50.67 days
2022: 15.15 + 32.10 = 47.25 days
Slight increase in operating cycle.
Profitability Ratios
13. Asset Turnover = Sales / Total Assets
2023: 5,563,303 / 3,553,750 = 1.57
2022: 5,175,166 / 3,754,200 = 1.38
Improved asset utilization.
14. Plant Turnover = Sales / Property, Plant & Equipment
2023: 5,563,303 / 2,500,000 = 2.23
2022: 5,175,166 / 2,750,000 = 1.88
Better efficiency in using plant assets.
15. Debt-to-Equity Ratio = Total Liabilities / Shareholders’ Equity
2023: 1,712,508 / 1,841,242 = 0.93
2022: 1,871,706 / 1,882,494 = 0.99
Leverage slightly decreased, indicating better financial stability.
16. Debt Ratio = Total Liabilities / Total Assets
2023: 1,712,508 / 3,553,750 = 48.2%
2022: 1,871,706 / 3,754,200 = 49.8%
Leverage improved slightly.
17. Equity Ratio = Shareholders' Equity / Total Assets
2023: 1,841,242 / 3,553,750 = 51.8%
2022: 1,882,494 / 3,754,200 = 50.2%
Slight improvement in equity proportion.
18. Return on Equity (ROE) = Net Income / Shareholders’ Equity
2023: 420,057 / 1,841,242 = 22.8%
2022: 191,742 / 1,882,494 = 10.2%
Strong profitability improvement.
19. Return on Assets (ROA) = Net Income / Total Assets
2023: 420,057 / 3,553,750 = 11.8%
2022: 191,742 / 3,754,200 = 5.1%
Higher returns on assets.
20. Net Profit Margin = Net Income / Sales
2023: 420,057 / 5,563,303 = 7.55%
2022: 191,742 / 5,175,166 = 3.71%
Stronger profitability in 2023.
21. Gross Profit Margin = Gross Income / Sales
2023: 1,668,991 / 5,563,303 = 30.0%
2022: 1,138,537 / 5,175,166 = 22.0%
Improved cost management.
