RATIO ANALYSIS CATEGORY DESCRIPTION COMPUTATION RATIO REFERENCE INTERPRETATION LIQUIDITY RATIOS
GMA NETWORK INC. has a good degree of liquidity. Based on its current ratio, it has 2.15pesos of current assets for every peso of liability. It's quick ratio points to adequate liquidity even after excluding pre-payments, with 2.10 pesos in assets that can be converted rapidly to cash for every peso of current liabilities. A material change that leads to the increase of the computed ratio is the increase in cash and short-term by 5% which is equivalent to P1, 758 million at year-end which is directly attributed to this years result of operation. 1. Liquid/ Acid Test Ratio (Cash and Cash Equivalents + Short-Term Investments Trade and Other Receivables)/Curr ent Liabilities (1,749,631,196+7,874,00 2+3,521,430,443)/3,314,3 37,516 1.59 Financial Position, page 2 2. Cash Ratio Cash and Cash Equivalents/ Current Liabilities 1,749,631,196/3,314,337, 517 0.582 Financial Position, page 2 3. Current Ratio Current Assets/Current Liabilities 7,123,258,726/3,314,337, 516 2.15 Financial Position, page 2
ACTIVITY/EFFICIENCY RATIOS
1. Accounts Receivable Turnover Sales on Account(Net Income)/Average Accounts Receivable* 12,950,879,332/3,681,905 ,190 3.5174396 55 Accounts Receivable=Fi nancial Position, page 2; Net Income= Comprehensiv e Income, page 2 GMA NETWORK INC. has a better Accounts Receivable turnover compared to last year which is 3.020077558 which means that the company maybe had extra efforts during 2013 than 2012 which eventually improved their accounts receivable turnover by approximately 0.49 times which is significant. This also indicates that they had collected on an average of 104 days their accounts receivable during the years as compared to last year which took them approximately 121 days with their collection of accounts receivable.
*Average Accounts Receivable= (Accounts Receivable, beg +Accounts Receivable, end )/2 3,512,420,443+3,842,389 ,937)/2=3,681,905,190
2 GMA NETWORK, INC. RATIO ANALYSIS 2. Average Collection Period 365 days/Accounts Receivable Turnover 365dats/3.517439665 103.76866 01days
SOLVENCY RATIOS
1. Debt to Equity Ratio Total Liabilities/ Average Shareholder's Equity 1,106,875000/8,788,423,8 23 0.13 Financial Position, page 2 Financial leverage based on its solvency ratio appears to be at comfortable levels with debt at only 13% equity and only 33% of assets are financed by debt. Since we are comparing short-term loans over total equity, the decrease of debt-to-equity ratio is caused by decrease of short term loans by 35% as payments made are higher P2, 5000M versus payment of only P1, 825M during 2012. Moreover interest expense can be covered by earnings before income tax and interest expense by 4.95 times. Although it was a decrease from 2012 ratio it is still good because we have greater earnings in 2013-2012. 2.Times Interest-Earned Ratio EBIT/Interest Expense 2,440,421,287/53,115,234 45.95 Comprehensiv e Income, page 2 3. Debt to Asset Ratio Total Liabilities/Averag e Total Assets 4,258,863,770/[(13,083,9 36,951+12,682,283,099)/ 2] 0.33 Financial Position, page 2
PROFITABILTY RATIOS
1.Gross Profit Margin Gross Profit/Sales 6,994,497,617/12,950,879 ,322 54.00% Comprehensiv e Income, page 2 A 54% gross margin ratio means that the company is profitable. It has a positive investment quality meaning it has a high earning that drives up its stock price. The company management is also effective and flexible in adapting trends, events, demands or uncertainties that have or which are reasonably expected to have a material impact on their revenue or income. The company management is also efficient and effective in employing and utilizing its assets. Because the company is profitable, 2. Return on Sales Net Income/Net Sales 1,674,975,012/12,950,879 ,322 12.93% Comprehensiv e Income, page 2 3. Total Asset Turnover Net Sales /Average Total Assets1,674,975, 013/12,950,879,3 22 12,950,879,332/3,681,905 ,190 1.005x Net Income=Comp rehensive Income, page 2; Total Assets=Financ
3 GMA NETWORK, INC. RATIO ANALYSIS ial Position, page 2 shareholders earned 19.74% for their investment in the company. 4. Return on Total Assets (Net Income+[Interest Expense(1-Tax Rate)]/Average Total Assets 1,674,975,012+[53,115,2 34(1- 30%)]/[(13,083,936,9510+ 12,682,283,099)/2] 13.29% Net Income and Interest expense,=Co mprehensive Income page 2; Average Total Assets=Financ ial Position, page 2 5. Return on Equity Net Income/ Average Total Equity 1,674,975,012/[(8,825,07 3,181+8,149,431,500)/2] 19.74 Net Income=Comp rehensive Income page 2; Average Total Equity=Financi al Position, page 2 6. Earnings per share Net Income- Preferred Dividends/ Average Number of Ordinary Share Outstanding 1,666,949,855- 514,435,885/3,360,297,00 0 0.343 Note 29 pages 60-61
7. Dividend Payout Ratio Dividend per share/EPS 0.25/0.343 0.73 Notes 19 page 50 8.Book value per share Ordinary Shareholder's Equity/ Number of Ordinary Shares Outstanding, end 5,000,000,000/3,361,047, 000 1.49 Independent Report on Supplementary Schedules, Schedule H 9. Working Capital Current Assets- Current Liabilities 7,123,258,726- 3,314,337,516 38089212 10 Financial Position, page 2
4 GMA NETWORK, INC. RATIO ANALYSIS
ADDITIONAL RATIOS
1. Asset to Equity Total Asset/Total Equity 13,083,936,951/8,825,073 ,181 1.48 Financial Position, page 2
2. Net Income Margin Net Income/Net Revenue 1,674,975,012/12,950,879 ,322 12.93 Comprehensiv e Income, page 2