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Abs CBN Ratio Analysis

The document analyzes various financial ratios for ABS CBN. It finds that liquidity ratios are increasing, indicating the company can pay debts, but cash flow ratios are decreasing. Capital structure ratios show increasing liabilities leading to higher debt levels, a serious problem. Earnings coverage ratios are continuously decreasing, representing a decreasing ability to pay debts. Asset usage ratios show assets are not being maximized. Profitability ratios are continuously decreasing as sales and profits decline. Market ratios show increasing share prices despite profit and sales issues.

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Marjorie Fronda Tumbali
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218 views2 pages

Abs CBN Ratio Analysis

The document analyzes various financial ratios for ABS CBN. It finds that liquidity ratios are increasing, indicating the company can pay debts, but cash flow ratios are decreasing. Capital structure ratios show increasing liabilities leading to higher debt levels, a serious problem. Earnings coverage ratios are continuously decreasing, representing a decreasing ability to pay debts. Asset usage ratios show assets are not being maximized. Profitability ratios are continuously decreasing as sales and profits decline. Market ratios show increasing share prices despite profit and sales issues.

Uploaded by

Marjorie Fronda Tumbali
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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ABS CBN RATIO

Liquidity Ratio

Current, Quick cash and Net working capital ratio is continuously increasing which indicates a favorable
position since this would mean that the company can able to pay its maturing debt through the use of
either, current assets, quick assets or cash. With the increasing ratio on working capital, this means that
the company can able to pay their debts while having sufficient capital to continue their operation.
However, the cash flow ratio keep on decreasing which implies that the company wasn’t able to
maintain to improve the inflows of fund through their operations. If continues, the company might be
able to sort in obtaining fund from the outside to continue the business. They should be able to keep
track on the items that affected the decrease in operating inflow to avoid more serious problems.

CAPITAL STRUCTURE AND LEVERAGE

The capital structure of the company begins to move towards the increase in liability leading to increase
in ratio of debt to equity, long-term to equity and debt to total asset. This is a serious problem which
indicates the company is starting to have a higher debt and the assets and equity won’t be able to cover
these. This concerns the ability of the company to pay the debt and affects its future prospects. The
company must increase its capital through the owners and not getting more fund from outsiders.

Earnings and Coverage

The continuous decrease in interest coverage, fixed charge coverage, and cash flow to fixed charges
ratio represents the decreasing ability of the company to pay the consequence of having debt to outside
creditors and the repayment of what they owe. If this ratios continues to decrease, this would affect the
image of the company given that users of financial information specially investors and creditors will see
this as a bad performance of the company which will make them harder to convince if soon we will ask
them to invest or lend us money.

Activity Ratios

The use of assets by the company wasn’t maximized which was indicated by the decreasing ratio in Total
Asset Turnover and Fixed Asset ratio. The company wasn’t able to use efficiently their assets to generate
higher sales. They must be start using the asset in a way that they will have a greater return so that the
expenses they incurred in acquiring and maintaining will be worth it .
Profitability Analysis

All ratios pertaining to the profit and sales of the company is continuously decreasing implying that the
company wasn’t able to attract and maintain customers in buying the service goods that they are
offering. If they won’t be able to solve this issue, there’s no doubt that in the future, they will declare
loss and worst bankruptcy. They must focus of their primary operation so they they will start to increase
their sales and profits. They must control their expenses so that this will decrease their cost and will
have higher profit.

Market Ratios

The prices of their shares are continuously increasing despite of their issues in maintaining good profit
and sales. Even if the value of these shares is increasing, they must not settle in this and focus in
increasing the revenue to cope up with the decrease in the previous years. Moreover, the increase in
earnings per share is a good indication, it doesn’t remove the fact that this will decrease in the future
due to continuous decrease in net income and sales.

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