Thoughts on Ratios

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I found completing the ratio task was really enjoyable.  Some questions that I have since completing the task will be outlined in my draft assignment however keen for a chat about them if you can assist.

  1. After restating and ratios, did anyone elses opinions of their company change? For me (having no accounting knowledge) I assumed that because my company was gaining profits each year they were wealthy… after ratios I am shocked to discover that my company is 82.70% in debt…. This ratio process identified to me that even though the company is making a profit it does not mean that it is paying out its debts.
  2. I am getting an insane figure in Debt/Equity Ratio… I don’t actually know why this is occurring but will definitely investigate it.
  3. My Earnings per Share (EPS) show up as zero however my annual report says others. Many of my shares are actually for staff so I was wondering if this would have an impact?
  4. My Dividends per Share (DPS) are also zero which once again concerns me and I am starting to think that I missed the start of the lecture where Maria referred to which figure to use from the Issued Share capital section.
  5. I was getting an interesting figure in Price Earnings Ratio so I used a * instead of / and this figure seemed more realistic, however is this correct?

    At the end of the day I have learnt many things about my company especially in regards to the asset turnover and economic profit which was fascinating to watch as it evolved.  But I think the thing that still shocks me the most is that my company is over 80% in debt and not using or gaining their own money.

How is your company fairing?

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