# Investment Analysis

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Submitted By Mykol
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Profitability, Liquidity and Debt Analysis Determining profitability of any given company is important when making any decisions about the company or organization. Profitability simply refers to the ability of the organization to make profits through its operations which is the main objective of any business (Palepu, & Healy, 2008). To know and analyse the profitability of an organization, various ratios such as the profit margin, return on assets and return on equity can be used to analyze the profitability. Liquidity on the other hand simply refers to the ability with which the company’s assets can be converted into cash. This is always calculated and analyzed using various ratios of liquidity (Palepu, & Healy, 2008). Debt analysis of a company simply refers to analysis of the company’s debt in relation to the assets of the company. This is done using debt ratio analysis whereby a debt ratio that is more than 1 means a company has more debts than assets while a ratio less than 1 means the company has more assets than debt.
Particulars DATA IN MILLIONS OF US DOLLARS 2,012 2,011 Total Revenue-Sales 12,985 17,260
Cost of Sales (COGS) 8,919 11,042
Net Income -985 -152
Gross Profit 4,066 6,218
Inventory 2,341 2,916
Cash 930 1,507
Total Current Assets 3,683 5,081
Long Term Debt 2,868 2,868
Total Equity 3,171 4,010
Total Assets 9,781 11,424
Current Liabilities 2,583 2,756

Ratio Calculations of profitability, liquidity and debt
Ratio Type Formula Ratio
Year 2012
Current Ratio Current Assets/Current Liabilities 1.43
Debt Ratio Total Debt/Total Assets 0.32
ROI Net Income/Owners Equity -0.31
Inventory Turnover Sales/Total Inventory 5.55
Profit Margin Net Income/Sales -0.08
Return on Sales Gross Profit/Revenue 0.31

Ratio Type Formula Ratio
Year 2011
Current Ratio Current Assets/Current

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