Referencing Styles : APA 1. When I was doing the ratio calculations such as Inventory turnover, Receivable turnover, Return on Assets, etc. These denominators are all average numbers, so do I also need to download the 2013 annual reports? Since I need statistics from year 2012 to calculate these ratios of year 2013. Or I can leave them blank?If you are required to calculate a ratio (e.g., inventory turnover) in 2014, you may only need the financial report of 2014 as it contains both results of 2013 and … View More 1. When I was doing the ratio calculations such as Inventory turnover, Receivable turnover, Return on Assets, etc. These denominators are all average numbers, so do I also need to download the 2013 annual reports? Since I need statistics from year 2012 to calculate these ratios of year 2013. Or I can leave them blank? If you are required to calculate a ratio (e.g., inventory turnover) in 2014, you may only need the financial report of 2014 as it contains both results of 2013 and 2014. It is similar if you are going to calculate a ratio of 2013 or even 2012. 2. When I was calculating the current ratio and the quick ratio, I found out that there are two different Total Current Liability of year 2014. The Total Current Liability shows on the 2014 annual report is $77XXX, and $79XXX on the 2015 annual report. Could you explain this for me? The difference could be because of some restatements from one year to another. Please use the year t (instead of the latest year)’s report to calculate the ratio of year t. It is consistent with how we deal with it in the previous question. 3. Should I use net profit for the year or net profit from continuous operations? You should use net profit after tax before any other comprehensive income. In your analysis, if relevant, you can mention the effect of profits from discontinued operations. 4. If the company does not have COGS (or cost of sales) in the income statement, how can I calculate the gross profit margin? Service companies do not have COGS, so you cannot calculate gross profit margin. In the income statement expenses can be classified by nature or function. When expenses are classified by nature, manufacturers disclose “Raw materials and consumables used” plus “changes in inventory of finished goods and work in process”. In that case COGS is equal to the sum of the two amounts. When expenses are classified by nature, retailers disclose “finished goods purchased for resale” plus “changes in inventory of goods for resale”, again COGS is the sum of the two amounts If expenses are classified by function in the income statement then COGS (or cost of sales) is required to be shown separately. If COGS is not explicitly identified in the income statement as indicated above it is important that you add a note in your sheet of ratio calculations pointing out what figure you used to calculate the ratio. 5. Which revenue should be considered to calculate gross margin percentage, profit margin and days sales in receivables? For the calculation of gross margin percentage and days sales in receivables use sales revenue according to the information provided in the income statement excluding “other revenue”. For profit margin use total revenues. 6. Should “devaluation loss be included in net profit after tax to calculate ratios? Devaluation loss should be treated the same as a loss from discontinued operations. It should be included in net profit after tax but the analysis has to include a comment on their effect on profits if the effect is relevant. 7. Should I use the formula provided in the formulae sheet to calculate the ratios? Yes. You have to use the formula provided in the formulae sheet to calculate the ratios and use the ending balance of the balance sheet accounts included in the ratios if it is not “average”. If for some extraordinary circumstances you cannot use the formula provided and you have to change it you must explain this in the Appendix. 8. Should I include the