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    Financial Analysis Ratio - Feasibility Studies (Fairy Haven)

    Uploaded by

    Irdo Kwan
    Financial Analysis Ratio - Feasibility Studies (Fairy Haven) 1. ROI 2. ROE 3. Profitability 4. Payback Period

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    © All Rights Reserved
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    Financial Analysis Ratio - Feasibility Studies (Fairy Haven)

    Uploaded by

    Irdo Kwan
    81 views2 pages
    Financial Analysis Ratio - Feasibility Studies (Fairy Haven) 1. ROI 2. ROE 3. Profitability 4. Payback Period

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    © © All Rights Reserved

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    DOCX, PDF, TXT or read online from Scribd

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    Financial Analysis Ratio - Feasibility Studies (Fairy Haven) 1. ROI 2. ROE 3. Profitability 4. Payback Period

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    81 views2 pages

    Financial Analysis Ratio - Feasibility Studies (Fairy Haven)

    Uploaded by

    Irdo Kwan
    Financial Analysis Ratio - Feasibility Studies (Fairy Haven) 1. ROI 2. ROE 3. Profitability 4. Payback Period

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Accounting Rate of Return (ARR)

    ARR = Average Annual Net Income Investment


    Year

    Annual Net Income

    616,413

    704,019.48

    786,035.59

    883,228.28

    996,101.73

    Total

    4,562,848.08

    Average Net Income

    912,569.62

    Investment

    5,748,150

    Accounting Rate of Return = 912,569.616 5,748,150


    Accounting Rate of Return = 15.88%
    With the total average net income and net cost of investment of P912,569.62 and
    P5,748,150 respectively, the ARR is computed to result at 15.88% which means that Fairys
    Havens project is expected to earn 15.88 cents out of each peso invested.
    Test of Profitability
    Net Profit Margin = Net Income Annual Sales
    Year
    1
    2
    3
    4
    5

    Net Income
    616,413
    704,019.48
    786,035.59
    883,228.28
    996,101.73

    Annual Sales
    1,656,000
    1,728,000
    1,803,600
    1,882,980
    1,966,329

    Net Profit Margin


    37.22%
    40.74%
    43.58%
    46.91%
    50.66%

    In the figure above, it shows the percentage which is an indicator that will be used to
    assess the profitability of Fairys Haven. A net profit margin of 37.22% in the first year as
    computed, 40.74% in the second year, 43.58% in the third year, 46.91% in the fourth year and
    50.66% in the fifth year which illustrates satisfaction of how much Fairys Haven will convert its
    revenue into profit.
    Test of Solvency
    Debt to Equity Ratio = Total Liabilities Total Equity

    Year
    1
    2
    3
    4
    5

    Total Liabilities
    3,331,643.06
    2,603,134
    1,809,059.10
    943,517.01
    -

    Figure above illustrates the

    Total Equity
    2,316,413
    2,920,432.48
    3,581,468.07
    4,339,696.35
    5,185,798.57

    Debt to Equity Ratio


    1.44
    0.89
    0.51
    0.22
    0.00

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