Asus 2015 Annual Report Download - page 114

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The root causes of the financial ratio change in the last two years:
Times interest earned: The current average total asset amount increased, causing the current return on assets to
decrease.
Ratio of return on equity: The decrease in the income in current period was a result of the decrease in ROE in current
period.
Cash flow ratio: The cash outflow from operating activities this year was intended to pay the payable accounts for the
purchased materials, causing the decrease in cash flow ratio.
Cash flow adequacy ratio: The cash inflow from operating activities in last 5 years was reduced while the inventory in
last 5 years increased, therefore the cash flow adequacy ratio dropped.
Cash reinvestment ratio: The cash outflow from operating activities of this year caused the decrease in cash
re-investment ratio.
Note 1: The financial information is audited by CPA.
Note 2: The 2016Q1 financial statements have not yet been audited by CPA up to the date of the report printed on
April 11, 2016.
Note 3: Equations:
1. Financial structure
(1) Ratio of liabilities to assets = Total liabilities / Total assets
(2) Ratio of long-term capital to property, plant and equipment = (Total equity + non-current liabilities) /
Net property, plant and equipment
2. Solvency
(1) Current ratio = Current assets / Current liabilities
(2) Quick ratio = (Current assets – Inventory – Prepaid expenses) / Current liabilities
(3) Times interest earned = Net income before tax and interest expense / Interest expense of the year
3. Operating ability
(2) Account receivable turnover (including accounts receivable and notes receivable derived from
business operation) = Net sales / Average accounts receivable (including accounts receivable and notes
receivable derived from business operation)
(3) Days sales in accounts receivable = 365 / Account receivable turnover
(4) Inventory turnover = Cost of goods sold / Average inventory amount
(5) Account payable turnover (including accounts payable and notes payable derived from business
operation) = Cost of goods sold/ Average accounts payable (including accounts payable and notes
payable derived from business operation)
(6) Average days in sales = 365 / Inventory turnover
(7) Property, plant and equipment turnover = Net sales / Average net property, plant and equipment
(8) Total assets turnover = Net sales / Average total assets
4. Profitability
(1) Ratio of return on total assets = [Net income (loss) + interest expense x (1-tax rate)] / Average total
assets
(2) Ratio of return on equity = Net income (loss) / Net average total equity
(3) Ratio of profit before tax to paid-in capital = Net income before tax / Paid-in capital
(4) Profit ratio = Net income (loss) / Net sales
(5) Earnings per share = (Profit attributable to shareholders of the parent – preferred stock dividend) /
Weighted average stock shares issued (Note 4)
5. Cash flow
(1) Cash flow ratio = Net cash flow from operating activity / Current liabilities
(2) Cash flow adequacy ratio = Net cash flow from operating activity in the past five years / (Capital
expenditure + Inventory increase + Cash dividend) in the past five years
(3) Cash reinvestment ratio = (Net cash flow from operating activity – Cash dividend) / (Gross property,
plant and equipment + Long-term investment + Other non-current assets + Working capital) (Note 5)