Financial Management

1. Liquidity or short-term solvency

| 2011 |

Current Ratio | 1.65 |

Quick Ratio | 1.48 |

Cash Ratio | 1.18 |

NWC to total assets | 0.197 |

2. Assets utilization or turnover

| 2011 |

Inventory Turnover | 15.19 |

Receivable turnover | 23.99 |

NWC turnover | 10.78 |

Fixed Asset turnover | 4.26 |

Total asset turnover | 2.12 |

3. Financial leverage or long-term solvency

| 2011 |

Total Debt ratio | 0.34 |

Debt-equity ratio | 0.494 |

Equity multiplier | 1.52 |

Long-term debt ratio | 0.032 |

4. Profitability

| 2011 |

Profit Margin | 0.0819 |

Return on assets | 0.174 |

Return on equity | 0.264 |

Ratio Analysis

(All Amounts expressed in thousands of HKD)

Cross-sectional analysis

1. Liquidity or short-term solvency

Compare with our competitor in term of liquidity, our company it not good as the competitor - Gayety. From the table we can see that both of current ratio, quick ratio, cash ratio and net working capital ratio are lower than Gayety. That means our firm is in a less liquidity position. For the cash ratio, we just get 0.75 which means that the cash on hand for our firm was only around 75% of our current liabilities. Compare to Gayety (1.18), they obviously have a healthier and stable position than us.

2. Assets utilization or turnover

For assets utilization, the inventory turnover, fixed asset turnover and total asset turnover is better in Gayety. For the inventory turnover, our firm got 8.95 while Gayety got 15.19 which indicated that Gayety was more efficiently in managing inventory as they had a higher ratio. For fixed asset turnover and the total asset turnover, our firm got 3.44 and 1.83while Gayety got 4.26 and 2.12. This reflected that Gayety can generate more money by using their assets. For our firm, we do better in the NWC turnover and receivable turnover and this meaning that there are more ‘’work’’ get out of our working capital. Also, we had a better control of our debtors.

3....