Ratio Analysis

Gross Margin: It indicates the gross profit earned by a company before the deduction of taxes and other expenses. The gross margin for the year 2003, 2004 and 2005 stood out to be 0.42, 0.42 and 0.40. It can be noticed that the profit margin of the firm has decreased for 2005 when compared to previous year. It can be due to reduction in sales (Carreras-Simó and Coenders, 2019).

Operating Profit: It indicates the income that is generated through the operation of the business. The operating profit for three years were 11.44%, 8.67% and 10.1%. It suggests that the profit from operation have declined due to slow down in the activities along with reduction in sales.

Current Ratio: The current ratio for the three years were 2.01, 2.27 and 1.77 suggesting that through the current assets are more than the current liabilities, the has comparatively declined for 2005. Current ratio more than 1 is an indicator that the firm will be easily available to repay their short term debts using the current assets of the firm and thus the burden of liability will be less (Haskins, 2017).

Debt to equity: It compares the debts to the equity of the firm. For 2005 the ratio was 0.44 indicating that the debts are lower than the equity and hence the operations of the firm can are financed majorly through equity share capital (Myšková and Hájek, 2017).