This project serves as an examination and exploration on the financial health and performance of Derrimon Trading Company Limited, a major distributor of consumer goods in Jamaica, over a three year period (2020-2018). Throughout this project comprehensive analysis and pertinent discussions will be undertaken to examine various financial ratios and how it impacts the overall financial position of Derrimon Trading Co. Ltd and its competitor Everything Fresh Limited.

Ratio Analysis Through ratio analysis were able to gain insights into a company's liquidity, profitability and operational efficiency through interpreting a companys balance sheet and income statements. Notably so, there are a plethora of financial ratios that a company may use in its analysis; however the following discussions will focus on liquidity ratios, profitability ratios, financial leverage ratios and activity ratios for Derrimon Trading Co. Ltd and Everything Fresh Limited. Liquidity Ratios Liquidity ratios measure a companys ability to pay off its liabilities. The two main liquidity ratios,current ratio and quick ratio will be discussed. Current Ratio Formula: Current Ratio =Current AssetsCurrent Liabilities

CURRENT RATIO Derrimon Trading Co. Ltd.

Everything Fresh Ltd. Year Calculations Ratio Year Calculations Ratio 2020 4,778,3972208121=2.16 2.16:1 2020 463,462263,847 = 1.76 1.76:1 2019 3,678,5091713683= 2.15 2.15:1 2019 661,635284,439=2.33 2.33:1 2018 3,012,6151,964,121 = 1. 53 1.53:1 2018 812,075250,675 = 3. 23 2.23:1

Quick Ratio Formula: Quick Ratio =Current Assets- InventoryCurrent Liabilities

QUICK RATIO Derrimon Trading Co. Ltd.

Everything Fresh Ltd. Year Calculations Ratio Year Calculations Ratio 2020 4,778,397 - 2,186,5602,208,121=2.16 2.17:1 2020 463,462 - 258,218263,847= 0.78 0.78:1 2019 3,678,509 - 1,992,1741,713,683= 2.15 0.98:1 2019 661,635 - 274,685284,439= 1.36 1.36:1 2018 3,012,615 - 1,280,7871,964,121 = 0. 88

2018 812,075 - 200,460 250,675 = 2. 43

Profitability Ratios Profitability ratios express how well a company can generate profits from its operations. The four main profitability ratios; gross profit margin, net profit margin, return on assets and return on equity will be discussed. Gross Profit Margin Formula: Gross Profit Margin =Gross ProfitNet Sales

GROSS PROFIT MARGIN Derrimon Trading Co. Ltd.

Everything Fresh Ltd. Year Calculations Ratio Year Calculations Ratio 2020 (2,482,663 12,777464)*100=19.43% 19.43%:1 2020 (142,819905,939)*100=15.76% 15.76%:1 2019 (2,278,834 12,649,017)*100=18.02% 18.02%:1 2019 (299,4861,902,456)*100=15.74% 15.74%:1 2018 (1,691,0338,759,236) * 100 = 19.30% 19.30%:1 2018 (218,7051,879,661) * 100 = 11.63% 11.63%:1

Net Profit Margin Formula: Net Profit Margin =Net Profit After Taxes Net Sales

NET PROFIT MARGIN Derrimon Trading Co. Ltd.

Everything Fresh Ltd. Year Calculations Ratio Year Calculations Ratio 2020 (311,089 12,777464)*100=2.43% 2.43%:1 2020 (3,364905,939)*100=0.37% 0.37%:1 2019 (302,708 12,649,017)*100=2.40% 2.40%:1 2019 (20,1461,902,456)*100=1.06% 1.06%:1 2018 (281,8458,759,236) * 100 = 3.21% 3.21%:1 2018 (21,1731,879,661) * 100 = 1.12% 1.12%:1

Return on Assets Formula: Return on Assets =Net Profit After Taxes Total Assets

RETURN ON ASSETS Derrimon Trading Co. Ltd.

Everything Fresh Ltd. Year Calculations Ratio Year Calculations Ratio 2020 (311,089 7,415,814)*100=4.19% 4.19%:1 2020 (3,364754,401)*100=0.45% 0.45%:1 2019 (302,708 5,782,684)*100=5.23% 5.23%:1 2019 (20,146976,070)*100=2.06% 2.06%:1 2018 (281,8453,012,615) * 100 = 9.35% 9.35%:1 2018 (21,173935,843) * 10=2.26% 2.26%:1

1. Calculate the receivable turnover ratio and average collection period

2. Conduct a trend analysis . Liquidity Ratios

Profitability Ratios Financial Leverage Ratios Activity Ratios

3. What are the implications and provide a basic overview of the company?