Lenovo
2013 US $’000

2012 US $’000

Profitability

(Net profit before tax and interest / sales )*100% = Net profit margin

(801,299/33,873,401)*100%

(582,443/29,574,438)*100%

2.365%

1.969%

Gross profit margin

(Sales-Cos)/Sales *100%

(33,873,401-29,799,511)/33,873,401*100%

(29,574,438-26,128,216)/29,574,438 *100%

12.026%

11.652%

Asset Turnover

Sale/(Non-current assets + current assets - current liabilities)=Asset Turnover

33,873,401/(4,492,260+12,389,737-12,091,474)

29,574,438/(4,040,348+11,820,400-11,809,677)

7.0700

7.300

Profit before interest and tax/ Total assets - current liabilities = ROCE

801,299/(16,881,997-12,091,474)

582,443/15,860,748 -11,809,677

0.167

0.143

Liquidity Rations

Current Assets / Current liabilities = Current Ratio

12,389,737/12,091,474

11,820,400/11,809,677

1.024

1.001

Current Assets - inventory/ Current Liabilities = Quick Ratio

(12,389,737-1,964,791)/12,091,474

(11,820,400-1,218,494)/11,809,677

0.862

0.897

(Trade Receivables/ Sales )*365days = Receivables period

(2,885,039/33,873,401) * 365days

(2,354,909/29,574,438)*356 days

31.087 days

29.063 days

(Inventory/ Cost of sales)*365 days = Inventory period cost of sales

(1,964,791/ 29,799,511) *356 days

(1,218,494/2,128,216)*365 days

24.065 days

17.021 days

(Trade accounts payable / Purchases ) *365 days= parables period

(3,624,500/29,799,511)*365 days

(4,050,272/26,128,216)*365days

44,3947 days

56,5805 days

ZTE
2013 RMB ’000

2012 RMB ’000

Profitability

(Net profit before tax and interest / sales )*100% = Net profit margin

(1,827,843/75,233,724) *100%

(1,983,200/84,118,874) * 100%

2.429%

2.357%

Gross profit margin

(75,233,724-53,125,904)/75,233,724 *100%

(84,118,874-64,091,546)/84,118,874 *100%

29.385 %

23.808%

Sale/(Non-current assets + current assets - current liabilities)=Asset Turnover

75,233,724/(100079,497-60,970,805)

84,118,874/(107,446,306-72,958,927)

1.923

2.439

Profit before interest and tax/ Total assets - current liabilities = ROCE

1,827,843/100,079,497-60,970,805

1,983,200/107,446,306-72,958,927

0.046

0.057

Liquidity

Current Assets / Current Liabilities = Current Ratio

76,405,282/60,970,805

82,619,011/72,958,927

1.253

1.132

Current Assets - inventory/ Current Liabilities = Quick Ratio

76,405,282-12,3,352/60,970,805

82,619,011-11,442,389/72,958,927

1.049

0.975

(Trade accounts payable / Purchases ) *365 days= Parables Period

21,393,257/75,233,724 *365 days

22,068,176/84,118,874 *365 days

103.790 days

95.755 days

(Inventory/ Cost of sales)*365 days = Inventory period cost of sales

12,434,352/54,775,081 *365 days

11,442,389/65,545,460 *365 days

82.857 days

63.718 days

(Trade accounts payable / Purchases ) *365 days= Parables Period

16,492,534/54,775,081 *365 days

18,115,877/65,545,460 *365 days

109.899 days

100.881 days

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Financial statement analysis
LENOVO & ZTE Financial statement analysis report Compare

Abstract
The purpose of the thesis was to evaluate and compare the financial statements of different two companies to rate their performances. LENOVO(992) and ZTE(000063) in IT domain between 2012-1012. The emphasis was to be able to choose among several companies the best one to invest in. The aim of the study was met by comparing the risk of different companies, their rate of return, future trends and their strengths and weaknesses.

In the theoretical section of the thesis different factors affecting the capital market were discussed, with the focus being on the risks of an investment. Basic financial statements and ratios were discussed briefly. Next cross sectional and time series techniques to compare the financial statements and ratios were revealed. Most of the information from the theories was later on used in the empirical part of the thesis.

In the empirical study,