$’000 | 2012 | 2011 | 2010 | Sales | 260,832 | 234,423 | 214,934 | Profit before tax | 39,196 | 39,322 | 34,731 | Income tax expense | 11,390 | 12,017 | 10,434 | Profit for the year | 27,806 | 27,305 | 24,297 | Net debt | 33,040 | 29,835 | 25,849 | Shareholders’ equity | 86,280 | 79,112 | 71,790 | Total Assets | 174,771 | 153,150 | 154,349 | Current Assets | 99,993 | 78,521 | 80,485 | Current Liabilities | 41,547 | 33,207 | 34,457 | Net Tangible Assets | 79,743 | 74,108 | 68,748 | Earnings before interest,tax,dep and amortisation. (EBITDA) | 46,879 | 46,587 | 41,193 | Depreciation and amortization | 4,922 | 4,529 | 4,141 | Earnings before interest and tax (EBIT) | 41,957 | 42,058 | 37,052 | Net interest expense/(revenue) | 2,761 | 2,736 | 2,321 | Net operating cash flows | 20,846 | 21,635 | 25874 |
Analysis of Profit and Loss/ Balance Sheets

Financial Performance Indicators

It is very important to an investor to forecast a company’s future level of profitability and the amount of risk involved in its future cash flows. This decides whether the investor is willing to purchase shares in a company or not.
A company’s past and present financial performances are significant indicators, which includes liquidity and cash management, dividend policies, overall performance of the company relative to its competitors in the industry. However in this particular report we will be emphasizing on Blackmores performance indicators which include liquidity, debt servicing, share price and risk, profitability etc.

Current Ratio

Current ratio = Current assets (Maturing within one year) Current liabilities (Due within one year) $’000 | 2012 | 2011 | 2010 | Current Assets | 99,993 | 78,521 | 80,485 | Current Liabilities | 41,547 | 33,221 | 34,457 | Current Ratio | 2.41 | 2.36 | 2.34 |

The main purpose of this indicator is to give an idea to a company indicating or pointing out its ability whether its short term assets (cash, receivables, inventory) are capable of paying back its current liabilities ( payables and debt). An ideal situation for Blackmores is to have its current ratio over 1 which they have clearly achieved (look at the figures above). This suggests that Blackmores would be able to pay off its debt or obligations when due, which shows how strong their financial health is which is a good sign.

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Return on Assets (ROA)

Return on asset = Net profit after tax Total Assets 2012 | 2011 | 2010 | 16% | 17.8% | 15.7% |
(Blackmores annual report 2013)
This is a very important indicator which measures Blackmores profitability relative to its total assets. Furthermore it indicates how efficient the management is using its earnings to generate income. It is always better to have a high ROA figure because it gives the investor the assumption that the management is allocating its resources in a wise manner. An effective management is where they make large profits with relatively lower investment.
Looking at the table below, Blackmores ROA figure has been varied but not significantly. It has had a constant rate in its return on assets. The highest ROA they have had in this particular period is in 2011, i.e. 17.8% where they have reduced the amount of total investment compared to 2010, but has increase their net profit after tax.

Return on Equity (ROE)

ROE = Operating profit after tax Equity (shareholder’s funds)

2012 | 2011 | 2010 | 33.8% | 34.5% | 32.2% |
(Blackmores annual report 2013)

Return on equity is a major indicator to its company as well as the outside world, especially to its existing and potential investors. This is because ROE measures the amount of income generated as a percentage of shareholders’ equity. This indicator is important to Blackmores because