Profitability Ratios

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Operating profit margin of year 2016 is 7.68 higher than year 2015 which is only 4.09. This is a good sign for Philips because they can gain higher profit before tax during 2016 compare to 2015.

Net profit margin of year 2016 is 0.043 slightly higher than year 2015 which is 0.016 show that the net profit gain of year 2016 is higher than 2015.

Return on assets of year 2016 is 4.58 which is higher than year 2015 only 2.17. This amount show that in year 2016 Philips more efficiently in utilizes its assets to generate earnings.

Return on equity of year 2016 is 11.94 is higher than year 2015 which is 5.73. Year 2016 the return of stockholder are earning more profit on their capital investment compare to year 2015.

The return on invested capital of year 2016 is 9.96 which is higher than year 2015 only 5.85. This reflected Philips has a greater bottom-line more effective to use the long-term capital in year 2016.

Interest coverage of year 2016 is 4.69 also higher than year 2015 which is 2.78 and this shows that in year 2016 Philips has less chance failing to meet its debt repayment obligations compare to year 2015.

Liquidity Ratios

Current ratio of year 2016 is 1.34 compared to year 2015 is 1.26. From the ratio, in year 2016 Philips has a high level of liquidity and less chance face the problem of cash squeeze.

Working capital of year 2016 is 3602 million EUR while year 2015 is 2625 million EUR which means year 2016 Philips has more internal funds to settle the current liabilities on time basic.

Leverage Ratios

Long term debt to capital of year 2016 is 0.24 is lower than year 2015 is 0.26. Ratio below 0.25 is more preferable so Philips has a good job in year 2016 which is 0.24 lower than 0.25 better than year 2015.

Debt to equity ratio of year 2016 is 0.32 which is lower than year 2015 is 0.35, year 2016 is better because Philips has more ability to borrow more additional funds.

Coverage Ratio of year 2016 is 4.69 is higher than year 2015 is 2.78 show that Philips has a signal progressively better creditworthiness in year 2016.

Long term debt to equity of year 2016 is 0.32 lower than year 2015 is 0.35, Philips has greater capacity to borrow additional funds compare to 2015.

Activity Ratios

Days inventory of year 2016 is 89.98 is higher than 2015 which is 85.96, year 2016 less inventory management efficiency than year 2015.

Inventory turnover of year 2016 is 4.06 while year 2015 is 4.25, the number of inventory turns of year 2015 is better than 2016.

Average collection period of year 2016 and 2015 is same which is 0.25, both year have the same length of waiting time received the payment.