The company’s equity amounts to $1,227,287 million, showing a decrease equivalent to 5.31%, compared with that at the close of December 31, 2016. The variation is mainly generated by changes in Other Comprehensive Income. Financial Indicators The main financial indicators for the fiscal period are shown below. Liquidity Ratios December 31, 2017 December 31, 2016 Current ratio Current assets / Current liabilities 1.57 0.47 Acid test of accounts receivable Current assets (less) trade receivables and accounts receivable from related parties / Current liabilities 1.29 0.31 These ratios measure Valorem S.A.’s ability to meet its short-term obligations, keeping an appropriate margin of safety. Debt Ratios December 31, 2017 December 31, 2016 Total debt Total liabilities / Total assets 30.81% 28.65% Short-term debt Current liabilities / Total assets 6.39% 8.47% The above indicators measure how and the extent to which short-term and long-term creditors participate in Valorem S.A.’s financing. Leverage December 31, 2017 December 31, 2016 Total Total liabilities / Equity 44.53% 40.15% Current liabilities / Equity 9.23% 11.88% Financial Financial obligations / Equity 35.77% 29.89% This compares financing vs. shareholders’ resources, and establishes the existing relationship between short-term and long-term financial commitments vs. Valorem S.A.’s
Liabilities Total consolidated liabilities were $2,243,914 million. Within this amount, the short-term and long-term financial obligations are the most representative, amounting to $982,297 million and accounting for 43.78% of total liabilities. Equity As of September 30, 2017, Valorem Business Group’s equity is $1,406,341 million, with a decrease of 2.48%, compared with the amount recorded as of December 31, 2016. Financial Indicators The main financial indicators for the fiscal period are below. Liquidity Ratios December 31, 2017 December 31, 2016 Current ratio Current assets / Current liabilities 0.93 0.82 Acid test of inventories Current assets (less) inventories / Current liabilities 0.58 0.54 Acid test of accounts receivable Current assets (less) trade receivables and accounts receivable from related parties / Current liabilities 0.72 0.51 These ratios measure Valorem Business Group’s ability to meet its short-term obligations, keeping an appropriate margin of safety. Debt Ratios December 31, 2017 December 31, 2016 Total debt Total liabilities / Total assets 61.47% 57.80% Short-term debt Current liabilities / Total assets 33.15% 30.35% The above indicators measure how and the extent to which short-term and long-term creditors participate in Valorem Business Group’s financing. Leverage December 31, 2017 December 31, 2016
Total liabilities / Equity 159.56% 136.97% Short-term Current liabilities / Equity 86.05% 71.92% Financial Financial obligations / Equity 69.85% 63.86% This compares third-party financing vs. shareholders’ resources, and establishes the existing relationship between short-term and long-term financial commitments vs. Valorem Business Group’s equity. Activity Ratios December 31, 2017 December 31, 2016 Portfolio turnover 15.67 10.54 Inventory turnover 10.39 14.33 Fixed-asset turnover 2.91 2.51 Operating asset turnover 4.61 4.96 Total asset turnover 1.29 1.25 Performance Ratios December 31, 2017 September 31, 2016 Gross margin Gross income / Operating revenue 18.95% 20.54% Operating margin Operating income / Operating revenue 1.14% 0.81% Net margin Net income / Operating revenue -0.79% -2.25% Equity performance Net income / Average equity -2.54% -6.02% Total asset performance Net income / Average total assets -1.02% -2.81% This is a relationship between earnings made in various instances of the income statement and the net income, and a relationship between net income and equity & total assets, showing the ability of these to generate earnings.