Business Ratio analysis finance help..

[Bexflower]

I have correctly calculated the ratios for my (fictional) buisness, however I don't really understand what they are telling me for example I don't know for each one if they're are considered good or bad or generally what each are telling me. So please could you help me with interpreting them?

Thanks!

Profitability ratios:
-Gross Profit Margin = 81.23% (forecasted for year 1 of my business)
-Gross Profit Margin = 80.89% (forecasted for year 3 of my business etc same in brackets below)

-Net Profit Margin = 31.03% (for year 1)
-Net Profit Margin = 27.57% (for year 3)

-Return on captial employed = 81.27% (for year 1)
-Return on capital employed = 68.84% (for year 3)

And...

Liquidity ratios:

-Current Ratio = 5.61 : 1 (for year 1)
-Current ratio = 5.78 : 1 (for year 3)

-Acid test = 5.11 : 1 (for year 1)
-Acid test = 5.32 : 1 (for year 3)

[Bexflower]

Any ideas?

[bednobs]

no

[rojash]

If you compare your results to (say Tesco), you'll see that they are very good (in fact, probably to good to be true).
http://finapps.forbes...o/Ratios.jsp?tkr=TESO

[Flyhalf]

Surely it depends on the business you're (supposedly) in?

[factor-fiction]

These seem extremely favourable. If I was an investor I'd worry that there had been some creative accounting