BWFF 2033 FINANCIAL MANAGEMENT
Page | 0
FIRST SEMESTER SESSION 2017/2018 (A171)
BWFF 2033 FINANCIAL MANAGEMENT
GROUP T
TOPIC:
ASSESSING FIRM’S FINANCIAL PERFORMANCE RATIO
& TREND ANALYSIS
(GROUP 1)
PREPARED FOR:
DR. RAJI JIMOH OLAJIDE
PREPARED BY:
NO.
NAME
MATRIC
NUMBER
COMPANY
1.
NURUL HUDA NAJWA BINTI ABU BAKAR
234299
2.
AFIFAH BINTI HAMZAH
234427
3.
NUR ATHIRAH BINTI ABDUL WAHID
239268
4.
MUHAMMAD FAIZ BIN ZULKIPLI
255242
5.
NORADILAH BATRISYIA BINTI MOKHTAR
247829
BWFF 2033 FINANCIAL MANAGEMENT
Page | 1
ASIA BRANDS BERHAD
a) Liquidity Ratio
EXPLAINATION :
Current Ratio
A current ratio for the year 2014, 2015 and 2016 is less encouraging for a business by decreasing
from year to year. It suggests that the business has not good enough in using cash to be able to
pay its debts, because their current asset increase followed by their current liability. Its means
their liability not easy to liquidity into cash.
Quick Ratio
The quick ratio measures the dollar amount of liquid assets available for each dollar of current
liabilities. Thus, the quick ratio for 2014 and 2015 of the company has liquid assets not available
to cover in their current liabilities. The higher the quick ratio for the year 2015, the better the
company’s liquidity position.
Liquidity Ratio
2014
2015
2016
Current ratio
=𝒄𝒖𝒓𝒓𝒆𝒏𝒕 𝒂𝒔𝒔𝒆𝒕
𝒄𝒖𝒓𝒓𝒆𝒏𝒕 𝒍𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒊
266,079,643
118,184,507
= 2.25
272,960,706
130,208,176
=2.10
220,848,579
214,484,751
= 1.03
Quick Ratio
=𝒄𝒖𝒓𝒓𝒆𝒏𝒕 𝒂𝒔𝒔𝒆𝒕 − 𝒊𝒏𝒗𝒆𝒏𝒕𝒐𝒓𝒚
𝒄𝒖𝒓𝒓𝒆𝒏𝒕 𝒍𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒊
266,079,643 − 177,924,155
118,184,507
= 0.75
272,960,706 − 160,715,158
130,208,176
=1.42
220,848,579 − 136,265,583
214,484,751
= 0.39
BWFF 2033 FINANCIAL MANAGEMENT
Page | 2
b) Asset management ratios
Asset management ratios
2014
2015
2016
Average collection period
=𝟑𝟔𝟓
𝑨𝒄𝒄𝒐𝒖𝒏𝒕 𝑹𝒆𝒄𝒆𝒊𝒗𝒂𝒃𝒍𝒆 𝑻𝒖𝒓𝒐𝒏𝒗𝒆𝒓
𝟑𝟔𝟓
𝟒. 𝟐𝟐
= 86 days
𝟑𝟔𝟓
𝟑. 𝟗𝟕
= 92 days
𝟑𝟔𝟓
𝟑. 𝟔𝟐
= 101 days
Receivables turnover
=𝑪𝒓𝒆𝒅𝒊𝒕 𝒔𝒂𝒍𝒆𝒔
𝑨𝒄𝒄𝒐𝒖𝒏𝒕 𝒓𝒆𝒄𝒆𝒊𝒗𝒂𝒃𝒍𝒆𝒔
𝟑𝟐𝟎,𝟒𝟔𝟑,𝟕𝟑𝟖
𝟕𝟓,𝟗𝟑𝟎,𝟗𝟎𝟕
= 4.22
𝟑𝟑𝟐,𝟕𝟒𝟑,𝟖𝟖𝟑
𝟖𝟑,𝟖𝟗𝟏,𝟑𝟔𝟒
= 3.97
𝟐𝟒𝟏,𝟖𝟐𝟎,𝟕𝟔𝟏
𝟔𝟔,𝟖𝟓𝟖,𝟗𝟓𝟕
= 3.62
Inventory turnover
= 𝑪𝑶𝑮𝑺
𝑻𝒐𝒕𝒂𝒍 𝒂𝒔𝒔𝒆𝒕
𝟏𝟓𝟑,𝟐𝟓𝟐,𝟔𝟓𝟏
𝟒𝟔𝟎,𝟏𝟓𝟎,𝟎𝟖𝟖
= 0.33
𝟏𝟕𝟖,𝟓𝟐𝟎,𝟒𝟔𝟓
𝟒𝟕𝟎,𝟕𝟗𝟔,𝟕𝟗𝟔
= 0.38
𝟏𝟑𝟗,𝟎𝟓𝟕,𝟐𝟎𝟕
𝟒𝟎𝟗,𝟏𝟕𝟐,𝟏𝟕𝟕
= 0.34
Total asset turnover
=𝑺𝒂𝒍𝒆𝒔
𝑻𝒐𝒕𝒂𝒍 𝒂𝒔𝒔𝒆𝒕
𝟑𝟐𝟎,𝟒𝟔𝟑,𝟕𝟑𝟖
𝟒𝟔𝟎,𝟏𝟓𝟎,𝟎𝟖𝟖
= 0.70
𝟑𝟑𝟐,𝟕𝟒𝟑,𝟖𝟖𝟑
𝟒𝟕𝟎,𝟕𝟗𝟔,𝟕𝟗𝟔
= 0.71
𝟐𝟒𝟏,𝟖𝟐𝟎,𝟕𝟔𝟏
𝟒𝟎𝟗,𝟏𝟕𝟐,𝟏𝟕𝟕
= 0.59
Fixed asset turnover
= 𝑺𝒂𝒍𝒆𝒔
𝑵𝒆𝒕 𝒇𝒊𝒙𝒆𝒅 𝒂𝒔𝒔𝒆𝒕
𝟑𝟐𝟎,𝟒𝟔𝟑,𝟕𝟑𝟖
𝟏𝟗𝟒,𝟎𝟕𝟎,𝟒𝟒𝟓
=1.65
𝟑𝟑𝟐,𝟕𝟒𝟑,𝟖𝟖𝟑
𝟏𝟗𝟕,𝟖𝟑𝟔,𝟎𝟗𝟎
= 1.68
𝟐𝟒𝟏,𝟖𝟐𝟎,𝟕𝟔𝟏
𝟏𝟖𝟖,𝟑𝟐𝟑,𝟓𝟗𝟖
= 1.28
BWFF 2033 FINANCIAL MANAGEMENT
Page | 3
Average collection period
Asia Brands company collects on its credit sales in 2014 until 2016 is increase from 86 days to
101 days. It took the longest to collect it when receivable turnover be increase from year to year.
Receivables turnover
They collected its outstanding credit accounts and reloan the money around 4.22 times on 2014
that it is the longest compare to 2015, its took nearly 3.97 times during the year and on 2016 are
the more fastest compare to 2014 and 2015, it’s just took around 3.62 times during the year.
Inventory turnover
Total Inventory turnover indicates that inventory how fast inventory can be sold and replaced
more frequently. In Asia Brands company, 2014 are the fastest inventory sold it with total
inventory turnover 0.33 than the year 2015 and 2016 despite is different not much.
Total asset turnover
Asset turnover ratio is the ratio of the value of a company’s sales or revenues generated relative
to the value of its assets. In 2015 are the highest asset turnover ratios that is 0.71 and decrease in
year 2016. Its mean their sales over total asset also decrease.
Fixed asset turnover
Fixed asset turnover generates a sales revenue of each dollar invested in fixed assets. In 2015 is
more efficient than 2014 and 2016 by using the fixed assets. In 2016 its decrease highly because
their sales also decrease.
BWFF 2033 FINANCIAL MANAGEMENT
Page | 4
c) Leverage Ratio
Debt ratio
The debt ratio is defined as the ratio of total in long-term and short-term debt to total assets,
expressed as a decimal or percentage. It can be interpreted as the proportion of a company’s
assets that are financed by debt. The debt ratio has increased drasticly in each year from 2014 to
2016 which is make their profit loss to the company.
Debt equity ratio
The Debt Equity ratio indicates how much debt a company is using to finance its assets relative
to the amount of value represented in shareholders’ equity and there’s increase fluently from the
year 2014 to 2016.
Leverage ratios
2014
2015
2016
Debt ratio
= 𝑻𝒐𝒕𝒂𝒍 𝒍𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒊𝒆𝒔
𝑻𝒐𝒕𝒂𝒍 𝒂𝒔𝒔𝒆𝒕
𝟐𝟏𝟕,𝟓𝟑𝟐,𝟗𝟗𝟒
𝟒𝟔𝟎,𝟏𝟓𝟎,𝟎𝟖𝟖
= 0.47
𝟐𝟑𝟎,𝟓𝟐𝟎,𝟕𝟓𝟖
𝟒𝟕𝟎,𝟕𝟗𝟔,𝟕𝟗𝟔
= 0.49
𝟐𝟏𝟒,𝟓𝟏𝟒,𝟒𝟔𝟑
𝟒𝟎𝟗,𝟏𝟕𝟐,𝟏𝟕𝟕
= 0.52
Debt equity ratio
= 𝑻𝒐𝒕𝒂𝒍 𝒅𝒆𝒃𝒕
𝑻𝒐𝒕𝒂𝒍 𝒆𝒒𝒖𝒊𝒕𝒚
𝟐𝟏𝟕,𝟓𝟑𝟐,𝟗𝟗𝟒
𝟐𝟒𝟐,𝟔𝟏𝟕,𝟎𝟗𝟒
= 0.90
𝟐𝟑𝟎,𝟓𝟐𝟎,𝟕𝟓𝟖
𝟐𝟒𝟎,𝟐𝟕𝟔,𝟎𝟑𝟖
= 0.96
𝟐𝟏𝟒,𝟓𝟏𝟒,𝟒𝟔𝟑
𝟏𝟗𝟒,𝟔𝟓𝟕,𝟕𝟏𝟒
= 1.10
Time interest earned
= 𝑬𝑩𝑰𝑻
𝑰𝒏𝒕𝒆𝒓𝒆𝒔𝒕
𝟒𝟐,𝟓𝟕𝟖,𝟔𝟏𝟓
𝟑𝟎,𝟖𝟏𝟏,𝟒𝟖𝟎
= 1.38
𝟔, 𝟓𝟓𝟑,𝟏𝟒𝟎
𝟏, 𝟔𝟏𝟒,𝟖𝟎𝟓
= 4.06
𝟒𝟓,𝟐𝟎𝟖,𝟗𝟓𝟓
𝟒𝟓,𝟐𝟐𝟐,𝟕𝟑𝟖
= 1.00
BWFF 2033 FINANCIAL MANAGEMENT
Page | 5
Time interest earned
Times interest earned (TIE) or interest coverage ratio is a measure of a company’s ability to
honor its debt payments. The ratio of that company not stable because its been increase in year
2014 to 2015 and decline in year of 2016.
d) Profitability ratios
Gross profit margin
Gross margin, alone, indicates how much profit a company makes after paying off its cost of
goods sold. It is a measure of the efficiency of a company using its raw materials and labor
during the production process. Gross profit from the year 2014 to 2016 have been decreasing but
not be followed by the sales.
Profitability ratios
2014
2015
2016
Gross profit margin
= 𝑮𝒓𝒐𝒔𝒔 𝒑𝒓𝒐𝒇𝒊𝒕
𝑺𝒂𝒍𝒆𝒔
𝟏𝟔𝟕,𝟐𝟏𝟏,𝟎𝟖𝟕
𝟑𝟐𝟎,𝟒𝟔𝟑,𝟕𝟑𝟖
= 52.18%
𝟏𝟓𝟒,𝟐𝟐𝟑,𝟒𝟏𝟖
𝟑𝟑𝟐,𝟕𝟒𝟑,𝟖𝟖𝟑
= 46.35%
𝟏𝟎𝟐,𝟕𝟔𝟑,𝟓𝟓𝟒
𝟐𝟒𝟏,𝟖𝟐𝟎,𝟕𝟔𝟏
= 42.50%
Net profit margin
=𝑵𝒆𝒕 𝒊𝒏𝒄𝒐𝒎𝒆
𝑺𝒂𝒍𝒆𝒔
𝟑𝟎,𝟖𝟏𝟏,𝟒𝟖𝟎
𝟑𝟐𝟎,𝟒𝟔𝟑,𝟕𝟑𝟖
= 9.61%
𝟏, 𝟔𝟏𝟒,𝟖𝟎𝟓
𝟑𝟑𝟐,𝟕𝟒𝟑,𝟖𝟖𝟑
= 0.49%
𝟒𝟓,𝟐𝟐𝟐,𝟕𝟑𝟖
𝟐𝟒𝟏,𝟖𝟐𝟎,𝟕𝟔𝟏
= 18.70%
Return on asset
= 𝑵𝒆𝒕 𝒊𝒏𝒄𝒐𝒎𝒆
𝑻𝒐𝒕𝒂𝒍 𝒂𝒔𝒔𝒆𝒕
𝟑𝟎,𝟖𝟏𝟏,𝟒𝟖𝟎
𝟒𝟔𝟎,𝟏𝟓𝟎,𝟎𝟖𝟖
=6.70%
𝟏, 𝟔𝟏𝟒,𝟖𝟎𝟓
𝟒𝟕𝟎,𝟕𝟗𝟔,𝟕𝟗𝟔
= 0.34%
𝟒𝟓,𝟐𝟐𝟐,𝟕𝟑𝟖
𝟒𝟎𝟗,𝟏𝟕𝟐,𝟏𝟕𝟕
= 11.05%
Return on equity
=𝑵𝒆𝒕 𝒊𝒏𝒄𝒐𝒎𝒆
𝑻𝒐𝒕𝒂𝒍 𝒆𝒒𝒖𝒊𝒕𝒚
𝟑𝟎,𝟖𝟏𝟏,𝟒𝟖𝟎
𝟐𝟒𝟐,𝟔𝟏𝟕,𝟎𝟗𝟒
= 12.70%
𝟏, 𝟔𝟏𝟒,𝟖𝟎𝟓
𝟐𝟒𝟎,𝟐𝟕𝟔,𝟎𝟑𝟖
= 0.67%
𝟒𝟓,𝟐𝟐𝟐,𝟕𝟑𝟖
𝟏𝟗𝟒,𝟔𝟓𝟕,𝟕𝟏𝟒
= 23.23%
BWFF 2033 FINANCIAL MANAGEMENT
Net profit margin
A higher net profit margin means that a company is more efficient at converting sales into
actual profit. Net profit margin are more efficient on the year 2016 because its increase drasticly
from 0.49 until 18.70 percent of their profit.
Return on asset
Return on asset evaluates how effectively the company employs its asset to generate a return and
it measures efficiency. The return on asset on 2016 are more effective when its net income
highest than the year of 2014 and 2015.
Return on equity ratio
The return on equity ratio is a profitability ratio that measures the ability of a firm to generate
profits from its shareholders investments in the company. The highest percentage of ROE in
2016 than the last year.
e) Market value ratios
Market Value Ratio
2014
2015
2016