Ratio Analysis Financial ratio analysis is a standard technique by a financial analyst to compare and analyze information. Under this financial ratio analysis a set of numbers that are form one or more of the financial statement and compared to each other to form ratios. For instance, to calculate asset ratios, firm¶s current liabilities are divided with the firm¶s current asset. This ratio gives the measurement of the firm¶s capacity to meet its current obligations. Firm ratios provide an insight into a particular firm operation. However they can provide analysts with better picture about the firm, if the value of the ratios obtained, are compared with another values. For examples, comparisons co mparisons of ratios can occur in three categories:
1.
Historical
comparison; this ratio looks at ratio of a firm from one period and compare it
to the same ratio from another period. For instance, the current ratio for example; managers could compare current fiscal year (2002) with current ratio with current ratio from the last fiscal year (2001) or o r the analysts could also compare this th is year¶s current ratio with current ratio from the last two fiscal years(2000 and 2001). This form of analysis is useful to analysts because it all a llow ow them t hem to detect any of emerging trends. 2.
Compare
analysis; this analysis involve, I. comparing of a particular firm, with other
firm¶s ratios within within the same industry. II. Comparing ratios of a particular firm, firm, with the industry average ratios. For instance, managers could take the current ratio of the company they work for (firm A) and compare it with the current ratio of firm B. here, it is essential that firm B is also from the same industry as firm A. before the comparison can be made between the current ratio of firm A with the average current ratio for the industry, we must first calculate the average current ratio for the industry. An industry average current is calculated by dividing the total current ratios of all the firm in the same industry with the number of firm within the industry. industry. 3.
A budget analysis: For this analysis, actual performance ratio of a firm compared with
the firm projected performance ratios. For instance, managers could construct are forecasted current ratio at the beginning of the fiscal period (January 2002) and then compare this ratio with the actual one at the end of their fiscal period (December 2002) . By making such managers would be able to determine, if what has been projected to happen, actual occurred. 1
Financial ratio are used by three main groups: 1.
Managers;
they employ ratio to help analyze, control, and thus improve their firm
operations. 2. Credits analysts, such as bank loan officers; they employ ratio to help ascertain a company¶s ability to pay its debt. 3. Stockholders (owners) : they employ ratio to measure a firm¶s growth prospect
Ratio analysis is divided into four categories based on the type of issues they address 1.
Liquidity
Ratios : A class of financial metrics that is used to determine a company's
ability to pay off its short-terms debts obligations. Generally, the higher the value of the ratio, the larger the t he margin of safety that the company possesses po ssesses to cover short-term debts. 2.
Asset Management Ratios: Asset
Management
Ratios attempt to measure the firm's
success in managing its assets to generate sales. For example, these ratios can provide insight into the success of the firm's credit policy and inventory management. These ratios are also known as Activity or Turnover Ratios. 3. Debt Management Ratios : Measure the extent to which a firm is using debt financing and the degrees of o f safety that the firm provides to creditors 4. Profitability Ratios:
Profitability
Ratios attempt to measure the firm's success in
generating income. These ratios reflect the combined effects of the firm's asset and debt management.
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Company
Profile
IOI Corporations
IOI Group's formation years were associated with real estate when it forayed into property development in 1982 followed by Oil Palm plantations in 1985. Today, IOI Group is internationally known as a leading global integrated palm oil player with operations stretching the entire palm value chain from seedlings to plantations to crop oil extraction to diverse value-added manufacturing across major continents - serving global markets in more than 65 countries. Close to its home-base in
Malaysia,
the Group is also
prominently known as one of the leading property developer with significant investment holdings of prime real-estates IOI Group employs more than 30,000 personnel of more than 23 different nationalities in 15 countries. IOI Group comprises of hundreds of companies helmed by IOI Corporation Bhd - a public listed company on the
Malaysian
Stock Exchange - with business activities under three key
segments
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4
Genting Plantations Berhad (Asiatic Development Berhad)
Genting Plantations Berhad ("Genting Plantations"), formerly known as Asiatic Development Berhad, is one of the fastest growing plantation companies listed on the Malaysia
Main
Board of Bursa
(formerly known as Kuala Lumpur Stock Exchange). Incorporated in
Malaysia
as a
private limited company on 29 September 1977, under the name of Asiatic Development Sdn Bhd, it became a wholly owned subsidiary of Genting of Genting Berhad ("Genting") on 22 February 1980 to spearhead Genting's plantation business. Listed on Bursa
Malaysia
on 30 August 1982, Genting P lantations currently ranks amongst
the top 10 listed companies in terms of market capitalization in the plantation sector. As at 30 April 2009, Genting Plantations is a 54.7% owned subsidiary of Genting Berhad. In April 1980, Genting Plantations commenced business through the successful acquisition acquisition of o f the Rubber Trust Group comprising 3 Hong Kong domiciled rubber companies which owned some 13,700 hectares of plantation land in Peninsular Malaysia. In June 1981, the Ko Rubber Companies, which owned about 10,000 hectares of plantation land in Peninsular Malaysia, were acquired by Genting Group and through a restructuring exercise in 1983, some 9,268 hectares of these plantation land and businesses were transferred to Genting Plantations. In the same year, Genting Plantations acquired a further 676 hectares of oil palm plantation and a 30 tone per hour oil mill. These acquisitions would have now proven to be most astute decisions judging by the development potential of some of the land and the capital appreciation that has since taken place, particularly the 3,200 hectare - Genting Kulai Besar Estate which is now being developed as the mega Genting Indahpura project in Kulai, Johor. Recognizing the scarcity of land in
Peninsular Malaysia,
Genting Group started making
inroads into Sabah. In 1985, Genting Group acquired Asiatic SDC Sdn Bhd, whose plantation business comprised some 4,000 hectares of oil palm plantation and a 20 tones per hour oil mill. In a subsequent rationalization of Genting Group's plantation activities, ownership of ASDC was transferred to Genting Plantations in 1991. A quick succession of land acquisitions in Sabah ensued for Genting Plantations, starting with the takeover of Tanjung Bahagia Sdn Bhd in 1988 which owns 8,094 hectares of jungle 5
land, followed by a joint venture arrangement with Landworthy Sdn Bhd (now known as Asiatic Tanjung Bahagia Sdn Bhd) in 1989 which added another 4,039 hectares. Between 1991 and 1996, another 5,730 hectares were acquired. With all these jungle lands fully cultivated, Genting Plantations,
with its long term vision to further its plantation interest, continues to expand its
land bank. Notable acquisitions include the 8,830-hectare agricultural land near the Sungai Tongod and the 5,611-hectare oil palm estate near Bukit Garam in 2001 and 2002 respectively. And in
May
2004, Genting
Plantations
has completed yet another acquisition of some 6,753
hectares of oil palm estates together with a 60 tones per hour oil mill in Kinabatangan, Sabah. In June 2005, Genting Plantations embarked on its maiden foray into the plantation business overseas. This expansion of plantation act ivities ivities in the Republic Repu blic of Indonesia is on a joint venture basis with a respectable palm oil producer in the country, the Sepanjang Group. The Genting Plantations-Sepanjang
70:30 joint venture will develop some 76,000 hectares of agricultural land
into oil palm plantation. Genting
Plantations
entered into another joint venture in 2008 to
develop 45,000 hectares in Ketapang. Following these recent acquisitions, Genting Plantation¶s current land bank is slated to increase to over 186,000 hectares in Indonesia and
Malaysia;
an
impressive 14-fold increase since 1980. The Group continues to be actively working towards adding more. At present, Genting Plantations owns 6 oil mills, one in Peninsular Malaysia, which attained the ISO 9002(1994) Quality
Management
Systems status in 2001 (which was subsequently
updated to the ISO 9001(2000) in 2002) and the others in Sabah. Total milling capacity to date is 265 tones per hour. In 1994, Genting Plantations entered into a joint venture with a Sarawak state agency to establish a 30/60 tones per hour palm oil mill in Serian, Sarawak. This mill scored a hat trick when it was awarded the Anugerah Industri Sawit
Malaysia,
in recognition of its high
oil extraction rate, by PORLA since its commissioning in August 1997. Whilst plantation business remains the core activity, Genting P lantations has since ventured into property development with the objectives to unlock the potential of its strategically located land bank and to reduce its dependence on single source income.
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The first project by Genting Plantation¶s property arm, Genting Property Sdn Bhd ("Genting Property")
is the 55-hectare Genting Cheng Perdana in Central
Melaka.
Officially launched in
October 1993, the project has turned out to be quite a success with its first phase of single- and double-storey houses completed and handed over to purchasers about 9 months ahead of schedule. Since then, 3 other phases have been completed and handed over in good time. What followed next was the launching of the 284-hectare Genting Permaipura project in late 1994. Located about 10 km from the fast-growing town of Sungai Petani, Kedah, a town poised to become the commercial/industrial hub of the northern region in Malaysia, Genting Permaipura comprises commercial and entertainment centers, bungalow lots, residential houses and shopoffices. Also included in this project is an 18-hole golf course with a 2-tier driving range which sprawls over 160 acres of prime land against the majestic backdrop of Gunung Jerai and a clubhouse, The Genting Permaipura Golf & Country Club. Further, in its push to the forefront of property development, Genting Property had embarked on another project - the massive Genting Indahpura or "Beautiful City" project at Kulai, Johor. Spanning over 30 years, this project located just 30 km north from the bustling and fast growing city of Johor Bahru involves the development of about 3,200 hectares of plantation land in Kulai, Johor, into a self-contained township. Genting Indahpura is conceptualized as a fully-integrated development complementing the State's plan to upgrade the existing Kulai town into a subregional centre complete with all modern amenities and convenience, and generously landscaped town parks and green lungs for healthy and recreational pursuits. The project's attraction lies in its excellent location which enjoys easy access from virtually every transportation route - road linkages through the North-South Expressway and the Second Link from Singapore; air linkages through the Sultan Ismail International airport in Senai 10 minutes away; and rail links through the Federal Railway lines. Genting Plantations also has other large tracts of land with development potential. These will continuously be monitored as to the t he timing and the type of o f development most suited in relation to their locations. With low land holding cost and huge reserves of own land bank, Genting Plantations
can aspire to play a bigger role ro le in the property sector in Malaysia in the near future.
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Moving
forward, the Group, through its wholly owned subsidiary, Asiatic Centre for
Genome Technology Sdn Bhd ("ACGT"), has ventured into the biotechnology industry in 2006. ACGT has set up an equally owned joint venture with Synthetic Genomics Inc ("Synthetic Genomics"), a privately held company dedicated to commercializing synthetic genomic processes and naturally occurring processes for alternative energy resources. The joint venture is tasked to carry out research and development activities on the use of genomics-based techniques and tools to increase the yield and profit stream from crop plants. It will initially focus on whole genome sequencing of oil palm. Synthetic Genomics, which was founded by genome pioneer J Craig Venter, Ph.D., will use its expertise in DNA sequencing to enable SGSI-Asiatic Limited to develop a comprehensive genomic study of oil palm whilst ACGT will be the exclusive agent and sole licensee, on a worldwide basis, for commercializing the technologies developed. In
May
2008, the joint venture announced that it had successfully
completed the first draft assembly of the oil palm genome. For more information, please visit www.acgt.asia.. www.acgt.asia Genting
Plantations
is actively involved in environmental conservation and committed to
sustainable development of oil palm cultivation. Since 1999, Genting
Plantations
has
collaborated with World Wide Fund for Nature ("WWF") in support of its " Partners for Wetlands") programmed to conserve the Kinabatangan floor plains aimed at rehabilitating and restoring reverie and wetland habitats as wildlife sanctuary and preservation of biodiversity. The Kinabatangan floodplains will serve as a corridor for wildlife movement of Borneo flagship species, such as pygmy elephant, orang utan and proboscis monkey. The Group, noted as the first plantation company to participate in the programmed, has extended its partnership with WWF for another 15 years from 2006. On the international front, the Group is one of the first 14 members of the Roundtable of Sustainable Palm Oil ("RSPO"), a multi-stakeholder association, whose primary objective is to promote the production and use of sustainable palm oil through co-operation within the supply chain and open dialogue with its stakeholders. Genting Plantations will continue to pursue and adopt good plantation management practices to uphold the well being of the environment it operates in. 8
IJM Plantations Berhad
IJM is one of Malaysian leading construction and it listed on the main board of Bursa Malaysia.
It¶s business activity encompass construction, construction, property property development, manufacturing manufacturing
and quarrying, infrastructure concessions and plantations. Headquartered in Selangor,
Malaysia
. IJM¶s regional aspirations have seen it establish a
growing present in neighboring developing market with operations presently spanning 11 countries, with primary focus in Malaysia, India United Arab Emirates, E mirates, Chine and Indonesia. IJM¶s phenomenal growth over the past two and half decades is is the result of its its unwavering focus on its its core competencies, diversification into into strategically related business and selective selective expansion into new markets. A product of a merger between three medium sized local construction companies - IGB Construction Sdn Bhd, Jurutama Sdn Bhd and Mudajaya Sdn Bhd, IJM was born in 1983 with an overarching purpose of competing more effectively against bigger foreign rivals. The Company rapidly established itself as a professionally managed construction group and soon gained market acceptance. Over the years, the Company progressively built on its competitive prowess, financial capacity and repute reput e to strengthen its footing as a serious local contractor. In April 2007, IJM acquired the Road Builder Group ("RBH"), its nearest competitor, to augment its position as the country's second biggest builder. In addition to bolstering its construction order book, property land bank and infrastructure portfolio, the enlarged Group enabled IJM to realize considerable synergistic benefits from the merger, greater local prominence as well as attain a more sizeable balance sheet to bid for larger jobs and facilitate its expansion into overseas markets. IJM¶s undertaking as a property developer began as a natural progression from its vast experience and expertise in construction. The Group¶s property arm has since grown considerably. Listed on the Main Board of Bursa
Malaysia,
IJM Land Berhad is presently one of
the largest property developers in Malaysia with sprawling townships, commercial buildings and high-rise condominiums under development in key growth areas throughout the country. The Group has also made significant inroads as a reputable developer into India in recent years.
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Besides this, it has also undertaken ventures overseas in the past such as in USA, Singapore and Australia. Initially supporting its manufacturing and quarrying operations with in-house orders, the Group's Industry Division quickly grew its operations into scalable core activities focused on demand outside the Group. IJM continued to expand on its operations in the Division through strategic acquisitions such as the takeover of Industrial Concrete Products Berhad in 2004 and successful market diversifications into China, India and Pakistan. Leveraging on its construction expertise, the Group also targeted infrastructure investments to create long-term recurrent income streams. Initial advancements into concession assets in Malaysia
however proved elusive, thus an international focus was adopted. IJM¶s involvement in
overseas infrastructure privatization (Build-Operate-Transfer) schemes met with tremendous success. Amongst the Group¶s investments in major overseas infrastructure projects are the Western Access Tollway in Argentina, five tolled highways in India and the Binh An water treatment concession in Vietnam. In
Malaysia,
IJM operates two urban highway and port
concessions from the RBH merger and has one toll road currently being constructed. The Group had previously invested in and profitably pro fitably sold several infrastructure assets in China. The Group also showed considerable foresight by venturing into plantations in 1985 as a source of steady income to cushion the cyclical nature of its core construction business. This investment has since paid off handsomely. Now listed on the
Main
Board of Bursa
Malaysia,
IJM Plantations Berhad has contributed significantly to the Group's earnings over the years and also helped bolster the Group during the economic downturn in the Asian financial crisis in 1997. It is currently expanding its plantation land bank into Indonesia and is at the initial stages of its oil palm fresh fruit bunches purchasing and milling business in India.
When IJM went public in 1986, it had a market capitalization of R M66 million and total assets of R M172 million. As at 31 March 2009, the Group's market capitalization and total assets stood at around R M4 billion and R M12 billion respectively.
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Batu Kawan Berhad Primary
SIC: Industrial Inorganic Chemicals, Not Elsewhere Classified, Primary NAICS: Inorganic Dye and Pigment Manufacturing Description: Manufacturing: Investment holding company with w ith subsidiaries engaged in the production of chemicals, general transport and haulage services, letting of warehouse facilities, investment holding, money lending, plantation p lantation operational and manufacturing International public company Wisma Taiko, 1 Jalan S P Seenivasagam, Ipoh, 30000, Malaysia ()60 05 241 7844, 60 05 254 8054 fax,
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Liquidity
Ratios
A class of financial metrics that is used to determine a company's ability to pay off its shortterms debts obligations. Generally, the higher the value of the ratio, the larger the margin of safety that the company possesses po ssesses to cover short-term debts.
1.
Current
Ratio
A liquidity ratio that measures a company's ability to pay short-term obligations. The Current Ratio formula is:
Also known as "liquidity ratio", "cash asset ratio" and "cash rat io".
Year 2009
2008
2007
2006
2005
Company IJM Plantations Berhad
-
2.45
1.73
1.92
1.55
Asiatic Development
-
6.85
5.90
5.67
5.00
Batu Kawan Berhad
9.97
5.87
10.67
11.18
8.53
IOI Corporation
4.70
3.11
5.05
3.59
3.71
Average
7.34
4.57
5.83
5.59
4.70
Times Series Analysis IJM Plantation Berhad¶ vision is to be a leading regional plantation group. For their current ratio in 2005 was 1.55. The coming next year, in 2006 increased to 1.92, about 0.37 diff. In 2007, suddenly its decreased to 1.73 from the past year. After that, its current ratio increased back in 2008, becomes 2.45. For the Asiatic Development, their current ratio for 2005 started with 5.00. Then, its become up in the next year, becomes 5.67. After that, its continuously increasing in the 2007¶ current ratio becomes 5.90. Its also increased again in 2008, becomes 6.85. 12
Looking the others company like Batu Kawan Berhad, current ratio for that company in year 2005 started by 8.53. After that, in 2006, its extremely increased by 11.18. However, its becomes 10.67 in 2007. Unfortunetly, its still decreased in year 2008, becomes 5.87. IOI Corporation is one of the big company. In 2005, the current ratio was 3.71. Its decreased in year 2006, becomes 3.59 less than past year. However, in the next year, in 2007, becomes 5.05. After that, it decreasing back in year 2008, becomes 3.11.
Cross Sectional (2008) In this case, all company has a comfortable current ratio based on the rule of thumb, a figure greater than 1.5 or 2.0 is required to be comfortable. This means that any point in time, the company has the ability to meet its short-term obligations of the company. However, IOI Corporation and IJM Plantations Berhad¶s current ratio is below than the industry average, 4.57. So, its liquidity position in comparison to other ot her firms in the same industry, is relatively weak.
2.
Quick Ratio
An indicator of a company's short-term liquidity. The quick ratio measures a company's ability to meet its short-term obligations obligations with its most liquid assets. The higher the quick ratio, the better the position po sition of the company. The quick ratio is calculated as:
Also known as the "acid-test ratio" or the "quick "qu ick assets ratio".
Year 2009
2008
2007
2006
2005
Company IJM Plantations Berhad
-
1.94
1.40
1.41
1.22
Asiatic Development
-
5.75
5.09
4.54
3.76
Batu Kawan Berhad
8.86
4.72
9.56
10.12
7.13
IOI Corporation
3.41
2.10
3.89
4.87
4.60
Average
6.14
3.63
4.99
5.235
4.18
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Times Series Analysis The IJM Plantation Berhad¶s quick ratio for 2005 was 1.22. After that, it¶s increased by 1.41, in 2006. However, in 2007, its quick ratio decreased to 1.40, diff by 0.01. Then, it¶s increased back in 2008, by 1.94. In year 2005, Asiatic Development¶s quick ratio started by 3.76. Although, in 2006, its decreasing about 0.78, by 4.54. Then, it¶s increasing back in 2007 by 5.09. Its also increasing again in the coming year becomes 5.75. For Batu Kawan Berhad, their quick ratio in 2005 was 7.13. After that, it¶s becomes 10.12 in the coming year, in 2006. However, its decreasing to 9.56 in 2007. Then, its continuously decreasing next year becomes 4.72. The other company like IOI Corporation has their quick ratio. In 2005, its quick ratio started by 4.60. However, it¶s becomes 4.87 in 2006. It¶s decreasing to 3.89 in 2007, less the year before. After that, the decreasing continues in next year, by 2.10.
Cross Sectional (2008) Since the ratio is above 1.0, this means that the firm can meet its short-term obligations without its inventories being liquidated. The industry average quick ratio is 3.63. So, IOI Corporation and IJM Plantations Berhad¶s quick ratio is low in comparison with other firms in the industry.
3. Cash Ratio
The ratio of o f a company's total tot al cash and cash ca sh equivalents to its current liabilities. liabilities. The cash ratio is most commonly used as a measure of company liquidity. It can therefore determine if, and how quickly, the company can repay its short-term debt. A strong cash ratio is useful to creditors when deciding how much debt, if any, they would be willing to extend to the asking party. Cash ratio calculated as :
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Year 2009
2008
2007
2006
2005
Company IJM Plantations Berhad
-
1.23
0.91
0.92
0.90
Asiatic Development
-
1.79
1.99
1.37
0.67
Batu Kawan Berhad
0.22
0.05
0.05
0.10
0.07
IOI Corporation
0.30
0.18
0.30
0.49
1.66
Average
0.26
0.81
0.81
0.72
0.83
Times Series Analysis IJM Plantations Berhad has their own cash ratio. In year 2005 , its cash ratio started with 0.90. There¶s not much diff in the next year, becomes 0.92. After that, its decreased to 0.91 in the coming year, 2007. Then, it¶s increasing back by 1.23 in 2008. The cash ratio for Asiatic Development in 2005 was 0.67. Then, its been increased in 2006 by 1.37 higher than past year. After that, its increasing again in 2007 becomes 1.99. However, its been decreasing coming next year, becomes 1.79. The Batu Kawan Berhad is another company has their own cash ratio. In 2005, its has cash ratio about, 0.07. After that, in 2006, it¶s has been increasing to 0.10. However, it¶s becomes 0.05, decreased by 0.05 less than past year. In 2008, that company has its cash ratio, 0.05 too. For IOI Corporation, its cash ratio in 2005 was 1.66. Its starting with good condition, and has been decreasing in 2006, becomes 0.49. After that, I¶ts becomes decreasing again in 2007, by 0.30. Then, it¶s still decreasing in the coming co ming year becomes 0.18.
Cross Sectional (2008) Industrial average for cash ratio in year 2008 is 0.81. The best company to pay their debt by cash is Asiatic Development 1.79. That mean, Asiatic Development can pay their every R M 1 debt with R M1.79 with their cash. That¶s followed by IJM Plantation (1.23) and IOI Corporation with 0.18. The worst company is Batu Kawan with 0.05 as a result.
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Asset Management Ratios Asset
Management
Ratios attempt to measure the firm's success in managing its assets to
generate sales. For example, these ratios can provide insight into the success of the firm's credit policy and inventory management. manage ment. These ratios are also known as Activity or Turnover Ratios.
1. Inventory Turnover
A ratio showing how many times a company's inventory is sold and replaced over a period. the
The days in the period can then be divided by the inventory turnover formula to calculate the days it takes to sell the inventory on o n hand or "inventory turnover turno ver days".
Year 2009
2008
2007
2006
2005
Company IJM Plantations Berhad
-
11.83
13.99
10.38
16.86
Asiatic Development
-
7.40
7.59
3.02
4.33
Batu Kawan Berhad
7.28
6.63
7.79
9.73
7.44
IOI Corporation
8.86
5.99
6.72
6.73
8.44
Average
8.07
7.96
9.02
7.47
9.27
Times Series Analysis Inventory turnover for IJM
Plantations
Berhad, show that changes are not consistent.
Inventory turnover in 2005 stood at 16.86 but was reduced in 2006 to 10:38. In 2007, back inventory turnover increased to 13.99. Inventory turnover decreased again in 2008 with 11.83
16
The Asiatic Development also shows the changes that are not consistent. Inventory turnover for 2005 was already 4.33 decreases to 3.02 in 2006. But in year 2007, Asiatic Development has increased inventory turnover to 7.59, but has declined slightly in year 2008 with 7.40. Inventory turnover for the Batu Kawan Berhad for the year 2006 is increased from 9.73 in 2005 with the 7:44. For the years 2007 and 2008 occurred with a decrease respectively 7.79 and 6.63 While the inventory for IOI Corporation shows continuous reduction. Inventory turnover in 2005 was 8:44 was reduced to 6.73 in 2006. Inventory turnover in 2007 has decreased slightly to 6.73 and in 2008 with 5.99. But, in 2009 it is increase to 8.86.
Cross Sectional (2008) The Inventory turnover industrial industrial Average for for all company at year 2008 is is 7.96.
IOI
Corporation was show Inventory turnover is 5.99, it was above the Inventory turnover industrial Average. It company is not effective in changes inventory to sale.
2.
Days Sales Outstanding - DSO
A measure of the average number of days that a company takes to collect revenue after a sale has been made. A low DSO number means that it takes a company fewer days to collect its accounts receivable. A high DSO number shows that a company is selling its product to customers on credit and taking longer to collect money. Days sales outstanding is calculated as:
17
Year 2009
2008
2007
2006
2005
Company IJM Plantations Berhad
-
42.37
33.80
27
13.51
Asiatic Development
-
35.13
46.19
61.67
51.92
Batu Kawan Berhad
111.03
118.48
141.95
114.11
109.29
IOI Corporation
41.18
60.93
54.34
54.24
43.24
Average
76.105
64.23
69.07
64.25
54.49
Times Series Analysis Days sales outstanding for IJM Plantation show that continues to increase. At year 2005 is 13.51 was increased to 27.00 in 2006. In 2008, the IJM plantation continued increase to 42.37 compared 33.80 in 2007. For the Asiatic Development company show changes that are not consistent. Days sales outstanding for 2005 was already 51.92 increase to 61.67 in 2006. But in 2007 Asiatic Development has decline of Days sales outstanding to 46.19 and 35.13 at 2008. The Days sales outstanding in 2005 for Batu Kawan Berhad is 109.29, it is increase to 114.22 at 2006. In 2008, it it is decline to 118.48 compared compared at year 2007 with 141.95. At year 2009, it it continues to decrease with 111.03. While at year 2005 the Days sale outstanding of IOI of IOI Corporation is 43.24, increase to 54.24 at year 2005. In year 2006, 2007, and 2008, the Days sales outstanding that continues to increase with respectively at 54.24, 54.34 and 60.93. But at year 2009, it was decline to 41.18.
Cross Sectional (2008) The Days sales outstanding industrial average for year 2008 is 64.23. IJM Plantations Berhad, Asiatic Development, Development, IOI Corporation C orporation below industrial average of days sales outstanding. outstanding. IJM Plantations Plantations Berhad company fewer days to collect its accounts receivable that is 33.8 day¶s followed by
Asiatic Development Development (46.19 day¶s) and IOI Corporation 54.34 days. While While Batu Kawan Berhad are not effective to collect their accounts receivable that¶s is 118.48 day¶s.
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3. Average Payment Period
APP. The number of days a company takes to pay off credit purchases. It is calculated as:
Year 2009
2008
2007
2006
2005
Company IJM Plantations Berhad
-
59.44
54.22
48.76
45.49
Asiatic Development
-
80.11
109.97
111.99
119.93
Batu Kawan Berhad
48.59
58.40
58.09
48.29
50.31
IOI Corporation
11.59
9.31
7.72
45.02
42.31
Average
22.85
51.815
57.5
63.52
64.51
Times Series Analysis Average Payment Period f or or the company IJM Plantations Berhad shows changes that are not consistent.
At year year 2005 it is is 45.49, was increase increase to 48.76 at at year 2006. Further Further increase
occurred in 2007 and 2008, respectively 54.22 and 59.44. For the Asiatic Development show changes that continues to decrease. At year 2005, it is 119.93 was decrease to 111.99 at year 2006. In year year 2007 and 2008, Average Payment Period was continues to decrease respectively 109.97 and 80.11. Whereas, average payment period for Batu Kawan Berhad show that is also inconsistent. For 2005 is 50.31 has been reduced to 48.29 on year 2006. In 2007 it occurred to the accretion 58.09, and continues to grow in 2008 with 58.40. But, in 2009 it come back to decrease at 48.59. IOI Corporation shows average payment period of four years is not consistent. For year 2005 is 42.31 has been increased to 45.02 in 2006. In year 2007 was a relatively large decrease occurred in the 7.72, but increased again slightly in 2008 with 9.31 and 2009 with 11.59.
Cross Sectional (2008) Average payment period industrial average for all company show of year 2008 is 51.815. The most successful company manage their account payable are Asiatic Development, IJM 19
Plantations
Berhad and Batu Kawan Berhad by taking 109.97, 59.44 and 58.09 day¶s. It¶s above
the industrial average. While IOI Corporation is taking the fewer days to settle their account payable by taking 9.31 day¶s.
4. Fixed-Asset Turnover Ratio
A financial ratio of net sales to fixed assets. The fixed-asset turnover ratio measures a company's ability to generate net sales from fixed-asset investments - specifically property, plant and equipment (PP&E) - net of depreciation. A higher fixed-asset turnover ratio shows that the company has been more effective in using the investment in fixed assets to generate revenues.
The fixed-asset turnover ratio is calculated as:
Year 2009
2008
2007
2006
2005
Company IJM Plantations Berhad
-
0.59
0.36
0.33
0.44
Asiatic Development
-
0.06
0.64
0.43
0.41
Batu Kawan Berhad
0.08
0.10
0.09
0.11
0.10
IOI Corporation
1.46
1.50
1.15
0.89
0.90
Average
0.77
0.56
0.56
0.44
0.46
Times Series Analysis Fixed-asset turnover ratios for the IJM
P lantations
Berhad show changes changes that are not
consistent. At year 2005, it is 0.44 was decrease to 0.33 at at year 2006. In year 2007, 2008, and and 2009 it was decrease respectively to 0.36, 0.59 and 0.69. For Asiatic Development in year 2005 is 0.41. The Fixed-asset turnover ratio in year 2006 and 2007 was increasing respectively to 0.43 and 0.64. But in year 2008, it was decrease to 0.06.
20
Fixed-asset turnover ratios ratios for the Batu Kawan Berhad show changes that are not consistent. In year 2005, it is 0.10 was increase to 0.11 at year 2006. A fixed-asset turnover ratio for year 2008 is 0.10, it was increase compared at year 2007 with 0.09 in year 2009, it was decrease to 0.08. IOI Corporation shows Fixed-asset turnover ratios changes that are not consistent. At year 2005, it is 0.09 was decrease to 0.89 for year 2006. For year 2007 and 2008, it was increase respectively to 1.15 and 1.50.
Cross Sectional (2008) Fixed-asset turnover ratios industrial average for all company show of year 2008 is 0.56. The best company their fixed asset is IOI Corporation and Asiatic Development because their fixed asset turnover are 1.15 and 0.64. The worst company manage their fixed asset is Batu Kawan Berhad, 0.09. Followed by IJM Plantations (0.36)
5. Total Asset Turnover
The amount of o f sales generated for every dollar's worth of assets. It is calculated by dividing sales in dollars by assets in dollars do llars.. Formula:
Also known as the Asset Turnover Ratio. Year 2009
2008
2007
2006
2005
Company IJM Plantations Berhad
-
0.48
0.32
0.29
0.39
Asiatic Development
-
0.04
0.40
0.30
0.30
Batu Kawan Berhad
0.08
0.10
0.08
0.10
0.10
IOI Corporation
1.60
1.77
1.53
0.59
0.62
Average
0.69
0.59
0.58
0.32
0.35
21
Times Series Analysis Total Asset Turnover for the IJM Plantations Berhad shows changes changes that are not consistent. At year 2005, it is 0.39 was decrease to 0.29 at year 2006. For year 2007 and 2008, it was increase respectively to 0.32 and 0.48. Total Asset Turnover for for the Asiatic Development shows changes that are not consistent. consistent. At year 2005, it is 0.30 and still same for year 2006 at 0.30. For year 2008, it was decrease to 0.04 if compared to 0.40 at year 2007. The company of Batu Kawan Berhad, also shows the changes that are not consistent. At year 2005 and 2006, it is respectively 0.10. Total Asset Turnover at year 2007 was decrease to 0.08, but at year 2008 it was become increase to 0.10. For year 2009, it was dropped back to 0.08. The Total Asset Turnover for IOI Corporation, show that at year 2005 was already 0.62 decreases to 0.59 in 2006. For year 2007 and 2008, it was increase respectively to 1.53 and 1.77. But at year 2009, it was decrease to 1.60.
Cross Sectional (2008) Total Asset Turnover industrial average for all company show of year 2008 is 0.59. IJM Plantation
Berhad, Asiatic Development and Batu Kawan Berhad show the total asset turnover is
under total industrial average. While, IOI Corporation show that the total asset turnover is above the total industrial average. IOI Corporation is a best performance because it was above industrial average. If the total asset turnover is small, it meaning total asset turnover do not help in carry out sales.
22
Debt Management Ratios Measure
the extent to which a firm is using debt financing and the dergree of safety that
the firm provides to creditors
1. Debt Ratio
A ratio that indicates what proportion p roportion of debt a company has relative to its assets. The measure gives an idea to the t he leverage of the company along with the potential risks the company faces in terms of its debt-load. debt-load.
Year 2009
2008
2007
2006
2005
Company IJM Plantations Berhad
-
0.22
0.29
0.34
0.38
Asiatic Development
-
0.07
0.09
0.08
0.07
Batu Kawan Berhad
0.02
0.02
0.02
0.02
0.02
IOI Corporation
0.52
0.46
0.37
0.41
0.58
Average
0.27
0.1925
0.1925
0.2125
0.2625
Time Series Analysis In year 2005, IJM Plantations Berhad¶s debt ratio was 0.38. An decreased happened in year 2006, about 0.04 which is 0.34. In year 2007, its clearly decreased from 0.34 to 0.29 from the past year. Its extremely decreased in year 2008 2 008 when debt ratio are 0.22 from the past year. Debt ratio for the Asiatic Development company in year 2005 was 0.07. An increased has been happened in year 2006 which is 0.01 diff, becomes 0.08. After that, when new year comes, in year 2007, increased has has been existed when the debt ratio was 0.09, diff about 0.01. Then, its its been finally decreased in year 2008, about 0.07 exactly the same with year 2005. For the Batu Kawan Berhad, their debt ratio for year 2005, 2006, 2007, 2008 and 2009 are 0.02. Its become constant for the year continuously.
23
The IOI Corporation¶s debt ratio for 2005 is 0.58. For the coming year, in 2006, its has been decreased to 0.41. Its also decreased in year 2007, which is 0.37. After that, its finally increased in 2008, which is 0.46 from the past year.
Cross Sectional Analysis (2008) In 2008, the debt ratio for industry average is 0.1925. However, IJM Plantations Berhad¶s debt ratio is 0.22, and IOI Corporation¶s debt ratio is 0.46 which means that his creditors have supplied for more than half of the firm¶s total financing. Furthermore, to make things worst, that company debt ratio exceeds the industry average of 0.1925 and this may make it costly for that company to borrow additional funds without first raising more equity capital. But, the others company, which is Asiatic Development and Batu Kawan Berhad are good on their debt ratio.
2.
Debt/Equity Ratio
A measure of a company's financial leverage calculated by dividing its total liabilities by stockholders' equity. It indicates what proportion of equ ity and debt the company is using to finance its assets.
Note: Sometimes only interest-bearing, long-term debt is used instead of total liabilities in the
calculation. Also known as the Personal Debt/Equity Ratio, this ratio can be applied to personal financial statements as well as companies'
Year 2009
2008
2007
2006
2005
Company IJM Plantations Berhad
-
0.29
0.41
0.51
0.61
Asiatic Development
-
0.07
0.10
0.09
0.08
Batu Kawan Berhad
0.03
0.02
0.12
0.02
0.02
IOI Corporation
0.82
0.85
0.59
0.71
0.94
Average
0.43
0.3075
0.305
0.3325
0.4125
24
Times Series Analysis In year 2005, the debt/equity ratio for IJM
P lantations
Berhad is 0.61. For the next year,
which is in 2006, its becomes decreased to 0.51. Its also decreased in the next year in 2007, at 0.41. Furthermore, its extremely decreased to 0.29 in year 2008. The Asiatic Developments debt/equity ratio for 2005 is 0.08. Its been increased in year 2006, from 0.08 to 0.09. Its still increased in the next year, by 0.01 diff, which is 0.10. Unfortunetly, its become decreased in year 2008, by 0.07. The Batu Kawan Berhad¶s debt/equity, for 2005 was 0.02. For 2006 is still constant whish is 0.02. Eventually, in year 2007, the debt/equity has been increased from 0.02 to 0.12, differences by 0.10. However, its down back in year 2008 at 0.02. The company of IOI Corporation got their debt/equity by 0.94 in year 2005. For the next year, was 0.71 has been decreased by 0.23. Then, in year 2007, its also decreased by 0.12 becomes 0.59. However, its suddenly increased in year 2008, by 0.26, which is 0.85.
Cross Sectional Analysis (2008) In 2008, the debt/equity ratio for industry average is 0.3075. This time, the IOI Corporation¶s debt/equity ratio is 0.85 which means that his creditors have supplied for more than half of the firm¶s total financing. Furthermore, to make things worst, that company debt ratio exceeds the industry average of 0.3075 and this may make it costly for that company to borrow additional funds without first raising more equity capital. But the others company, like IJ M
Plantations
Berhad, Asiatic Development and Batu Kawan Berhad are good on their debt/equity ratio.
3. Equity Multiplier
A measure of financial leverage. Calculated as:
Like all debt management ratios, the equity multiplier is a way of examining how a company uses debt to finance its assets. Also known as t he financial leverage ratio or leverage ratio.
25
Year 2009
2008
2007
2006
2005
Company IJM Plantations Berhad
-
1.29
1.41
1.52
1.61
Asiatic Development
-
1.07
1.10
1.09
1.09
Batu Kawan Berhad
1.05
1.04
7.66
1.04
1.04
IOI Corporation
1.82
1.85
1.59
1.71
1.63
Average
1.44
1.31
2.94
1.34
1.34
Times Series Analysis Equity multiplier is a measure of financial leverage. We start from IJ M Plantations Berhad¶s ratio for 2005 is 1.61. After 1 year, its has been decreased by 0.09 which is from 1.61 to 1.52. In year 2007, its also has been decreased by 0.11 from 1.52 to 1.41. Unfortunetly, its still decreasing in the next year from 1.41 to 1.29. Lets we talk about the t he Asiatic Development¶s equity multiplier. In 2005, its started with 1.09. After 1 year, its still exactly the same which is 1.09. However, its has been increased by 0.01 in year 2007 by 1.10. But, its not long time, its been decreased back in 2008 by 1.07 from 1.10 in the past year. Batu Kawan Berhad is also, the best company in
Malaysia.
In 2005, its got their equity
multiplier by 1.04, and its constant continuously until 2006. After that, its has been increased by 6.62 from 1.04 to 7.66 in 2007. However, its suddenly decreased in year 2008 and still the same amount in year 2005, which is 1.04. Others company is IOI Corporation. The equity multiplier for 2005 is 1.63 and its increasing in the next year, in 2006 by 0.08 and becomes 1.71. However, in 2007, its has been decreased by 0.12 from 1.71 to 1.59.After that, its increased back in year 2008 by 0.26 from 1.59 to 1.85.
Cross Sectional Analysis (2008) Industrial average for Equity multiplier ratio in year 2008 is 1.31. The good company uses debt to finance their asset is IOI Corporation with their result is 1.85. The IJM Plantation Berhad is just aroung the industrial average that¶s is 1.29. Another company below the average are Asiatic Development and Batu Kawan Berhad with is their score are 1.07 and1.04.
26
. 4. Times Interest Earned - TIE
A metric used to measure a company's ability to meet its debt obligations. It is calculated by taking a company's earnings before interest and taxes (EBIT) and dividing it by the total interest payable pa yable on bonds and a nd other o ther contractual debt. It is usually quoted q uoted as a ratio and indicates how many times a company can cover its interest charges on a pretax basis. Failing to meet these obligations could force a company into bankruptcy. Calculated as:
Also referred to as "interest coverage ratio" and "fixed-charged " fixed-charged coverage".
Year
2009
2008
2007
2006
2005
IJM Plantations Berhad
-
28.83
6.32
5.10
5.13
Asiatic Development
-
25.23
36. 97
29.83
54.37
Batu Kawan Berhad
58.74
64.14
32.7
89.21
20.75
IOI Corporation
8.53
16.61
14.27
9.50
11.24
Average
33.64
33.70
17.76
33.41
22.87
Company
Times Series Analysis We start with IJ M Plantations Berhad¶s profit margin for 2005 was 15%. For 2006, its profit margin decreased to 14.58% from the past year. After that, its increased again in 2007 by 16.19%. There are increasing again in the next year by 29.73%. The Asiatic Development¶s profit margin for 2005 was 33%. After that, its has been decreased in 2006 by 30.04%. However, its increased back in 2007 by 38% higher than the past year. All the while, in 2008, 36.41% for their profit margin. Now, let see the Batu Kawan Berhad¶s profit margin for 2005 was 107%. For 2006, its profit margin increased to 115% greater than the past year. After that, its increasing again, becomes 162%. In 2008, its still still increasing becomes 181%.
27
Lastly, let look for the IOI Corporation¶s profit margin in 2005 was 15%. For 2006, its profit margin decreased to 14% less than the past year. However, its increased back in 2007 by 17%. Its continue increasing in the next year becomes 22%.
Cross Sectional Analysis (2008) A high profit margin ratio shows good control of goods of sold and other expenses. Better control of these two costs means that the lower the cost is to the firm. Ultimately, this will increase the firm over all net income. IJM Plantations Berhad, Asiatic Development, and IOI Corporation¶s profit margin is below the industry average of 67.29%. This result occurs perhaps the costs are too high. High costs, in turn, generally occur because of o f inefficient operations. This reinforces the conclusion that based on that 3 company¶s fixed assets and total assets turnover ratios which show that 3 company¶s operating team are not utilizing their assets extensively and efficiently.
28
Profitability Ratios rofitability Profitability
Ratios Rat ios attempt to measure the firm's success in generating inco me. These ratios
reflect the combined effects of the firm's asset and debt management.
1. Profit Margin
A ratio rat io of profitability calculated as net income divided by revenues, or o r net profits divided by sales. It measures how much out of every dollar of sales a company actually keeps in earnings. Profit
margin is very useful when comparing companies in similar industries. A higher
profit margin indicates a more profi pro fitable table company that has better control over its costs compared to its competitors. Profit margin is displayed as a percentage; a 20% profit margin, for example, means the company has a net income of $0.20 for each dollar of sales. Also known as Net Profit Margin.
Calculated as:
Year
2009
2008
2007
2006
2005
IJM Plantations Berhad
-
29.73%
16.19%
14.58%
15%
Asiatic Development
-
36.41%
0.38%
30.04%
33%
Batu Kawan Berhad
143%
181%
162%
115%
107%
IOI Corporation
7%
22%
17%
14%
15%
Average
75%
67.29%
48.89%
43.41%
42.50%
Company
Times Series Analysis We start with IJ M Plantations Berhad¶s profit margin for 2005 was 15%. For 2006, its profit margin decreased to 14.58% from the past year. After that, its increased again in 2007 by 16.19%. There are increasing again in the next year by 29.73%. 29
The Asiatic Development¶s profit margin for 2005 was 33%. After that, its has been decreased in 2006 by 30.04%. However, its increased back in 2007 by 38% higher than the past year. All the while, in 2008, 36.41% for their profit margin. Now, let see the Batu Kawan Berhad¶s profit margin for 2005 was 107%. For 2006, its profit margin increased to 115% greater than the past year. After that, its increasing again, becomes 162%. In 2008, its still still increasing becomes 181%. Lastly, let look for the IOI Corporation¶s profit margin in 2005 was 15%. For 2006, its profit margin decreased to 14% less than the past year. However, its increased back in 2007 by 17%. Its continue increasing in the next year becomes 22%.
Cross Sectional Analysis (2008) A high profit margin ratio shows good control of goods of sold and other expenses. Better control of these two costs means that the lower the cost is to the firm. Ultimately, this will increase the firm over all net income. IJM Plantations Berhad, Asiatic Development, and IOI Corporation¶s profit margin is below the industry average of 67.29%. This result occurs perhaps the costs are too high. High costs, in turn, generally occur because of o f inefficient operations. This reinforces the conclusion that based on that 3 company¶s fixed assets and total assets turnover ratios which show that 3 company¶s operating team are not utilizing their assets extensively and efficiently.
2.
Return On Assets - ROA
An indicator of how profitable a company is relative to its total assets. ROA gives an idea as to how efficient management is at using its assets to generate earnings. Calculated by dividing a company's annual earnings by its total assets, ROA is displayed as a percentage. Sometimes this is referred to as "return on investment". The formula for return on assets is:
th is Note: Some investors add interest expense back into net income when performing this calculation because they'd like to use operating returns before cost of borrowing.
30
Year
2009
2008
2007
2006
2005
IJM Plantations Berhad
-
14.22%
5.16%
4.33%
5.7%
Asiatic Development
-
14.71%
15%
8.9%
10%
Batu Kawan Berhad
11%
17%
10%
11%
10%
IOI Corporation
7%
14%
11%
8%
9%
Average
9%
14.98%
10.29%
8.01%
8.68%
Company
Times Series Analysis We start with the IJM Plantations Berhad¶s return on assets ratio (ROA) in 2005 was 5.7%. In 2006, its ROA becomes 4.33% less than the past year. However, in 2007, its increased back becomes 5.16%. It extremely increased for the coming next year, becomes 14.22%. Now, let take a look for the Asiatic Development¶s return on assets ratio (ROA) in 2005 was 10%. In 2006, its ROA becomes 8.9% less than the past year. However, in 2007, its ROA increased back with a large ratio becomes 15%. Then, its decreased again in small percentage, becomes 14.71%. Besides, Batu Kawan Berhad also has their own ROA, In 2005, its ROA was 10%. In the coming next year 2006, its ROA was 11% increased by 1%. However, in 2007, its decreased back to 10% same percentage in 2005. After that, its increased again in 2008 becomes 17%. Lastly, the IOI Corporation¶s ROA in 2005 was 9%. In 2006, its ROA was 8% less than the past year decreased by 1%. However, in 2007, its increased again by 11%. For 2008, its ROA continue increasing becomes 14%.
Cross Sectional Analysis (2008) A firm with good control over its interest expense as well as efficient in utilizing its assets to generate sales will eventually have higher net profit. This will then be translated into higher return on total assets ratio. IJM
P lantations
Berhad, Asiatic Development, and IOI Corporation¶s return is below the
industry average by 14.98%. This low return resulted from inefficient utilization of assets and above-average use of debt. 31
3. Return On Equity - ROE
The amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested. ROE is expressed as a percentage and calculated as:
Net income is for the full fiscal year (before dividends paid to common stock holders but after dividends to preferred stock.) Shareholder's equity does do es not include preferred shares. Also known as "return on net worth" (RONW).
Year 2009
2008
2007
2006
2005
Company IJM Plantations Berhad
-
18.31%
7.29%
6.56%
9.3%
Asiatic Development
-
15.85%
17%
9.79%
11%
Batu Kawan Berhad
16%
18%
1.02%
11%
11%
IOI Corporation
170%
26%
17%
14%
15%
Average
93%
19.54%
10.58%
10.34%
11.58%
Times Series Analysis We started our return in equity ratio (ROE) by the IJM Plantations Berhad. In 2005, its ROE was 9.3%. When arrived in 2006, its ROE decreased to 6.56% less than the past year. After that, in 2007, its ratio increased back to 7.29%. However, its ratio extremely increased by 18.31% in 2008. Now, we look at the Asiatic Development¶s ROE ratio in 2005, was 11%. Then, in 2006, its becomes 9.79% less than the past year. However, its ratio extremely increased back by 17% in 2007. After that, its its ratio decreased in small percentage in 2008 by 15.85%.
32
Next, we look at the Batu Kawan Berhad¶s return on equity (ROE) in 2005, was 11%. Its ratio constant for the next year, was 11% in 2006. However, it becomes extremely decreased by 1.02% in 2007. Then, its increased back by 18% in year 2008. Lastly, we talk about the IOI Corporation¶s return on equity (ROE) in 2005, was 15%. After that, in 2006, its ratio becomes 14% less than 15% from the past year. However, its percentage becomes greater than before before by 17% in 2007. Then, its increasing increasing again in 2008, by 26%.
Cross Sectional Analysis (2008) IJM
Plantation
Berhad, Asiatic Development, and Batu Kawan Berhad¶s return to
stockholder¶s ratio is below the industry average of 19.54%. The firm¶s low assets management ratios and low profit margin (due to the above average use of debt) result in profitability ratios inferior to the industry norms.
33
Market/Book Ratios
1. Book-To-Market Ratio
A ratio used to find the value of a company by comparing the book value of a firm to its market value. Book value is calculated by looking at the firm's historical cost, or accounting value. Market value is determined deter mined in the stock market through its market capitalization. cap italization. Formula:
Year 2009
2008
2007
2006
2005
Company IJM Plantations Berhad
-
0.28
0.47
0.70
1.00
Asiatic Development
-
0.45
0.42
0.73
0.65
Batu Kawan Berhad
0.91
0.75
0.71
1.89
0.91
IOI Corporation
0.29
0.20
4.04
3.89
2.13
Average
0.60
0.42
1.41
1.80
1.17
Times Series Analysis (2008) We start the book to market ratio (M/B) by interpretation of IJM Plantations Berhad. In 2005, that company¶s (M/B) ratio was 1.00. Then, after one year, its ratio becomes 0.70 from the past year. After that, its still decreasing to 0.47 in 2007. Then, its continue decreased in 2008 by 0.28. Next, lets we talk about the Asiatic Development¶s (M/B) ratio for year 2005 was 0.65. After one year, its ratio becomes 0.73 from 0.65 in the previous year. Then, in 2007, its ratio was 0.42, decreased from the past year. Lastly, in 2008, its still decreasing by 0.45. Now, let see the Batu Kawan Berhad¶s (M/B) ratio, in 2005 was 0.91. After one year, in 2006, its ratio change to 1.89. After that, its ratio becomes decreasing to 0.71 from the past year. However, in year 2008, its ratio increased with small value to 0.75. Lastly, for IOI Corporation¶s (M/B) ratio in 2005 was 2.13. After one year, in 2006, its ratio increased by 3.89 greater than the past year. After that, in 2007, its still increased by 4.04. Then, its suddenly decreased in 2008, by 0.20.
34
Cross Sectional (2008) Industrial average for book to market ratio year 2008 is 0.42. The companies above the average are Batu Kawan Berhad & Asiatic Development they are goog in book to market ratio by 0.75 and 0.45.
Meanwhile,
the worst company in book to market ratio are IOI Corporation
and is followed by IJM Plantations Berhad.
2.
Price-Earnings Ratio - P/E Ratio
A valuation ratio of a company's co mpany's current share price compared to its per-share earnings. Calculated as:
For example, if a company is currently trading at $43 a share and earnings over the last 12 months were $1.95 per share, the P/E ratio for the stock would be 22.05 ($43/$1.95). EPS is usually from the last four quarters (trailing
P/E),
but sometimes it can be taken
from the estimates of earnings expected in the next four quarters (projected or forward P/E). A third variation uses the sum of the last two actual quarters and the t he estimates of the next two quarters. Also sometimes known as "price multiple" or "earnings multiple".
Year
2009
2008
2007
2006
2005
IJM Plantations Berhad
-
0.15
0.21
0.18
0.12
Asiatic Development
-
0.14
0.14
0.14
0.09
Batu Kawan Berhad
0.11
0.19
0.22
0.08
0.10
IOI Corporation
0.28
0.20
0.22
0.80
0.57
Average
0.195
0.17
0.20
0.30
0.19
Company
35
Times Series Analysis We start the price earnings ratio ( P/E ratio) with the IJM Plantations Berhad. In 2005, its P/E
ratio started with 0.12. Then, after 1 year, its becomes 0.18, increased by 0.06. In 2007,
its still increased to 0.21. However, it decreasing to 0.15 in 2008 from the past year. Now, we look at the Asiatic Development¶s P/E ratio in 2005 was 0.09. After one year, its becomes 0.14, greater than the year before. However, its ratio becomes constant for the next 2 years, 2007 and 2008. For Batu Kawan Berhad, its P/E ratio in 2005 was 0.10. Then, after one year, its ratio becomes 0.08, less than year before. However, it started increasing in 2007 by 0.22. After that, its ratio down back in 2008 by 0.19. Lastly, for company IOI Corporation, the P/E ratio in 2005 was 0.57. After one year, its ratio increasing from 0.57 to 0.80. Unfortunetly, its ratio decreasing in 2007, from 0.80 to 0.22. Then, its started decreasingfor the next year, from 0.22 to 0.20.
Cross Sectional (2008) This ratio shows how much investors are willing to pay per R M of reported profits. In other word, for every one R M of reported profits, how much more they are willing to pay. IJM
Plantations
and Asiatic Development¶s
P/E
ratio is below the industry average
compared to other firms in the industry. This suggests that the company is regarded as having poorer growth prospect.
36
DuPont Analysis
A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are measured at their gross book value rather than at net book value in order to produce a higher return on equity (ROE). It is also known as "DuPont identity".
DuPont analysis tells us that ROE is affected by three t hings: -Operating efficiency, which is measured by profi pro fitt margin marg in -Asset use efficiency, which is measured by total tot al asset turnover - Financial leverage, which is measured by the equity multiplier
DuPont Analysis calculated as:
OR
OR
Year
2008
Company IJM Plantations Berhad
18.31%
Asiatic Development
15.85%
Batu Kawan Berhad
18%
IOI Corporation
26%
Average
19.54%
37
38
