Beruflich Dokumente
Kultur Dokumente
BBPW3103
FINANCIAL MANAGEMENT I
MATRICULATION NO.
780529065374001
780529-06-5374
MOBILE NO.
019-3935233
E-MAIL ADDRESS
ekmatul_manurah@oum.edu.my
LEARNING CENTRE
PETALING JAYA
Financial Management 1
TABLE OF CONTENTS
BBPW3103
PAGES
4. Comparison of the companies liquidity and asset management ratio for the year
2012 between Dutch Lady Milk Industries and Nestle Malaysia Berhad............. 15
5. Summary............................................................................................................... 19
REFERENCES
ATTACHMENTS
Financial Management 1
1.
BBPW3103
INTRODUCTION
Financial Management 1
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Financial Management 1
2.
DUTCH
LADY
MILK
INDUSTRIES
BERHAD
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COMPUTATION
AND
2.1.2
Current Ratio
Current Ratio measures the company's current assets by current liabilities. Generally,
the higher figure is better, it indicates that the firm has the higher total current assets
against current liabilities and easily as well as the ability to pay short-term debt using
its current assets.
Calculation Formula :
Current Ratio
= Current Assets__
Current Liabilities
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= RM308.5 million
RM161.8 million
= 1.9
Result of the calculation above shows that Dutch Lady only has RM1.90 value of
current asset for every ringgit of current liability.
2.1.3
Quick Ratio
The Quick Ratio also known as the acid-test ratio, is a Liquidity Ratio that is more
refined and more stringent than the current ratio. Instead of using current assets in the
numerator, the quick ratio uses a figure that focuses on the most liquid assets. The
main asset left out is inventory, which can be hard to liquidate at market value in a
timely fashion. The quick ratio is more conservative than the current ratio and focuses
on cash, short-term investments and accounts receivable. The formula is as follows:
Calculation Formula :
Quick Ratio
The quick ratio for Dutch Lady is 1.36 times. It shows the company able to pay its
short term debt from its current assets. Obviously, it is a good position for Dutch Lady
to be in because the firm able to meet its short-term debt without stress.
2.2
Asset management ratios show how successfully a company utilizing its asset to generate
sales or cash. The higher the asset turnover ratios, the more sales the company is generating
from its assets. Low asset turnover ratios mean inefficient utilization of assets. Ratios that can
be used to measure the efficiency in asset management as shown below :2.2.1
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ratio determines how quickly a company collects outstanding cash balances from its
customers during an accounting period. It is an important indicator of a company's
financial and operational performance and can be used to determine if a company is
having difficulties collecting sales made on credit.
Calculation formula :
Account Receivable Turnover = Credit Sales______
Account Receivable
= RM882.2 million
RM11.7 million
= 75.4 times
Based on the result of the calculation above shows that Dutch Lady has 75.4 times
ability to collect debts.
2.2.2 Average Collection Period
The average collection period is the number of days, on average, that it takes to the
company to collect its accounts receivables, i.e. the average number of days required
to convert receivables into cash.
Calculation formula :
Average Collection Period
(days sales outstanding)
= __________360__________
Account Receivable Turnover
= 360
75.4
= 4.77 days
or
Average collection period
= Account Receivable
Yearly Sales /360
= 11.7 million
882.2/360
= 4.77 days
Based on the calculation above shows that Dutch Lady need 4.77 days to collect debts
from its customer. Its mean that Dutch Lady has a very effiencient startegy in
collecting their debts.
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Based on the calculation above shows that Dutch Lady can sell its inventory 6.17
times in a period of time of a year.
2.2.4 Average Inventory Sales Period
The average inventory sales period measure the numbers of days had been taken to
make one complete circle of inventory sales. The higher number of average shows
that the company takes longer time to sell its inventory.
Calculation formula :
Average Inventory Sales Period = _____360________
Inventory Turnover
= 360
6.17
= 58.3 days
Or
Average Inventory Sales Period = Inventory___________
Cost of Good Sold/360
= 86,781 million
535,475 / 360
= 58.3 days
Based on the calculation above shows that Dutch Lady takes 58.3 days to sell its
inventory.
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____Sales_____
Net Fixed Asset
= 882.2 million
73.1 million
= 12.6 times
Result of the above calculation shows that Dutch Lady can use 12.6 times its fixed
asset in generating sales. Dutch Lady has a good asset management.
= Sales_____
Total Assets
= RM882.2 million
RM382.8
= 2.3 times
Base on the calculation Dutch Lady company total asset turnover shows 2.3 times which
shows the company has made rapid sales for the whole year. The company use it asset
effectively to generate sales for 2012.
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3.
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3.1.2
Current Ratio
Current ratio measures the company's current assets by current liabilities. Generally,
the higher figure is better, it indicates that the firm has the higher total current assets
against current liabilities and easily as well as the ability to pay short-term debt using
its current assets.
Calculation Formula :
Current Ratio
= Current Assets__
Current Liabilities
= RM840.7 million
RM929.4 million
= 0.9
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3.1.3
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Quick Ratio
The Quick Ratio also known as the acid-test ratio, is a Liquidity Ratio that is more
refined and more stringent than the current ratio. Instead of using current assets in the
numerator, the quick ratio uses a figure that focuses on the most liquid assets. The
main asset left out is inventory, which can be hard to liquidate at market value in a
timely fashion. The quick ratio is more conservative than the current ratio and focuses
on cash, short-term investments and accounts receivable. The formula is as follows:
Calculation Formula :
Quick Ratio
3.2
Asset management ratios show how successfully a company utilizing its asset to generate
sales or cash. The higher the asset turnover ratios, the more sales the company is generating
from its assets. Low asset turnover ratios mean inefficient utilization of assets. Ratios that can
be used to measure the efficiency in asset management as shown below :3.2.1
Financial Management 1
3.2.2
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= __________360__________
Account Receivable Turnover
= 360
11.9
= 30.3 days
or
Average collection period
= Account Receivable
Yearly Sales /360
= 11.7 million
139.23/360
= 11.7 million
0.386
= 30.3 days
3.2.3
Inventory Turnover
Inventory turnover to measure number of times inventory is sold in a period of time as
one year. It is a good indicator of inventory quality efficient buying practices, and also
in inventory management. This ratio is important to show how gross profit is earned
each time inventory is turned over. If the company shows the high value for inventory
turnover usually company can sell a lot of items to maintain an adequate return on the
capital invested in the company.
Calculation formula :
Inventory Turnover
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Based on the calculation above, the ratio of inventory turnover shows 7.3 which is
consider as very high ratio . Nestle has done a brisk business over the whole year by
converting its stock into sales rapidly.
3.2.4
3.2.5
____Sales_____
Net Fixed Asset
= 4,556.4 million
945.8 million
= 4.8 times
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3.2.6
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= Sales_____
Total Assets
= RM4,556.4 million
RM1,905.2 million
= 2.4 times
14
4.
COMPARISON OF THE COMPANIES LIQUIDITY AND ASSET MANAGEMENT RATIO FOR THE YEAR 2012.
RATIOS
Liquidity Ratio :
Net Working Capital
RM146.7 million
405 % higher than Nestle Malaysia Berhad
This figure shown that the company had a very higher
surplus fund and able to settles its short-term debts.
-RM88.7 Million
Negative symbol means that the company unable to settle its
short-term debts.
Had more subsidiaries and investments.
Influence Factors :
Influence Factors :
Business run with low inventory and account receivable.
Business operation almost strictly cash basis
1.9 times
36% higher than Nestle
The ratio shows that the business has RM1.90 value of
current assets to pay every ringgit of current liabilities.
Business has enough current assets to cover its current
liabilities.
0.9 times
Influence Factors :
Influence Factors :
Current Ratio
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Quick Ratio
1.36 times
Business able to settle its short-term debts from its current
assets
Its shows that business have no stress in handling shortterm debts.
0.46 times
Business has problem to settle its shor-term debts using its
current asset.
Business has more fixed asset than current asset.
Influence Factors :
Business has more short-term debts than long term debts
Influence factors :
Shows that business run the with more long term debts.
75.4 times
Business has good strategy to collect debts from customer
Business can use the funds for others investments
Shows that the company has low bad debts
11.9 times
Business only has 11.9 times to collect debts from its customer
Business has
Influence Factors :
Influence Factors :
Business has less customer that pay via credit term
Business used more funds to invests than keep as a surplus
fund.
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4.77 days
Dutch Lady has good strategy to collect debts from
customer
Dutch Lady can use the funds for others investments
Shows that the company has low bad debts
Influence Factors :
Inventory Turnover
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30.3 days
Ratio figure shows that Nestle took every 30.3 days to collect
debts from customer.
Shows that Nestle has high bad debts compare to Dutch Lady
Influence Factors :
Nestle has dealing with more cash transaction customers.
Nestle focus more on one big customer
6.17 times
Shows that Dutch Lady has less inventory turnover 6.17
times compare with Nestle 7.3 times.
Shows that business not productive
7.3 times
Shows that Nestle has more inventory turnover 7.3 times
compare with Dutch Lady.
Shows that business are productive
Influence Factors :
Influence Factors :
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58.3 days
Shows that business need more numbers of days (9 days)
taken to make one round inventory sales.
Compare to Nestle only takes 49.3 days to complete one
round inventory sales.
49.3 days
Shows that Nestle only took 49.3 days to make one round
inventory sales that is less than Dutch Lady
Influence Factors :
Influence Factors :
12.6 times
Shows that Dutch Lady more efficient in using fixed assets
to generate sales compare to Nestle
Shows that Dutch Lady has more 23.5% times to generate
sales using its fixed asset.
The higher ratio shows that Dutch Lady better than Nestle
because it indicates efficient asset management.
7.8 times
Shows that Nestle asset management in generating sales is
less effiicient
Shows that Nestle has less 23.5% times to generate sales
using its fixed asset.
The lower ratio shows that Nestle weaker than Dutch Lady
because it indicates less efficient asset management.
Influence Factors :
Influence Factors :
Business has lots of fixed assets
Business has more unsatisfactory sales
2.3 times
Total asset turnover between Dutch Lady and Nestle not
much difference. Dutch Lady less only 2.95% compare to
Nestle.
2.44 times
Nestle has higher total asset turnover value which is more
2.95% and its shows that Nestle more efficient in using its all
asset to generate sales.
Influence Factors :
Influence Factors :
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5.
SUMMARY
Dutch Lady Milk Industries Berhad was incorporated in Malaysia since 1963 and became the
the first in the world to introduce the growing up milk formula. Dutch Lady expanding the
business with variety of product such as Dutch Lady 123, Dutch Lady 456 and Dutch Lady
6+ and more. In year 2012 Dutch Lady achieved the highest level of profit before tax in its
history, amounting to RM165.8 million, 17% higher than the previous year. Nestle Malaysia
Berhad was a public listed company on the Bursa Malaysia Berhad since 13 December 1989.
Nestle started in Malaysia since 1912 as the Anglo-Swiss Condensed Milk Company in
Penang. Nestle shows higher sales in all product categories which is Confectionery, Liquid
Drinks, Chilled Dairy and Ice Cream, recording strong double-digit growth. Nestle took full
benefit, registering a turnover of RM4.6 billion, 7.3% higher than the same period last year,
largely due to the strong growth on the domestic front. Domestic sales grew by 9.7% and
export grew by 0.8% in 2012 after an exceptional strong performance in 2011.
Dutch Lady Milk Indutries Berhad Based on those ratios calculation results, it looks Nestle
has a better performance than Dutch Lady. Nestle has a lot of variety category of products
that they have sold and Nestle company is also has wider market than Dutch Lady. The
categories of Nestle products are baby foods, breakfast cereals, chocolate and confectionery,
beverages, bottled water, dairy products, ice cream, prepared foods, foodservice, and pet
care. That reason is the one of many reasons that is causing Nestle performance is better than
Dutch Lady. However, if we observe in one category such as assets management and cash
flow, Dutch Lady has a efficient management rather than Nestle. Dutch Lady run the
business with focusing in environmental awareness
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REFERENCES
Dutch Lady Website (1963). Dutch Lady : The Company : Company Profile : [Online].
Available : http://www.dutchlady.com.my/en/home.asp?page=company&subpage=
comp_profile. [03 March 2014].
Bursa Malaysia Berhad Website. (2014). Dutch Lady Milk Industries Annual Report 2012 :
[Online]. Available
http://www.bursamalaysia.com/market/listed-companies/company-announcements/1270293
Bursa Malaysia Berhad Website. (2014). Nestle Malaysia Berhad Annual Report 2012 :
[Online]. Available
http://www.bursamalaysia.com/market/listed-companies/company-announcements/1250881
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ATTACHMENT 1
Income Statement Nestle Malaysia Berhad for the year 2012
22
ATTACHMENT 2
Balance Sheet Nestle Malaysia Berhad for the year 2012 (page 1)
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ATTACHMENT 3
Balance Sheet Nestle Malaysia Berhad for the year 2012 (page 2)
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ATTACHMENT 4
Income Statement Dutch Lady Milk Industries Berhad for the year 2012
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ATTACHMENT 5
Balance Sheet Dutch Lady Milk Industries Berhad for the year 2012
26