Beruflich Dokumente
Kultur Dokumente
Corporate Finance
BWFM5013
Dr Ahmad Rizal bin Mazlan
2014
2015
1.67
1.31
1.21
0.91
43%
75%
1.75
19.04
times
49%
94%
1.94
1) LIQUIDITY RATIOS
Current ratio
Quick ratio
2) LONG TERM SOLVENCY
RATIOS
Debt ratio
Debt Equity Ratio
Equity multiplier
Times interest earned ratio
3) ASSET MANAGEMENT
RATIO
Inventory Turnover
5.89 times
61.97days
2.13 times
5.85 times
62.43
days
7.18 times
50.84 days
0.90 times
1.88 times
7.88 times
46.34
days
0.79 times
1.37 times
4) PROFITABILITY RATIOS
OPM Operating Profit
Margin
NPM Net Profit Margin
ROA Return of Assets
ROE Return of Equity
11%
8%
7%
13%
2%
0.02%
0.01%
0.02%
55.80
0.20
-3.2
-2.46
Table 1
Liquidity Ratios
Liquidity ratio is one of the useful tools to ensure whether or not the company have enough cash
to repay the bank. Liquid assets have potential to convert quickly and cheaply.
2014RATIOS2015
1) LIQUIDITY
Current ratio
Quick ratio
1.67
1.31
1.21
0.91
Referring to UMW Holdings income statement given and the Financial Ratio Analysis (Table 1)
both ratios, showed that the ratios less than 2 indicate that a firm may have difficulty meeting
current obligations. However, an investor should also take note of a company's operating cash
flow in order to get a better sense of its liquidity. A low current ratio can often be supported by a
strong operating cash flow
2014
2015
2) LONG
TERM SOLVENCY
RATIOS
Debt ratio
Debt Equity Ratio
Equity multiplier
Times interest earned ratio
43%
75%
1.75
19.04
49%
94%
1.94
times
2.13 times
2014
2015
3) ASSET
MANAGEMENT
RATIO
Inventory Turnover
5.89 times
5.85 times
62.43
61.97 days
days
Turnover
7.18 times
7.88 times
46.34
50.84 days
0.90
days
0.79
(TAT)
Fixed Asset Turnover
times
1.88 times
times
1.37 times
One way to understand the concept of the efficiency ratio is the measure of what a firm must
spend in order to make one dollar. (Farlex Financial Dictionary, 2012). UMW Holdings TAT was
quite low which is good in both years.
Profitability ratios
Investors use the profit margin to compare companies in the same industry to decide which
companies have good profitability. The higher the profit margin is, the better the company is
thought to control costs (Farlex Financial Dictionary, 2012).
2014
2015
4) PROFITABILITY
RATIOS
OPM Operating Profit
Margin
NPM Net Profit Margin
ROA Return of Assets
ROE Return of Equity
11%
8%
7%
13%
2%
0.02%
0.01%
0.02%