Ratio Analysis
C. OVERALL ANALYSIS OF ALL COMPANIES
LIQUIDITY: CURRENT RATIO
The current ratio is a financial ratio that measures whether or not a firm has enough resources to pay its debts over the next 12 months. From the table it shows that Ajinomoto (M) Berhad is the highest liquidity. The ratio is 5.38, followed by Padini Holding Berhad at 2.37 and 3rd British American Tobacco with ratio at 1.91. Therefore, we can see that Ajinomoto has enough resources to pay its debt over the next 12 months.
LEVERAGE : DEBT RATIO
Debt ratio is a financial ratio that indicates the percentage of a company‘s assets that are provided via debt. Among the 6 companies, it shows that British American Tobacco has the highest debt ratio at 68.75%, followed by Nestle (M) Berhad with debt ratio at 66.88 and Maxis Berhad at 52.4%. It so called the higher the ratio, the greater risk will be associated with firm’s operation. In addition, high debt to assets ratio may indicate low borrowing capacity of a firm, which in turn will lower the firms’ s financial flexibility.
PROFITABILITY : NET PROFIT ON SALES, RETURN ON TOTAL ASSETS, RETURN ON EQUITY AND EARNING PER SHARE
NET PROFIT ON SALES
Net profit ratio is the ratio of net profit (after taxes) to net sales. It is expressed as percentage. The net profits are obtained after deducting income - tax and, generally, non operating expenses and incomes are excluded from the net profits for calculating this ratio. Thus, incomes such as interest on investments outside the business, profit on sales of fixed assets, etc are excluded. Therefore, in this situation we’ve found that Maxis Berhad has the highest net profit that is 25.88%, followed by Parkson Corporation Sdn Bhd (19.60%) and British American Tobacco (18.44%). Obviously, the higher the ratio the better is the profitability. But while interpreting the ratio it should be kept in minds that the performance of profits also be seen in relation to investments or capital
LIQUIDITY: CURRENT RATIO
The current ratio is a financial ratio that measures whether or not a firm has enough resources to pay its debts over the next 12 months. From the table it shows that Ajinomoto (M) Berhad is the highest liquidity. The ratio is 5.38, followed by Padini Holding Berhad at 2.37 and 3rd British American Tobacco with ratio at 1.91. Therefore, we can see that Ajinomoto has enough resources to pay its debt over the next 12 months.
LEVERAGE : DEBT RATIO
Debt ratio is a financial ratio that indicates the percentage of a company‘s assets that are provided via debt. Among the 6 companies, it shows that British American Tobacco has the highest debt ratio at 68.75%, followed by Nestle (M) Berhad with debt ratio at 66.88 and Maxis Berhad at 52.4%. It so called the higher the ratio, the greater risk will be associated with firm’s operation. In addition, high debt to assets ratio may indicate low borrowing capacity of a firm, which in turn will lower the firms’ s financial flexibility.
PROFITABILITY : NET PROFIT ON SALES, RETURN ON TOTAL ASSETS, RETURN ON EQUITY AND EARNING PER SHARE
NET PROFIT ON SALES
Net profit ratio is the ratio of net profit (after taxes) to net sales. It is expressed as percentage. The net profits are obtained after deducting income - tax and, generally, non operating expenses and incomes are excluded from the net profits for calculating this ratio. Thus, incomes such as interest on investments outside the business, profit on sales of fixed assets, etc are excluded. Therefore, in this situation we’ve found that Maxis Berhad has the highest net profit that is 25.88%, followed by Parkson Corporation Sdn Bhd (19.60%) and British American Tobacco (18.44%). Obviously, the higher the ratio the better is the profitability. But while interpreting the ratio it should be kept in minds that the performance of profits also be seen in relation to investments or capital