Ratio Analysis Of The London Biscuit Berhad Finance Essay

Fiscal analysis besides calls as fiscal statement analysis or accounting analysis. It is prepared by those professionals who utilizing ratios that used of information taken from fiscal statements and other studies such as a certain company one-year study. Besides that, a fiscal analysis is a relationship that indicates about the industry activities, liabilities, current assets, account receivable and so on. It is the procedure of evaluate some concern, some undertaking and budgets to find their suited for investing. It besides refers as an appraisal of the viability, stableness and profitableness of a concern. Fiscal analysis can generalize a company yesteryear performed and estimated their acting in future. So, the intent of making the fiscal analysis is in order to avoid the mistake decision about the house ‘s fiscal status. Besides that, it besides provides fiscal place or public presentation of a company that is utile for user to do economic sciences determinations. There are several mensurating instrument may be used to measure including horizontal analysis, perpendicular analysis and ratio analysis.

Hire a custom writer who has experience.
It's time for you to submit amazing papers!


order now

Ratio analysis helped to place the strength and failings of a company. It can clearly find and foregrounding all the tendencies and exposed the strength and failings of a company. It compared past ratio or ratio of other house in the same or different industry. Other than that, ratio analysis gives a meaningful comparing of house ‘s fiscal informations with other houses. The company I decided to take for measuring the fiscal place and public presentation utilizing accounting ratio analysis are London Biscuit Berhad and Apollo Food Holding Berhad.

London Biscuit Berhad is a place grown Malaysian company, it chief concern doctrine flexible joints on fabrication and selling bars and bite nutrient which score high in footings of merchandise safety and quality. The company strongly believes that this is the lone manner to guarantee the client satisfaction and trueness to the merchandise and the trade name it embodies. London Biscuits separately packed and ready to eat merchandises can be divided into 2 chief classs viz. , maize based bites and bar merchandises such as Swiss Rolls, Pie Cakes and Layer Cakes. In add-on, London Biscuits besides manufactures scope miscellaneous cocoa confectionery including chocolate-coated peanuts and biscuits, battercake cookies, jelly and puddings, wafer sticks, cup sticks and bite noodles. London Biscuits merchandises can be found in Malaysia and 65 other markets in worldwide. It chief abroad markets are China, Hong Kong, Macau, Indonesia, Singapore, Taiwan, Thailand, Vietnam and the Middle East. Next, Apollo Food Holding Berhad is a Malaysia-based company engaged in investing retention and proviso of direction services. The Company which is fabricating compound cocoa confectionery merchandises and bed bars based in Malaysia. Apollo ‘s merchandise chiefly divided into two chief classs which are Chocolate Wafer merchandises and Layer Cake, Chocolate Layer Cake and Swiss axial rotation merchandises. It entirely owned subordinates are Apollo Food Industries ( M ) Sdn Bhd and Hap Huat Food Industries Sdn Bhd. The Apollo merchandises are distributed in Malaysia and other abroad market which are Singapore, Indonesia, Thailand, Philippines, Vietnam, China, Hong Kong, Taiwan, Japan, India, Middle East, Mauritius, and Maldives.

The comparing between London Biscuit Berhad and Apollo Food Holding Berhad:

Liquidity ratio

Liquidity ratio defined as it its ability to run into debt duties. It measure the ability of a company to utilize the hard currency retire their liabilities instantly and company short-run fiscal state of affairs. Besides that, it besides defined as the inquiry does the assets in a company plenty to cover their liabilities and that is will the house have the resources to pay the creditors?

Net working capital

Net working capital = current assets – current liabilities

London = 109,188,926 – 152,378,455 = – 43189529

Apollo = 102,345,475 – 8,009,467 = 94336008

Decision: With the comparing above, London Company holding a short-run fiscal job because their current liabilities are excessively much that means their current assets is non adequate to cover all their liabilities. In opposite, Apollo Company is holding a good fiscal. They have adequate assets to cover their liabilities. In short, London Company holding a hapless liquidness place, it might under a hapless recognition hazard but for the Apollo Company, they are in good liquidness place, means that they have adequate ability to recognition their hazard or get the better of it.

Current ratio

Current ratio = Current assets

Current liabilities

London = 109,188,926

152,378,455

= 0. 716

Apollo = 102,345,475

8,009,467

=12.8

Decision: With the information above, London Company has 0.716 available assets that can be converted into the hard currency for every dollars company owes but for Apollo Company, they have 12.8 available assets can be converted to the hard currency which is more than figure of 17 of the London Company. In short, London Company holding a hard meeting current duty. They will get down paying their measure easy, borrowing from its bank and so on. But for the Apollo Company, they have adequate resources to pays its debt but if the current ratio continually excessively high, they may non expeditiously utilizing its current assets. It may bespeak in working capital direction.

Acid-test ( speedy ) ratio

Acid-test ( speedy ) ratio = current assets – ( stock list + prepaid disbursals )

Current liabilities

London = 109,188,926 – ( 31,562,835 + 6,227,271 )

152,378,455

= 0.469

Apollo = 102,345,475 – ( 14,569,823 )

8,009,467

= 10.959

Decision: With the comparing above, London Company can non effectual wage its liabilities presently because it holding low speedy ratio. They holding 0.469 which has less than 1, the stock list is non including from the amount of assets financially that means in this ratio. But for Apollo Company, they had good liquidness when compared to the London Company which is more than 1. That means the company has adequate ability to snuff out its current liabilities instantly.

Asset use ( activity ) ratios

Asset use ( activity ) ratios are to find how efficaciously a house or a company is pull offing its assets. It is necessary to measure the activity or liquidness of specific current histories and it exists to mensurate the activity of debitors, stock list and entire assets.

Account receivable turnover

Account receivable turnover = net recognition gross revenues

Average histories receivable

London = 223,434,122

26,305,732 + 22,772,367

2

= 9.1

Apollo = 159,531,255

20,472,957 + 21,296,157

2

= 7.6

Decision: This ratio is the ratio that represents the figure of clip the house roll uping its recognition during the twelvemonth. For the London Company, they need collect about more 9 yearss so merely they can complete to roll uping their recognition. For the Apollo Company, they need about 7 yearss to roll up all the recognition during this twelvemonth. So, with this comparing, we know that Apollo Company is more efficiency than the London Company. This shows that the company has the ability to roll up its recognition from their debitors.

Average aggregation period

Average aggregation period = histories receivable

Daily recognition gross revenues

London = 26,305,732

223,434,122

365

= 43

Apollo = 20,472,957

159,531,255

365

= 47

Decision: The ratio above show the hard currency roll uping attempt makes by both companies. From the ratio above, we know about the London Company need about 43 yearss to roll up their money and for the Apollo Company, they need about the norm of 47 yearss so merely they have ability to roll up their money. With the comparing of the both company, London Company are more efficiency to roll up back their outstanding when compared with the Apollo Company.

Inventory turnover ratio

Inventory turnover ratio = costs of goods sold

Average stock list

London = 169,284,276

( 31,562,835 + 33,055,440 )

2

= 169,284,276

32309137.5

= 5.24

Apollo = 114,034,444

( 14,569,823 + 12,208,778 )

2

= 114,034,444

13389300.5

= 8.52

Decision: From the ciphering above, London Company has used 5.24 times sold their stock list but Apollo Company has used 8.52 times sold their stock list. That means Apollo Company indicates a greater gross revenues efficiency and it has a lower hazard of loss. Usually the company which has high figure is more stable because the turnover straight affected its net income. For London Company which has figure of 5.24, the company might keep excessively much stock list or old stock list or its control might be hapless. Excess stock list represents that an investing with a low or zero rate of return.

Fixed plus turnover

Fixed plus turnover = net gross revenues

Entire fixed plus

London = 223,434,122

392,174,946

= 0.6

Apollo = 159,531,255

124,806,077

= 1.28

Decision: Apollo Company has utilizing its fixed assets more efficient to bring forth their gross revenues or income when comparing with the London Company which are 0.6. The higher the ratio, the better because the company has less money tied up in fixed assets. For this ratio, Apollo Company has efficaciously uses its works and equipment but for London Company, their ratio might be low because possibly they over invested in works and equipment.

Entire plus turnover

Entire plus turnover = net gross revenues

Entire assets

London = 223,434,122

501,363,872

= 0.45

Apollo = 159,531,255

227,151,552

= 0.7

Decision: In this ratio, Apollo Company is more efficaciously in bring forthing its gross revenues by utilizing its assets when comparing with the London Company. The higher the ratio, the smaller the investing required to bring forth the gross revenues. In this ratio, Apollo Company has the higher ratio compared to the London Company, that means the Apollo Company put a smaller sum so it plenty to bring forth a batch of gross revenues. So, the company is in higher profitableness than the London Company.

Profitability ratio

Profitability ratio showed an indicant of house ‘s fiscal state of affairs during the twelvemonth. It shows the return on gross revenues and capital employed. Besides that, it besides shows how good the house is executing in order to bring forth the net income and how efficaciously the house is being managed and the company ‘s ability to gain net income and return on investing.

Gross net income border

Gross net income border = gross net income

Net gross revenues

London = 54,149,846

223,434,122

= 24.2 %

Apollo = 45,496,811

159,531,255

= 28.5 %

Decision: In this ratio, Apollo Company is in high gross net income border. London Company has 24.2 % in gross net income but Apollo Company they holding 28.5 % in gross net income border. In short, the Apollo Company has good gross is utilised to cover their costs of goods sold. Higher ratio shows that the company has greater efficiency in turning natural stuff into income. For London Company, the company has low gross net income when comparison with Apollo Company, without an equal gross net income, the company possibly will non be able to pay its operating and other disbursals and construct for the hereafter.

Net net income border

Net net income border = net net income

Net gross revenues

London = 18,065,326

223,434,122

= 0.08

= 8 %

Apollo = 24,676,992

159,531,255

= 0.15

=15 %

Decision: This ratio is to cipher how profitableness the company generated from income or gross. London Company has generated 8 % in this ratio but Apollo Company generated 15 % which is higher than the London Company. This shows that the Apollo Company runing its company really good and they are efficaciously to change overing gross into net income. Besides that, this besides show that the Apollo Company is good in control their costs. In opposite, a low ratio will give the higher hazard to company, they may worsen in gross revenues such as the London Company.

Tax return on entire assets

Tax return on entire assets = net income

Average entire assets

London = 18,065,326

( 501,363,872 + 447,756,032 )

2

= 18,065,326

474559952

= 0.038

Apollo = 24,676,992

( 227,151,552 + 210,527,264 )

2

= 24,676,992

218839408

= 0.113

Decision: This ration show that the net incomes generate of company in each $ 1 in assets. London Company generated 0.038 net incomes in each $ 1 but for Apollo Company, they generate 0.113 net incomes in each $ 1. Both of the companies are generated less net income, but with the comparing, Apollo Company is generated more net income than London Company. But for the company which has larger initial investing, they might hold lower return in gross revenues. Besides that, for the London Company, low return consequences might do from the company ‘s low basic gaining power plus or high involvement costs such as debt.

Tax return on common equity

Tax return on common equity = net incomes available to common shareholders

Average shareholders ‘ equity

London = 18,065,326

( 199,330,061 + 168,662,503 )

2

= 18,065,326

183996282

= 0.1

Apollo = 24,676,992

( 80,000,000 + 80,000,000 )

2

= 24,676,992

80000000

= 0.3

Decision: London Company earned 0.1 figure of net income when the stockholder puting $ 1 in the company. In opposite, Apollo Company earned 0.3 figure of net income when the stockholder puting $ 1 into the company. With the comparing, Apollo Company ratio is more than the London Company ratio. With the figure of 0.1, the London company income is lower than their disbursals. With this sort of consequence, London company stockholder might lost the confident to the company, their might get down to exchange to other company which can bring forth more income for them or they will demo low active behaviour in this investing.

Market value ratios

Market value ratios are the ratios relate the house ‘s stock monetary value to its net incomes ( or book value ) per portion. Normally, investors use these ratios to measure and supervise the advancement of their investings. Besides that, these ratios give direction an indicant of what investors think of the company ‘s past public presentation and future chances.

Gaining per portion

Gaining per portion = ( net income – preferable dividends )

Entire common portions outstanding

London = 18,065,326

12,776,040

= 1.41

Apollo = 24,676,992

80,000,000

= 0.3085

Decision: For the computation in above, London Company invest per portion in the company can acquire 1.41 net income but for the Apollo Company, they invest per portion can acquire merely 0.3085. In this type of consequence, London Company is able to bring forthing more income to their stockholders. But for Apollo Company, possibly they have excessively much stockholders, so they need to administer their income into smaller sum.

Book value per portion

Book value per portion = ( entire shareholder ‘s equity – preferable dividends )

Shares outstanding

London = 248,777,109

12,776,040

= 19.47

Apollo = 203,176,465

80,000,000

= 2.54

Decision: For the consequence of the ratio above, we know that the investors in London Company need pay more $ 19.47 in the company. For the Apollo Company, they need pay more $ 2.54 in the company. This state of affairs is depending on the market value. The more increase the market value in the market, the more addition the book value per portion in the company.

Dividend ratios

Dividend payout = dividends per portion

gaining per portion

London = 0

17.31

= 0

Apollo = 20

30.58

= 0.65

Decision: From this sort of ratio, London Company acquire 0 dividend payout but for Apollo Company they have about 0.65 dividend payout. Normally, high growing houses in early life by and large have low or zero payout ratios such as the London Company.

Leverage ratio

Leverage ratio besides called as the debt direction ratio. It shows the extent that debt is used in a company ‘s capital construction. Besides that, it is the ratio that utilizing to measure a company ‘s liability to utilize it plus expeditiously to bring forth gross. Leverage ratio indicates a company ability to run into its long term duties as they become due and it concentrates on the long-run fiscal and operating construction of the concern. Company which has high purchase may confront the job such as bankruptcy.

Debt ratio

Debt ratio = sum liabilities

Entire assets

London = 252,586,763

501,363,872

= 0.5

= 50 %

Apollo = 23,975,087

227,151,552

= 0.106

= 10.5 %

Decision: In this ratio, the London Company has higher debt ratio compared to the Apollo Company which is 10.5 % . London Company possibly is indicated low adoption capacity of a house, which in bend of lower the fiscal flexibleness. Besides that, London Company has providers more than half of the entire funding. Creditors may be loath to impart the house more money, and direction might likely be subjecting the house to the hazard of bankruptcy if it sought to increase the debt ratio.

Debt / equity ratio

Debt / equity ratio = sum liabilities

Stockholder ‘s equity

London = 252, 586,763

199,330,061

= 1.27

Apollo = 23,975,087

80,000,000

= 0.3

Decision: In this ratio, that shows that London Company have puting $ 1 equity but they need to pay their debt for a $ 1.27. For the Apollo Company, they need to pay $ 0.3 merely when they puting $ 1 in equity. With compared the both ratio, London Company is in higher debitor than the Apollo Company. The company which holding a higher debt will be more hazardous than others company, and most of the investors will non put their money on them.

Timess involvement earned ( involvement coverage ) ratio

Time involvement earned ratio = gaining before involvement and revenue enhancement

Interest disbursals

London = 17,594,691

6,032,744

= 2.92

Apollo = 32,247,766

0

= 0

Decision: In the ratio above, London Company have 2.92 clip involvement earned ratio but for the Apollo Company, they do n’t hold any involvement disbursals. So, for the Apollo Company, that means that they use more equity to buy the assets in the company. This state of affairs may due to Apollo Company have much more stockholders. So, they non necessitate wages any involvement disbursals because they did n’t use any loan.

Decision, insides this fiscal statement, we can see that the strength and failings of the both company which are London Company and Apollo Company. From the liquidness ratio, we can state that the Apollo Company is more stable and good command in their all types of ratio. They have adequate ability to avoids their company from being a to a great extent debitor. After that, depend on the purchase ratio, we can says that Apollo Company is stable depend to the London Company, they besides have more ability to direction their debt. Besides that, depend on the profitableness ratio and market value ratio, we besides can says that the Apollo Company is more stable than the London Company. Insides all types of ratio in the profitableness ratio, we can see that the company is gaining net income presently than the London Company. In short, I have decision that the Apollo Company is more stable and more profitableness than the London Company.

x

Hi!
I'm Heather

Would you like to get such a paper? How about receiving a customized one?

Check it out