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Account (FNBE Sem 2 2013)

Account (FNBE Sem 2 2013)

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Accounting assignment Accounting assignment Document Transcript

  • Foundation in Natural and Built Environment Semester 2- January 2013 Basic Accounting (FNBE0145) By: Mercy Onesmo Kamala (0311314) Wong Li Hui Amy (0312406)
  • Table of Content Company Background and Recent Development Ratio Calculation Interpretion on the ratio Results Investment Recommendation Appendix Referencing
  • Company Background and Recent Development Dutch Lady Milk Industry Berhad (Dutch Lady Malaysia) is a manufacturer of dairy products in Malaysia since the 1950’s. It was incorporated in 1963 and was the first milk company in Malaysia to be listed on Bursa Malaysia, the local stock exchange in 1968. Royal FrieslandCampina, a Dutch multinational corporation and one of the largest milk companies in the world is its holding company. Dutch Lady Malaysia manufacturers and sells a wide range of quality dairy products and fruit juices for the home and export market such asGrowing-up Milk, Powdered Milk, Condensed Milk, UHT Milk, Sterilised Milk, Pasteurised Milk, Cultured Milk, Infant Formula ,Yoghurt and Fruit Juice Drinks. Since 1995, the company has continually been accredited with ISO 9001 certification. The strong emphasis is also placed on food safety with HACCP (Hazard Analysis Critical Control Point) System covering all its plants. Furthermore, the company also has in place ISO 14001 Environment Management System and OHSAS 18001 (Occupational Health And Safety Assessment Series). Dutch Lady Milk Industries Berhad’s extensive product range now spans from infant formula and growing up milk to fruit juice and yoghurt snacks while Dutch Lady Malaysia first established itself as a manufacturer of sweetened condensed milk. Every product innovation in the company’s rapidly developing infant and child formula range is backed by extensive research both locally and internationally. Royal FrieslandCampina which is the parent company in the Netherlands, is constantly funding efforts to study and find out ways to take your little one’s nutrition to the next level. The Dutch Lady range also extends far beyond familiar flagship products such as Dutch Lady 123 or Dutch Lady UHT milk. Other delicious items from the company that may have found their way into the snack break at work. It include JOY fruit juices , and the LOW and 0% Fat eating and drinking yoghurt range. The latter, in certain, represent Dutch Lady’s constant efforts to open up an increasing variety enjoyable-based treats for the entire family.
  •  PROFITABILITY RATIO Ratio 2011 2012 Return on Equity (ROE) 108082*100%= 47.3% 228313 123380 *100%= 51.9% 237644 Net Profit Margin (NPM) 108082*100%= 13.3% 810647 123380*100%= 14% 882179 Gross Profit Margin (GPM) 304472 *100%= 37.6% 810647 346704 *100%= 39.3% 882179 Selling Expense Ratio(SER) 106180*100%= 13.1% 810647 120676 *100%= 13.7% 882179 General Expense Ratio (GER) 26134*100%= 3.2% 810647 27472 *100%= 3.1% 882179 Financial Expense Ratio (FER) 919 *100%= 0.1% 810647 2862*100%= 0.3% 882179  FINANCIAL STABILITY RATIO Ratio 2011 2012 Working Capital Ratio (WC) 324466= 2.4: 1 135309 308510= 1.91: 1 161786 Total Debt Ratio (TD) 139360*100%= 35% 398514 166640*100%= 43.5% 382774 Inventory Turnover Ratio (IT) 365= 59.9 days 506175/83085 365= 61.4 days 535475/90114.5 Debtor Turnover Ratio (DT) 365= 25.2 days 810647 /55945 365= 10.9 days 882179 /26445 Interest Coverage Ratio (IC) 3104+108082= 35.8 times 3104 6056+123380= 21.4 times 6056
  •  Price/Earning Ratio (PE) P/E= Current share price/ Earnings per share = 47.72/ 1.93 P/E = 24.7  Interpretation of Profitability Ratio Profitability Ratio 2011 2012 Interpretation Return on Equity Ratio (ROE) 47.3% 51.9% During the 2011-2012 period, the Return On Equity has increased from 47.3% to 51.9%. This means that the owner is getting more return on his/her capital. Net Profit Margin Ratio (NPM) 13.3% 13.9% During the 2011-2012 period, the Net Profit Margin has increased from 13.3% to 13.9%. This means that the business controlled more of its expenses. Gross Profit Margin Ratio (GPM) 37.6% 39.3% During the 2011-2012 period, the Gross Profit Margin has increased from 37.6% to 39.3%. This means that the ability of the business to control its Cost of Goods Sold gets better. Selling Expense Ratio (SER) 13.1% 13.7% During the 2011-2012 period, the Selling Expense Ratio has increased from 13.1% to 13.7%. This means that the business gets worse in controlling its selling expenses. General Expense Ratio (GER) 3.2% 3.1% During the 2011-2012 period, the General Expense Ratio has decreased from 3.2% to 3.1%. This means that the business gets better in controlling its general expenses. Financial Expense Ratio (FER) 0.1% 0.3% During the 2011-2012 period, the Financial Expense Ratio has increased from 0.1% to 0.3%. This means that the business is gets worse in controlling its financial expenses.
  •  Interpretation of Financial Stability Ratios Stability Ratios 2011 2012 Interpretation Working Capital Ratio (WC) 2.4: 1 1.9: 1 During the 2011-2012 period, the Working Capital decreased from 2.4: 1 to 1.9: 1. This means that its ability to pay current liabilities gets worse. In addition, it doesn’t have the minimum 2:1 ratio. Total Debt Ratio (TD) 35% 43.5% During the 2011-2012 period, the Total Debt has increased from 35% to 43.5%. This means that the total debt of business has increased. However, its debt is less than 50%. Inventory Turnover Ratio (IT) 59.9 days 61.4 days During the 2011-2012 period, the Inventory Turnover has increased from 59.9 days to 61.4 days. This means that the business is selling its inventory slower. Debtor Turnover Ratio (DT) 25.2 days 10.9 days During the 2011-2012 period, the Debtor turnover has decreased from 25.2 days to 10.9 days. This means that the business is more effective in collecting debt. Interest Coverage Ratio (IC) 35.8 times 21.4 times During the 2011-2012 period, the Interest Coverage has decreased from 35.8 times to 21.4 times. This means that the business has less ability to pay its interest expense. However, it satisfies the minimum ratio of 5 times. Interpretation of P/E Ratio The company’s P/E Ratio is 24.7 which mean that an investor will wait for 24.7 years in order for him to recoup his investment. This is considered as a higher P/E Ratio as a conservative investor would pay not more than P/E of 15.
  • Investment Recommendation
  • Referencing: Dutchlady.com.my (1963). Dutch Lady::The Company :: Company Profile. [online] Retrieved on 23 May 2013. At http://www.dutchlady.com.my/en/home.asp?page=company&subpage=comp_profile Dutchlady.com.my (1963). Dutch Lady ::The Company :: Introduction To Dutch Lady. [online] Retrieved on 23 May 2013 . Available at Introduction To Dutch Lady. At http://www.dutchlady.com.my/en/home.asp?page=company&subpage=intro_dutch En.wikipedia.org (2013). Dutch Lady Milk Industries Berhad - Wikipedia, the free encyclopedia. [online] Retrieved on 23 May 2013.At http://en.wikipedia.org/wiki/Dutch_Lady_Milk_Industries_Berhad Huang, S. (2011). Dutch Lady Annual Report 2011. [online] Retrieved on 23 May 2013 At http://www.dutchlady.com.my/sharedfiles/financial/files/DL_AnnualReport_2011.pdf Huang, S. (2012). Dutch Lady Annual Report 2012. [online] Retrieved on 23 May 2013 At http://www.dutchlady.com.my/sharedfiles/financial/files/DL_AnnualReport_2012.pdf