4. Financial Ration Of MASTEEL
Return Of Equity (ROE)
eturn of Equity 00% R = ( Net Profit
Average Owners Equity )× 1
ROE for 2013 = 00% (27,014,000
540,501,500 )× 1
= 5%
ROE for 2012 = 00% (24,346,000
540,501,500 )× 1
= 4.5%
Over the period of year 2012 and 2013, the ROE of the business has
increased from 4.5% to 5% . The owner is getting more return from his
capital.
5.
Net Profit Margin (NPM)
et Profit Margin 00% N = (Net Sales
Net Profit
)× 1
NPM for 2013 = 00% ( 27, 014, 000
1, 375, 441, 000 )× 1
= 1.96%
NPM for 2012 = 00% ( 24, 346, 000
1, 312, 189, 000 )× 1
= 1.86%
During the period, the NPM has a minor increase from 1.86% to 1.96%.
This means that the ability of the business to control its overall expenses
is slightly better compared to the previous year.
6. Gross Profit Margin (GPM)
ross Profit Margin 00% G = ( Net Sales
Gross Profit
)× 1
GPM for 2013 = 00% ( 86,791,000
1,375,441,000 )× 1
= 6.31%
GPM for 2012 = 00% ( 75,153,000
1,312,189,000 )× 1
= 5.73%
Over the period of year 2012 to 2013, the GPM has increased from 5.73%
to 6.31%. The business is getting better in terms of their ability to control
its cost of goods sold expenses for year 2013 than 2012.
7. Selling Expenses Ration (SER)
elling Expenses Ratio 00% S = ( Net Sales
Selling Expenses
)× 1
SER for 2013 = 00% ( 17, 828, 000
1, 375, 441, 000 )× 1
= 1.3%
SER for 2012 = 00% ( 19, 544, 000
1, 312, 189, 000 )× 1
= 1.49%
The SER of the business has slightly decreased from 1.49% to 1.3%
throughout the year. It means that the business’s ability to control its
selling expenses is getting better.
8. General Expenses Ratio (GER)
eneral Expenses Ratio 00% G = ( Net Sales
General Expenses
)× 1
GER for 2013 = 00% ( 27, 199, 000
1, 375, 441, 000)× 1
= 1.98%
GER for 2012 = 00% ( 19, 352, 000
1, 312, 189, 000)× 1
= 1.47%
The GER has increased from 1.47% to 1.98% over the period of year
2012 and 2013. The business’s ability of controlling its general expenses
is worse in year 2012 than 2013.
9. Financial Expenses Ratio (FER)
inancial Expenses Ratio 00% F = ( Net Sales
Financial Expenses
)× 1
FER for 2013 = 00% ( 15,140,000
1,375,441,000 )× 1
= 1.1%
FER for 2012 = 00% ( 15,261,000
1,312,189,000 )× 1
= 1.16%
Over the period of year 2012 and 2013, the FER has decreased by 0.05%,
from 1.16% to 1.1%. In other words, the financial expenses in year 2013
is slightly lower than 2012.
10. Working Capital
orking Capital W = ( Total Current Assets
Total Current Liabilities )
Working capital for 2013 = (435, 500, 000
523, 506, 000
)
= 1.2 : 1
Working capital for 2012 = (368, 580, 000
462, 280, 000
)
= 1.25 : 1
Over the period of 2012 to 2013 the working capital of the business has
dropped from 1.25:1 to 1.2:1. The business’s ability to pay of its current
liabilities is not as good as the previous year. In addition, it does not meet
the criteria of a ratio 2:1.
11.
Total Debt
otal Debt 00% T = ( Total Assets
Total Liabities
) × 1
Total Debt for 2013 = 00% ( 460, 755, 000
1, 015, 001, 000 )× 1
= 45.4%
Total Debt for 2012 = 00% (930, 785, 000
404, 028, 000
)× 1
= 43.4%
From the year 2012 to 2013, the total debt has increased from 43.4% to
45.4%. The total debt of this business has increased. In addition, it still
satisfies the requirement of a maximum of 50% debt.
12. Stock Turnover
tock Turnover 365 S = ÷ ( Average Inventory
Cost Of Goods Sold
)
Stock Turnover for 2013 = 65 3 ÷ ( 200, 838, 000
1, 288, 650, 000
)
= 57 days
Stock Turnover for 2012 = 65 3 ÷ ( 200,838,000
1,237,036,000
)
= 60 days
During the period of year 2012 and 2013, The stock turnover has
decreased from 60 days to 57 days. The business sold its goods faster in
2013 compared to 2012.
13. Debtor Turnover
ebtor Turnover 65 D = 3 ÷ ( Credit Sales
Average Debtors )
Debtor Turnover 2013 =
= 123 days65 3 ÷ ( 687, 720, 500
[(239,952,000 + 222,703,000) / 2] )
Debtor Turnover 2012 =
= 129 days65 3 ÷ ( 656, 094, 500
[(239,952,000 + 222,703,000) / 2] )
Over the period of year 2012 to 2013, the debtor turnover of the business
has decreased from 129 days to 123 days. It means that the business
received their money faster than the previous year.
*(Due to the absence of credit sales figure in the annual report, we have
taken the revenues of both years and divided by 50%)
14. Interest Coverage
nterest Coverage I = ( Interest Expenses
Interest Expenses + Net Profit
)
Interest coverage for 2013 = ( 15,140,000
15,140,000 + 27,014,000
)
= 2.78 times
Interest coverage for 2012 = ( 15,261,000
15,261,000 + 24,346,000
)
= 2.6 times
During the period of year 2012 to 2013, the interest coverage of the
business increased from 2.6 times to 2.78 times. It also means the
business ability to pay off its interest expenses is better. However a
business should never fall below 5 times.
15.
P/E Ratio
P/E Ratio = ( Earning Per Share
Current Share Price
)
= ( 0.62
0.1238 )
= 5.008
Based on the information we acquired from the webpage of Bursa
Malaysia dated 3rd June 2015, the share price of MASTEEL is RM 0.62
and its earning per share is RM 0.1238. This means the P/E ratio of
Malaysia Steel Works Berhad is 5.008 (0.62/0.1238).