Fiscal analysis is one of the most common ways of analysing fiscal informations is to cipher ratios from the informations to compare against those of other companies or against the company ‘s ain historical public presentation. For illustration, return on assets is a common ratio used to find how efficient a company is at utilizing its assets and as a step of profitableness. This ratio could be calculated for several similar companies and compared as portion of a larger analysis.
4.2 Analysis of Balance Sheet
4.2.1 Asset Structure
Figure 4.2.1 Asset Structure of Kuala Lumpur Kepong Berhad
The graph above shows the assets construction for Kuala Lumpur Kepong Berhad ( KLK Berhad ) for the last five old ages, 2006 to 2010. Non-current plus for KLK Berhad grew invariably every twelvemonth with over RM 3 billion in the twelvemonth 2006 and rose to RM 4 billion the following twelvemonth of 2007. The assets grew invariably for the last three old ages of 2008, 2009 and eventually in the 2010 with over estimated value of RM 5 billion in its non-current assets. It is every bit expected out of KLK Berhad as the company keep huge Numberss plus such as belongings, works and equipment, biological assets and many more.
The current assets for KLK Berhad besides show changeless addition in its assets for the last five old ages. In the twelvemonth 2006, the current assets value at over RM1 billion and rose over RM 2 billion in 2007. In the twelvemonth 2008, the current assets rose to a farther RM 3 billion before diminution somewhat in 2009 and ulterior additions in the twelvemonth 2010.
4.2.2 Fiscal Structure
Figure 4.2.2. Fiscal Structure of Kuala Lumpur Kepong Berhad
Based in the graph above, the fiscal construction consists of long term lialibilities, current liabilities and stockholder equity. Based on the chart given, the long term liabilities for Kuala Lumpur Kepong Berhad addition from twelvemonth 2006 to 2010. It is because the company has to borrow from the other establishment or bank for a long period.
In current liabilities, Kuala Lumpur Berhad the same form of motion from 2006 to 2008 when the company maintain on increasing and worsening from 2008 to 2009, and back to increase until 2010. The fluctuated form in term of current lialibilities are happen due to the different degree of revenue enhancement in each twelvemonth.
The stockholder equity besides shows the same form between Kuala Lumpur Berhad as it increases from twelvemonth 2006 to 2010. These may go on because the company are acquiring stronger in the industry and acquiring more stockholder from twelvemonth to twelvemonth.
4.3 Analysis of Net income and Loss Statement
4.3.1 Interest Duty
Figure 4.3.1 Interest Duty of Kuala Lumpur Kepong Berhad
Refer to the graph above, Kuala Lumpur Kepong Berhad ( KLK ) show that involvement on that company bit by bit increasing from twelvemonth 2006 until twelvemonth 2009. It besides indicates the company had addition in the sum of borrowing from fiscal establishments. However, in the twelvemonth 2010 the company involvement is much lower as to compare with the old twelvemonth due to the fact that the company may hold lower the sum of borrowing or pay its debt.
4.3.2 Dividend Distribution
Figure 4.3.2 Dividend Distribution of Kuala Lumpur Kepong Berhad
The graph above depicts the dividend distribution of Kuala Lumpur Kepong Berhadfrom period of 2006 to 2010. As can be seen above, the dividend distributed in the twelvemonth 2006 and 2007 is RM0.36 and RM0.37 severally. In the twelvemonth 2008, the dividend distributed rose to RM0.55 before worsening to RM0.40 in 2009. The dividend distribution is affected by the net income or gross the company generate for the twelvemonth. In the 2007, the dividend distributed additions as the net income generated by the company increases every bit good and farther additions as the net income for the company farther additions. The dividend diminution subsequently in 2009 and increases yet once more in the twelvemonth 2010 as the company public presentation are good for the twelvemonth.
4.4 Financial Ratio Analysis
4.4.1 Horizontal Analysis
In this horizontal analysis, ratio are analyzed signifier selected company which is Kuala Lumpur Kepong Berhad ( KLK Berhad ) for the last five old ages of 2006 to 2010.
Current ratio for KLK Berhad is mean of 2.00 times per twelvemonth during the last five old ages. In 2006, KLK current ratio is 2.61 times, it ‘s 2nd highest following to 2.67 times in the twelvemonth 2010. KLK Berhad recorded low current ratio on the twelvemonth 2008 with 2.07 times.
Current ratio steps of the adequateness of working capital and short-run liquidness, since it indicates the extent to which short-run duties are covered by assets that are capable of being converted to hard currency in a period approximately matching to the adulthood of the duties. Well above 1.0 times of current ratio, indicates that good chance the company can retire current debts. With ratios all above 2.0, KLK Berhad is in a comfy fiscal place.
Quick ratio for KLK Berhad is all above 1.0 index which means that a higher ratio indicates the sum of liquid assets available are able to countervail debt about the same as current ratio. KLK Berhad recorded is 1.28 times in 2006 and the highest is 1.54 times in 2009 and worsen to 1.38 times in 2010.
KLK Berhad recorded at least RM1 billion of healthy net working capital per twelvemonth with changeless addition each twelvemonth from 2006 to 2010. High net working capital indicates the sum of assets available to pay off the short term disbursals such as wages, equipment lease, stock list, and so on. In 2006, RM 1,134,928,000, addition in 2007 to RM1,232,541,000. The sum invariably increase RM100,000,000 per twelvemonth until 2010 with value of RM 2,125,335,000 in 2010. Working capital besides demonstrates the sum of liquid assets that are available to prolong and construct a concern by mensurating the company ‘s efficiency and short-run fiscal wellness. Since, KLK Berhad have healthy, the company are expeditiously are able to prolong its concern.
KLK Berhad debt ratio for the twelvemonth 2006 is 18.08 % , 27.25 % in 2007, increases to 32.55 % in 2008 and somewhat lessening in 2009 with 30.93 % . It rose to 37 % in the twelvemonth 2010. Debt ratio are used to derive a general thought the sum of purchase being used by a company. A low per centum means that the company is less dependent on purchase, for case money borrowed from or owed to others. The lower the per centum, the less purchase a company is utilizing and the stronger its equity place. In general, the higher the ratio, the more hazard that company is considered to hold taken on. KLK Berhad debt ratio sum are aligned with the size of its concern and as a big, well-established company, KLK Berhad can force the liability constituent of their balance sheet construction to higher per centums without acquiring into problem.
Debt equity ratio another purchase ratio that compares a company ‘s entire liabilities to its entire stockholders ‘ equity. This is a measuring of how much providers, loaners, creditors and obligors have committed to the company versus what the stockholders have committed. Similar to the debt ratio, a lower the per centum means that a company is utilizing less purchase and has a stronger equity place. For KLK Berhad debt equity ratio is 0.22 times in 2006, 0.37 times in 2007, 0.48 times in 2008, 0.45 times in 2009 and eventually diminish in 2010 to 0.20 times. Since the ratio is lower than 1.0 indicates that the company does non utilize more debt than equity in financing its activities.
Timess involvement earned determines how easy a company can pay involvement disbursals on outstanding debt. KLK Berhad recorded times involvement earned of 41.12 times in 2006 which is the highest during the last five old ages and lowest of 13.40 times in the twelvemonth 2009. When a company ‘s involvement coverage ratio is merely 1.5 or lower, its ability to run into involvement disbursals may be questionable. Therefore, KLK Berhad is at a comfy place since higher is desirable as it indicates higher border of safety.
Activity ratios measure the effectivity in pull offing the company ‘s assets and efficiency in managing the company ‘s operations.
Average aggregation period for KLK Berhad is 28 yearss in the twelvemonth 2006 and 2008. In 2007, 38 yearss, 48 yearss in 2009 and 39 yearss in 2010. With low ratio of mean aggregation period, KLK Berhad have higher hard currency rhythm and low cost capital the investings in history receivable.
Account receivable turnover for KLK Berhad is the highest in the twelvemonth 2006 with 12.86 times and lowest in the twelvemonth 2009 with 7.5 times. Higher history receivable turnover indicates the efficient receivable direction with low mean aggregation period and financess militias in receivable are released for other productive investing.
Inventory turnover for KLK Berhad is 3.65 times in 2006, 3.49 times in 2007, 4.48 times in 2008, 5.34 times and 4.12 times in 2010. A higher stock list turnover is indicates higher hazard of inability to run into production and gross revenues demand but it is still preferred due to efficient stock list direction and lower cost of investing stock lists and parts to company ‘s profitableness.
Fixed plus turnover reflect a company ‘s efficiency in pull offing these important assets. Simply put, the higher the annual turnover rate, the better. KLK Berhad fixed plus turnover in 2006 is 1.02 times which is the lowest and highest is 2.92 times in 2010. KLK Berhad turnover is invariably increasing during the last five old ages.
The entire plus turnover for KLK Berhad during the last five old ages, from 2006 to 2010 are 0.69 times, 0.72 times, 0.92 times, 0.77 times and 0.82 times severally. This ratio measures the company ability to utilize all of its assets to bring forth gross revenues expeditiously, therefore higher ratio is desirable and most preferable as it refers to break efficiency in pull offing the resources or the direction control over its investing in assets. Since KLK Berhas entire plus turnover is comparatively low, it indicates that the company in non using its resources every bit expeditiously as the company can.
KLK Berhad gross net income border from 2006 to 2010 lessening each twelvemonth from 32.76 % in 2006 to 29.14 % in 2010. The gross net income border is used to analyse how expeditiously a company is utilizing its natural stuffs, labour and manufacturing-related fixed assets to bring forth net incomes. A higher border per centum is a favourable net income indicator.This indicates that the company ‘s public presentation in utilizing its resources to bring forth net income have decrease in figure this last five old ages.
KLK Berhad operating net income border had fluctuates during this last five old ages. In 2006, runing net income border of 14.93 % is recorded and later addition to 17.58 % in 2007. It increases to 18.68 % in 2008 before diminution to 13.84 % in 2009 and rose in 2010 to 18.74 % . Higher border is preferred as it stand for lower cost construction and will ensue in higher net incomes.
Operating ratio in 2006 is 12.47 % , 10.92 % in 2007, 13.87 % in 2008, 10.87 % in 2009 and 6.74 % in 2010. KLK Berhad runing ratio is comparatively low therefore is it desirable because it indicates better efficiency and higher net incomes can be expected.
Net net income border measures the after-tax-profit per Ringgit of gross revenues. It is the ability of the company to bring forth the net income from its gross revenues after subtracting all disbursals. The net net income border for KLK Berhad is rather high with 11.23 % in 2006 and its lowest 9.56 % in 2009 before rose to 14.25 % in 2010. This indicates the company ability to do net incomes for distribution to the equity holders and internal beginning of funding to back up growing of the company.
KLK Berhad return on plus is besides tolerably high with it highest of 31.44 % in 2010 and lowest of 7.47 % in 2009. Higher return on plus makes attractive to obtain outside capital and keep its growing during the concern period.
Gaining per portion of the company step the sum of net incomes available to common shareholders per portion common stock held. KLK Berhad had paid attractive for the last five old ages due to the high generated income. Gaining per portion of the company increases every twelvemonth from 2006 to 2010 with 41.00 sen in 2006, 65.20 sen in 2007, 97.70 sen in 2008, 57.50 sen in 2009 and lastlty in 2010 with 95.10 sen of gaining per portion.
The dividend per portion of KLK Berhad is besides every bit attractive as its gaining per portion. In 2006, KLK Berhad paid 36.40 sen, 36.90 sen in 2007 and in conclusion 54.90 sen in 2008. KLK Berhad nevertheless did non paid any dividend in the last two old ages which is in 2009 and 2010.
4.4.2 Vertical Analysis
Kuala Lumpur Kepong Berhad ( KLK Berhad ) public presentation for 2010 mentioning to its current ratio was acceptable as to compare with its rival Batu Kawan Berhad. On norm, KLK Berhad manage to enter current ratio 2.67x from the in the twelvemonth 2010. However, Batu Kawan Berhad current ratio is higher with 8.04x in the same twelvemonth. Higher current ratio indicates that the company has adequate resourcers to pay their debt and batch more efficient. It is besides gives signal of safe liquidness in which besides indicates that KLK Berhad has adequate resources as to compare with Batu Kawan Berhad in term of paying their debt
KLK berhad speedy ratio is much lower as to compare with Batu Kawan Berhadin in 2010 with 1.38x for KLK Berhad and 7.34x for Batu Kawan Berhad. If speedy ratio is higher, company may maintain excessively much hard currency on manus or have a job roll uping its histories receivable. Higher speedy ratio is needed when the company has trouble borrowing on short-run notes. A speedy ratio higher than 1:1 indicates that the concern can run into its current fiscal duties with the available speedy financess on manus. A speedy ratio lower than 1:1 may bespeak that the company relies excessively much on stock list or other assets to pay its short-run liabilities
KLK Berhad ‘s cyberspace working capital exceed over RM1 billion worth wich is much higher whereas Batu Kawan Berhad highest is over RM 200 million. Positive working capital means that the concern is able to pay off its short-run liabilities. Besides, a high on the job capital can be a signal that the company might be able to spread out its operations. Negative on the job capital means that the concern presently is unable to run into its short-run liabilities with its current assets. Therefore, an immediate addition in gross revenues or extra capital into the company is necessary in order to go on its operations. Working capital besides gives an thought of company ‘s efficiency. Money tied up in stock list or histories receivable can non pay off any of the company ‘s short term fiscal duties.
As speedy summarisation, purchase ratios for KLK Berhad is higher in comparing to Batu Kawan Berhad. High purchase will ensue in high hazard.
KLK Berhad activity ratio is more promising comparison to Batu Kawan Berhad. A higher activity ratio equal to higher profitableness. KLK Berhad besides record a higher turnover overall which mean better usage of capital or resources and subsequently consequence in better profitableness ratio.
In footings of profitableness, both KLK Berhad and Batu Kawan record high ratio for the last five old ages. Both company are able to pull off their resources efficient and wages off their debt rather expeditiously every bit good.
In decision, Kuala Lumpur Kepong Berhad does performed better in overall state of affairs as to compare with Batu Kawan Berhad. However there is still failing in the debt portion of the company, KLK Berhad. Batu Kawan Berhad manage to avoid adoption from other fiscal establishments in some old ages of runing its concern therefore execute better take downing their debt. In add-on, KLK Berhad manage to execute and pull offing their resources and assets much better in comparing with Batu Kawan Berhad.