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Ann Joo Resources Berhad are separated into two main division which is the
manufacturing division and trading division:
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P&L Statement
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Balance Sheet
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Return On Equity
During the year 2012-13 period, the Return on Equity has increased from -1.78%
to 21.7% which means the owner is getting more return from his capital than last
year.
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During the year 2012-13 period, the Net Profit Margin has increased from -0.89%
to 0.57% which means the business is getting better at controlling its overall
expenses.
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During the year 2012-13 period, the Gross Profit Margin increase from 3.44% to
9.17% which means the ability of the business to control cost of good sales had
getting better.
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The selling expenses is obtain through distribution expenses, since other operating
expenses is more on assets and operations. During the year 2012-13, the Selling
Expenses Ration has increase from 1.45% to 1.72% which means the business is
getting worsen at controlling its selling expenses.
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During the year 2012-13, the General Expenses Ratio has decrease from 4% to
3.71% which means the ability of the business to control its general expenses has
improved.
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During the year 2012-13, the Financial Expenses Ratio has increase from 1.44% to
2.7% which means the ability of the business to control its financial expenses has
gotten worsen.
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Working Capital
During the year 2012-13, the Working Capital Ratio has decrease from 1.17:1 to
1.1:1. This means the business ability to pay current liabilities with current assets is
getting worsen. In addition, it does not satisfy the minimum requirement of 2:1.
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Total Debt
During the year 2012-13, the Total Debt ratio has increase from 64.29% to 66.13%.
This means that the business overall liability has increased. However, the
maximum limit is still over 50%.
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Stock Turnover
During the year 2012-13, the Stock Turnover ratio has increase from 235 days to
260 days. This means the business is selling its products at a slower rate.
Debtor Turnover
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Due to the absence of credit sales, we take the revenue as an example of credit
sales. During the year 2012-13, the Debtor Turnover Ratio has increased from
49days to 57 days. This means the effectiveness of a business collecting its debts is
slower.
Interest Coverage
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During the year 2012-13, the Interest Coverage ratio has increase from 0.38 times
to 1.21 times. This means that the business ability to pay its interest expenses has
become better. In addition, the business Interest Coverage Ratio does not satisfies
the minimum requirement of 5.
P/E Ratio
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P/E Ratio = Current Share Price / Earnings Per Share (in numbers of times)
Based on BloomBerg, which is one webpage that we can view the latest news for
shares market.
So, on the date (12 November 2014), the current share price is RM1.16 and its
earnings per share is RM0.0364. This means the P/E ratio of Ann Joo Resources
Berhad is 31.868 (1.16/0.0364).
Conclusion
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The profitability is quite unsatisfying due to the loss that occurred in the year 2012
and the few profits earned in year 2013. Due to the loss in the year 2012, it has
caused the Return on Equity and Net Profit Margin to undergo a negative
percentage which gives a bad sign for the investors. But luckily in year 2013, it
started to develop better and started to cover up their loss bit by bit. However, the
profit earned in 2013 is insufficient to cover up the overall expenses and debts
from the year 2012, so I take that as a non-profitable company to invest in.
On the other hand, the stability of the company is inconsistent due to Selling and
Financial Expenses Ratio which are getting worse year by year, and only the
General Expenses Ratio gives a positive feedback but as an investor, the positive
feedback from the General Expenses Ratio does not matter at all. Thus, we need to
improve these three expenses so that it will improve the stability. Sadly, the
Working Capital, Stock Turnover and Debtor Turnover also produces
unsatisfactory results. Imagine if the Stock Turnover and Debtor Turnover began
getting worse as years pass. So, it will affect the investors decision a lot and even
though the company still can sell their products at a slower rate, the debtors might
return the money slowly or even turn out to be bad debts. Of course, this is still
quite a big loss to the company.
Lastly, the P/E ratio which is 31.868, this means that the investors would still need
to wait another 30 years to claim back the original principal he or she invested. As
investor, if the P/E ratio is more than 15, investor take it as a sign to avoid
investing in this company. Hence the answer is a NO to invest in this company
since everything is leading to a negative outcome.
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REFERENCE
1. Ann Joo Resources Berhad ( 2013. December 31) Annual Report 2013.
Retrieved from http://www.annjoo.com.my/
2. BloomBerg ( 2014. November 12) Ann Joo Resources Berhad. Retrieved
from http://www.bloomberg.com/
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