Вы находитесь на странице: 1из 28

A162 BWFF 2033 (O) FINANCIAL MANAGEMENT

Group Assignment

1.1 INTRODUCTION

Individual investors or firms that are interested in investing in small businesses


use financial analysis techniques in evaluating target companies' financial information.
By examining past and current financial statements balance sheets, income statements
and cash flow statements potential investors can form opinions about investment value
and expectations of future performance. Financial analysis can also assist small-
business owners as they weigh the effect of certain decisions, such as borrowing, on
their own companies. if a firm is interested in investing in a small business, its financial
analysts will likely examine the company's past and current financial statements. The
objective would be to discover possible weaknesses and any problem areas that should
be discussed with company owners. The analysts would look for unusual movements in
items from year to year and for patterns in revenue and profits. Steady growth is
normally positive, and severe ups and downs might be a sign of discord. Cash flow
statements should indicate how the business normally obtains and uses cash. The
management team of a small business might conduct a similar analysis as a part of an
annual review of the business.

The company's financial adviser or accountant might participate in such reviews.


ratio analysis compares values within the company from year to year and against other
companies and the industry. Liquidity ratios such as the current ratio (current assets
divided by current liabilities) show the company's ability to pay its short-term obligations
on time. The debt ratio (total assets divided by total liabilities) shows how much of the
company's assets are provided by debt. A lower percentage shows a lower dependence
on debt. The higher the percentage, the more risk the company has taken on. Business
owners and small-business management teams might use ratio analysis in their regular
planning, to measure their companies against others in their industry. If ratio analysis
shows that a company has a great deal more debt than other businesses in its industry,
the owner might be prompted to pay off or reduce some loans.

In this project, we chose a reputable and well known company in Malaysia Astro
Malaysia Holdings. Of this company, we will analyze various types of ratio that we can
get data from the financial statements of this company. Our objective is to do research,

1
A162 BWFF 2033 (O) FINANCIAL MANAGEMENT
Group Assignment

so that we are able to understand how to calculate financial ratios, explain the
usefulness of financial ratios, the company's performance during the year and also
learning with the original financial data from a well-known company in Malaysia. We
chose the Astro Malaysia Holdings as an option for our review of the data because as
we know, this company has been known for a lot of good customers from Malaysia
itself, even been known to ASEAN. therefore, we are interested in finding out more
about the statistics of financial ratios of the company.

1.2 COMPANY BACKGROUND

Astro Malaysia Bhd was incorporated as privately owned company in June 1, 1996,
operated under MEASAT satellite system to broadcast the digital direct service into the
customer. As an entertainment company, Astro Malaysia listed on the main market of
the Bursa Malaysia Securities Berhad on 21 September 2012. During the prospectus
session, Astro uphold 70.8% which owned by Astro, meanwhile the remaining shares
are held by institutional shareholder including cornerstone investor-high net worth
shareholder and retail shareholder.

Astros is now stands as the consumer and content leader in Malaysia and
ASEAN, focusing on 4 pillars as the main core businesses in entertainment purpose, for
instance on watch, listen, read and shop services where offered into the public
consumers. Malaysian people are embraced with a multi-tainment 360 O as the positive
approach of Astro in wrapped up the diversity of Malaysian people where an
entertainment is approaching the multidimensional and multicultural approach to
enhance the lives of all Malaysians into a whole new level of multimedia purpose. Multi-
tainment 360O encompass of all varieties Astros products e.g Astro Television, Astro
Radio, Astro Entertainment, Astro Digital Publications and Astro Digital and Astro Shop.

Over the years, the consumer of Astros provided with 184 TV channels accessed
through DTH (Direct-To-Home) satellite TV, IPTV (Multi-channel digital TV with
dedicated IP network and bandwith), OTT (Over-the-Top, video services accessed
through third partys network). From 184 TV channels, 73 are branded of Astro which 50

2
A162 BWFF 2033 (O) FINANCIAL MANAGEMENT
Group Assignment

channels showed in High Definition pictures. For about 4.4 million customers,
approximately 63 percent of Malaysian household subscribed an Astros content
including High Definition, Standard Definition, Personal Video Recorder, Video on
Demand, TV, IPTV platform services where accessed through Astro B.yond. In addition,
the non-subscription (NJOI) offered with 25 free TV channels and also 20 radio stations.
As the content leader, Astro accommodate radio listeners with the Malay, Chinese, Tamil
and English-language stations. The radio listeners of Astros were constituting 12.9
million weekly and 3.9 million unique visitors per month accessed through terrestrial and
digital platforms respectively. Additional service of Astros provided through Go Shop
that encourage 44 millions online viewers monthly.

From 2010 to 2014, the Astros award comprises of Golden award at Putra Brand
Awards, Brands of the Year 2012, Brand Icon 2013, CASBAA Convention (Chairman
Award) 2014, Silver Stevie Award 2014, Outstanding Business Awards 2014,
organization of the Year (Management Accounting) 2014. Currently, the company
chaired by Tun Dato Seri Zaki bin Tun Azmi as independent non-executive chairman,
employs a total workforce of 4,800 employees nationwide, headquartered at the All Asia
Broadcast Center in Technology Park Malaysia. Astro also has been operated 4 Astro
Lifestyle Center and 19 Customer Service Center to pursuit of the 1 st media brand
choice in ASEAN.

2. METHODOLOGY

2.1 Liquidity Ratios

a. Current Ratio

The current ratio is a liquidity ratio that measures a company's ability to


pay short-term and long-term obligations. To gauge this ability, the current ratio
considers the current total assets of a company (both liquid and illiquid) relative
to that companys current total liabilities.

The formula for calculating a companys current ratio, then, is:

3
A162 BWFF 2033 (O) FINANCIAL MANAGEMENT
Group Assignment

Current Ratio = Current Assets / Current Liabilities

The current ratio is called current because, unlike some other liquidity
ratios, it incorporates all current assets and liabilities. The current ratio is also
known as the working capital ratio.

2013 2014 2015


RM000 RM000 RM000
Current Assets 1,218,174 1,263,455 512,263
Current Liabilities 102,522 252,390 339,603
Inventory 23,624 17,536 12,989

The Calculation For Astro Malaysia Holdings :

Current Ratio (2013)

1,218,174
102,522 = 11.8820740914

Current Ratio (2014)


1,263,455
252,390 = 5.0059629938

Current Ratio (2015)


512,263
339,603 = 1.5084171812

b. Quick Ratio

The quick ratio or acid test ratio is a liquidity ratio that measures the ability
of a company to pay its current liabilities when they come due with
only quick assets. Quick assets are current assets that can be converted
to cash within 90 days or in the short-term.

The formula for calculating a companys quick ratio, then, is:

4
A162 BWFF 2033 (O) FINANCIAL MANAGEMENT
Group Assignment

Quick Ratio = Current Assets Inventory / Current Liabilities

The Calculation For Astro Malaysia Holdings :

Quick Ratio (2013)


1,218,17423,624
102,522 = 11.6516455005

Quick Ratio (2014)


1,263,45517,536
252,390 = 4.9364832204

Quick Ratio (2015)


512,26312,989
339,603 = 1.4701695804

2.2 Asset Management Ratios

a. Average Collection Period

The average collection period can be calculated as follows: 365


days in a year divided by the accounts receivable turnover ratio.

The formula for calculating a companys average collection period, then,


is:

Average Collection Period = Number of Working Days / Debtors Turnover

Ratio

The Calculation For Astro Malaysia Holdings :

Average Collection Period (2013)

= 365 / 5.13
= 71 days

Average Collection Period (2014)

= 365 / 2.22

5
A162 BWFF 2033 (O) FINANCIAL MANAGEMENT
Group Assignment

= 164 days
Average Collection Period (2015)
= 365 / 1.88
= 194 days

b. Receivable Turnover
Accounts receivable turnover is the number of times per year that a
business collects its average accounts receivable. The ratio is intended to
evaluate the ability of a company to efficiently issue credit to its customers
and collect funds from them in a timely manner.

The formula for calculating a companys receivable turnover, then, is:

Receivables Turnover = Sales / Accounts Receivable

The Calculation For Astro Malaysia Holdings :

Receivables Turnover (2013)

= Sales / Account Receivable


= 679,859 / 132,546
= 5.13 times
Receivable Turnover (2014)
= Sales / Account Receivable
= 343,492 / 154,580
= 2.22 times
Receivable Turnover (2015)
= Sales / Account Receivable
= 457,982 / 242,395

= 1.88 times

6
A162 BWFF 2033 (O) FINANCIAL MANAGEMENT
Group Assignment

c. Inventory Turnover
In accounting, the Inventory turnover is a measure of the number of
times inventory is sold or used in a time period such as a year.

The formula for calculating a companys inventory turnover, then, is:

Inventory Turnover = Cost of Goods Sold (COGS) / Inventory

The Calculation For Astro Malaysia Holdings :

Inventory Turnover (2013)

= Cost of Goods Sold / Inventory


= 2,609,630 / 23,624
= 110.46 times

Inventory Turnover (2014)

= Cost of Goods Sold / Inventory


= 3,021,559 / 17,536
= 172.3 times
Inventory Turnover (2015)
= Cost of Goods Sold / Inventory
= 3,341,192 / 12,989
= 257.23 times

d. Total Asset Turnover


The asset turnover ratio is an efficiency ratio that measures a
company's ability to generate sales from its assets by comparing net sales
with average total assets. In other words, this ratio shows how efficiently a
company can use its assets to generate sales.

The formula for calculating a companys total asset turnover, then, is:

Total Asset Turnover = Sales / Total Assets

7
A162 BWFF 2033 (O) FINANCIAL MANAGEMENT
Group Assignment

The Calculation For Astro Malaysia Holdings :

Total Asset Turnover (2013)

= Sales / Total Asset


= 679,859 / 516,092
= 1.32
Total Asset Turnover (2014)
= Sales / Total Asset
= 343,492 / 7,103,529
= 0.05
Total Asset Turnover (2015)
= Sales / Total Asset
= 457,982 / 6,939,347
= 0.065

e. Fixed Asset Turnover


The fixed-asset turnover ratio is, in general, used by analysts to
measure operating performance. It is a ratio of net sales to fixed assets.
This ratio specifically measures how able a company is to generate net
sales from fixed-asset investments, namely property, plant and equipment
(PP&E), net of depreciation.

The formula for calculating a companys fixed asset turnover, then, is:

Fixed Asset Turnover = Sales / NFA

The Calculation For Astro Malaysia Holdings :

Fixed Asset Turnover (2013)

= Sales / Net Fixed Asset


= 679,859 / 819,544
= 0.83

8
A162 BWFF 2033 (O) FINANCIAL MANAGEMENT
Group Assignment

Fixed Asset Turnover (2014)

= 343,492 / 1,011,065
= Sales / Net Fixed Asset
= 0.34
Fixed Asset Turnover (2015)
= Sales / Net Fixed Asset
= 457,982 / 172,660
= 2.65

2.3 Leverage Ratios

a. Debt Ratio

Debt Ratio is a financial ratio that indicates the percentage of a


company's assets that are provided via debt. It is the ratio of total debt (the
sum of current liabilities and long-term liabilities) and total assets (the sum
of current assets, fixed assets, and other assets such as 'goodwill').

The formula for calculating a companys total debt ratio, then, is:

Total Debt Ratio = (TA TE) / TA

The Calculation For Astro Malaysia Holdings :

Total Debt Ratio (2013)

Total Asset = Non-current Asset + Current Asset

Non-current Asset = 8,889,995,000

Current Asset = 1,218,174,000

Total Asset = 8,889,995,000 + 1,218,174,000

= 10,108,169,000

Total Equity = 7,065,233,000

9
A162 BWFF 2033 (O) FINANCIAL MANAGEMENT
Group Assignment

Total Debt Ratio = (10,108,169,000 - 7,065,233,000) /

10,108,169,000

= 3,042,936,000 / 10,108,169,000

= 0.3010

Total Debt Ratio (2014)

Total Asset = Non-current Asset + Current Asset

Non-current Asset = 8,767,022,000

Current Asset = 1,263,455,000

Total Asset = 8,767,022,000 + 1,263,455,000

= 10,030,477,000

Total Equity = 7,012,830,000

Total Debt Ratio = (10,030,477,000 - 7,012,830,000) /

10,030,477,000

= 3,017,647,000 / 10,030,477,000

= 0.3008

Total Debt Ratio (2015)

Total Asset = Non-current Asset + Current Asset

Non-current Asset = 9,309,522,000

Current Asset = 512,263,000

10
A162 BWFF 2033 (O) FINANCIAL MANAGEMENT
Group Assignment

Total Asset = 9,309,522,000 + 512,263,000

= 9,821,785,000

Total Equity = 6,939,347,000

Total Debt Ratio = (9,821,785,000 - 6,939,347,000) /

9,821,785,000

= 2,882,438,000 / 9,821,785,000

= 0.2935

b. Debt Equity Ratio

Debt/Equity Ratio is a debt ratio used to measure a company's


financial leverage, calculated by dividing a companys total liabilities by its
stockholders' equity. The D/E ratio indicates how much debt a company is
using to finance its assets relative to the amount of value represented in
shareholders equity.

The formula for calculating a companys debt equity ratio, then, is:

Debt/Equity = TD / TE

The Calculation For Astro Malaysia Holdings :

Debt Equity Ratio (2013)

Total Debt = 3,042,936,000

Total Equity = 7,065,233,000

Debt Equity Ratio = 3,042,936,000 / 7,065,233,000

= 0.4307

Debt Equity Ratio (2014)

Total Debt = 3,017,647,000


11
A162 BWFF 2033 (O) FINANCIAL MANAGEMENT
Group Assignment

Total Equity = 7,012,830,000

Debt Equity Ratio = 3,017,647,000 / 7,012,830,000

= 0.4303

Debt Equity Ratio (2015)

Total Debt = 2,882,438,000

Total Equity = 6,939,347,000

Debt Equity Ratio = 2,882,438,000 / 6,939,347,000

= 0.4154

c. Time Interest Earned

Times interest earned (TIE) or interest coverage ratio is a measure


of a company's ability to honor its debt payments. It may be calculated as
either EBIT or EBITDA divided by the total interest payable.

The formula for calculating a companys time interest earned, then, is:

Time Interest Earned = EBIT / Interest

The Calculation For Astro Malaysia Holdings :

Time Interest Earned (2013)

Earnings Before Interest and Taxes (EBIT) = 620,045,000

Interest = *There are no interest for this

year

Time Interest Earned (2014)

Earnings Before Interest and Taxes (EBIT) = 310,420,000

Interest = *There are no interest for this

year

12
A162 BWFF 2033 (O) FINANCIAL MANAGEMENT
Group Assignment

Time Interest Earned (2015)

Earnings Before Interest and Taxes (EBIT) = 426,896,000

Interest = *There are no interest for this

year

2.4 Profitability Ratios

a. Gross Profit Margin

Gross profit margin is a financial metric used to assess a


company's financial health and business model by revealing the proportion
of money left over from revenues after accounting for the cost of goods
sold (COGS). Gross profit margin, also known as gross margin, is
calculated by dividing gross profit by revenues.

The formula for calculating a companys gross profit margin, then, is:

Profit Margin = Net Income / Sales

The Calculation For Astro Malaysia Holdings :

Gross Profit Margin (2013)

Profit Margin = Net Income / Sales

= 679,852 / 7

= 9693.14

Gross Profit Margin (2014)

Profit Margin = Net Income / Sales

= 343,492 / 343,492

=1

13
A162 BWFF 2033 (O) FINANCIAL MANAGEMENT
Group Assignment

Gross Profit Margin (2015)

Profit Margin = Net Income / Sales

= 457,982 / 457,982

=1

b. Net Profit Margin

Net profit margin is the ratio of net profits to revenues for a


company or business segment. Typically expressed as a percentage, net
profit margins show how much of each dollar collected by a company as
revenue translates into profit.

The formula for calculating a companys net profit margin, then, is:

Net Profit Margin = Net Profit / Sales

The Calculation For Astro Malaysia Holdings :

Net Profit Margin (2013)

Net Profit Margin = Net Profit / Sales

= 620,045 / 679,859

= 91.20%

Net Profit Margin (2014)

Net Profit Margin = Net Profit / Sales

= 310,420 / 343,492

= 90.37%

Net Profit Margin (2015)

Net Profit Margin = Net Profit / Sales

= 426,896 / 457,982

14
A162 BWFF 2033 (O) FINANCIAL MANAGEMENT
Group Assignment

= 93.21%

c. Return On Asset (ROA)

Return on assets (ROA) is an indicator of how profitable a company


is relative to its total assets. ROA gives an idea as to how efficient
management is at using its assets to generate earnings.

The formula for calculating a companys return on asset, then, is:

Return On Asset (ROA) = Net Income / Total Assets

The Calculation For Astro Malaysia Holdings :

Return On Asset (2013)

Return On Assets = Net Income / Total Assets

= 620,045 / 10,108,169

= 6.13%

Return On Asset (2014)

Return On Assets = Net Income / Total Assets

= 310,420 / 10,030,477

= 3.09%

Return On Assets (2015)

Return On Assets = Net Income / Total Assets

= 426,896 / 9,821,785

= 4.34%

15
A162 BWFF 2033 (O) FINANCIAL MANAGEMENT
Group Assignment

d. Return On Equity (ROE)

Return on equity (ROE) is a measure of profitability that calculates


how many dollars of profit a company generates with each dollar of
shareholders' equity.

The formula for calculating a companys return on equity, then, is:

Return On Equity (ROE) = Net Income / Total Equity

The Calculation For Astro Malaysia Holdings :

Return On Equity (2013)

Return On Equity = Net Income / Total Equity

= 620,045 / 7,065,233

= 8.77%

Return On Equity (2014)

Return on equity = Net Income / Total Equity

= 3,104.20 / 7,012,830

= 4.42%

Return On Equity (2015)

Return On Equity = Net Income / Total Equity

= 426,896 / 6,939,347

= 6.15%

2.5 Market Value Ratio

a. Earnings Per Share (EPS)

16
A162 BWFF 2033 (O) FINANCIAL MANAGEMENT
Group Assignment

Earnings per share (EPS) is the portion of a company's profit


allocated to each outstanding share of common stock. Earnings per share
serves as an indicator of a company's profitability.

The formula for calculating a companys earnings per share, then, is:

Earning Per Share = Net Income / Average Outstanding Common Shares

The Calculation For Astro Malaysia Holdings :

Earnings Per Share (2013)

Market Price = 2.860 (24 march 2017, 4.59pm)

Net Income = 673,694,000

Shares Outstanding = 5.21 (B)

EPS = Net Income / Shares Outstanding

= 673,694,000 / 5,210,000,000

= 0.13

Earning Per Share (2014)

Market Price = 2.860 (24 march 2017, 4.59pm)

Net Income = 376,556,000

Shares Outstanding = 5.21 (B)

EPS = Net Income / Shares Outstanding

= 376,556,000 / 5,210,000,000

= 0.07

Earning Per Share (2015)

Market Price = 2.860 (24 march 2017, 4.59pm)

Net Income = 415,457,000

17
A162 BWFF 2033 (O) FINANCIAL MANAGEMENT
Group Assignment

Shares Outstanding = 5.21 (B)

EPS = Net Income / Shares Outstanding

= 415,457,000 / 5,210,000,000

= 0.08

b. Price / Earning Ratio

The price-earnings ratio (P/E Ratio) is the ratio for valuing a


company that measures its current share price relative to its per-share
earnings.

The formula for calculating a companys price / earning ratio, then, is:

PE Ratio = Price Per Share / Earnings Per Share

The Calculation For Astro Malaysia Holdings :

PE Ratio (2013)

PE Ratio = Price Per Share / EPS

= 2.860 / 0.13

= 22 times

PE Ratio (2014)

PE Ratio = Price Per Share / EPS

= 2.860 / 0.17

= 40.86 times

PE Ratio (2015)

PE Ratio = Price Per Share / EPS

= 2.860 / 0.08

= 35.75 times

18
A162 BWFF 2033 (O) FINANCIAL MANAGEMENT
Group Assignment

3. Findings and Analysis

Current Ratio

The current ratio helps investors and creditors understand the liquidity of a
company and how easily that company will be able to pay off its current liabilities.
This ratio expresses a firm's current debt in terms of current assets. So a current
ratio of 4 would mean that the company has 4 times more current assets than
current liabilities.

A higher current ratio is always more favorable than a lower current ratio
because it shows the company can more easily make current debt payments.The
highest ratio was at 2013 was (11.8820740914) and declining at 2014
(5.0059629938) and also at 2015 (1.5084171812).

Quick Ratio

Higher quick ratios are more favorable for companies because it shows
there are more quick assets than current liabilities. A company with a quick ratio
of 1 indicates that quick assets equal current assets. This also shows that the
company could pay off its current liabilities without selling any long-term assets.
An acid ratio of 2 shows that the company has twice as many quick assets than
current liabilities. Therefore, Astro Company gain quick ratio was at
11.6516455005 in 2013 but declining in the next year to 4.9364832204,
1.4701695804.

Debt Ratio

A lower debt ratio usually implies a more stable business with the potential
of longevity because a company with lower ratio also has lower overall debt.
Each industry has its own benchmarks for debt, but .5 is reasonable ratio. At
2013 debt ratio was 0.3010 then 2014 was 0.3008 and 2015 was 0.2935.so the
best ratio debt was at 2015.

Debt Equity Ratio

19
A162 BWFF 2033 (O) FINANCIAL MANAGEMENT
Group Assignment

A debt to equity ratio of 1 would mean that investors and creditors have an
equal stake in the business assets.but in this company debt ratio 2013 was
0.4307, 2014 was 0.4303 and 2015 was 0.4154.A lower debt to equity ratio
usually implies a more financially stable business. Companies with a higher debt
to equity ratio are considered more risky to creditors and investors than
companies with a lower ratio. Unlike equity financing, debt must be repaid to the
lender. Since debt financing also requires debt servicing or regular interest
payments, debt can be a far more expensive form of financing than equity
financing. Companies leveraging large amounts of debt might not be able to
make the payments.

Time Interest Earned

The times interest earned ratio, sometimes called the interest coverage
ratio, is a coverage ratio that measures the proportionate amount of income that
can be used to cover interest expenses in the future.

In some respects the times interest ratio is considered a solvency ratio


because it measures a firm's ability to make interest and debt service payments.
Since these interest payments are usually made on a long-term basis, they are
often treated as an ongoing, fixed expense. As with most fixed expenses, if the
company can't make the payments, it could go bankrupt and cease to exist.
Thus, this ratio could be considered a solvency ratio.

viewed from the calculation of the Interest Earned Time Astro company,
EBIT (Earnings Before Interest and Taxes) fluctuations in the value that is in
2013, the data is then decreased from 620,045,000 to 310,420,000. But in the
last year its going up to 426,896,000.

Average Collection Period

An average collection period shows the average number of days


necessary to convert business receivables into cash. The degree to which this is
useful for a business depends on the business's relative reliance on credit sales

20
A162 BWFF 2033 (O) FINANCIAL MANAGEMENT
Group Assignment

to generate revenue; a high balance in accounts receivable can be a major


liability.

In terms of business management, the average collection period is an


extension of operating efficiency. Much like the receivables turnover ratio, the
average collection period can be used in conjunction with liquidity ratios to
highlight problems in cash flow or solvency. Regarding to the data that Astro
Company have, 71 days (2013), 164 days (2014), 194 days (2015) it is going
bigger year by year.

Receivable Turnover

It can be used to determine if a company is having difficulties collecting


sales made on credit. The higher the turnover, the faster the business is
collecting its receivables. It can be expressed in many forms including accounts
receivable turnover rate, accounts receivable turnover in days, accounts
receivable turnover average, and more. A useful tool in managing and improving
Accounts Receivable Turnover ratio indicates how many times the accounts
receivable have been collected during an accounting period. From the calculation
we got that the value of receivable turnover 5.13 times (2013), 2.22 times (2014)
and 1.88 times (2015)

Inventory Turnover

Inventory turnover is ultimately expressed as the number of times you sold


through inventory in a given period. Inventory turnover is costs of goods sold
divided by your average inventory. Cost of goods includes your variable costs in
acquiring and selling products. Average inventory is the value of your inventory
during a given period 110.46 times (2013), 172.3 times (2014) and 257.23 times
(2015).

Total Asset Turnover

Asset turnover is a key element in a commonly used measure of


profitability: return on assets. Return on assets measures how well a company

21
A162 BWFF 2033 (O) FINANCIAL MANAGEMENT
Group Assignment

uses assets to generate profit, not just sales revenue. The formula for return on
assets is Net Income divided by Average Total Assets. Notice that if you multiply
asset turnover (Sales divided by Average Total Assets) by profit margin (Net
Income divided by Sales), you get Net Income divided by Average Total Assets --
in other words, return on assets. In general, companies with high asset turnover
tend to have low profit margins, while those with low turnover tend to have higher
profit margins. 1.32 (2013), 0.05 (2014) and 0.065 (2015).

Fixed Asset Turnover

Fixed assets generally refers to those assets that cannot easily be


converted into cash. Current assets, such as marketable securities and accounts
receivable, are not included in the fixed asset total. Common fixed assets are
real estate, equipment and vehicles. However, because fixed assets include all
illiquid assets that benefit the operational efficiency of the company for an
extended period of time, a company's total fixed assets as reported on the
balance sheet may include intangible assets, such as goodwill. For the purposes
of the fixed asset turnover ratio calculation, these intangible assets are
subtracted from the total, yielding the net fixed asset figure. This is also often
referred to as property, plant and equipment, or PP&E, because these types of
big-ticket investments typically make up the bulk of the net fixed asset total 0.83
(2013), 0.34 (2014) and 2.65 (2015).

Gross Profit Margin

Gross margin ratio is a profitability ratio that measures how profitable a


company can sell its inventory. It only makes sense that higher ratios are more
favorable. Higher ratios mean the company is selling their inventory at a higher
profit percentage. For Astro company for both year was 1 so the sales revenue
was covering operating costs of company.

22
A162 BWFF 2033 (O) FINANCIAL MANAGEMENT
Group Assignment

Net Profit Margin

The profit margin ratio directly measures what percentage of sales is


made up of net income. In other words, it measures how much profits are
produced at a certain level of sales.

This ratio also indirectly measures how well a company manages its
expenses relative to its net sales. That is why companies strive to achieve higher
ratios. They can do this by either generating more revenues why keeping
expenses constant or keep revenues constant and lower expenses.For astro
company in 2014 was 90.37 and increasing to at 2015 93.21%.so that the
revenues on sales was increased by 3,21 from previous year.

Return On Asset (ROA)

The return on assets ratio measures how effectively a company can earn
a return on its investment in assets. In other words, ROA shows how efficiently a
company can convert the money used to purchase assets into net income or
profits. Therefore, in 2014 was 3.09% and increased 2015 was at 4.34% from
that i could tell the return of assets increased 1% for asset values spending
management that means better from previous year.

Return On Equity (ROE)

Therefore, for 2014 was 4.42% at 2015 was at 6.15% that show the
values in 2015 is better than 2014 because that being said, investors want to see
a high return on equity ratio because this indicates that the company is using its
investors' funds effectively. Higher ratios are almost always better than lower
ratios, but have to be compared to other companies' ratios in the industry. Since
every industry has different levels of investors and income, ROE can't be used to
compare companies outside of their industries very effectively.

Earnings Per Share (EPS)

23
A162 BWFF 2033 (O) FINANCIAL MANAGEMENT
Group Assignment

Earnings per share is the same as any profitability or market prospect


ratio. Higher earnings per share is always better than a lower ratio because this
means the company is more profitable and the company has more profits to
distribute to its shareholders.

There for in 2013 ,2014 ,2016 was 0.13 ,0.07 and 0.08 the highest was
0.17.so the better performance was 2014.

Price / Earnings Ratio

The price to earnings ratio indicates the expected price of a share based
on its earnings. As a company's earnings per share being to rise, so does their
market value per share. A company with a high P/E ratio usually indicated
positive future performance and investors are willing to pay more for this
company's shares.

The highest ratio was at 40.86 times in 2014 but declining 2015 at 35.75
times and the lowest was 22 times. A company with a lower ratio, on the other
hand, is usually an indication of poor current and future performance. This could
prove to be a poor investment. In general, a higher ratio means that investors
anticipate higher performance and growth in the future. It also means that
companies with losses have poor PE ratios.

4. Conclusion and Recommendation

a. Conclusion

So, we have make analysist about the financial performance from this
company for 3 years from the 2013 until 2015 and our judgement about this
company. Astro Malaysia has good financial performance it can be see from their

24
A162 BWFF 2033 (O) FINANCIAL MANAGEMENT
Group Assignment

gross profit margin but it only good for 2013 and also this company has a good
net profit margin for 3 years with more than 90 % each year. Although for ROA
and ROE this company is under 10 % they dont have interest for each year. They
also have a good value in Earning Per Share and Earning ratio. For the ratio this
company has good value in current ratio and quick ratio for 2 years from 2014
until 2015 but bad value for 2013 and they have a bad value for asset
management ratio and leverage ratio for 3 years.

b. Recommendation

This company should increase their performance for selling their product
and improve their quality management so they can reduce their ratio and their
own risk for their company and they can increase their profitability. These
companies also have to frequently perform maintenance on the performance of
the company

25
A162 BWFF 2033 (O) FINANCIAL MANAGEMENT
Group Assignment

5. References

Astro Company Background. Retrieved 19 March 2016 from


http://corporate.astro.com.my/aboutus.aspx

(Astro Malaysia Holdings, 2016)

Annual report for Astro Company. Retrieved 20 March 2016 from


http://corporate.astro.com.my/Portals/_default/skins/amh2015/downloads/reports/
AMH-AR16-ENG.pdf

A. Ross, Stephen. W. Westerfield, Randolph. D. Jordan, Bradford. Lim, Joseph.


Tan, Ruth. Fundamentals of Corporate Finance (2012) McGraw-Hill Education
(Asia).

26
A162 BWFF 2033 (O) FINANCIAL MANAGEMENT
Group Assignment

(Stephen A. Ross, 2012)

27
A162 BWFF 2033 (O) FINANCIAL MANAGEMENT
Group Assignment

28