Ratio Analysis And Liquidity Ratios Finance Essay

As we can see that the highest current ratio among 2005-2009 is belong to twelvemonth 2007 which is 1.23. By and large, the higher the current ratio means the better of the steadfast fiscal public presentation. But in twelvemonth 2009, current ratio lessening to 1.04. It does non look good in the fiscal public presentation of the house. As we can see that the overall current ratio graph is show unstable while current ratio addition in the first three old ages and diminution in twelvemonth 2008 and 2009.

Traveling on to Quick ratio of texchem group, we can clearly see that the best twelvemonth in speedy ration is belonging to twelvemonth 2007 which ensuing 1.01 after excluded stock list of the house. The ground of calculate quick ratio is to find how much stock list occupy in the house. Generally, investor will concentrate on speedy ratio instead than current ratio. For texchem group in twelvemonth 2007, we can see that the stock list of the house in that twelvemonth is non much, the ground may be because of the stock list turnover in twelvemonth 2007 is high, so that house do non keep so much of stock list. Therefore the speedy ratio of twelvemonth 2007 is above 1 comparison to other old ages.

Activity Ratios

This subdivision of activity ratio step about the house activities facets of Texchem group public presentation among twelvemonth 2005 to 2009. In activity ratio, we will discourse on stock list turnover, mean aggregation period in times, and mean payment period in times. Below show the stock list turnover of Texchem group from twelvemonth 2005 to 2009.

Harmonizing to the consequence show in the stock list graph above, we can see the stock list turnover of Texchem in twelvemonth 2007 and 2008 are the same high which consequence of 17.37 and 17.38 times. It is about the same in these two old ages. In twelvemonth 2005, stock list turnover is 13 times but somewhat lessening in twelvemonth 2006 to 12.81. In twelvemonth 2006 to 2007, we can state that was a critical minute among the twelvemonth. May be because of the economic system of twelvemonth 2007 is making good, that is why the stock list turnover addition quickly from 12.81 to 12.37. Although in twelvemonth 2008 is the planetary economic system crisis, but it seem does non impact Texchem public presentation.

Graph above demoing the mean aggregation period of Texchem group from twelvemonth 2005 to 2009. Average aggregation period intending how fast for a steadfast return clip to roll up back the money from day-to-day sale on recognition. In finance position, the faster a house can roll up back the money which on recognition intending the better of the steadfast fiscal. For Texchem group, in the first three from 2005 to 2007 are about the same which is 0.20 to 0.21 times yearly. But in 2008, because of addition in sale and lessening in history receivable, so it affect the mean aggregation period during the twelvemonth. In my sentiment, there is besides another ground on why the mean aggregation period in twelvemonth 2008 was lessening. On my position, twelvemonth 2008 was economic system crisis twelvemonth which affect every house & A ; acirc ; ˆ™s fiscal public presentation, for those house who covering with Texchem may be required to widen the payment period in order for them to sit away from the storm. For Texchem group itself, they besides hope every house who deal with them are able to pay them back in this difficult state of affairs. So they are willing to widen the aggregation period to their client.

Average payment period for Texchem group is demoing on above. The highest payment clip is in twelvemonth 2009. This was because of diminishing in purchases. From RM49, 319,331 in twelvemonth 2008 lessening to RM20, 912,618 in twelvemonth 2009. There was RM28, 406,713 spread between 2008 and 2009. From twelvemonth 2005 to twelvemonth 2007, Texchem group purchases and invest lower limit of RM32, 022,911 and upper limit of RM37, 003,539 in belongings. This made the house have to pay much more times within a twelvemonth. However, in twelvemonth 2009, it seem Texchem does non pull off their finance really good. As resulted in the one-year study of Texchem group, in twelvemonth 2009, account collectible of Texchem group was addition to RM157, 865,237 from RM149, 806,355. This made Texchem group have to pay more comparison to old twelvemonth. In order to unclutter the payment, Texchem group have to pay more times within a twelvemonth in order to unclutter the history. So in twelvemonth 2009, mean payment period of Texchem group was addition to 7.54 times a twelvemonth.

Entire assets indicate on how good is a house to the full utilizes its assets to bring forth gross revenues. The highest assets turnover was 2.13 on twelvemonth 2008. Harmonizing to the consequence showed on above, the overall of the steadfast public presentation was rather satisfied. Because we can see the growing of the assets turnover was addition in every old ages except twelvemonth 2009. In my sentiment, Texchem did really good in using their assets to bring forth gross revenues particularly in twelvemonth 2008 which a twelvemonth of economic system crisis.

Profitability Ratio

In this subdivision, we discoursing on how much of gross generate by Texchem Group in order to pull more people to put in Texchem. Under Profitability ratio, we discuss about gross net income border, runing net income border, net net income border, gaining per portion, return on assets ( ROA ) , and return on equity ( ROE ) .

Graph above show the Gross Profit Margin and Operating Profit Margin of Texchem Group. The overall of gross net income border is demoing lessening from twelvemonth 2005 to 2008. However, in twelvemonth 2009, gross net income border somewhat increase from 16.23 % to 19.19 % . The extremum is in twelvemonth 2005. Traveling on to runing net income border which is step on the net income that generate after deduce costs and disbursals but excepting involvement, revenue enhancements, and preferable stock dividends. However, it does non look good during these five old ages clip. We can see that it diminishing from 2005 to 2009 except twelvemonth 2007. The worst twelvemonth was 2009 which is 0.97 % generated in that twelvemonth merely. This is non good for Texchem fiscal because it still necessitate to pay for involvement, revenue enhancements, and preferable stock dividends. 2009 was a unsafe twelvemonth.

Net net income Margin is step the net income after operating net income deduced those involvement, revenue enhancements, and preferable stock dividends. As the operating net income border stated antecedently, we already can foretell that Texchem will demo to be negative. Unfortunately, in twelvemonth 2008 and 2009, it shows negative 0.12 and 0.9 of net net income border. In twelvemonth 2007 was a critical twelvemonth which generated net income of 1.4 much higher than twelvemonth 2006. However, it was bead quickly in twelvemonth 2008.

Traveling to gaining per portion, it step on how much of money can be earn from each outstanding portion during a period of clip. Obviously, the best twelvemonth to be invest in Texchem is twelvemonth 2005 which earn 15.03 sen per portion. In my sentiment, I will non put in Txchem in twelvemonth 2008, because that twelvemonth was planetary economic system crisis twelvemonth. Stock market was affected by the economic system crisis every bit good.

The last portion of profitableness ratio will be ciphering on return on assets ( ROA ) and return on equity ( ROE ) . ROI is besides known as ROI ( Return on investing ) which step on how much a company generate net income with the assets that they holding in manus. Obviously, in old ages 2008 and 2009, both ROA and ROE does non look to acquire any return and house holding a difficult clip to pay their stockholders due to the loss of fiscal.

Debt Ratio

Debt ratio step the figure of entire assets which borrow from 3rd party being used to bring forth net income. In debt ratio, the greater of the ratio indicate the more assets can be use to bring forth net income.

Debt ratio of Texchem group show diminishing in the first three old ages and increasing in the last two old ages. Harmonizing to the informations on above, 2005 was a best twelvemonth which holding more people & A ; acirc ; ˆ™s financess to be used in investing. However, the overall public presentation were staying in the scope of 67 % to the highest 71 % .

The clip involvement earn ratio was well increase and diminishing over the old ages. In twelvemonth 2005 and 2006, it shows negative of 106.12 and 107.48. Although it was addition in twelvemonth 2007, but in 2008 it had been pull down the ratio back to negative of 62.52 by the economic system crisis. The overall public presentation of Texchem in clip involvement gaining ratio was bad among these old ages.