Master of Business Administration

Othman Yeop Abdullah

Graduate School of Business

Corporate Finance
BWFM5013
Dr Ahmad Rizal bin Mazlan

UMW Holdings Berhad

Financial Analysis Ratio
Rajarajeswary Sellamuthu (819442)

UMW Holdings Berhad : FINANCIAL RATIO

ANALYSIS
FINANCIAL RATIOS

2014

2015

1.67
1.31

1.21
0.91

43%
75%
1.75
19.04
times

49%
94%
1.94

1) LIQUIDITY RATIOS
Current ratio
Quick ratio
2) LONG TERM SOLVENCY
RATIOS
Debt ratio
Debt Equity Ratio
Equity multiplier
Times interest earned ratio
3) ASSET MANAGEMENT
RATIO
Inventory Turnover

5.89 times
61.97days

2.13 times

5.85 times
62.43
days

Days' sales in inventory

Account receivable
Turnover

7.18 times

Average collection period

Total Asset Turnover
Fixed Asset Turnover

50.84 days
0.90 times
1.88 times

7.88 times
46.34
days
0.79 times
1.37 times

4) PROFITABILITY RATIOS
OPM Operating Profit
Margin
NPM Net Profit Margin
ROA Return of Assets
ROE Return of Equity

11%
8%
7%
13%

2%
0.02%
0.01%
0.02%

5) MARKET VALUE RATIOS

EPS (Basic)
Price Earning ratio

55.80
0.20

-3.2
-2.46

Table 1

Liquidity Ratios
Liquidity ratio is one of the useful tools to ensure whether or not the company have enough cash
to repay the bank. Liquid assets have potential to convert quickly and cheaply.

2014RATIOS2015
1) LIQUIDITY
Current ratio
Quick ratio

1.67
1.31

1.21
0.91

Referring to UMW Holdings income statement given and the Financial Ratio Analysis (Table 1)
both ratios, showed that the ratios less than 2 indicate that a firm may have difficulty meeting
current obligations. However, an investor should also take note of a company's operating cash
flow in order to get a better sense of its liquidity. A low current ratio can often be supported by a
strong operating cash flow

2014
2015
2) LONG
TERM SOLVENCY
RATIOS
Debt ratio
Debt Equity Ratio
Equity multiplier
Times interest earned ratio

43%
75%
1.75
19.04

49%
94%
1.94

times

2.13 times

Asset management ratios

Referring to Dr Rizals notes, this ratio also called as Efficiency Ratios where it measure
effectiveness of a company in using its assets to generate revenue.

2014
2015
3) ASSET
MANAGEMENT
RATIO

Inventory Turnover

5.89 times

5.85 times
62.43

Days' sales in inventory

Account receivable

61.97 days

days

Turnover

7.18 times

7.88 times
46.34

Average collection period

Total Asset Turnover

50.84 days
0.90

days
0.79

(TAT)
Fixed Asset Turnover

times
1.88 times

times
1.37 times

One way to understand the concept of the efficiency ratio is the measure of what a firm must
spend in order to make one dollar. (Farlex Financial Dictionary, 2012). UMW Holdings TAT was
quite low which is good in both years.
Profitability ratios
Investors use the profit margin to compare companies in the same industry to decide which
companies have good profitability. The higher the profit margin is, the better the company is
thought to control costs (Farlex Financial Dictionary, 2012).

2014
2015
4) PROFITABILITY
RATIOS
OPM Operating Profit
Margin
NPM Net Profit Margin
ROA Return of Assets
ROE Return of Equity

11%
8%
7%
13%

2%
0.02%
0.01%
0.02%