Accounting ratio (finance ratio) is related to two numeric values which is taken from financial statement. This ratio is mainly use for accounting; it can be use in many ratios. With this, we can evaluate overall financial conditions. Accounting ratio is used by managers, current and potential shareholders and creditors. The strength and weakness of a company can be comparing by using accounting ratio through security analysts. If a company are transact in financial market, the market price of the share is used in some financial statement. Accounting ratio can be express in decimal value and also in value of percent. For an example, 0.10 and 0.1%.Accounting ratio can specify much kind of aspects of a business and it is the whole part of the financial statement. Accounting ratio have its own categories according to the financial aspect of a business which the ratio measure. Here are the five different categories for measuring five various aspect of business performance. First is the profitability of company, which is to measure by accounting ratio. There is various type of calculation in profitability of company.
The seven types are Gross profit markup, Gross profit margin, and Operating profit margin on sales, Profit margin on sales, basic earning power, return on total assets and return on common equity. (a) Gross profit markup (%) = x100 Where cost of goods sold = opening stock + purchases – closing stock (b) Gross profit margin (%) = x100 Where net sales = sales – return inwards (c) Operating profit margin (%) = x100 (d) Profit margin on sales (%) = x100 (e) Basic earning power BEP) = x100 Where total assets = fixed assets + current assets (f) Return on total assets (ROA) = x 100 =Aƒ-100 (g) Return of common equity (ROE) = x100 ==Aƒ-100 Second aspect is the liquidity of company. There are two types in this aspect. Both types are current ratio/working capital ratio and liquid ratio/quick ratio/acid-test ratio. (a) Current ratio/ working capital ratio = (b) Liquid ratio/ quick ratio/ acid-test ratio = Third aspect is asset management of company, there is six types of calculation measurement. The six are Asset management of company, fixed assets turnover, total assets turnover, debtor ratio, debtor payment period and day sales outstanding. (a) Inventory turnover or stock turnover = or (b) Fixed assets turnover = _______Net sales________ Fixed assets net book value Where net sales = sales – return inwards (c)
Total assets turnover = Where net sales = sales – return inwards And total assets = fixed assets + current assets (d) Debtor ratio = (e) Debtor payment period = Debtor ratio Aƒ- 365 days / 52 weeks / 12 weeks (f) Days sales outstanding (DSO) = Fourth is debts management and capital gearing company. The types are debts ratio, capital gearing ratio, debts equity ratio, times interest earned, creditor ratio and creditor payment period. (a) Debts ratio / total debts to total assets ratio = (b) Capital gearing ratio = Prior charge debts capital Total capital = preference share capital + debenture + loan stock + loan (Ordinary share capital + preference share capital + reserves + long-term liabilities) Or (fixed assets + current assets – current liabilities) (c) Debts equity ratio = (d) Times interest earned / interest cover = (e) Creditor ratio =____Creditor___ Credit purchase (f) Creditor payment period = creditor ratio Aƒ- 365 days / 52 weeks / 12 months (in days / week / months) =(In days/weeks/months) =Aƒ- 365 days / 52 weeks/12 months The last aspect is market value of investment to ordinary shareholders. The types of these aspects are earning per share, earning ratio, dividend over, earning yield, dividend yield, cash flow ratio and book value ratio (a) Earning per share = (b) Price / Earning ratio = Market price per ordinary share Earnings per share (c) Dividend cover = _______Earning per share______ Net ordinary dividend per share
Or = Profit after interest, after taxation, after preference dividend & after minority interest Net ordinary dividend (d) Earning yield = e) Dividend yield = (f) Price / cash flow ratio = (g) Market price / book value ratio Accounting ratio even allows comparing between companies and industries. Generally, ratio has no meaning but the ratio of the firm is different and dissimilar industries and which is also facing different risk and competitions. We can also compare accounting ratio for business measurement with using inter-temporal and inter-firm. Inter-temporal can show the changes of price which can make comparison difficult unless if the adjustments are made. Impacts of changes in technology on the amount of assets, like the return and the future market. Impacts of a changing environment base on result which refers in accounting information. Potential effects of differences in accounting policies on reported resulted. Problems come with establishing with a ordinary base to equate other years. Inter-firm can elaborate the selection of industry norms and the benefits. Various firms having various financial and business risk profile and of the analysis. Various firms utilize various accounting policies. Inter-firm shows the impacts the size of the business and its comparators is unsafe, structure and returns. Impact of various environments on result, such as various countries / home-based versus multination multinational firms.
Gamuda berhad is one of the Malaysia’s major investments holding group and company which related to civil engineering’s construction. This company is operating of three kinds of sectors: 1) Engineering and constructions – which is related of buildings and constructions, such as buildings, railways, dams, highways and other constructions which is engaged to constructions. 2) Property development and club operations- which is related to the development of commercial properties, residential and club operations. 3) Water and expressway concessions- which related to the management and tolling of the highway operations and of the management of water supply. Gamuda is operates mainly in Malaysia and also operates in other countries such as Vietnam, Bahrain, Taiwan, Qatar and more. Gamuda’s headquater is located at Selangor Darul Ehsan and its about 1232 are employed by the management to work.
1976- The company of named Gamuda Berhad was created. 1992- 10/8/1992 Gamuda Berhad was list into the main board of the Kuala Lumpur stock exchange 1993- Gamuda was having partnership with Kesas sdn bhd, with a signed of conssesion agreement to undertake the management, construction, maintenance and operations of the Shah Alam Expressway for the period of nine months and twenty eight years. 1994- Gamuda own its very first land bank by buying the land of Ladang Bukit Kemuning located in Shah Alam. This shows that Gamuda has made an entry into property development. 1996- Gamuda signed a new concessions agreement with the Federal government through Lingkaran Trans Kota Holdings Berhad to make Lebuhraya Damansara Puchong as a private ownership. 2000- Gamuda was voted as the Best Asian Construction Company by the Euromoney magazine 2001- During November, Gamuda signed with National Highways Authority of India a concessions agreement to undertake the highways projects in West Bengal, India 2002- During October, gamuda has signed with New Asia Construction& Development Corporation of Taiwan and Kaohsiung Rapit Transit Corporation a joint agreement to undertake Kaohsiung Rapit Transit project in Taiwan 2004- The government of Malaysia has sent a letter to MMC-Gamuda to inform that joint venture that the government of Malaysia has made a decision that to postpone the implementation of the 2T to a day to be informed. 2006- Gamuda has won the award for new Sitra Causeway Bridges project in the country of Bahrain. 2010- During march, Gamuda Berhad acquires 60% of stake in Sai Gon Thuong Tin Tan Tang to bring up Celadon city in the city of Ho Chi Minh, Vietnam.
WCT is one of the Malaysia’s companies which are famous and related to the provision of engineering services. This company is operating of three kinds of sectors: 1) Civil engineering work: it’s specialized in highway constructions, earthworks and also related infrastructure works. 2) Property development: Development of commercial properties and of residential 3) Property investments: Holding the assets for the rental income and capital appreciations.
1981- This company was found and named as WCT Earthwork and Buildings Contractors Sdn Bhd 1993- WCT has completed the first successful project of infrastructure- Selangor Turf Club, Sungai Besi, Malaysia 1997- Launched of very first property sales- Integrate Township Bandar Bukit Tinggi, Klang, Malaysia 2001- Receive award of Malaysia Construction Industries Excellence Award for special projects categories- Sepang F1 Circuit 2002- Awarded for builder of the year 2005- WCT has achieved very good property sales for RM 2.0 Billion 2008- WCT Land Berhad had been privatized for 100% owned subsidiary All the information has gather via internet.
Gross Profit markup (%) = Aƒ- 100 x100 =8.23% Gross profit = 2455143000 – 1580125000 – 363348000 – 8595000 – 19973000 – 19260000 – 40866000 =422976000 Cost of the good sales = 1580125000 + 363348000 + 8595000 + 19973000 + 19260000 + 40866000 =2032167000 Aƒ- 100 = 20.81% Gross profit margin (%) = Aƒ- 100 x100 = 7.60% Gross profit = 2455143000 – 1580125000 – 363348000 – 8595000 – 19973000 – 19260000 – 40866000 =422976000 Net sales value = 2455143000 – 0 =2455143000 Aƒ- 100 = 17.23% Operating profit margin on sales (%) = Aƒ-100 x100 =5.23% Aƒ- 100 = 10.58% Profit margin on sales (%) = Aƒ-100 x100 =3.15% Aƒ- 100 = 11.43% Basic earning power(BEP)= Aƒ- 100 1 925 297 000+2 553 187 000= 4 478 484 000 x100 =5.45% Total assets = 2347737000 + 4203173000 =6550910000 Aƒ- 100 = 3.97% Return on Total assets= Aƒ- 100 x100 =3.28% Total assets = 2347737000 + 4203173000 =6550910000 Aƒ- 100 = 4.28% Return on common equity= Aƒ-100 388,856+369,256+492,134=1,250,246 x100 =11.77% Aƒ- 100 = 8.62%
Inventory Turnover = or =37.92times Cost of sales = 1580125000 + 363348000 + 8595000 + 19973000 + 19260000 + 40866000 =2032167000 = 25.49 times Total Assets Turnover= =1.04times = 0.37 times Debtor Ratio= x100 =0.32:1 = 0.65 : 1 Days sales outstanding= =116.8 OR 0.65365days =237.25days
Debts ratio= 1,183,958+1,807,550=2,991,508 =0.67:1 Total assets = 2347737000 + 4203173000 =6550910000 Debts equity ratio= =2.39:1 =1:1 Times interest earned or Interest cover= 4.85times =5.93 times
Today’s world it is full about economics. In this economic, especially, the name and term of market which is mean the aggregate of buyers and sellers of some service and transaction between them. There are various dissimilar financial markets. Every single financial market make out with a various types of financial instrument in conditions of its assets backing it. Various financial markets serve various kinds of clients and function in various parts of the country. Financial market also disagree or to say differ from physical assets markets. The reason is because physical asset markets are also called as real asset markets or can be also called as tangible assets to deal with real, tangible and physical asset, for example machinery, food, furniture, computer and other physical assets. Financial markets are set to deal with various kind of financial instrument such as mortgages, bonds, share, notes and other which can claim on real assets as well. Financial markets can also claim on derivative securities or commodities whose values are derived from the changes in the value of the assets. Both physical asset market and financial market can also be run as the future market and spot market. Future market sort to the deal which being purchase and trade for the future delivery at the future day such as three months or eight months into the future whereas spot markets sort to the deal which is being purchase and trade for a spot or immediate delivery within a few days. There are few major financial markets.
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