FINANCIAL REPORT ANALYSIS

ANALYSIS OF MAYORA AND SIANTAR TOP AS A SAMPLE

FOR FOOD AND BEVERAGES COMPANY

Written by :
Rahma Yulia Prastiwi
Angelia Claudya
Reno Albra

S1 Management
Faculty of Economic and Business
Universitas Airlangga
2016
INDUSTRY ANALYSIS
Industry analysis is being used to see the competitiveness of a firm in its industry. It is also
used ass a benchmark for firm and a performance comparison with firms competitors. It can
be used to maintain the performance of a firm. The industry analysis report sheds light on the
economic health of the company, underlining the understanding whether it will be beneficial
for the stakeholders to invest in such a company and offering recommendations and/or
corrective actions to take in case of any untoward developments in the company.

We begin with analyzing some company in food and beverages industry. We choose five
company such as Mayora, Siantar Top, Indofood, Sari Roti, and AISA. The analysis consists
of some ratio :

a. Current Ratio
The tabel below shows us that mayora is a leading company in current ratio. They
have the biggest current asset and using small amount of debt.

Current Ratio (%)

MYOR STTP INDF ROTI AISA Average

b. Debt to Asset ratio

Every company in the industry, maintain their debt to asset ratio. We can see that there
is a rising trend, but not that significant. The lines tend to stagnan.
 DAR (X)

MYOR STTP INDF ROTI AISA Average

c. Debt to Equity Ratio

There is a declining trend in this ratio, which is good. It means every company in this
industry tend to lower debt usage to fund their equity. Mayora still leading.

DER(X)

MYOR STTP INDF ROTI AISA Average

d. ROA
 The companies experience a performance decline in generating profit in 2014. The
trend in the graph is declining. It is probably caused by inflation that makes a raising
in cost.

ROA (%)

MYOR STTP INDF ROTI AISA Average

e. ROE
Same condition with ROA, ROE is suffering in 2014 due to inflation. Companies
facing a problem in gereating profit because of rising in costs.

ROE (%)

MYOR STTP INDF ROTI AISA Average

f. Gross Profit Analysis
So far so good is the best sentence for this condition. Every company can increase
their selling year by year and in some companies like Mayora and Sari Roti, they did
a huge efficiency in COGS so they can double their margin.

Gross Profit Margin(%)

MYOR STTP INDF ROTI AISA Average

g. Operating Profit Margin

From this graph, we can conclude that the declining ROA and ROE is caused by the
declining in Operating Profit. Higher costs lead to lower income.

Operating Profit Margin (%)

MYOR STTP INDF ROTI AISA Average

h. Net Profit Cycle
Same as Operating Income, theres a declining trend.

Net Profit Cycle (%)

MYOR STTP INDF ROTI AISA Average

 FIRM LEVEL ANALYSIS
COMMON SIZE ANALYSIS
A common-size financial statement is displays line items as a percentage of
one selected or common figure. Creating common-size financial statements makes it
easier to analyze a company over time and compare it with its peers. Using common-
size financial statements helps investors spot trends that a raw financial statement may
not uncover.
All three of the primary financial statements can be put into a common-size
format. Financial statements in dollar amounts can easily be converted to common-
size statements using a spreadsheet. The biggest benefit of a common-size analysis is
that it can let an investor identify large or drastic changes in a firms financials. Rapid
increases or decreases will be readily observable, such as a rapid drop in reported
profits during one quarter or year.

RATIO ANALYSIS
A ratio analysis is a quantitative analysis of information contained in a
companys financial statements. Ratio analysis is based on line items in financial
statements like the balance sheet, income statement and cash flow statement; the
ratios of one item or a combination of items - to another item or combination are
then calculated. Ratio analysis is used to evaluate various aspects of a companys
operating and financial performance such as its efficiency, liquidity, profitability
and solvency. The trend of these ratios over time is studied to check whether they are
improving or deteriorating. Ratios are also compared across different companies in
the same sector to see how they stack up, and to get an idea of
comparative valuations. Ratio analysis is a cornerstone of fundamental analysis.
- Liqudity Ratio
o 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:
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.
o Quick Ratio
 The current ratio is a popular financial ratio used to test a
company's liquidity (also referred to as its current or working capital position)
by deriving the proportion of current assets available to cover current
liabilities.The concept behind this ratio is to ascertain whether a company's
short-term assets (cash, cash equivalents, marketable securities, receivables
and inventory) are readily available to pay off its short-term liabilities (notes
payable, current portion of term debt, payables, accrued expenses and taxes).
In theory, the higher the current ratio, the better.

Formula:

o Cash Ratio
The cash ratio is an indicator of a company's liquidity that further
refines both the current ratio and the quick ratio by measuring the amount of
cash, cash equivalents or invested funds there are in current assets to cover
current liabilities.

Formula:
- Solvency Ratio
A key metric used to measure an enterprises ability to meet its debt and other
obligations. The solvency ratio indicates whether a companys cash flow is sufficient
to meet its short-term and long-term liabilities. The lower a company's solvency ratio,
the greater the probability that it will default on its debt obligations.
o Debt to Asset Ratio
Total debt to total assets is a leverage ratio that defines the total
amount of debt relative to assets. This enables comparisons of leverage to be
made across different companies. The higher the ratio, the higher the degree of
leverage, and consequently, financial risk. This is a broad ratio that includes
long-term and short-term debt (borrowings maturing within one year), as well
as all assets tangible and intangible.

o Debt to Capital Ratio

The debt-to-capital ratio is a measurement of a company's
financial leverage. The debt-to-capital ratio is calculated by taking the
company's debt, including both short- and long-term liabilities and dividing it
by the total capital. Total capital is all debt plus shareholders' equity, which
may include items such as common stock, preferred stock and minority
interest. The simplified formula for the debt-to-capital ratio is:

o Debt to 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 D/E ratios can be
represented in the following way:
Debt - Equity Ratio = Total Liabilities / Shareholders' Equity
- Activity Ratio
Activity ratios measure a firm's ability to convert different accounts within its
balance sheets into cash or sales. Activity ratios measure the relative efficiency of a
firm based on its use of its assets, leverage or other such balance sheet items and are
important in determining whether a company's management is doing a good enough
job of generating revenues and cash from its resources.
o Inventory Turn Over
Inventory turnover is a ratio showing how many times a company's inventory
is sold and replaced over a period of time. The days in the period can then be
divided by the inventory turnover formula to calculate the days it takes to sell
the inventory on hand. It is calculated as sales divided by average inventory.
The formula is :
Sales / Inventory

o Days Sales of Inventory

The days sales of inventory value, or DSI, is a financial measure of a
company's performance that gives investors an idea of how long it takes a
company to turn its inventory (including goods that are a work in progress, if
applicable) into sales. Generally, a lower (shorter) DSI is preferred, but it is
important to note that the average DSI varies from one industry to another.
Here is how the DSI is calculated:

o Receivables Turn Over

The receivables turnover ratio is an activity ratio measuring how
efficiently a firm uses its assets. Receivables turnover ratio can be calculated
 by dividing the net value of credit sales during a given period by the
average accounts receivable during the same period. Average accounts
receivable can be calculated by adding the value of accounts receivable at the
beginning of the desired period to their value at the end of the period and
dividing the sum by two. The method for calculating receivables turnover ratio
can be represented with the following formula.

The receivables turnover ratio is most often calculated on an annual basis,

though this can be broken down to find quarterly or monthly accounts
receivable turnover as well.
-
o Days of Sales Outstanding
Days sales outstanding (DSO) is a measure of the average number of
days that a company takes to collect revenue after a sale has been made. DSO
is often determined on a monthly, quarterly or annual basis and can be
calculated by dividing the amount of accounts receivable during a given
period by the total value of credit sales during the same period, and
multiplying the result by the number of days in the period measured. The
formula for calculating days sales outstanding can be represented with the

following formula
A low DSO value means that it takes a company fewer days to collect
its accounts receivable. A high DSO number shows that a company is selling
its product to customers on credit and taking longer to collect money.

o Fixed Asset Turn over

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. In a general sense, a higher fixed-asset turnover ratio indicates
that a company has more effectively utilized investment in fixed assets to
generate revenue. The fixed-asset turnover ratio is calculated as:

o Total Asset Turn over

Asset turnover ratio is the ratio of the value of a
companys sales or revenues generated relative to the value of its assets. The
Asset Turnover ratio can often be used as an indicator of the efficiency with
which a company is deploying its assets in generating revenue.
Asset Turnover = Sales or Revenues / Total Assets
Generally speaking, the higher the asset turnover ratio, the better the
company is performing, since higher ratios imply that the company is
generating more revenue

- Profitability ratio
o 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. Also known as "gross margin." Calculated as:
o Operating profit margin
Operating margin is a margin ratio used to measure a company's
pricing strategy and operating efficiency. Operating margin is a measurement
of what proportion of a company's revenue is left over after paying for
variable costs of production such as wages, raw materials, etc. It can be
calculated by dividing a companys operating income (also known as
"operating profit") during a given period by its net sales during the same
period. Operating income here refers to the profit that a company retains
after removing operating expenses (such as cost of goods sold and wages)
and depreciation. Net sales here refers to the total value of sales minus the
value of returned goods, allowances for damaged and missing goods, and
discount sales. Operating margin is expressed as a percentage, and the formula
for calculating operating margin can be represented in the following way

o 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 equation to calculate net profit margin is:
net margin = net profit / revenue.

o 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. Calculated by dividing a company's
annual earnings by its total assets, ROA is displayed as a percentage.
Sometimes this is referred to as "return on investment". The formula for return
on assets is:

o ROE
Return on equity (ROE) is the amount of net income returned as a
percentage of shareholders equity. Return on equity measures a corporation's
profitability by revealing how much profit a company generates with the
 money shareholders have invested. ROE is expressed as a percentage and
calculated as:
Return on Equity = Net Income/Shareholder's Equity
Net income is for the full fiscal year (before dividends paid to common
stock holders but after dividends to preferred stock.) Shareholder's equity does
not include preferred shares.

o ROCE
Return on capital employed (ROCE) is a financial ratio that measures a
company's profitability and the efficiency with which its capital is employed.
ROCE is calculated as:
ROCE = Earnings Before Interest and Tax (EBIT) / Capital
Employed
Capital Employed as shown in the denominator is the sum
of shareholders' equity and debt liabilities; it can be simplified as (Total Assets
Current Liabilities). Instead of using capital employed at an arbitrary point
in time, analysts and investors often calculate ROCE based on Average
Capital Employed, which takes the average of opening and closing capital
employed for the time period. A higher ROCE indicates more efficient use of
capital. ROCE should be higher than the companys capital cost; otherwise it
indicates that the company is not employing its capital effectively and is not
generating shareholder value.