GSLC 1 – Corporate Financial Management

Pramudya Nusa Yudiananto

LA 55 – 2201728710

Financial Ratio Analysis

Financial Statement Analysis & Comparison

PT AKR Corporindo Tbk.

Emiten Code : AKRA

In this analysis, the financial statements that will be used for comparison is :

 2017 Yearly Period Financial Statement of PT AKR Corporindo Tbk.

 2018 Yearly Period Financial Statement of PT AKR Corporindo Tbk.

Yearly Period were started from January and ended in December.

a. Current Ratio

In this ratio, Investors will know to what extent the company's current assets can be used to
cover short-term liabilities or current debt.

To calculate the current ratio of a company, we need to list and calculate how much is the
amount of the company’s current assets and current liabilities.

And then it was divided into this formula :

Current Assets
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

The calculation of AKR Corporindo Current Ratio for year 2017 is :

Corporate financial management

1 GSLC 1 – 03 /10/2018 : Financial Ratio Analysis
 Current Assets Rp [Link].000
=
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 𝑅𝑝 [Link].000

= 1.62

The calculation of AKR Corporindo Current Ratio for year 2018 is :

Current Assets Rp [Link].000

=
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 𝑅𝑝 [Link].000

= 1.39

2017 = 1.62 -- 2018 = 1.39

In comparison, the current ratio of AKR Corporindo in 2018, is decreasing from 2017.

If the current ratio of a company is >1 times, then the company has good ability to pay off
its obligations. Because the ratio of assets is greater than the liabilities they have. But if the
company's current ratio is below <1 times, then its ability to pay off debt is still
questionable.

In conclusion, AKR Corporindo still have a good ability to pay off it’s obligations, thus it has a
decreasing amount from 2017, but it still can be tolerated.

b. Quick Acid 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. The acid test of finance
shows how well a company can quickly convert its assets into cash in order to pay off its
current liabilities. It also shows the level of quick assets to current liabilities.

To calculate Quick Acid Ratio, we need to look first into this formula :

Current Assets − Inventory − Prepaid Expenses

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

For AKR Corporindo in year 2017 , their quick acid ratio are :

Corporate financial management

2 GSLC 1 – 03 /10/2018 : Financial Ratio Analysis
 𝑅𝑝 [Link].000 − 𝑅𝑝 [Link].000 − 𝑅𝑝 [Link]
𝑅𝑝[Link].000

= 1.42

For AKR Corporindo in year 2018 , their quick acid ratio are :

𝑅𝑝 [Link].000 − 𝑅𝑝 [Link].000 − 𝑅𝑝 [Link]

𝑅𝑝 [Link].000

= 1.22

2017 = 1.42 -- 2018 = 1.22

In comparison, the quick acid ratio of AKR Corporindo in 2018, is also decreasing from
2017.

A company with a quick ratio of 1 indicates that quick assets equal current assets. This also
stated that the company could pay off its current liabilities without selling any long-term
assets. Obviously, as the ratio increases so does the liquidity of the company. More assets
will be easily converted into cash if need be.

In Conclusion, we can see that AKR Corporindo have a slightly more quick assets than current
assets, so it don’t need to pay off it’s current liabilities by selling any long term assets, and
the current operations are making enough profits to pay off it’s current liabilities. So by the
looks of AKR Corporindo quick ratio, it’s liquidity in overall are already good.

c. Inventory Turnover Ratio

Inventory turnover is the number of times a company sells and replaces its stock of goods
during a period. Inventory turnover provides insight as to how the company manages costs
and how effective their sales efforts have been.

To calculate Inventory Turnover Ratio, we need to look first into this formula :

Cost of Goods Sold

𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦

For AKR Corporindo in year 2017 , their Total Inventory Turnover ratio are :

Corporate financial management

3 GSLC 1 – 03 /10/2018 : Financial Ratio Analysis
 Cost of Goods Sold Rp [Link].000
=
𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑅𝑝 [Link].000

= 15.30

For AKR Corporindo in year 2018 , their Total Inventory Turnover ratio are :

Cost of Goods Sold Rp [Link].000

=
𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑅𝑝 [Link].000

= 16.21

2017 = 15.30 -- 2018 = 16.21

In comparison, the Inventory Turnover ratio of AKR Corporindo in 2018, is increasing from
2017.

A low turnover ratio implies weak sales and possibly excess inventory, also known as
overstocking. It may indicate a problem with the goods being offered for sale or be a result
of too little marketing.

A high turnover ratio implies either strong sales or insufficient inventory. The former is
desirable while the latter could lead to lost business. Sometimes a low inventory turnover
rate is a good thing, such as when prices are expected to rise (inventory pre-positioned to
meet fast-rising demand) or when shortages are anticipated.

From the turnover ratio data of AKR Corporindo, we can conclude that they have a high
inventory turnover ratio, and it’s increasing from year 2017 to 2018. It means that AKR
Corporindo does not overspend by buying too much inventory and wastes resources by
storing non-salable inventory. It also shows that the company can effectively sell the
inventory that it buys.

d. Total Asset Turnover

The asset turnover ratio measures the value of a company's sales or revenues relative to the
value of its assets. The asset turnover ratio can be used as an indicator of the efficiency with
which a company is using its assets to generate revenue. The higher the asset turnover

Corporate financial management

4 GSLC 1 – 03 /10/2018 : Financial Ratio Analysis
ratio, the more efficient a company. Conversely, if a company has a low asset turnover ratio,
it indicates it is not efficiently using its assets to generate sales.

To calculate Total Asset Turnover Ratio, we need to look first into this formula :

Net Sales
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠

For AKR Corporindo in year 2017 , their Total Asset Turnover ratio are :

Net Sales Rp [Link].000

=
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 𝑅𝑝 [Link].000

= 1.09

For AKR Corporindo in year 2018 , their Total Asset Turnover ratio are :

Net Sales Rp [Link].000

=
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 𝑅𝑝 [Link].000

= 1.18

2017 = 1.09 -- 2018 = 1.18

In comparison, the Total Asset Turnover ratio of AKR Corporindo in 2018, is increasing
from 2017.

Higher asset turnover ratios mean the company is using its assets more efficiently. Lower
ratios mean that the company isn’t using its assets efficiently and most likely have
management or production problems. A ratio of 1 means that the net sales of a company
equals the average total assets for the year.

For AKR Corporindo, their asset turnover ratios are already high and proportional, meaning
that this company is well managed when it comes to the usage of it’s assets to produce
products and generate sales.

Corporate financial management

5 GSLC 1 – 03 /10/2018 : Financial Ratio Analysis
e. Debt Ratio

Debt ratio is a financial ratio that measures the extent of a company’s leverage. The debt
ratio is defined as the ratio of total debt to total assets, expressed as a decimal or
percentage. It can be interpreted as the proportion of a company’s assets that are financed
by debt. A ratio greater than 1 shows that a considerable portion of debt is funded by
assets. In other words, the company has more liabilities than assets. A high ratio also
indicates that a company may be putting itself at a risk of default on its loans if interest
rates were to rise suddenly. A ratio below 1 translates to the fact that a greater portion of a
company's assets is funded by equity.

To calculate the Debt Ratio, we need to look first into this formula :

Total Liabilities
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠

The calculation of AKR Corporindo Debt Ratio for year 2017 is :

Total Liabilities 𝑅𝑝 [Link].000

=
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 𝑅𝑝 [Link].000

= 0.46

The calculation of AKR Corporindo Current Ratio for year 2018 (yearly) is :

Total Liabilities 𝑅𝑝 [Link].000

=
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 Rp [Link].000

= 0.50

2017 = 0.46 -- 2018 = 0.50

Corporate financial management

6 GSLC 1 – 03 /10/2018 : Financial Ratio Analysis
 In comparison, the Debt Ratio of AKR Corporindo in 2018, is increasing from 2017.

Thus, it has an increase in the Debt Ratio, but it’s still in the safe zone ( debt ratio <1),
meaning that AKR Corporindo greater portion of assets is still funded by equity, and still have
a good leverage to pay it’s debt or liabilities.

f. Times Interest Earned Ratio

Times interest earned ratio is a method or formula that used to measure a company's ability
to meet its debt obligations. The formula is calculated by taking a company's earnings
before interest and taxes and dividing it by the total interest payable on bonds and other
contractual debt. Times interest earned ratio indicates how many times a company can
cover its interest charges on a pretax earnings basis.

The EBIT amount of AKR Corporindo for year 2017 is Rp [Link].000

Interest Expense of AKR Corporindo for year 2017 is Rp [Link]

The EBIT amount of AKR Corporindo for yearly of year 2018 is Rp [Link]

Interest Expense of AKR Corporindo for year 2018 is Rp [Link]

To calculate the Time Interest Earned Ratio, we need to look first into this formula :

Earnings Before Interest and Taxes

𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐸𝑥𝑝𝑒𝑛𝑠𝑒

For AKR Corporindo in year 2017 , their Time Interest Earned ratio are :

Earnings Before Interest and Taxes 𝑅𝑝 [Link].000

=
𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐸𝑥𝑝𝑒𝑛𝑠𝑒 𝑅𝑝 [Link]

= 49.71

For AKR Corporindo in year 2018 , their Time Interest Earned ratio are :

Corporate financial management

7 GSLC 1 – 03 /10/2018 : Financial Ratio Analysis
 Earnings Before Interest and Taxes 𝑅𝑝 [Link]
=
𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐸𝑥𝑝𝑒𝑛𝑠𝑒 𝑅𝑝 [Link]

= 10.3

2017 = 49.71 -- 2018 = 10.3

In comparison, the Time Interest Earned ratio of AKR Corporindo in 2018, is radically
decreasing from 2017.

In other words, a ratio of 4 means that a company makes enough income to pay for its total
interest expense 4 times over. Said another way, this company’s income is 4 times higher
than its interest expense for the year.

Creditors would favor a company with a much higher times interest ratio because it shows
the company can afford to pay its interest payments when they come due. Higher ratios are
less risky while lower ratios indicate credit risk.

g. Gross Profit Margin

Gross profit margin is a metric used to assess a company's financial health and business
model by revealing the amount of money left over from sales after deducting the cost of
goods sold. The gross profit margin is often expressed as a percentage of sales and may be
called the gross margin ratio.

To calculate the Gross Profit Margin , we need to look first into this formula :

Gross Profit
𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠
For AKR Corporindo in year 2017 , their Gross Profit Margin are :

Gross Profit 𝑅𝑝 [Link].000

=
𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠 𝑅𝑝 [Link].000

= 0.102 x 100

= 10.21 %

Corporate financial management

8 GSLC 1 – 03 /10/2018 : Financial Ratio Analysis
For AKR Corporindo in year 2018 , their Gross Profit Margin are :

Gross Profit 𝑅𝑝 [Link].000

=
𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠 𝑅𝑝 [Link].000

= 0.066 x 100

= 6.60 %

2017 = 10.21 % -- 2018 = 6.60 %

In comparison, the Gross Profit Margin of AKR Corporindo in 2018, is decreasing from
2017.

The higher the amount of Gross Profit Margin Ratio, the more efficient the company
management in generating profit for every rupiah of labor cost / expense involved.

From the calculated Gross Profit Margin data above, AKR Corporindo management is pretty
successful in generating revenue from the costs involved in producing their products and
services, in year 2017. But in 2018, unfortunately they are pretty less efficient is in their
management, resulting a decreasing Gross Profit Margin Ratio, and also a loss in company's
profitability.

h. Operating Profit Margin

Operating margin measures how much profit a company makes on a dollar of sales, after
paying for variable costs of production, such as wages and raw materials, but before paying
interest or tax. It is calculated by dividing a company’s operating profit by its net sales.

To calculate the Operating Profit Margin , we need to look first into this formula :

Operating Earnings or EBIT

𝑅𝑒𝑣𝑒𝑛𝑢𝑒 𝑜𝑟 𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠

For AKR Corporindo in year 2017 , their Operating Profit Margin are :

EBIT 𝑅𝑝 [Link].000
=
𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠 𝑅𝑝 [Link].000

= 0.063 X 100

Corporate financial management

9 GSLC 1 – 03 /10/2018 : Financial Ratio Analysis
= 6.30 %

For AKR Corporindo in year 2018 , their Operating Profit Margin are :

EBIT 𝑅𝑝 [Link]
=
𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠 𝑅𝑝 [Link].000

= 0.038 X 100

= 3.80 %

2017 = 6.30 % -- 2018 = 3.80 %

In comparison, the Operating Profit Margin of AKR Corporindo in 2018, is decreasing from
2017.

A company that only converts around 3 percent (approximately) of its revenue to operating
income can be questionable to investors and creditors. The auto industry made a switch like
this in the 1990’s. GM was making more money on financing cars than actually building and
selling the cars themselves. Obviously, this did not turn out very well for them.

For AKR Corporindo, they have a pretty good Operating Profit Margin (>3), but still they have
a room for management improvement to generate more profit from their operating
activities.

i. Net Profit Margin

The net profit margin is equal to how much net income or profit is generated as a
percentage of revenue. Net profit margin is the ratio of net profits to revenues for a
company or business segment. Net profit margin is typically expressed as a percentage but
can also be represented in decimal form. The net profit margin illustrates how much of each
dollar in revenue collected by a company translates into profit.

To calculate the Net Profit Margin , we need to look first into this formula :

Earnings Available for Common StockHolders

𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠
For AKR Corporindo in year 2017 , their Net Profit Margin are :

𝑅𝑝[Link].000
𝑅𝑝 [Link].000

Corporate financial management

10 GSLC 1 – 03 /10/2018 : Financial Ratio Analysis
= 0.066 X 100

= 6.6 %

For AKR Corporindo in year 2018 , their Net Profit Margin are :

𝑅𝑝[Link].000
𝑅𝑝 [Link].000

= 0.070 X 100

=7%

2017 = 6.6 % -- 2018 = 7 %

In comparison, the Net Profit Margin of AKR Corporindo in 2018, is increasing from 2017.

For AKR Corporindo, their net profit margin ratio data tells us that the company are
generating enough profit from it’s sales, resulting the growth of their revenue. The growth of
the net profit margin also tells us that the company operating costs / expenses are not
increasing radically than the generated profit itself.

j. EPS

Earnings per share (EPS) is calculated as a company's profit divided by the outstanding
shares of its common stock. The resulting number serves as an indicator of a company's
profitability. It is common for a company to report EPS that is adjusted for extraordinary
items and potential share dilution. The higher a company's EPS, the more profitable it is
considered.

To calculate the Earnings per share , we need to look first into this formula :

Earnings Available for Common StockHolders

𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑆ℎ𝑎𝑟𝑒𝑠 𝑜𝑓 𝐶𝑜𝑚𝑚𝑜𝑛 𝑆𝑡𝑜𝑐𝑘 𝑂𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔

For AKR Corporindo in year 2017 , their Earning Per Share are :

Corporate financial management

11 GSLC 1 – 03 /10/2018 : Financial Ratio Analysis
 Rp [Link].000
[Link] 𝑠ℎ𝑎𝑟𝑒𝑠

= Rp 302.54,- per share

For AKR Corporindo in year 2018 , their Earning Per Share are :

Rp [Link].000
[Link] 𝑠ℎ𝑎𝑟𝑒𝑠
= Rp 413.43 per share

2017 = Rp 302.54 -- 2018 = Rp 413.43

In comparison, the Earnings Per Share of AKR Corporindo in 2018, is increasing from 2017.

For AKR Corporindo, the increasing amount of EPS tells us that the company is more
profitable, because they have more profits than the previous year (2017) to be distributed to
it’s shareholders.

k. ROA/ROTA

Return on total assets (ROTA) is a ratio that measures a company's earnings before interest
and taxes (EBIT) relative to its total net assets. The ratio is considered to be an indicator of
how effectively a company is using its assets to generate earnings. EBIT is used instead of
net profit to keep the metric focused on operating earnings without the influence of tax or
financing differences when compared to similar companies.

To calculate the Return on total Assets , we need to look first into this formula :

EBIT
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠

For AKR Corporindo in year 2017 , their ROA are :

Corporate financial management

12 GSLC 1 – 03 /10/2018 : Financial Ratio Analysis
 Rp [Link].000
𝑅𝑝 [Link].000

= 0.0687 x 100

= 6.87 %

For AKR Corporindo in year 2018 , their ROA are :

Rp [Link]
𝑅𝑝 [Link].000

= 0.0446 x 100

= 4.46 %

2017 = 6.87 %-- 2018 = 4.46 %

In comparison, the Return on Assets of AKR Corporindo in 2018, is decreasing from 2017.

For AKR Corporindo, the Return On Assets calculation data stated that the company are less
efficient in year 2018 when it comes to converting the money to purchase or acquiring assets
to produce greater amounts of net income.

l. ROE

Return on equity measures how efficiently a firm can use the money from shareholders to
generate profits and grow the company. Unlike other return on investment ratios, ROE is a
profitability ratio from the investor’s point of view—not the company. In other words, this
ratio calculates how much money is made based on the investors’ investment in the
company, not the company’s investment in assets or something else.

To calculate the Return on Equity , we need to look first into this formula :

Corporate financial management

13 GSLC 1 – 03 /10/2018 : Financial Ratio Analysis
 Net Income
𝑆ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟𝑠 𝐸𝑞𝑢𝑖𝑡𝑦 (𝑂𝑟𝑑𝑖𝑛𝑎𝑟𝑦 𝑆𝑡𝑜𝑐𝑘)

For AKR Corporindo in year 2017 , their ROE are :

Rp [Link].000
𝑅𝑝 [Link].000

= 0.886 x 100

= 88.6 %

For AKR Corporindo in year 2018 , their ROE are :

Rp [Link].000
𝑅𝑝 [Link].000

= 1.026 x 100

= 102.6 %

2017 = 88.6 %-- 2018 = 102.6 %

In comparison, the Return on Equity of AKR Corporindo in 2018, is increasing from 2017.

For AKR Corporindo, since this ratio are based on Investor’s point of view, the increasing
amount of ROE from 2017 to 2018 were a positive signaling to the investors, thanks to the
more money that were made on the investor’s investment in the company.

Corporate financial management

14 GSLC 1 – 03 /10/2018 : Financial Ratio Analysis