The difference between the ratio is 2.3% from the year 2017. The higher ratio for gross profit is the better. This is means that the company did well in managing its cost of sales and generating the gross profit. It also shows that the company has more to cover for operating, financing, and other costs. The company (Top Glove Corporation) also stated that the uptrend in sales revenue for year 2018 were followed by increased demand across all glove segments, highlighting the importance of gloves as an essential item to the medical sector, increasingly stringent health requirements and rising healthcare awareness globally. This is the reason why the gross profit margin increased during the year because of the sales of the products also increased. Net Profit Margin Ratio Net profit margin for the year of 2018 and 2017 are 10.4% and 9.7% respectively. It is shows that the difference for the ratio is 0.7% from the year 2017. The higher ratio for net profit is the better. This is means that the company is very efficient at converting the sales into actual profit. The higher net profit margin will show to the investor that the company is well manage and the operation of the company are very performed against its competitor. Current Ratio Current ratio for year 2018 and 2017 is 1.12 and 1.57 respectively. The current ratio for the year is decreasing to 0.45. The decreasing of current ratio is a little bit not safe for the company because the company may face the liquidity problem. As we can see, that the current ratio for year 2018 is still good because the current assets is higher than current
liability but company should aware with the trend line of the current ratio. If the current ratio is less than 1, then the problem will occur to the company such as not have ability to pay its liability. And if the current ratio better that the lower current ratio, the company may maintain their liquidity ratios. Quick Asset Ratio Quick asset ratio for year 2018 is 0.77 while for year 2017 is 1.18. The difference of the quick ratio is 0.41. The lower quick ratio is better because the company can quickly convert assets to the cash and the company also can quickly rid of its current liability. In any case, Top Glove Corporation must achieve the right balance between liquidity risk arising from a low quick ratio and the risk of loss resulting from a high quick ratio. Inventory Turnover Inventory turnover for year 2018 is 8.17 while for year 2017 is 9.68. The differences between year 2018 and 2017 is 1.51. The decrease of inventory turnover is quite high. It will show that the company have weak sales and possibly excess inventory. The company also may arise the problem with the goods being offered for sales or too little marketing or company may be overstocking or deficiencies in the product line or marketing effort. It is a sign of ineffective inventory management because inventory usually has a zero rate of return and high holding cost for the company.
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