Corporate-finance-partC.docx

# 17030000 rm 712689000 100 239 in 2014 the gross

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17,030,000 RM 712,689,000 × 100 = 2.39% In 2014, the gross profit margin for EG is 3.20% which means 3.20% of the sales generated are utilized for the cost of goods sold. In 2016, 7.11% of the sales generated are used to finance the cost of goods sold. The operating profit margin in 2014 indicates that for every RM1 of sales, RM0.015 is left after taking into consideration of the cost of goods sold and operating expenses. In 2016, for every RM1 of sales generated, RM0.044 is left after deducting the cost of goods sold and operating expenses. As for the net profit margin, in 2014, for every RM1 of sales the company generates, RM0.0002 is created for the shareholders. In 2016, for every RM1 of sales the company produces, RM0.023 is created for the shareholders. Activity Ratios 2014 2015 (Rights Issue) 2016 Asset turnover = Sales Total Assets RM 993,376,000 RM 452,218,000 = 2.20 times RM 636,075,000 RM 441,928,000 = 1.44 times RM 712,689,000 RM 617,740,000 = 1.15 times Inventory turnover = Cost of GoodsSold Inventory RM 961,593,000 RM 90,054,000 = 10.68 times RM 602,082,000 RM 82,591,000 = 7.29 times RM 661,987,000 RM 124,359,000 = 5.32 times Account receivable turnover = Sales Account Receivable RM 993,376,000 RM 148,230,000 = 6.70 times RM 636,075,000 RM 155,562,000 = 4.09 times RM 712,689,000 RM 273,258,000 = 2.61 times Assets turnover of 2.20 times in 2014 indicates that for every RM1 of asset owns, EG can generate RM2.20 of sales. In 2016, the company able to create RM1.15 of sales for every RM1 of asset owns. The inventory turnover of 10.68 times in 2014 means that the assets were replenished 10.68 times in a year, which is equivalent to stocks being turned over once every 34 days (365÷10.68). In 2016, the inventories were restocked 5.32 times in a year, in other words, once every 68 days (365÷5.32). Inari’s receivables turnover in 2014 is 6.70 times which signals that on average, the receivables were fully collected 6.70 times during the year or once every 54

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days (365÷6.70). In 2016, the receivables were fully collected 2.61 times on average or once every 139 days (365÷2.61). Solvency Ratios 2014 2015 (Rights Issue) 2016 Debt-to-equity ratio = Total Debt Total Equity RM 329,234,000 RM 122,984,000 × 100 = 267.70% RM 312,619,000 RM 129,309,000 × 100 = 241.76% RM 383,062,000 RM 234,678,000 × 100 = 163.23% Debt-to-asset ratio = Total Debt Total Assets RM 329,234,000 RM 452,218,000 × 100 = 72.80% RM 312,619,000 RM 441,928,000 × 100 = 70.74% RM 383,062,000 RM 617,740,000 × 100 = 62.01% In 2014, EG’s debt-to-equity ratio is 267.70% indicates that 267.70% of shareholders’ equity is used to finance the assets. In 2016, 163.23% of the shareholders’ equity is used to finance the assets. Debt-to-asset ratio of 72.80% in 2014 showed that total liabilities constitute 72.80% of EG’s total assets whereas in 2016, the total liabilities accounts for 62.01% of the company’s assets. Event study Inari Amertron Berhad’s sales revenue was RM793, 655,000 in year 2014 while it has increased to RM1, 043,120,000 in year 2016. The sales revenue has been increased rapidly after the equity financing happened in year 2015. Besides that, the total equity of the company also has an increment of RM422, 513,000 during the year 2016. However, the net income of the company has increased in year 2015 but has a slightly decreased in year 2016. This make the return on equity of the company decreased from 28.08% to 21.06%. In addition to that, total assets of Inari
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• Summer '17
• ms lau
• Finance, Revenue, Financial Ratio, Generally Accepted Accounting Principles, INARI AMERTRON BERHAD

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