Earned ratio both company experience a downward

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earned ratio, both company experience a downward trends owing to the same reason which is the decrease of profit earned as compared to the year before. However, this does not affect much of the ability of both companies to satisfy their debt obligations as Padini still have 40 times higher of profits to cover its interest expenses while Bonia’s profit is 7 times higher compare to its interest payable. Regarding the ability of the company to generate profit, both companies have turned worse from 2014 to 2015. Total gross profit and net profit generated by Bonia and Padini in 2015 had decrease from that of 2014 although both companies’ financial statement reported a slight increase in sales revenue. This result in the gross profit margin and net profit margin of both companies deteriorates over the years. Overall, Bonia seems to have higher gross profit margin but lower net profit margin when compared to that of Padini. A possible reason to this is that Bonia manage to get a lower offer price for its inventories resulting in lower cost of sales, on the other hand, Bonia might be doing bad in managing its operating expenses when compared to Padini. In conclusion, Padini will be better off than Bonia in terms of investment choices because it can provide higher dividend taking into account its net profit margin. Both Padini and Bonia have experienced a decrease from 2014 to 2015 in their ability to generate profits with their available assets. However, it is evident that Padini is doing a better job at generating profits from every ringgit of assets. This is because, despite having a lesser amount of total assets, Padini still managed to generate more revenue compared to Bonia, indicating that the management is doing a fairly good job in utilizing its assets such as converting its investments in assets into profits. In terms of return on equity, Padini has also outperformed Bonia, although the ratio has declined for both the companies from 2014 to 2015. Bonia did not generate as much return as Padini on every ringgit of its equity due its lower revenue earned. Bonia seemed to have slightly lesser capital equity compared to Padini, which limits it from involving itself in more opportunities and activities that will generate more return. 18
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Pursuant to the Earnings per Share ratio, Bonia earned more than Padini for every ordinary shares issued in 2014, however it plunged to only RM0.06 in 2015. Therefore, Padini has a better EPS in 2015. Bonia’s sudden drop in EPS could be explained by the splitting of its shares from RM0.50 into RM0.25 each, which doubled the number shares fully paid and issued, consequently, reduces its EPS in 2015. In contrast, the number of shares issued by Padini remained the same for both the years. As a result, Padini was able to pay dividends of greater amount than Bonia to its shareholders due to higher EPS. Therefore, investors should be keener to invest in Padini which offers greater dividend payments, in comparison to Bonia. However, the price/earnings ratio shows that investors are more
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  • Summer '17
  • ms lau
  • Financial Ratio, Generally Accepted Accounting Principles, Padini Holdings Berhad, Padini, Bonia Corporation Berhad

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