The current assets are increased by RM 369,558,000 and the current liabilities are increased by RM 182,476,000 from year 2009 to year 2010. Thus, Digi Bhd has more cash liquidity for year 2012 than year 2011.
Current ratio is to test a company's liquidity. Current ratio is ascertained whether a company's short-term assets are readily available to pay off the short-term liabilities. Therefore, in theory, the higher the current ratio is better for the company.
Total Asset Turnover (TAT)
Total asset turnover is measures a firm's efficiency at using its assets in generating sales or revenue. Therefore, the higher the total assets turnover is better for the firm.
The net income is Increased by RM 22,925,000 and the total assets decreased by RM 161,418,000 from year 2011 to 2012. Efficiency for the company Digi berhad on generating earning using their assets is improved.
Return on investment is an indicator of how profitable a company is relative to its total assets. It gives an idea as to how efficient management is at using its assets to generate the earnings. Therefore, the higher the return on investment is better for the company, because the company is earning more money on less investment.
Net Profit Margin (NPM)
Year
2011
2012
Net Income
Net Profit Margin =
Sales
RM292,445,000
= 19.24x
RM1,519,970,000
RM315,370,000
= 19.92x
RM1,582,518,000
The net income is increased by RM 286,125,500 and the sales are increased by RM 62,548,000 from year 2011 to year 2012. Thus, Digi bhd had better control over its cost for year 2012 than year 2011.
Net profit margin is measures how much out of every dollar of sales a company actually keeps in earnings. The higher the profit margin indicates a more profitable company that has better control over its costs compared to its competitors.
Times Interest Earned (TIE)
Times Interest Earned measure a company's ability to meet its debt obligations. It is calculated by taking a company's earnings before interest and taxes (EBIT) and dividing it by the total interest payable on bonds and other contractual debt. It is usually quoted as a ratio and indicates how many times a company can cover its interest charges. Failing to meet these obligations could force a company into bankruptcy.
Year
2011
2012
EBIT
Times Interest Earned =
Interest Expenses
RM394,813,000
= 40.86x
RM9,662,000
RM404,165,000
= 28.47x
RM14,194,000
The Earnings Before Interest And Tax is increased by RM 9,352,000 and the Interest Expenses are Increased by RM 6,532,000 from year 2011 to year 2012. Thus, the performance of Times Interest Earned in Digi Bhd for year 2011 is better than year 2012.
Suggestions
DIGI BERHAD is a telecommunication company, they provide telecommunication services. For example, SMS (Short Message Services), MMS (Multimedia Message Services), Calling services, Data Internet on smartphone devices and roaming service. Digi Berhad have some close competitor in the market like Maxis, celcom, U-mobile and tune-talk.
From year 2011 to 2012, the financial expenses for Digi Bhd have raised from RM 9,662,000
to RM14,194,000. Digi Berhad can decrease the amount by issuing new bonds to the market instead of borrowing money from the bank. It will decrease the interest charged from the bank and thus indirectly improve the company's financial status.
Digi Berhad can also increase their sales by providing better services to their customer. For example the signal problem, they can build more signal tower so that they can have more service coverage and their customer can get better services and thus having a better competitive advantages to their competitor. Wining competitor's customer will increase sales of the company Digi Berhad.
Question 2
Present value of funds needed for college expenses for first child:
11,000 12,000 13,000 14,000
0 12 13 14 15 years
11,000 / (1+0.13)12
RM2,537.7648
12,000 / (1+0.13)13
RM2,449.9740
13,000 / (1+0.13)14
RM2,348.7952
14,000 / (1+0.13)15
RM2,238.4705
RM9,575.0045
Present value of funds needed for college expenses for second child:
16,000 17,000 18,000 19,000
0 15 16 17 18 years
16,000 / (1+0.13)15
RM2,558.2520
17,000 / (1+0.13)16
RM2,405.4361
18,000 / (1+0.13)17
RM2,253.9224
19,000 / (1+0.13)18
RM2,105.4339
RM9,323.0444
Retirement Annuity:
35 25 years
30 65 90 years old
PV PVAN
Present Value Annuity (PVAN)=PMT
= 50,000
= RM 366,499.2489
Present value for retirement annuity:
Present Value (PV) = FV / (1+i)n
= 366,499.2489 / (1+0.13)35
= RM 5,085.4287
Total present value = 9,575.0045 + 9,323.0444 + 5,085.4287
= RM 23,983.4776
35 years
30 65 years old
PV = 23,983.4776
Present Value Annuity (PVAN)=PMT
23,983.4776 = PMT
PMT = RM3,161.7232
Therefore, I must save RM 3,161.7232 for each of the next 35 years in order to meet these goals.
Question 3
The Financial Market of Malaysia is governed and regulated by Bursa Malaysia or Malaysia Stock Exchange (MYX), the barometer of Financial Market in Malaysia.
Well, the Malaysia financial system has two main categories, which called as Financial Institutions and Financial Market. The Financial Institutions comprise Banking System and Non-bank Financial Intermediaries whereas the four main markets for Financial Market which are Money and Foreign Market, Capital Market, Derivatives Market, and also Offshore Market.
Sunway Holdings Berhad involves in Capital Market Malaysia. Capital Market is a market whereby organizations from the public and private sector sell securities in order to raise funds for long term operations. Capital Markets comprise the Bond Market and Stock Market. Sunway Holdings Berhad involves in Stock Market. Based on the reference price of RM2.80 per share, the market capitalization of Sunway Holdings Berhad is RM3.6 billions. This amount of market capitalization ranks Sunway Holdings Berhad to the top five property and construction companies listed on Bursa Malaysia.
Sunway Holdings Berhad is a profit organization, whereby its organization's goal is to maximize the profit. The subsidiaries under Sunway Group such as Sunway Lagoon Theme Park, Sunway Pyramid Shopping Mall and Sunway Construction Sdn Bhd are making profits every day.
The factor that may influence the investment of Sunway Holding Berhad is the prospect of Sunway Holdings Berhad, the director of Sunways Holdings Berhad is pleased to announce that Sunway Construction Berhad which is a subsidiary of Sunway Holdings Berhad had received the letter of award for a contract worth RM569 million from Syarikat Prasarana Negara Berhad. It is expected to bring a positively great amount of earning by the end of year 2012.
Furthermore, services and manufacturing sector in Malaysia have become the main growth economic activities. Sunway Holdings Berhad is major in service sector such as property development, hospitality, leisure and entertainment. In other words, Sunway Group has the advantage on the whole country trend. In conclusion, Sunway Holdings Berhad is expected to bring more income to investors and shareholders in the coming future.
Question 4
If a company sells additional common stock and uses the proceeds to increase its inventory level and to increase its cash balances, what is the near-term (immediate) impact (increase, decrease, no change) of this transaction on the following ratios:
1. Current Ratio
Since Current Assets will increase (because cash - a current asset would increase), then Current Ratio would be increased.
2. Return On Stockholders' Equity
Since the number of common stock shares would increase, then the Return on Equity would be decreased.
3. Quick Ratio
Same as number 1 above- the effect would be an increase in the Quick Ratio
4. Debt To Total Assets
Cash will increase, therefore Total Assets would increase, and the Debt to Total Assets Ratio would decrease
5. Total Asset Turnover
Cash will increase, therefore Total Assets would increase, and the Total Asset Turnover would decrease
