Automotive Holding Group Limited

Finance
Chosen Company: Automotive Holding Group Limited
Brief Profile Background of the Company
Automotive Holding Group Limited is an Australian company trading on Australian Stock
Exchange. The company has seen lots of up and down in 52 weeks with prices from double
the current price to a or to a low trough than the current price. The 52 week high of the
company is $ 3.87 and 52 week low of the company is $ 1.39. The company marks its
establishment at Perth, Australia. The company was established in 1952 and is listed on the
S&P/ ASX 200. The largest shareholder in the company is Nick Politis holding 22.8% stake
in the company through AP Eagers Limited. (Automotive Holdings Group Limited, 2019)
Automotive Holding Group Limited forays in the business of retailing in automotives in
Australia and New Zealand (part of Australasia). The major areas of concern of the company
include
(a) Automotive retail;
(b) Refrigerated logistics;
(c) other logistic.
Automotive Retail Segment
Under the automotive retail segment, the company has approximately one hundred and ninety
franchises of motor vehicles in more than 110 dealership locations both across New Zealand
and Australia. This segment is the major contributor of Revenue of the company.
Refrigerated Logistics
Under the Refrigerated Logistic Segment, the company deals in operating cold storages and
in transportation.
Other Logistic
The company also marks its presence in diverse businesses like truck and trailer body
building, transportation of goods along with their storage etc. (Reuters, 2019)
Ratio Analysis of Automotive Holding Group Limited
For analysing the financial health of the company and the proposed future investment
prospects of the company, an analysis has been carried out considering the latest financial
statement and the financial statement of past three years for comparability purpose. The
relevant extracts of Statement of Profit and Loss and the Statement of Financial Position of
the company has been detailed here-in-below:

Automotive Holding Group Limited
Statement of Profit and Loss
Sl
No Particular 30-06-2018
30-06-
2017 30-06-2016 30-06-2015
1 Total Revenue 6474053 6106064 5625999 5245789
2 Cost of Revenue 4977948 4651737 4190744 3928948
3 Gross Profit 1496105 1454327 1435255 1316841
4 Operating Expense
a. Research development
b. Selling general and administrative 1212607 1176435 1128715 1020438
c. Non-recurring
d. Others 97780 79241 84782 85688
e. Total Operating Expenses 6343124 5955611 5447862 5076689
f. Operating income or loss 130929 150453 178137 169100
5 Income from continuing operations
a. Total other income/ expenses net -78602 -60459 -40988 -39072
b. Earnings before interest and taxes 130929 150453 178137 169100
c. Interest expense -44584 -41447 -36580 -33576
d. Income before tax 52327 89994 137149 130028
e. Income Tax expense 14535 28901 40263 35913
f. Minority Interest 20011 14914 24928 23299
g.
Net Income from continuing
operations 37792 61093 96886 94115
6 Net Income 32639 55539 90071 88091
7
Net income applicable to common
shares 32639 55539 90071 88091
Automotive Holding Group Limited
Statement of Financial Position
Sl
No Particular 30-06-2018 30-06-2017 30-06-2016 30-06-2015
1 Current asset
a. Cash and cash equivalent 73046 95035 108593 69862
b. Net receivables 416570 356957 333614 318586
c. Inventory 1110746 899796 828111 732030
d. Other current asset 44981 51023
e. Total Current Asset 1645343 1401911 1304866 1149645
2 Long Term Investment 8355 8316 5076 7375
3 Property Plant and Equipment 376524 401130 359041 349174
4 Goodwill 233738 222565 209277 186614
5 Intangible Asset 305430 290605 252983 205427
6 Other Asset 68701 60866 60192 58847
7 Deferred Long term charges 68701 60866 60192 58847
8 Total Asset 2638091 2385393 2191435 1957082
9 Current Liabilities

Automotive Holding Group Limited
Statement of Financial Position
a. Accounts Payable 186494 137435 96371 102769
b. Short/ Current long term debt 4352 5125 17363 12986
c. Other Current Liabilities 199163 173143 163357 167925
d. Total Current Liabilities 1503207 1224557 1099341 959236
10 Long Term Liabilities 225461 224438 265632 197243
11 Other liabilities 40931 43836 38340 35737
12 Minority Interest 20011 14914 24928 23299
13 Total Liabilities 1861577 1583050 1471932 1261439
14 Total Stock Holder equity 756503 787429 694575 672344
(Verizon Media, 2019)
The fundamental analysis has been carried out on the basis of ratio analysis encompassing
liquidity, profitability, efficiency, solvency and gearing and investment ratio. The
computation of ratios have been presented here-in-below:
Profitability Ratio
(a) Gross Profit Margin: The ratio computed the percentage of sales which exceeds the
cost of goods sold. This ratio measures how efficiently business use its resources like
labour, material and others. It helps in analysing how profitable is the core business
activity of the company without paying any focus on the indirect cost of production. The
higher the gross margin of the company, the better the company is performing. The
computation of Gross Margin is carried out in the following manner:
Gross Profit Margin: Gross Profit earned/ Sales. (InvestingAnswers, Inc., 2019)
The Gross Profit Margin of the company for the current year and the past two years have
been presented here-in-below:
Gross Profit Margin
Sl.
No particular Gross Profit Sales Gross Profit Margin
1 2018 1496105 6474053 23.11%
2 2017 1454327 6106064 23.82%
3 2016 1435255 5625999 25.51%

On the basis of above data, it can be inferred that the gross profit margin earned by the
company has decreased continuously over the years on account of the following reasons:
(a) Cost of Material Consumed has increased;
(b) Cost of Labour has been increased ;
(c) No parity increase in selling price of good;
(b) Operating Profit Margin: The ratio computed the percentage of sales which exceeds
the cost of operations of the company. This ratio measures how efficiently business use
its resources like labour, material and others and other indirect cost of production
excluding taxes. It helps in analysing how profitable is the normal business operations of
the company. The higher the operating profit margin of the company, the better the
company is performing. The computation of Operating Margin is carried out in the
following manner:
Operating Profit Margin: Operating Profit earned/ Sales.
Operating Profit Margin
Sl
No particular Operating Profit Sales Operating Profit Margin
1 2018 130929 6474053 2.02%
2 2017 150453 6106064 2.46%
3 2016 178137 5625999 3.17%
On the basis of above data, it can be inferred that the operating profit margin earned by
the company has decreased continuously over the years on account of the following
reasons:
(a) Cost of Material Consumed has increased;
(b) Cost of Labour has been increased ;
(c) No parity increase in selling price of good;
2015 2016 2017 2018 2019
21.50%
22.00%
22.50%
23.00%
23.50%
24.00%
24.50%
25.00%
25.50%
26.00%
23.11%
23.82%
25.51%
Gross Profit Margin

(c) Net Profit Margin: The ratio computed the percentage of sales which exceeds the net
cost of all activities of the company. This ratio measures how efficiently business
manage its overall all cost and is reflector of health of the company. It helps in analysing
how profitable is the overall performance of the company. The higher the net profit
margin of the company, the better the company is performing. The computation of Net
Profit Margin is carried out in the following manner:
Net Profit Margin: Net Profit earned/ Sales.
Net Profit Margin
Sl.
No particular Net Profit Sales Net Profit Margin
1 2018 32639 6474053 0.50%
2 2017 55539 6106064 0.91%
3 2016 90071 5625999 1.60%
(InvestingAnswers, Inc., 2019)
On the basis of above data, it can be inferred that the operating profit margin earned by
the company has decreased continuously over the years on account of the following
reasons:
(a) Cost of Material Consumed has increased;
(b) Cost of Labour has been increased ;
(c) No parity increase in selling price of good;
(d) Net Income from continuous operations Profit Margin: The ratio computed the
percentage of sales which exceeds the net cost from continuous operation of the
company. This ratio measures how efficiently business manage its overall all cost and is
reflector of health of the company. It helps in analysing how profitable is the overall
performance of the company. The higher the net profit margin of the company, the better
the company is performing. The computation of Net Profit Margin is carried out in the
following manner:
Net Profit Margin from continuous operation: Net Profit margin earned/ Sales.
Net Income from continuous operation Profit Margin
Sl
No particular Net Profit from
continuous operation Sales Net Profit Margin
1 2018 37792 6474053 0.58%
2 2017 61093 6106064 1.00%
3 2016 96886 5625999 1.72%

On the basis of above data, it can be inferred that the net income from continuous
operating profit margin earned by the company has decreased continuously over the
years on account of the following reasons:
(a) Cost of Material Consumed has increased;
(b) Cost of Labour has been increased ;
(c) No parity increase in selling price of good;
Liquidity Ratio
(a) Current Ratio: The ratio is also known as working capital ratio and measures the short
term capability of the company to meet its obligations which are due in year. It is one of
the significant liquidity ratio and measures the capability of the company to manage its
working capital effectively. The ratio measures the health of the company. The
computation of Current Ratio is carried out in the following manner:
Current Ratio: Current Asset/ Current Liabilities
Current Ratio
Sl.
No particular Current Asset Current Liabilities Current Ratio
1 2018 1645343 1503207 1.09
2 2017 1401911 1224557 1.14
3 2016 1304866 1099341 1.19
On perusal of the above, it can be see that current ratio of the company has shown a
decrease on year on year basis which signifies that company has not been able to actively
manage its working capital. (CFI Education Inc., 2019)
(b) Quick Ratio: The ratio measures the efficiency of the company to meet its short term
financial liability. It is one of the significant liquidity ratio and measures the capability of
the company to manage its working capital effectively. The ratio measures the health of
the company and generally considers only those asset which can be immediately
converted to cash for the repayment of debt. The idle ratio is 1:1. The computation of
Quick Ratio is carried out in the following manner:
Quick Ratio: Quick Asset/ Current Liabilities
Quick Asset: Current Asset- Inventory
Quick ratio
Sl.
No particular Quick Asset Current Liabilities Quick Ratio
1 2018 534597 1503207 0.36
2 2017 502115 1224557 0.41

3 2016 476755 1099341 0.43
On perusal of the above, it can be see that quick ratio of the company has shown a
decrease on year on year basis which signifies that company has not been able to actively
manage its working capital and meet its short term liability.
Gearing Ratio
(a) Total Debt-Equity Ratio: This ratio measures the degree of leverage in the financial
statement of the company. The higher the ratio, the more leveraged the company shall
be. Further, the higher the leverage the higher the risk shall be. The ratio analyse the
structure of capital of the company and the funding pattern of the assets of the company.
The computation of Total Debt-Equity Ratio is carried out in the following manner:
Total Debt-Equity Ratio
Sl
No particular Total Debt Equity Total Debt-Equity Ratio
1 2018 229813 756503 0.30
2 2017 229563 787429 0.29
3 2016 282995 694575 0.41
On perusal of the above data, it can be inferred that the total debt to equity ratio of the
has been decreasing symbolising that company is not leveraged and can resort to loans
for future funds which is a positive symbol for the company. However, the company
shall not be able to reap the benefit of trading on equity.
(b) Debt-Equity Ratio: This ratio measures the degree of leverage in the financial
statement of the company. The higher the ratio, the more leveraged the company shall
be. Further, the higher the leverage the higher the risk shall be. The ratio analyse the
structure of capital of the company and the funding pattern of the assets of the company.
The idle ratio is 2:1 and consider only long term debt. The computation of Debt-Equity
Ratio is carried out in the following manner: (CFI Education Inc., 2019)
Long Term Debt-Equity Ratio
Sl
No Particular Long Term Debt Equity Debt-Equity Ratio
1 2018 225461 756503 0.30
2 2017 224438 787429 0.29
3 2016 265632 694575 0.38
On perusal of the above data, it can be inferred that the total debt to equity ratio of the
has been decreasing symbolising that company is not leveraged and can resort to loans
for future funds which is a positive symbol for the company. However, the company
shall not be able to reap the benefit of trading on equity.
Efficiency Ratio

(c) Cash Conversion Cycle: This ratio is a mixture of all the turnover ratio encompassing
debtor turnover ratio, creditor turnover ratio and inventory turnover ratio. It measures
how quickly a company able to convert its investment in the inventory and other
resources into cash flows from sales. Further, the shorter the duration of the cycle the
good is for the company and better the working capital management. The computation of
Cash Conversion Cycle is carried out in the following manner:
Cash Conversion Cycle: Receivable Days+ Inventory Days- Payable Days.
Cash Conversion Cycle
Sl
No
particula
r
Receivable
Days Inventory Days Payable
Days Cash Conversion Cycle
1 2018 21.81 56.68 9.13 69.35
2 2017 20.64 51.64 6.99 65.30
3 2016 21.16 50.61 6.46 65.31
On perusal of the above, it can be inferred that cash conversion cycle of the Automotive
Group has increased on year in year basis which is not good for the company and
represent poor management of the company to convert sales into cash.
Debtor Turnover Ratio
Sl
No particular Debtor Sales Debtor Turnover Ratio
1 2018 386763.5 6474053 16.74
2 2017 345285.5 6106064 17.68
3 2016 326100 5625999 17.25
Inventory Turnover Ratio
Sl
No particular Inventory Sales Inventory Turnover Ratio
1 2018 1005271 6474053 6.44
2 2017 863953.5 6106064 7.07
3 2016 780070.5 5625999 7.21
Payable Turnover Ratio
Sl
No particular Payable Sales Payable Turnover Ratio
1 2018 161964.5 6474053 39.97
2 2017 116903 6106064 52.23
3 2016 99570 5625999 56.50
Solvency Ratio
(c) Current Ratio: The ratio is also known as working capital ratio and measures the short
term capability of the company to meet its obligations which are due in year. It is one of
the significant liquidity ratio and measures the capability of the company to manage its

working capital effectively. The ratio measures the health of the company. The
computation of Current Ratio is carried out in the following manner:
Current Ratio: Current Asset/ Current Liabilities
Current Ratio
Sl.
No particular Current Asset Current Liabilities Current Ratio
1 2018 1645343 1503207 1.09
2 2017 1401911 1224557 1.14
3 2016 1304866 1099341 1.19
On perusal of the above, it can be see that current ratio of the company has shown a
decrease on year on year basis which signifies that company has not been able to actively
manage its working capital. (CFI Education Inc., 2019)
(d) Quick Ratio: The ratio measures the efficiency of the company to meet its short term
financial liability. It is one of the significant liquidity ratio and measures the capability of
the company to manage its working capital effectively. The ratio measures the health of
the company and generally considers only those asset which can be immediately
converted to cash for the repayment of debt. The idle ratio is 1:1. The computation of
Quick Ratio is carried out in the following manner:
Quick Ratio: Quick Asset/ Current Liabilities
Quick Asset: Current Asset- Inventory
Quick ratio
Sl.
No particular Quick Asset Current Liabilities Quick Ratio
1 2018 534597 1503207 0.36
2 2017 502115 1224557 0.41
3 2016 476755 1099341 0.43
On perusal of the above, it can be see that quick ratio of the company has shown a
decrease on year on year basis which signifies that company has not been able to actively
manage its working capital and meet its short term liability.
Conclusion
Thus, on the basis of above discussions it can be inferred that company has not been
performing well on year on year basis. In addition, the share prices and the market
sentiments have reflected a negative trend towards this stock as the stock is trading at
near about 52 week low. Also, as computed above the financial performance of the
company has witnessed a decrease on year on year basis which does not actively support

the investment climate. Thus, it can be concluded on the basis of fundamental analysis
investment in the company shall not be made.
References
Automotive Holdings Group Limited. (2019). Corporate & Investor Information. Retrieved from
ahgir.com: http://www.ahgir.com.au/
CFI Education Inc. (2019). Current Ratio Formula. Retrieved from corporatefinanceinstitute.com:
https://corporatefinanceinstitute.com/resources/knowledge/finance/current-ratio-formula/
CFI Education Inc. (2019). Debt Equity Ratio. Retrieved from corporatefinanceinstitute.com:
https://corporatefinanceinstitute.com/resources/knowledge/finance/debt-to-equity-ratio-
formula/
InvestingAnswers, Inc. (2019). Gross Profit Margin. Retrieved from investinganswers.com:
https://investinganswers.com/financial-dictionary/ratio-analysis/gross-profit-margin-2076
InvestingAnswers, Inc. (2019). Net Profit Margin. Retrieved from investinganswers.com:
https://investinganswers.com/financial-dictionary/financial-statement-analysis/net-profit-
margin-2233
Reuters. (2019). reuters.com. Retrieved from Automative Holdings Group Ltd.:
https://www.reuters.com/finance/stocks/company-profile/AHG.AX
Verizon Media. (2019). Automotive Holdings Group Limited (AHG.AX). Retrieved from
in.finance.yahoo.com: https://in.finance.yahoo.com/quote/AHG.AX?p=AHG.AX