Financial Analysis of Singapore Post: Liquidity, Profitability, Solvency and Turnover Ratios

This report provides an analysis of Singapore Post's financial performance in terms of liquidity, profitability, solvency and turnover ratios. It includes a comparison of different subsidiaries of Singa post and their financial indicators. The report also discusses the compliance of Singapore Post with CSR activities and corporate governance.

FINANCE

Contents
Introduction...........................................................................................................................................2
Financial performance...........................................................................................................................2
Liquidity ratios...................................................................................................................................3
Profitability ratios..............................................................................................................................4
Solvency ratio....................................................................................................................................9
Turnover ratios................................................................................................................................11
Conclusion...........................................................................................................................................14
References...........................................................................................................................................16
Appendix.............................................................................................................................................18

Introduction
In order to demonstrate the understanding of Singapore post`s financial situation, the
analytical report has been produced in terms of current position and its compliance with the
CSR activities and corporate governance. Singapore post is a conglomerate of many
subsidiaries. The company envisions becoming a global leader in communications and
ecommerce logistics. Subsidiaries such as SP ecommerce, Famous Holdings, Speedpost,
lock+store, quantium solutions, and couriersPlease.
Singapore post offers local and international postal services, letter-shopping, warehousing, e-
commerce logistics, mailroom management, end-to-end mail services, data printing, and
fright services. The company is headquartered in Singapore. The company has generated a
revenue of $1.1 billion with a workforce of 1900 employees. Main competitors of Singapore
Post are CH Robinson, Purolator, and DHL. The company is a public and independent
company. The CEO of the company is Paul William Coutts. Singapore Post limited is a
leading company that offers retail, logistics, and mail solutions in Asia Pacific region and
Singapore. The company is designated as public postal licensee. The company is one of the
largest retail distributor network of Singapore with extensive tri-channel of over 60 post
offices and 300 odd self-service automated machines (SAM) with online shopping and portal
vPOST. The company has to comply the obligation that are under Cap. 50 and SGX-ST
(Singapore Exchange) listing rules. The company follows international SFRS, which is very
much similar to International Financial reporting standards (IFRS).
Financial performance
Financial performance can be effectively derived only by analysing the financial statements
of the company. To examine the financial performance of several indicators and ratios of
Singapore Post will be analysed. The comparison can be made only between different
subsidiaries of Singa post. Although, there are many types of financial analysis such as

vertical, profitability, liquidity, efficiency, and leverage. Ratio analysis is an measuring tool
used by the company or the stakeholders to examine the performance of the organisation. The
use of analysis is not limited to stakeholders, investors, suppliers, and customers. The
analysis is from year to year, which is horizontal analysis. Each subsidiaries will be analysed-
Liquidity ratios
It is defined as a financial metrics that determines whether the company is able to pay off its
current liabilities. Payment obligation should not include debt obligations which are long
term and are capitalised. A high liquidity ratio means that the company is able to pay off its
current obligations from the current assets. A high liquidity ratio means that the organisation
is in good condition to pay off its short term outstanding debts. To order to analyse the
liquidity, the analysis will consider current ratio and quick ratio.
Current ratio
This ratio decides that how efficient is the organisation to pay off its short-term obligations.
There is an ideal ratio i.e. ratio 1.2 to 2 discloses that company is good enough to pay off its
obligations. Whereas, if the current ratio is below 1 then the organisation does not have
appropriate current assets in order to cover short term obligations.
2014 2015 2016 2017 2018
0.000
0.500
1.000
1.500
2.000
2.500
Current ratio

The above graphical representation denotes that Singapore post has been maintaining a
considerable liquidity in all the five years from 2014 to 2018.
Quick ratio
2014 2015 2016 2017 2018
0.000
0.002
0.004
0.006
0.008
0.010
0.012
0.014
0.016
Quick ratio
Quick ratio is also known as acid test ratio that measures the ability of the company to use
near cash and other quick assets in order to extinguish current liabilities. Quick ratio
compares the amount of total of cash, accounts receivables, and marketable securities to total
of current liabilities. It is considered that quick ratio greater than one means that the
organisation is able enough to pay off its short term obligations.
Profitability ratios
Profitability ratios are a series of financial metrics, which are used to assess the ability of the
business that have generated earnings in relation to its revenue, and operating costs etc. These
ratios shows how effectively the company has used its existing assets in order to generate
value for the shareholders. These are categorised in gross profit margin, operating proift
margin, net profit margin, return on total assets, return on capital employed, return on equity.

These ratios are the indication of high revenue of each subsidiaries under whole
conglomerate.
Gross profit ratio
2014 2015 2016 2017 2018
68%
70%
72%
74%
76%
78%
80%
Gross profit ratio
From the above graphical representation, it can be seen that the gross profit of the whole
group have been increasing from 2014 to 2018. Although, the increase is not very much
consistent as it was 72% in 2014, 71% in 2015, 74% in 2016, 75% in 2017, and 78% in 2018.
The growth in the rate of gross profit is due to increasing revenue as each of the subsidiaries
contributes to a certain level.

The annual report of the company have suggested the revenue of all the subsidiary groups of
the company. The group has reported that financial data is based on three main operational
segments. From the above diagram, it can be seen that in 2018, the whole conglomerate
reports a revenue of $1.46 billion of which 41.7% of revenue is derived from postal services.
Logistics contributes 40.2% of the total revenue and other e-commerce segment contributes
nearly 18.1%. While differentiating the revenue of e-commercial and non-commercial
sectors, e-commerce contributes to 55.2% of total group`s revenue. This also contributes to
all three business segments such as cross border eCommerce deliveries that are under postal
segment, last mile deliveries, warehousing that are under e-commerce segment.
Net profit
2014 2015 2016 2017 2018
0%
5%
10%
15%
20%
25%
Net Profit Margin
Net profit ratio determines the percent of net profit to the percent of total sales. It determines
the ability of the organisation to decide whether the company is able much to derive profits
from its sales revenue. The graphical representation straightly reflects that the company have
huge operating expenses, which further reduces the net profit because the gross profits are
high enough but the operating cost of the company is to high.
Return on capital employed

This ratio is a financial metrics that measures whether the returns are achieved by the
organisation by deploying capital. A higher percentage will always be a good sign of
organisation performance. It is compared to that rate at which the company has borrowed and
any increase in the borrowings will further lead to reduction in the earnings of the
shareholders. A feasible rate is the one, which is greater than the rate at which the company
has borrowed. If the company has increased the long-term earnings, it will further decrease
the return on capital employed.
2014 2015 2016 2017 2018
0%
5%
10%
15%
20%
25%
30%
Return on Capital Employed
From the above graph, it is clearly visible that Return on capital employed is not consistent as
it was around 26% in 2014, 12% in 2015, 18% in 2016, 8% in 2017, and certainly 7 to 8 in
2018. The reason of increasing returns are that increase in the capital employed. Further, the
company is not using its capital efficiently as the reason can be due to marginal decrease in
the amount of owner`s capital.
Return on equity
A financial metric, which measures the net return, derived from the capital invested by the
investors. For instance- A return of 11% on equity, which means that the organisation is able
to generate 11-cent return at each dollar of net worth. It evaluates the ability of the

management that can generate income from the equity available. A ROE of 15 to 30% is
considerably good.
2014 2015 2016 2017 2018
0%
5%
10%
15%
20%
25%
Return on Equity
From the above graph, it can be said that return on equity is very much fluctuating that shows
that the company has high risk of paying obligations that why it is not able much to return a
particular level of return to the equity shareholders. Apart from this, a standard return on
equity should be 15-20%, which is visible only in few years, in 2014 and 2016. This indicates
that earning per share has been decreasing. It is quite visible that although the company is
able to earn gross profits but it incurs a lot of operating and non-operating expenses.
Return on total assets
This ratio measures the organisation`s profits that is before interest and taxes in relation to
total assets employed in it. It is considered that a return of 5% or more is considerably well.
Further, this indicates that how efficiently the organisation is using the assets so that it can
generate profits before obligations of contracts have been paid.

2014 2015 2016 2017 2018
0%
2%
4%
6%
8%
10%
12%
Return on Total assets
Form the above graph, it is important to understand that an ideal return of 5% should always
be there, so that the shareholders can build trust on the company. In 2014, the company
generates a return of nearly 11% that further fell to 7% in 2015 then increased to 10% in
2016, 1% in 2017, and 5% in 2018. The return on assets have been fluctuating for the last
five years. During 2014 and 2016, the company has high return of assets whereas it was very
much fluctuating and deprived in 2015, 2917 and 2018. The increase shows that the company
might have purchased more assets in 2017 as its average is extremely less due to establishing
cost.
Solvency ratio
Debt equity ratio
This ratio interprets that how effectively the organisation has composed capital structure. It is
important to know which element is more in total capital structure, this ratio determines the
risk of the shareholders as 2:1 is the ideal ratio for that depicts that when company employ
two debts then one equity in sufficient in the total capital but it differs from industry to
industry.

2014 2015 2016 2017 2018
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
Debt- equity
From the graph, it can be seen that the ratio was 0.9 in 2014, 0.5 in 2015, 0.56 in 2016, .59 in
2017, and .56 in 2018. From the data, it is observed that the company has high leverage risk
in 2014 whereas the risk was considerably low that lies in the rage of 0.5 in every other year
except 2014. The reason can be that the company have completely written off the long debt in
2014 that no longer exist in 2015.
Interest coverage ratio
2014 2015 2016 2017 2018
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
Interest coverage ratio

The ratio helps to measure the interest coverage of the organisation, which is out available
earnings that is before tax and interest. It is seen that organisation has managed the interest
payment out of total available net profit. From the above graph, it can be analysed that the
company the gross profit has decreased in such a huge manner because of high interest
obligations. Undoubtedly, the company has generated huge gross profit but at the same time,
it is capable enough of paying the obligations of interest.
Turnover ratios
These ratios are also known as efficiency ratios as it divulges that how effectively the
organisation manage the capital funds in order to maximise the output. This ratio is helpful to
reflect the company`s efficiently deploy its assets, receivables, assets turnovers, and payable
turnover ratio.
Receivable turnover ratio
2014 2015 2016 2017 2018
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
Receivable tunover ratio
From the above graphic representation, it is easily visible that the company is capable enough
in 2014 with number of times as 15 times. Whereas, in 2015, it was 5 times, in 2016, it is 5
times and again in 2018 it is nearly 4.2 times. The graph represents the number of times
incurred by the company and it gets the payment from its debtors. The company was in very

good liquid position in 2914 as it received the payment many times whereas it decreased
drastically in 2015, 2016, 2017, and 2018. Apart from this, there can be another reason such
as the company has given small services to every subsidiary then further the company might
have classified its tender sales in huge groups. Most importantly, there can be reason that the
company has incurred a lot of sales that were even uncertain because the revenue from
operations and gross profit is also high.
Creditor’s turnover ratio
2014 2015 2016 2017 2018
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
Creditor turnover ratio
Creditor’s turnover ratio has to be good enough as it creates an image and brand reputation as
if it does not pay its obligation to its creditors then it just spoil the image of the company.
From the above image, it can be found that in 2014, the company was very much regular in
paying its creditors then slowly in 215, 2016, 2017, and 2018; it reduced as the number of
times reduced a lot. However, 4 times is very many sufficient times to pay its creditors. As in
2014, the company disturbs its cash flow system and payable turnover. If company increases
its sales, then at the same time, it needs the raw material or in this case access to other
satellite services several times that has increased the number of times of turnovers.
Inventory turnover ratio

2014 2015 2016 2017 2018
0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
Inventory turnover ratio
Form the above graphical representation of inventory ratio, it can be said that in 2018, the
turnover ratio for inventory is extremely high that reflects that company have high blockages
of funds in its business operations. From the diagram above, it can be seen that the company
has raised its inventory turnover drastically which in turn reflects that the company has huge
blockage of funds in relation to business operations. In 2014, the company has an inventory
turnover of 92, which is undoubtedly extreme, which is also not a good sign of managing the
inventory. With the time, the company has tried to reduce its turnover ratio in 2015 but
certainly, it could not improve the state the turnover ratio started increasing again
Asset turnover ratio
It is a financial measure that reflects the efficiency of the company`s use in relation to the
assets while generating the sales revenue. Most companies with low profits tend to high asset
turnover whereas on the other hand, high profit margin almost have low asset turnovers.

2014 2015 2016 2017 2018
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
Assets turnover ratio
From the graph, it can said that the company is efficiently purchasing its assets and using
them in most appropriate way. As seen in the figure, the company attains a turnover of 1.2
times, Further in 2015, it is seen that the company generates low turnover, which means the
company have installed the assets properly, and using them efficiently. Same in 2016, 2017
and 2018, the company has been maintaining its turnover ratios.
Conclusion
From the above analysis, it can be said that the company is not consistent much as which
creates doubts among the customers, and other stakeholders. Further, it is important to know
that the financial statement of Singapore post can be appropriately derived only from the
incomes statement, balance sheet, cash flow statement and other details that have been further
reported to reporting authority and by keeping the business more transparent and their easy
access to the stakeholders. In order to analyse all the details and certain information, it could
be inferred that Singapore post has kept moderate financial leverage and the profitability of
company is already way too high to order to cover the interest obligation. It is analyzed that
company if in case find any issue in complying with the IFRS rules and domestic accounting

standards while preparing the financial statements then in this case, IFRS rules will override
the domestic accounting standards.

References
Singapore Post (2017-18) Annual report. Available on:
file:///C:/Users/System04099/Downloads/Singapore%20Post%202017-18%20(1).pdf
[Accessed on 31/03/19]
Singapore Post, (2016) Annual report.. Available on:
https://www.singpost.com/sites/default/files/b2c_financial_news_files//ann201706271.pdf
[Accessed on 31/03/19]
Singapore Post, (2015) Annual report. Available on:
https://www.singpost.com/about-us/investor-centre/financial-results [Accessed on 31/03/19]
Al Nimer, M., Warrad, L. and Al Omari, R., 2015. The impact of liquidity on Jordanian
banks profitability through return on assets. European Journal of Business and
Management, 7(7), pp.229-232.
Boardman, A.E., Greenberg, D.H., Vining, A.R. and Weimer, D.L., 2017. Cost-benefit
analysis: concepts and practice. Cambridge University Press.
Dey, M.S. and Choudhury, S.R.D., 2018. Profitability and Liquidity Position of Selected
Small Enterprises in Shillong City of Meghalaya. research journal of social sciences, 9(7).
Ehiedu, V.C., 2014. The impact of liquidity on profitability of some selected companies: The
financial statement analysis (FSA) approach. Research Journal of Finance and
Accounting, 5(5), pp.81-90.
Rani, N., Yadav, S.S. and Jain, P.K., 2015. Financial performance analysis of mergers and
acquisitions: evidence from India. International Journal of Commerce and
Management, 25(4), pp.402-423.

Sujan, M.H.K., Islam, F., Azad, M.J. and Rayhan, S.J., 2017. Financial profitability and
resource use efficiency of boro rice cultivation in some selected area of Bangladesh. African
Journal of Agricultural Research, 12(29), pp.2404-2411.
Vogel, H.L., 2014. Entertainment industry economics: A guide for financial analysis.
Cambridge University Press.

Appendix
Particulars 2014 2015 2016 2017 2018
AUD$ '000 AUD$ '000 AUD$ '000 AUD$ '000 AUD$ '000
Total Revenue 821 920 1,152 1349 1464
COGS 230 263 300 345 328
Gross profit 591 657 852 1004 1136
Purchase 826 921 1,150 1,349 1,461
EBIT 180.0 181.0 289.0 146 140
Finance cost 8.0 7.0 8.0 9 9
Net profit 143 158 249 33 126
Current Assets 556 798 368 608 627
Inventory 5 6 4 4 1
Quick Assets 551 792 364 604 626
Average inventory 2.5 8.0 5.0 4.0 2.5
Trade receivables/Debtors 108.0 140.0 178.0 191 261
Average Debtors 54.0 178.0 229.0 273.5 321.5
Total Assets 1322 2198 2416 2717 2725
Average assets 661 2421 3406 3774.5 4079.5
Current Liabilities 352.0 415.0 501.0 587 596
Trade Payables/Creditors 136 154 167 201 306
Average creditors 68 222 244 284.5 406.5
Total Liabilities 628 734 865 1010 975
Capital Employed 694.0 1464.0 1551.0 1707.0 1750.0
Long term loans 220 221 209 215 221
Shareholders' Equity 694 1464 1550 1706 1750
Financial Data of Singapore Post
Computation of ratio analysis
Liquidity ratio 2014 2015 2016 2017 2018
Current ratio 1.580 1.923 0.735 1.036 1.052
Quick ratio 0.014 0.014 0.008 0.007 0.002
Profitability Ratios 2014 2015 2016 2017 2018
Gross profit ratio 72% 71% 74% 74% 78%
Net Profit Margin 17% 17% 22% 2% 4%
Return on Capital Employed 26% 12% 19% 9% 8%
Return on Equity 21% 11% 16% 2% 7%
Return on Total assets 11% 7% 10% 1% 5%
Solvency Ratios
Capital structure ratio 2014 2015 2016 2017 2018
Debt- equity 0.90 0.50 0.56 0.59 0.56
Intrest coverage ratio 22.50 25.86 36.13 16.22 15.56
Activity ratio

Efficiency ratio 2014 2015 2016 2017 2018
Receivable turnover ratio 15.20 5.17 5.03 4.93 4.55
Creditor turnover ratio 12.15 4.15 4.71 4.74 3.59
Inventory turnover ratio 92.00 32.88 60.00 86.25 131.20
Assets turnover ratio 1.24 0.38 0.34 0.36 0.36