Financial Ratio Analysis: Malaysia Airports and Axiata Group (FIN2212)

This assignment, for the Financial Management course (FIN2212), involves a comprehensive financial ratio analysis of two Malaysian companies: Malaysia Airports Holdings Bhd and Axiata Group Bhd. The student calculates and compares various financial ratios, including current ratio, quick ratio, ac...Read More

Assessment Analysis
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Date: 28 / 02 / 2020
Student Name:
Student Number:
Session: JANUARY 2020
Course Code: FIN2212
Course Title: FINANCIAL MANAGEMENT

Assessment Analysis
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Individual Assignment
Part A: Compute the following ratios for the most recent two years
Company One
Malaysia Airports Holdings Bhd 5014
Ratio Formula 2018 2019
1. Current Ratio Current Assets / Current Liabilities 2 2.14
2. Quick Ratio
(Acid Test)
Current Assets - Prepaid - Inventory / Current
Liabilities
1.88 2.01
Account receivables
turnover ratio
Net Sales / Net Receivables 8 6.91
Inventory turnover
ratio
Net Sales / Net Inventory 16.47 14.63
Fixed assets
turnover ratio
Net Sales / Net Fixed Assets 12.62 10.87
Total assets turnover
ratio
Net Sales / Total Fixed Assets 0.22 0.23
Times interest
earned ratio
EBIT/ Interest Expense 2.07 1.94
Debt-to-assets ratio Debt / Assets 2.44 2.35
Gearing ratio Debt / Equity 0.54 0.5
Gross profit margin Gross Profit / Sales *100 54.4 56
Operating profit
margin
Operating Profit / Sales *100 19.6 22.8
Net profit margin Net Profit / Sales *100 13.81 9.34
Return on assets Net Income / Total Assets 2.99 2.17
Return on equity Net Income / Total Equity 7.38 5.18
Average collection
period
365 / Account Receivable Turnover 45.6250 52.8220

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Company Two
Axiata Group Bhd
Ratio Formula 2018 2019
1. Current Ratio Current Assets / Current Liabilities 0.67 0.6
2. Quick Ratio
(Acid Test)
Current Assets - Prepaid - Inventory / Current
Liabilities
0.44 0.46
Account receivables
turnover ratio
Net Sales / Net Receivables 11.56 5.31
Inventory turnover
ratio
Net Sales / Net Inventory 21.77 23.59
Fixed assets
turnover ratio
Net Sales / Net Fixed Assets 0.88 0.8
Total assets turnover
ratio
Net Sales / Total Fixed Assets 0.36 0.37
Times interest
earned ratio
EBIT/ Interest Expense -2.56 1.27
Debt-to-assets ratio Debt / Assets 3.65 4.15
Gearing ratio Debt / Equity 0.84 1.22
Gross profit margin Gross Profit / Sales *100 82.1 83.9
Operating profit
margin
Operating Profit / Sales *100 5.8 24.4
Net profit margin Net Profit / Sales *100 -21.08 -2.56
Return on assets Net Income / Total Assets -7.53 -0.95
Return on equity Net Income / Total Equity -23.86 -3.52
Average collection
period
365 / Account Receivable Turnover 31.5744 68.7382
(Wen, and Zhu, 2019).
Part B: Introduction of the companies and Comparison of the ratios for both companies
Introduction of Malaysia Airports Holdings Bhd 5014
The company is formerly named as the Malaysia Airport Berhad which is stated under the
publicly traded government-linked company. The organization is served as an aviation industry it
was founded in the year 1991 having it business operation head quarters Kuala Lumpur. Its key

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people are divided as follows Department of Civil Aviation (DCA) on airports and aviation
industry in Malaysia and the Malaysia Airports Berhad, is to focus on the operation,
management, and maintenance of airports and dealing with the products like airline services. The
company has a group of about 10000 employees and more. Further, having a parent organization
as the Khazanah Nasional. Further, it provides a concept where the leases and collects charges
from commercial operations in its airports as well as provide various non airport services like
repair and maintenance of the airports.
Introduction of Axiata Group Bhd 6888
The company is formerly named as the TM International Berhad which is stated and
named under the financial year 1992 to financial year 2009. The organization is served as a
telecommunications company, it was founded in the year 1992 having it business operation head
quarters Kuala Lumpur. Its key people and the chairman is the Ghazzali Sheikh Abdul Khalid
and dealing with the products like Mobile Network Operation, Network Infrastructure & Digital
Internet Company. The company has a group of about 25000 employees and more. Further,
having a parent organization as the Khazanah Nasional. The going is doing great business and
stand as second in line of business having its main competitors as the Telkomsel and the Telenor.
Further, the company is aiming to become an leading telecommunication group which
aims to be an New Generation Digital Champion by 2022. The company is known to transform
its products of pure-play mobile assets into a Triple Core Strategy-driven business focusing on
Digital Telco, Digital Businesses and Infrastructure and becoming the biggest name in Asia.
Fianacial Year 2018
Ratio Malaysia Airports Holdings Bhd
5014
Axiata
Group
Bhd
6888
Reasons For
Difference
Effect On
the
company
1.
Current
Ratio
2 0.67 Major reasons is
because the former
is an Aviation and
the other is the
Telecommunicatio
n Company
The former
is in better
condition
as liquidity
is higher
2. Quick
Ratio
(Acid Test)
1.88 0.44 The former
is in better
condition
as liquidity
is higher
Account
receivables
turnover
ratio
8 11.56 The higher
the ratio
better is the
condition
Inventory 16.47 21.77 The Lower

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turnover
ratio
ratio the
better is the
movement
of the stock
Fixed
assets
turnover
ratio
12.62 0.88 The higher
efficiency
level
provides a
positive
impact on
the
business
operations
Total
assets
turnover
ratio
0.22 0.36 The higher
efficiency
level
provides a
positive
impact on
the
business
operations
Times
interest
earned
ratio
2.07 -2.56 The higher
the number
value, the
better is the
company
conditions
to pay of
its interest
amount
Debt-to-
assets ratio
2.44 3.65 The lower
the ratio
the better is
the
organizatio
n in
position of
the equity
balance.
Gearing
ratio
0.54 0.84 The Lower
ratio the
better is the
debt
position of
the
company
Gross
profit
margin
54.4 82.1 Higher
percentage
value

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means
better profit
position
Operating
profit
margin
19.6 5.8 Higher
percentage
value
means
better profit
position
Net profit
margin
13.81 -21.08 Higher
percentage
value
means
better profit
position
Return on
assets
2.99 -7.53 The higher
efficiency
level
provides a
positive
impact on
the
business
operations
Return on
equity
7.38 -23.86 The higher
efficiency
level
provides a
positive
impact on
the
business
operations
Average
collection
period
45.6250 31.574
4
The higher
efficiency
level
provides a
positive
impact on
the
business
operations
Axiata Group Bhd 6888
Ratio Malaysia Airports Holdings Bhd
5014
Axiata
Group
Bhd
Reasons For
Difference
Effect On
the
company

Assessment Analysis
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6888
1.
Current
Ratio
2.14 0.6 Major reasons is
because the former
is an Aviation and
the other is the
Telecommunicatio
n Company
The former
is in better
condition
as liquidity
is higher
2. Quick
Ratio
(Acid Test)
2.01 0.46 The former
is in better
condition
as liquidity
is higher
Account
receivables
turnover
ratio
6.91 5.31 The higher
the ratio
better is the
condition
Inventory
turnover
ratio
14.63 23.59 The Lower
ratio the
better is the
movement
of the stock
Fixed
assets
turnover
ratio
10.87 0.8 The higher
efficiency
level
provides a
positive
impact on
the
business
operations
Total
assets
turnover
ratio
0.23 0.37 The higher
efficiency
level
provides a
positive
impact on
the
business
operations
Times
interest
earned
ratio
1.94 1.27 The higher
the number
value, the
better is the
company
conditions
to pay of
its interest
amount
Debt-to-
assets ratio
2.35 4.15 The lower
the ratio

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the better is
the
organizatio
n in
position of
the equity
balance.
Gearing
ratio
0.5 1.22 The Lower
ratio the
better is the
debt
position of
the
company
Gross
profit
margin
56 83.9 Higher
percentage
value
means
better profit
position
Operating
profit
margin
22.8 24.4 Higher
percentage
value
means
better profit
position
Net profit
margin
9.34 -2.56 Higher
percentage
value
means
better profit
position
Return on
assets
2.17 -0.95 The higher
efficiency
level
provides a
positive
impact on
the
business
operations
Return on
equity
5.18 -3.52 The higher
efficiency
level
provides a
positive
impact on
the
business
operations

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Average
collection
period
52.8220 68.738
2
The higher
efficiency
level
provides a
positive
impact on
the
business
operations
(Malasiya Airports, 2019 , Axiata, 2019 )References
Axiata , 2019. Annual Reports. Available At
https://www.axiata.com/investors/integrated-annual-reports/
Malasiya Airports, 2019. Annual Reports. Available At
http://mahb.listedcompany.com/financials.html
Wen, H. and Zhu, T., 2019. Interpretation of Financial Statements.