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FINANCIAL RATIO ANALYSIS

BASIC ACCOUNTING ( FNBE 0145 )

ASSIGNMENT 1

TEE SIN YI (0315689)

LEONG CHEE MUN (0316256 )

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Report Content

Brief History of YTL 3-4

Profitability of YTL(Year 2012-2013)

5-7

P/E Ratio 8

Investment Recommendation 9

Appendix 10-13

References 14

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Brief History of YTL

YTL Corporation Berhad is one of the largest companies listed on the Bursa Malaysia, and

together with its four listed entities has a combined Market Capitalisation of about RM 30.4

billion as at 30 April 2014, and has total assets of over RM53.6 billion. The company was

listed in 1985 and has also had a secondary listing on the Tokyo Stock Exchange since 1996.

YTL was the first Asian non-Japanese company to be listed on the Tokyo Stock Exchange.

The YTL Group's core businesses are ownership and management of regulated utilities and

other infrastructural assets, serving 12 million customers in three continents.

Year 1955

The YTL Corporation (YTL Corp) was founded by Tan Sri Dato' Seri Yeoh Tiong Lay aka Dr.

Yeoh Tiong Lay in 1955.

Year 1988

His oldest son, Tan Sri Dato' Seri Francis Yeoh Sock Ping aka Dr. Francis Yeoh Sock Ping,

became the Managing Director of YTL Corp in 1988. Under the stewardship of Dr. Francis,

the YTL Group grew from a single listed entity in 1985 to a group of five listed companies.

Until now…

YTL Corporation's strategy of providing "World Class Products and services at very

competitive prices" along with its history of Innovation, has led directly to it recording a

compounded annual growth rate in Pre-tax profits of 55% over the last 15 years, and an

enviable track record of creating shareholder value. It has been paying dividends every year

since it was listed on KLSE. YTL Corporation's strategy has also resulted in it and its

subsidiaries accumulating numerous International Awards in the process.

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YTL Corporation Bhd emerged in the coveted position of being the largest non-government

linked company in the 2010 MB100 survey of Malaysia's Largest Listed Companies. YTL Corp

moved up to number five from number 20 previously, and its subsidiary YTL Power

International Bhd secured the eighth spot.

YTL Logo

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Profitability of YTL

Financial Ratio

Profitability Ratios

2012RM’000

2013RM’000

Interpretation

Return on Equity (ROE)

1,835,92013,458,095

×100

= 13.64%

1,845,78214,968,500

×100

= 12.33%

During the 2012 to 2013 period, the ROE has

increased from 13.64% to 12.33%. This means the

owner is getting less return from her/his investment.

Net Profit Margin (NPM)

1,835,92020,195,789

×100

= 9.09%

1,845,78219,972,948

×100

= 9.24%

During the 2012 to 2013 period, the NPM has

increased from 9.09% to 9.24%. This means the

business is getting better at controlling its overall

expenses.

Gross Profit Margin (GPM)

4,230,37420,195,789

×100

= 20.95%

4,156,37919,972,948

×100

= 20.81%

During the 2012 to 2013 period, the GPM has

decreased from 20.95% to 20.81%. This means getting

work at controlling its COGS.

Selling Exp. Ratio (SER)

318,14620,195,789

×100

= 1.57%

318,66719,972,948

×100

= 1.6%

During the 2012 to 2013 period, the SER has

increased from 1.57% to 1.6%. This means the

business getting worse at controlling its selling

expenses.

General Exp. Ratio (GER)

1,052,06920,195,789

×100

= 5.2%

1,075,82019,972,948

×100

= 5.39%

During the 2012 to 2013 period, the GER has

increased from 5.2% to 5.39%. This means the

business getting worse at controlling its general

expenses.

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Financial Exp. Ratio (FER)

1,009,22020,195,789

×100

= 4.99%

1,001,29319,972,948

×100

= 5.01%

During the 2012 to 2013 period, the FER has increase from 4.99% to 5.01%. This means the business getting

better at controlling financial expenses.

Stability Ratios

2012RM’000

2013RM’000

Interpretation

Working Capital (WCR)

51,623,31315,932,809

= 3.24:1

20,719,3798,109,706

= 2.55:1

During the 2012 to 2013 period, the WCR decrease from 3.24:1 to 2.55:1. This

means that the business ability to pay current

liabilities with current asset getting worst. In addition, the

business satisfy minimum requirement of 2:1.

Total Debt (DR)

37,244,05751,623 ,313

×100

= 72.15%

38,061,74953,619,494

×100

= 70.98%

During the 2012 to 2013 period, the DR decrease from

72.15% to 70.98%. This means that the business total debt has reduced. However, it is still over the maximum

limit of 50%.

Stock Turnover (STR)

365÷[ 15,965,415882,228 ]

= 20.17 days

365÷[ 15,816,569910,611 ]

= 21.01 days

During the 2012 to 2013 period, the STR has

increased from 20.17days to 21.01days. This means the

business is selling inventories slower.

Debtor Turnover

(DTR)

365÷[ 10,097,8943,547,580 ]

= 128 days

365÷[ 9,986,4743,607,394 ]

= 132 days

During the 2012 to 2013 period, the DTR has increase from 128 days to 132 days.

This is means the business is collecting debts slower.

Interest Coverage

(ICR)

2,847,0751,001,293

= 2.84 times

2,983,3101,009,220

= 2.96 times

During 2012 to 2013 period, the ICR has increase from

2.84 times to 2.96 times. This means the business ability to pay its interest is stronger. In

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addition, it does not satisfy the minimum requirement of

5 times.

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P/E Ratio

P/E Ratio

¿ Current Share PriceEarning SharePrice

¿ 1.740.12

= 14.5

The P/E Ratio for YTL Corporation Berhad is 14.5. This is means investor need to wait for 14.5 years to recoup this investment.

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Investment Recommendation

A) ProfitabilityDuring the 2012 to 2013 period, YTL Corporation Berhad had experienced a bad profitability since Return on Equity was decreased from 13.64% to 12.33%. This means the owner was getting less from her/his investment. Although YTL Corporation Berhad had experienced bad profitability during the year, but Net Profit Margin was increased from 9.09% to 9.24% while Gross Profit Margin was decreased 0.14% which means they were getting work at controlling overall expenses and Cost of Goods Sold. Conversely, Selling Expenses, General Expenses and Financial Expenses Ratio increased 0.03%, 0.19% and 0.02% in the year. This means the business is getting better at controlling Financial Expenses.

B) StabilityYTL Corporation Berhad has strong Financial Stability. This is because they satisfied the minimum requirement of 2:1 for Working Capital. Besides, for Interest Coverage they increased 0.12 times this year which means it satisfied the minimum requirement. However, they were actually in an unsafe level for Total Debt since they were decrease by 1.17% and above 50%. In addition, they sold its inventory and collecting debts are slower and inefficient.

C) PriceThe price of YTL Corporation Berhad’s share is still considered cheap as it P/E Ratio does not over 15, which is 14.5.

In conclusion, we do not recommend investor invest this corporation due to the reason that it does not have good profitability, even though has strong financial stability and cheap share price right now.

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Appendix

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References

http://www.facebook.com/l.php?u=http%3A%2F%2Fwww.ytlcommunity.com%2Fannualreport%2Fpdf%2FYTL%2520Corporation%2520Berhad_Annual%2520Report%25202013.pdf&h=jAQFRf0QR

http://www.facebook.com/l.php?u=http%3A%2F%2Fwww.ytlcommunity.com%2Fannualreport%2Fpdf%2FYTL%2520Corporation%2520Berhad_Annual%2520Report%25202012.pdf&h=jAQFRf0QR

http://www.facebook.com/l.php?u=http%3A%2F%2Fwww.thestar.com.my%2FBusiness%2FMarketwatch%2F%3Fquote%3DYTL&h=jAQFRf0QR