Table of Contents

INTRODUCTION.................................................................2
SECTION 1. COMPARISON OF YEAR ENDED 31 MARCH 2015
AND 2014 FINANCIAL REPORTS..........................................3
SECTION 2. RATIO ANALYSIS...............................................3

1. LIQUIDITY...........................................................................3
1.1. Current ratio.................................................................................. 3
1.2. Liquid ratio.................................................................................... 3
2. SOLVENCY...........................................................................4
2.1. Equity ratio.................................................................................... 4
2.2. Debt ratio...................................................................................... 4
2.3. Debt to equity ratio.......................................................................4
2.4. Interest cover ratio........................................................................4
3. WORKING CAPITAL MANAGEMENT........................................4
3.1. Inventory turnover.........................................................................4
3.2. Days sales of inventory ratio.........................................................5
3.3. Creditor days ratio.........................................................................5
4. PROFITABILITY...................................................................5
4.1. Gross profit margin........................................................................5
4.2. Net profit margin...........................................................................5
4.3. ROCE............................................................................................. 5
5. ASSET EFFICIENCY...............................................................5
5.1. Capital turnover............................................................................. 6
5.2. Asset turnover ratio.......................................................................6

SECTION 3. COMPARATIVE ANALYSIS OF COMPETITOR

PERFORMANCE KUMPULAN EUROPLUS BERHAD................6
1.
2.
3.
4.
5.

Liquidity measures..............................................................6
Solvency measures.............................................................6
Working capital management measures...............................7
Profitability ratios...............................................................7
Asset efficiency measures...................................................8

SECTION 4. KEY PERFORMANCE INDICATORS OF IJM

CORPORATION BERHAD......................................................8
SECTION 5. EVALUATION OF THE USES OF KPIS IN ASSESING
ORGANIZATION PERFORMANCE.........................................10
CONCLUSION...................................................................10
FORMULAS, DEFINITIONS AND LIMITATIONS OF APPLIED
FINANCIAL RATIOS...........................................................10
REFERENCES:..................................................................14
APPENDIX 1. RATIO CALCULATIONS FOR IJM CORPORATION
BERHAD..........................................................................14
APPENDIX 2. RATIO CALCULATIONS FOR KUMPULAN
EUROPLUS BERHAD.........................................................19

EXECUTIVE SUMMARY
This report was written with the purpose of examining IJM
Corporation Berhads overall performance of financial years ended
2014 and 2015. Ratios were used to compare FY 15 and FY 14 in
order to: determine companys ability to pay its short term
responsibilities; to measure IJMs capability to meet its long term
obligations; to see how efficiently IJM is using its assets; to assess its
stock management and to analyze IJM Corp Bhd profitability.
Next we compared IJM Corporations ratio results to one of its
competitors Kumpulan Europlus Berhad, which is also one of the
biggest conglomerates in Malaysia mostly concentrated in
construction business. Afterwards, key performance indicators for
each IJMs divisions were identified with its target summarized and
performance analyzed followed by evaluation of KPIs. By analyzing
all the ratios calculated, comparison made we came into conclusion
that IJM regressed over a year, therefore we tried to figure out the
possible reasons of the decline in each of its sectors and give
recommendations. Also we have discussed the main limitations of
using ratios to measure a companys performance.
INTRODUCTION
IJM Corporation Berhad founded in 1983 is one of the leading
conglomerates in Malaysia. With the headquarters located in
Petaling Jaya, Selangor it is one of the 823 companies listed on the
Main Market of Bursa Malaysia Securities Market, with the ticker
symbol IJM:MK.
Group structure:
Construction
Property
Industry
Plantation
Infrastructure and others
IJMs central business is construction, with the motto Excellence
through quality this year IJM Construction Sdn Bhd won the best
builder award. It also became one of the main suppliers of essential
materials for constructing not only in Malaysia but outside as well.
Its property development arm, IJM Land Berhad, recommended itself
as one of the foremost property developers in Malaysia. IJM Corp.
Bhd also operates in plantation, after the successful investment into
oil palm plantations back in 1985 it continues putting a great
amount of emphasis on this division.
IJM established its presence in 10 other countries, besides Malaysia
with its primary focus in India, China and Indonesia. In this report we
are going to measure the financial performance of this company by

analyzing the financial statements ended 31 March of present

(2015) and last (2014) years; compare and analyze IJM to its
competitor KEURO using ratio calculations and analyze a companys
key performance indicators (KPI).

SECTION 1. COMPARISON OF YEAR ENDED 31 MARCH 2015

AND 2014 FINANCIAL REPORTS.
The company stated consolidated revenue of RM 5,448,282,000 in
2015 with the biggest contributor IJM Land Bhd (property division)
taking 37% the total revenue. Nevertheless group revenue has
decreased by 9% from year of 2014, in which a company presented
outstanding performance compared to previous years with the
revenue of RM 6,006,481,000. It is mainly because of decreased
sales in Construction division by 69% in 2015 compared to previous
year.
The Groups profit before taxation saw a drastic decrease by 28%
from
RM 1,019,357,000 in 2015 to RM 1,416,314,000 recorded a year
ago. According to IJMs CEO the decrease was a result of one-off
items that were included in FY2015 which are Groups asset
monetization activities and fair value gains and losses and without
them, as Mr. Choon suggests, there would be a decline only by 5.5%
(Annual report 2015: 63). It is obvious that with a decline in PBT the
net profit will be much lower, knowing that there was no significant
change in tax expenses, in 2015 a companys total profit was for RM
362,615,000 less than it was a year before.
There are inconspicuous changes in companys assets and liabilities,
though IJMs non-current liabilities increased by 10%, quite
noticeable change occurred in bonds the number has raised twice.
Overall, a company is continuing demonstrating quite impressive
financial performance year after year. By comparing financial
reports of present and past year it is obvious that the company
regressed over a year. However if we take a look at previous years
performances, until this year IJM Corporation has been only
succeeding.
SECTION 2. RATIO ANALYSIS.
1. LIQUIDITY
Current ratio

2015
2,6

2014
2

Liquid ratio

2,4

1,9

Change
0,6 % increase
(by 30%
increase)
0,55 increase
(by 27%
3

increase)
1.1. Current ratio. IJM Corporations current ratios for present and
previous years show that it is in a good financial health, because its
current assets are twice its current liabilities. Over one year the
current ratio has increased by 30% from 2 to 2,6% making a
difference of 0,6%, however it is not necessarily a good thing (Elliot
2009: 686) it could be a sign of inefficient control over working
capital as poor stocks and accounts receivables control.
1.2. Liquid ratio. It again shows that the IJMs financial position is
in a healthy condition. In both years the company proved that it
has enough cash on hand to pay its bills. Moreover, the company
has increased its ability to pay its current liabilities by 27% since
year of 2014. It could possibly say that the company is rapidly
converting receivables into cash.
2. SOLVENCY
Equity ratio
Debt ratio
Debt to equity
ratio
Interest cover

2015
0,48
0,51

2014
0,48
0,50

1,05

1,04

5,2

7,1

Change
Stable
0,01% increase
(by 2%
increase)
0,01% increase
(by 0,96%)
1,9% decrease
36% decrease

2.1. Equity ratio. IJMs equity ratio has been stable from 2014 to
2015. Shareholders own 48 % of the assets and creditors own the
rest. This number is considered to be average and generally not so
appealing for new investors, in fact if shareholders portion was
bigger it would look more attractive for potential investors.
2.2. Debt ratio. According to Cunningham (2004: 209) if the
companys debt ratio is too high then it may not be able to borrow
money or need to pay a higher interest rate to borrow, which makes
a company to be less financially flexible. IJMs saw a little change,
growth for 0,01 %
2.3. Debt to equity ratio. Those companies with a higher ratio in
the eyes of creditors are seen as unreliable for financing their
money in and a lower debt to equity ratio is equal to stable
business. In IJM Corporation there has been an imperceptible
change over 1 year. Just like the equity ratio (which revealed that
almost half [48%] of IJMs assets are owned by investors) this ratio
has proved again that shareholders and creditors have
approximately an equal stake in the assets.
2.4. Interest cover ratio. If the companys interest cover is above
4

1.5 the companys financial position is considered to be strong (Elliot

1993: 577). Since IJMs interest cover ratios are far more than that
the company is safe and will have no hardships in paying its interest
obligations. Nevertheless, a companys interest cover ratio has
decreased twice over the year, which is a negative signal of financial
difficulty.
3. WORKING CAPITAL MANAGEMENT
Inventory
turnover
Days sales of
inventory
Creditor days

2015
6,9

2014
10,3

Changes
3,4% decrease

75 days

49 days

185 days

166 days

26 days
difference
19 days
difference

3.1. Inventory turnover. Inventory turnover of 6,9% in 2015

means that IJM sold its inventory 6,9 times during the year,
compared to higher inventory rate of 10,3 in 2014. The problem
could be the poor sales or too much inventory in this year.
3.2. Days sales of inventory ratio. For IJM in 2014 it took
approximately 49 days to turn its inventory into cash, but a year
later it took almost 2 times more than before. We hypothesize that
the reason for increase was the fact that in 2015 sales were slower,
also a company bought more inventory, RM000 191,110 worth
more in 2015 compared to the last year.
3.3. Creditor days ratio. For such a huge conglomerate creditor
days shown above considered to be pretty commendable. Even
though there is a 19 days increase from year of 2014, knowing that
IJM has increased its quick ratio over a year, allowing a company to
pay its short-term obligations quickly, the only reason for the
increased creditor days could be again worsened sales. It is very
important for a company to pay its suppliers in time otherwise it
would lead to supply problems.
4. PROFITABILITY
2015

2014

Gross profit
margin

18%

24%

Net profit margin

13%

17,9%

ROCE

6,6%

10,2%

Change
6% decrease
(25%
decrease)
4,95%
decrease
(36,8%
decrease)
3,6% decrease
5

(54,5%
decrease)
4.1. Gross profit margin. The IJM Corporation experienced a
perceptible drop over a year, thus making a company retain less on
each ringgit of sales to spend on its obligations. Even though the
cost of goods in 2014 was higher, it still shows better results in
gross profit margin compared to present year results. The decline
could probably be explained by poorer sales performed in 2015 with
difference of RM000 558,199
4.2. Net profit margin. We can see that there is a slight regress
from previous year, a decrease of 4,95%. Roughly speaking, in
previous year 17% from every ringgit in revenue was profit,
compared to 13% in 2015.
4.3. ROCE. The most attractive ROCE for investors is when its high
and stable (Elliot 2009:684). We see a significant decrease in the
IJMs ROCE of 3,6% compared to last year, when a company made
profits of 10 cents from every ringgit invested in capital employed.
5. ASSET EFFICIENCY
2015

2014

Change

Capital turnover 0,7

1,2

Asset turnover

0,32

0,5% decrease
(by 71 % decrease)
0,05% decrease
(by 18 % decrease)

0,27

5.1. Capital turnover. In this present year IJM could not use its
working capital as efficiently as it did last year and suffered an
evident decrease. This could be explained by higher investment into
stocks a company did in this year compared to last year.
5.2. Asset turnover ratio. Asset turnover ratios for construction
companies tend to be lower and since IJMs core business is
construction 0,27 and 0,32 are average. A decrease of 0,05% a
company has experienced since last year.
SECTION 3. COMPARATIVE ANALYSIS OF COMPETITOR
PERFORMANCE KUMPULAN EUROPLUS BERHAD.
KEB or KEURO has been incorporated only in 2000 and in 3 years it
has been in a Bursa Malaysia List; its core business is construction.
The company has divisions similar to IJMs.
1. Liquidity measures

KEURO
Current ratio
Liquid ratio

2015
5,93
5,91

2014
0,57
0,56

Change
5,36% increase
5,35%

IJM saw an imperceptible increase in its current ratio of 0,6% in 2015

as compared to KEURO, which have experienced a drastic change,
an increase of 5,36%. It could be an index of improvement of
KEUROs capability to better settle their current liabilities than its
competitor IJM, nonetheless KEUROs current ratio considered to be
too high, which is a negative factor.
Liquid Ratio: IJM has experienced an increase of 0,55% and its liquid
ratio is above 1% in both 2015 and 2014 years (2,4% and 1,9%
respectively) proving that they are able to pay long-term debts. In
case of KEURO it exceeded its liquid ratio to more than 5% flashing
a sign of inefficiency, even though it has enough assets to create
more projects, they fail to utilize them.
2. Solvency measures
KEURO
Equity ratio
Debt ratio
Debt to equity ratio
Interest cover

2015
0,88
0,11
0,13
7,76

2014
0,41
0,58
1,43
3,38

Change
47% increase
47% decrease
1,3% decrease
4,38% increase

IJM has demonstrated stable equity ratio, though KEURO boosted it

by 47%. This means that both companies are getting investments
but KEURO have attained slightly higher investments as compared
to IJM. However both companies give a bigger slice to shareholders
rather than to creditors.
The debt ratio of IJM had a slight increase from 0,51% from last
years 0,5% and it is a negative sign, because it generally accepted
to be less than 0.5%. In case of KEURO it has dropped percentage of
assets provided by creditors from 0,58 to 0,11% freeing themselves
from future responsibilities.
IJM has increased its debt to equity ratio by imperceptible 0.01%.
However its competitor KEURO has decreased to 0.13% from 1.43%,
making themselves more appealing for investors.
IJMs interest cover decreased by 1,9%, however KEURO had the
opposite experience an increase by 4,48%. Which illustrates
KEUROs surpass over IJM in paying its interests.
3. Working capital management measures
KEURO
Inventory
turnover

2015
8,67

2014
8,90

Changes
0,23%
decrease
7

Days sales of
inventory

44 days

50 days

6 days less

IJM group decreased its ability to supply its goods quickly by 3,4% as
compared to KEURO, which also saw a decrease but only by 0,23%.
IJM is facing more inventory cost as compared to previous year. This
means their operational efficiency has decreased.
In 2015 IJM took 26 more days to turn over its inventory compared
to year of 2014. However, for KEURO number of days sales of
inventory only went down from 50 days to 44 because sales of
goods increased.
4. Profitability ratios
KEURO

2015

2014

Gross profit
margin
Net profit margin

5,21%

21,7%

4,95%

17,84%

ROCE

6,08%

19,5%

Change
16,49%
decrease
12,89%
decrease
13,42%
decrease

IJMs gross profit margin has decreased by 6% as compared to

KEUROs reasonable decrease of 16,49%, portraying a decline in its
total profits.
IJM and KEURO have both shown a decrease in their net profit
margin by 4,95% and 1,89% respectively. Both companies have
failed to manage their expenses, although second companies
change is more sensible.
ROCE or earning of per ringgit of capital has decreased for both IJM
and KEURO by 3,6% and 13,42% respectively. This numbers suggest
that IJM is much more efficient in employing capital than KEURO.
5. Asset efficiency measures
KEURO
Capital
turnover
Asset turnover

2015

2014

Change

4,17%

-13.61%

2,45%

3,4%

17,78%
increase
9,5% decrease

IJMs insensible decrease in capital turnover of 0,5% and KEUROs

increase by 17,78% experienced between 2015 to 2014 proves that
IJMs competitors management has become more efficient in using
its short term assets and liabilities to support sales.

IJM and KEURO have shown a decrease in asset turnover by 0,05%

and 0,95% respectively. Worsening its efficiency in using assets
could be linked to production or management problems.
SECTION 4. KEY PERFORMANCE INDICATORS OF IJM
CORPORATION BERHAD
Key Performance Indicator is used to measure a companys
strategies and goals, it tells us what structure divisions of the
company have progressed and which ones have regressed. The IJM
Group comprises of four divisions through which they generated
their KPIs.
Division
Construction

Property

Target
The Construction
division has acquired
the order of projects
worth RM 7.0 billion
in FY 15. The major
projects secured are:
West Coast
Expressway (RM
2,828.00 million),
New Deep Water
Terminal at Kuantan
Port Phase 1 (RM
1,188.03 million),
Radia - Mixed
Development project
in Bukit Jelutong (RM
435.34 million),
Potpourri
Commercial
Development project
in Ara Damansara
(RM 355.68 million),
Commercial
Development project
in Damansara Utama
(RM 396.00 million)
and Puteri Cove
Residences Mixed
Development project
in Johor Bahru (RM
538.50 million).
In the coming
financial year, the
property division has
planned to work on
new projects in

Performance
The construction
division of the
company has
achieved revenue of
RM 1224.31 million &
PBT of 184.84 million
against RM 2080.8
million & RM 168.17
million in 2014. This
resulted in 41%
decrease in revenue
and 10% increase in
terms of PBT. Higher
PBT was due to the
better profit margins
which were derived
from the completion
of several projects
such as: PERKESO
Rehabilitation Centre,
Platinum Park Phase
3, EMU Depot,
Jelutong Expressway,
Stage 3 and Pahang
Selangor Raw Water
Transfer.

This division made

revenue of RM
2,203.42 million in
the FY 15, which is
slightly less than FY

Penang, Klang Valley

and Johor. This
division also plans on
launching affordable
products to increase
their revenue.

Industry

The target is to focus

on Tier. A contractors
of scaffolding
business and to
increase revenue by
26% and PBT by 7%

Plantation

To sustain this
division by higher
crop production
through exploring
more areas for
plantation in
Indonesia and make
use of them.

14 revenue of RM
2,224.96 million. PBT
of FY 15 was RM
494.66 million which
showed a decline of
34% as compared to
financial year of
2014 PBT of RM
748.66 million.
Industry division
achieved revenue of
RM 926.77 million
and PBT of RM
125.60 million in FY
15. Their core
product PSC
(Pretensioned Spun
Concrete) faced high
competition this year.
Nevertheless the
revenue from PSC
increased by 2% and
the PBT dropped by
17% as compared to
FY 14.
In FY 15 the revenue
of this division
experienced an
increase of 3% (RM
667.67 million) as
compared to the
financial year of
2014 (RM 646.98
million) due to higher
sales volume. On the
other hand the PBT
was declined by 18%
as compared to
previous year, due to
the fluctuation of
foreign exchange.

SECTION 5. EVALUATION OF THE USES OF KPIS IN ASSESING

ORGANIZATION PERFORMANCE
Construction Division: Together with the government of Malaysia the
construction division has acquired high order book and in-house jobs
worth RM 7 billion. Due to the increase in governments
infrastructure spending, this division will be benefited due to the
high demand of building materials.
10

Property Division: In the upcoming year the property divisions

performance is expected to be satisfactory due to the upcoming
projects. These projects are at strategic locations and are expected
to generate a handsome amount of revenue.
Industry Division: The path to achieve the target is vague as there
are no specific projects have been mentioned to achieve the growth
in revenue and PBT.
Plantation Division: This division has planned to sustain by
increasing crop production through using areas of Indonesia that are
fertile and are available for plantations.
Plantation Division: This division has planned to sustain by
increasing crop production through using areas of Indonesia that are
fertile and are available for plantations.
CONCLUSION
From our analysis we found out that IJM Group did not perform well
as compared to the previous year. Revenue and the profit before tax
of the group declined by 9% and 28% respectively. This is mainly
due to the high decrease in sales (69%) of the Groups Construction
Division. Another reason for the Groups loss was environmental
factor, the drop in the exchange rate. Their competitor, KEURO has
performed better compared to their previous year. This group is
much younger, however already giving outstanding performance.
IJM needs to acquire more order books through strengthening their
capabilities and by increasing their resources, so they can meet
their customers requirements. IJM needs to concentrate on their
domestic growth and try to acquire more international projects to
increase their revenue, which is essential for their growth in the
coming years. Nevertheless the company already has big projects in
their pipeline. Most of them are long-term projects that will
contribute to the Groups earnings in coming years.
FORMULAS, DEFINITIONS AND LIMITATIONS OF APPLIED
FINANCIAL RATIOS
Name
Current
ratio

Formula
Current assets
Current liabilities

Definition
Helps to
understand the
liquidity of a
company and
measures the
ability to pay
back its shortterm obligations

Limitation
In the calculation this ratio
includes inventories as well,
which in the end displays
incorrect liquidity position,
hence inventories cannot
always be considered as
liquid. For instance some
companies have large

11

using its current

assets.

inventory bases, but low

sales, as a result it adds
more % to the ratio result.

Liquid
ratio

Current assetsinventories
Current liabilities

Is used to find
out how the
company, by
using its quick
assets (cash or
anything that
can be easily
converted to
cash), can pay
its upcoming
obligations.

This ratio cant be used for

all types of businesses; the
acceptable and average
liquid ratio may vary. For
instance supermarkets
usually have very high
inventory and if the
inventory is subtracted from
current assets, it will leave a
supermarket with
considerably low quick ratio.
Another disadvantage is
that liquid ratio ignores
timing of money received
and paid out, for example a
company has no obligations
to pay today but it has bills
to pay some time later,
however the ratio is
calculated so now the
measurement of companys
liquidity is not very
accurate.

Equity
ratio

Total equity
Total assets

Measures how
much of a
companys
assets are
owned by
investors. The
high equity ratio
demonstrates to
investors that
the company is
worth their
investments,
since so many
other investors
have a faith in a
company and
already
financing their
investments in
it.

Cannot be an indicator of
companys solvency; timing
again is important here
since debts could be paid
out already before the
calculations were done, it
doesnt measure its ability
to pay those debts.
Moreover if the
shareholders portion of the
companys assets is bigger
it doesnt necessarily mean
that the company is able to
make more money for
investors in the future.

12

Debt
ratio

Total liabilities
Total assets

Presents the
percentage of
total assets
provided by
creditors.

Total liabilities are a sum of

long-term and short-term
liabilities, however longterm obligations are more
important for investors as
they look into the future
potential earnings

Debt to
equity
ratio

Total liabilities
Totalequ ity

Compares a
companys total
equity to total
debt. The lower
the ratio is the
trust worthier
the company
will be for new
investors.

Just like in the debt ratio it

includes short-term bills
which are not favorable for
investors, According to
Beirne and Dauderis some
liabilities such as operating
leases do not appear in the
current or noncurrent
liabilities, therefore it
doesnt enter the ratio
(1991: 14). It is more
focused on the total amount
of debts a company has
rather than its ability to pay
them.

Interest
cover
ratio

Profit before tax+ Interest

Interest

This ratio
determines
whether a
company can
pay its interest
on its loans in a
particular period
of time.

This is highly variable

solvency measurement;
even between the same
industries the norms can be
different sometimes some
companies with a low
interest coverage ratio but
consistent production and
sales still can cover its
interest payments without
difficulties.

Inventor
y
turnover

Net sales
Inventories

Measures how
quickly a
company uses
its supply of
goods over a
given period of
time.

High inventory turnover

may look appealing
however indicates low gross
profit, using only two figures
for calculating average
inventory turnover days
may be misleading.

Days
sales of
inventor
y

Inventories
x 365
Cost of sales

Shows how a
company
manages its
inventory, in
how many days
a company can

As Beirne and Dauderis

noted: A high turnover can
have negative
consequences if turnover
becomes so rapid that, at
any point of time, items
13

turnover its
inventory.

customers want to purchase

are out of stock (1991:
722)
Higher number doesnt
necessarily mean its
positive for an organization
it may suggest liquidity
problems

Creditor
days

Trade payables
x 365
Purchases

Gross
profit
margin

Net income
x 100
Cost of sales

Net
profit
margin

Net income
100
Net sales

Measures how
much income is
kept in a
company as
compared to the
total sales
overall efficiency
of the business.

It doesnt include the total

sales volume. Some
companies might have high
net profit margin but low
sales volume, which in the
end leads to low total profit.
As a result the companys
profitability might be
underestimated.

ROCE

Profit before tax

This ratio is used
x 100
(Total assetsCurrent liabilities)to assess how
efficiently a
company uses
its capital.

It uses past data (annual

report) and it is not always
basis for future earnings. It
should not be given too
much emphasis on this ratio
by investors; the analysis of
the key profitability ratios
should be carried out.

Capital
turnover

Net sales
Money a
business
has in
(Current assetsCurrent liabilities
)
hand to spend
on its operations
after paying its
bills,
demonstrates
how efficiently a
company is
turning cash into
sales.

If the ratio is too high it

could be deceptive, no
doubt it would look good,
but in reality a company
might be having a very low
working capital that might
cause a company to run out
of money to fund the
business.

Asset
turnover

Total sales
Total assets

As Elliot suggested,
Although this ratio can act
as a good guide to company

Calculates the
average number
of days a
company takes
to pay its
suppliers.
Reveals how
much income a
company makes
after paying off
its cost of sales.

Measures a
companys
ability to use its

It doesnt take all costs into

consideration, hence not
allowing measuring the total
profitability.

14

assets to
generate sales;
a higher number
is more
favorable.

performance, it can also be

misleading (2009:685).
According to him if the asset
turnover increases the
capital base will be
decreasing and in the end
the company fails to
maintain its non-current
assets (Elliot 2009).

REFERENCES:
Annual report (2015) IJM Corporation Berhad [online] available from
<http://www.ijm.com/web/investor/annualReports.aspx> [13
October 2015]
Annual report (2015) Kumpulan Europlus Berhad [online] available
from <http://klse.i3investor.com/servlets/staticfile/269330.jsp> [27
October 2015]
Beirne, T., Dauderis, H. (1991) Financial accounting. An introduction
to decision making. Orlando: Harcourt Brace Jovanovich
Elliot, B., Elliot, J. (2009) Financial accounting and reporting.
Gasport: Ashford Colour Press Ltd
Elliot, B; Elliot, J. (1993) Financial accounting and reporting.
Hertfordshire: Hall International Ltd
Cunningham, B., Nikolai, L., Bazley, J. (2004) Accounting information
for business decisions. Mason: South-Western, a division of
Thompson Learning

APPENDIX 1. RATIO CALCULATIONS FOR IJM CORPORATION

BERHAD.
1.LIQUIDITY
1.1. Current ratio

15

Current ratio =

Current assets
Current liabilities

Current assets (2015) = 11,182,930

Current assets (2014) = 9,360,524
Current liabilities (2015) = 4,300,102
Current liabilities (2014) = 4,554,233
Current ratio (2015) =

11, 182, 930

4,300, 102

2.60061971

Current ratio (2014) =

9,360, 524
4, 554,233

= 2.05534587

1.2. Liquid ratio

Liquid ratio =

Current assetsinventories
Current liabilities

Current asset (2015) = 11,182,930

Current asset (2014) = 9,360,524
Inventories (2015)= 783,912
Inventories (2014)= 592,802
Current liabilities (2015) = 4,300,102
Current liabilities (2014) = 4,554,233
Liquid ratio (2015) =

11,182,930783,912
=2.41831891
4,300,102

Liquid ratio (2014) =

9,360,524592,802
=1.92518082
4,554,233

2. SOLVENCY
2.1. Equity ratio
Equity ratio =

Total equity
Total assets

Total equity (2015) = 9,575,537

Total equity (2014) = 8,950,272
Total assets (2015) = 19,730,689
Total assets (2014) = 18,398,468
Equity ratio (2015) =

9,575,537
19,730,689

= 0,48531184

16

8,950,272
18,398,468

Equity ratio (2014) =

= 0,48646833

2.2. Debt ratio

Debt ratio =

Total liabilities
Total assets

Total liabilities (2015) = 10,071,865

Total liabilities (2014) = 9,317,543
Total assets (2015) = 19,730,689
Total assets (2014) = 18,398,468
Debt ratio (2015) =

10,071,865
19,730,689

= 0,51046697

Debt ratio (2014) =

9,317,543
18,398,468

= 0,50643037

2.3. Debt to equity ratio

Debt to equity ratio =

Total liabilities
Total equity

Total liabilities (2015) = 10,071,865

Total liabilities (2014) = 9,317,543
Total equity (2015) = 9,575,537
Total equity (2014) = 8,950,272
Debt to equity (2015) =

10,071,865
9,575,537

Debt to equity (2014) =

9,317,543
= 1,04103462
8,950,272

= 1,05183292

2.4. Interest cover

Interest cover =

Profit before tax+ Interest

Interest

Profit before tax (2015) = 1,019,357

Profit before tax (2014) = 1,416,314
Interest (2015) = 242,682
Interest (2014) = 231,195
Interest cover (2015) =

1,019,357+ 242,682
242,682

= 5,20038157

17

Interest cover (2014) =

1,416,314 +231,195
231,195

= 7,12605809

3. WORKING CAPITAL MANAGEMENT

3.1. Inventory turnover
Inventory turnover =

Net sales
Inventories

Net sales (2015) = 5,448,282

Net sales (2014) = 6,006,481
Inventories (2015)= 783,912
Inventories (2014)= 592,802

Inventory turnover (2015) =

5,448,282
783,912

= 6,9501194

Inventory turnover (2014) =

6,006,481
592,802

= 10,1323562

3.2. Days sales of inventory

DSI =

Inventories
x 365
Cost of sales

Inventories (2015)= 783,912

Inventories (2014)= 592,802
Cost of sales (2015) = 3,767,422
Cost of sales (2014) = 4,346,179
DSI (2015) =

783,912
x 365=
3,767,422

DSI (2014) =

592,802
x 365= 49,7845878
4,346,179

75,9479241

3.3. Creditor days

Creditor days =

Trade payables
x 365
Purchases

Trade payables (2015) = 2,014,477

Trade payables (2014) = 2,038,086
Purchases = Cost of sales + Closing stock Opening stock

18

Purchases (2015) = 3,958,532

Purchases (2014) = 4,457,180
Creditor days (2015) =

2,014,477
x 365=
3,958,532

Creditor days (2014) =

2,038,086
x 365= 166,899562
4,457,180

185,746662

4. PROFITABILITY
4.1. Gross profit margin
Gross profit margin =

Net income
x 100
Cost of sales

Net income (2015) = 713,041

Net income (2014) = 1,075,656
Cost of sales (2015) = 3,767,422
Cost of sales (2014) = 4,346,179
Gross profit margin (2015) =

713,041
x 100=18,926497
3,767,422

Gross profit margin (2014) =

1,075,656
x 100=24,749464
4,346,179

4.2. Net profit margin

Net profit margin =

Net income
100
Net sales

Net income (2015) = 713,041

Net income (2014) = 1,075,656
Net sales (2015) = 5,448,282
Net sales (2014) = 6,006,481
Net profit margin (2015) =

713,041
100
5,448,282

= 13.0874466

Net profit margin (2014) =

1,075,656
100
6,006,481

= 17.9082561

4.3 ROCE

19

ROCE =

Profit before tax

x 100
(Total assetsCurrent liabilit ies)

Profit before tax (2015)= 1,019,357

Profit before tax (2014) = 1,416,314
Total assets (2015) = 19,730,689 current liabilities= 15,430,587
Total assets (2014) = 18,398,468 current liabilities= 13,844,235
Current liabilities (2015) = 4, 300, 102
Current liabilities (2014) = 4, 554, 233
ROCE (2015) =

1,019,357
x 100
(19,730,6894,300, 102)

= 6,606081

ROCE (2014) =

1,416,314
x 100
(18,398,4684,554, 233)

= 10,230352

5. ASSET EFFICIENCY
5.1. Capital turnover
Capital turnover =

Net sales
(Current assetsCurrent liabilities )

Net sales (2015) = 5,448,282

Net sales (2014) = 6,006,481
Current asset (2015) = 11,182,930
Current asset (2014) = 9,360,524
Current liabilities (2015) = 4,300,102
Current liabilities (2014) = 4,554,233
Capital turnover (2015) =

5,448,282
= 0,79157608
11,182,9304,300,102

Capital turnover (2014) =

6,006,481
= 1,2497123
9,360,5244,554,233

5.2. Asset turnover

Asset turnover =

Total sales
Total assets

Net sales (2015) = 5,448,282

Net sales (2014) = 6,006,481
Total assets (2015) = 19,730,689
Total assets (2014) = 18,398,468

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Asset turnover (2015) =

5,448,282
19,730,689

= 0,27613237

Asset turnover (2014) =

6,006,481
18,398,468

= 0,32646637

APPENDIX 2. RATIO CALCULATIONS FOR KUMPULAN

EUROPLUS BERHAD.
1.LIQUIDITY
1.1.Current Ratio
Current ratio =

Current assets
Current liabilities

Current Assets (2015) = 533,947

Current Assets (2014) = 138,872
Current Liabilities 2015 = 89,922
Current Liabilities 2014 = 244,105
Current ratio (2015) =

533,947
89,922

5.93

Current ratio (2014) =

138,872
241,405

= 0.57

1.2.Liquid Ration
Liquid ratio =

Current assetsinventories
Current liabilities

Current asset (2015) = 533,947

Current asset (2014) = 138872
Inventories (2015) = 2,133
Inventories (2014) = 1,562
Current liabilities (2015) = 89,922
Current liabilities (2014) = 241,105
Liquid ratio (2015) =

533,9472,133
=5.91
89,992

Liquid ratio (2014) =

133,8721.562
=0.56
241,105

2. SOLVENCY
21

2.1.Equity Ratio
Equity ratio =

Total equity
Total assets

Total equity (2015) = 665,179

Total equity (2014) = 168,290
Total assets (2015) = 755,333
Total assets (2014) = 409,639
Equity ratio (2015) =

665,179
755,333

Equity ratio (2014) =

8,950,272
18,398,468

= 0.88
= 0.41

2.2.Debt Ratio
Debt ratio =

Total liabilities
Total assets

Total liabilities (2015) = 90,154

Total liabilities (2014) = 241,349
Total assets (2015) = 755,333
Total assets (2014) = 409,639
Debt ratio (2015) =

10,071,865
19,730,689

= 0.11

Debt ratio (2014) =

9,317,543
18,398,468

= 0.58

2.3.Debt to Equity Ratio

Debt to equity ratio =

Total liabilities
Total equity

Total liabilities (2015) = 90,154

Total liabilities (2014) = 241,349
Total equity (2015) = 665,179
Total equity (2014) = 168,290
Debt to equity (2015) =

90,154
665,179

Debt to equity (2014) =

241,349
= 1.43
168,290

= 0.13

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2.4.Interest Cover
Interest cover =

Profit before tax+ Interest

Interest

Profit before tax (2015) = 40,485

Profit before tax (2014) = 32,869
Interest (2015) = 5,985
Interest (2014) = 13,783
Interest cover (2015) =

40,485+5,985
5,985

Interest cover (2014) =

32,869+13,783
13,783

= 7.76
= 3.38

3. WORKING CAPITAL MANAGEMENT

3.1.Inventory turnover
Inventory turnover =

Net sales
Inventories

Net sales (2015) = 18,500

Net sales (2014) = 13,910
Inventories (2015) = 2,133
Inventories (2014) = 1,562
Inventory turnover (2015) =

18,500
2,133

= 8.67

Inventory turnover (2014) =

13,910
1,562

= 8.90

3.2.Days sales of inventory

DSI =

Inventories
x 365
Cost of sales

Inventories (2015) = 2,133

Inventories (2014) = 13,910
Cost of sales (2015) = 17,584
Cost of sales (2014) = 11,429
DSI (2015) =

2,133
x 365=
13,910

DSI (2014) =

13,910
x 365= 50 days
11,429

44 days

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PROFITABILITY
4.1.Gross profit margin
Gross profit margin =

Net income
Cost of sales

Net income (2015) = 916

Net income (2014) = 2481
Cost of sales (2015) = 17,584
Cost of sales (2014) = 11,429
Gross profit margin (2015) =

916
=5.21
17584

Gross profit margin (2014) =

32,869
=21.7
11,429

4.2. Net profit margin

Net profit margin =

Net income
100
Net sales

Net income (2015) = 916

Net income (2014) = 2,481
Net sales (2015) = 18,500
Net sales (2014) = 13,910
Net profit margin (2015) =

916
100
18,500

= 4.95%

Net profit margin (2014) =

2,481
100
13,910

= 17.84%

4.3 ROCE
ROCE =

Profit before tax

(Total assetsCurrent liabilities)

Profit before tax (2015) = 40,845

Profit before tax (2014) = 32,869
Total assets (2015) = 755,333
Total assets (2014) = 409,639
Current liabilities (2015) = 89,922
Current liabilities (2014) = 241,105

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ROCE (2015) =

40,845
(755,33389,922)

ROCE (2014) =

32,869
(755,333241,105)

= 6.08%
= 19.5%

5. ASSET EFFICIENCY
5.1.Capital turnover
Capital turnover =

Net sales
(Current assetsCurrent liabilities )

Net sales (2015) = 18,500

Net sales (2014) = 13,910
Current asset (2015) = 533,947
Current asset (2014) = 138,872
Current liabilities (2015) = 89,922
Current liabilities (2014) = 241,105
Capital turnover (2015) =

18500
= 4.17%
533,94789,922

Capital turnover (2014) =

13,910
= (13.61%)
138,872241,105

5.2.Asset turnover
Asset turnover =

Total sales
Total assets

Net sales (2015) = 18,500

Net sales (2014) = 13,910
Total assets (2015) = 755,333
Total assets (2014) = 409,639
Asset turnover (2015) =

18,500
755,333

= 2.45%

Asset turnover (2014) =

13,910
409,639

= 3.4%

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