Vous êtes sur la page 1sur 7

3.

Financial Analysis Performance

3.1 Time-series analysis

Liquidity Ratios
1.80
1.60
1.40
1.20 0.80
0.74
1.00
Time

0.80 0.50
0.60 0.44
0.35
0.40 0.83 0.76
0.20 0.38 0.46 0.53
-
2017 2016 2015 2014 2013
Year

Current ratio Acid-test ratio

Chart 3.1.1: Liquidity ratio for 5-years

The current ratio used to measure the firm's ability to meet its short-term obligation. The
acid-test ratio similar to current ratio but excludes inventory. Based on Chart 3.1.1, the
current ratio and acid-test ratio of Digi along 5-years are below 1.0. In other words, the
current liabilities are higher compared to current assets. It seems that Digi had a liquidity
crisis from 2013 to 2017 mainly in 2015 with a current ratio of 0.38 times and acid-test ratio
0.35 times. However, the inventory does not give a massive impact on the liquidity ratio of
Digi. Refer to the statements of financial position (Appendix); the current liabilities are
higher mainly due to trade and other payables. When looking further, the items under trade
and other payables shows that the significant figure is on accruals.
Noted that Digi is using debt finance to operate their company, proven by the Chart
3.1.2 where the debt-to-equity ratio keep grows from 2013 to 2017 with 4.68 times to 10.25
times respectively. We can justify that the higher accruals related to the loan and borrowings
both under current and non-current liabilities because of accrued interest especially in the
year 2015. The company's liquidity ratio had improved year-to-year also may be because of
the reclassification of loan and borrowings from current liabilities to non-current liabilities.
On the overall, the liquidity ratio below than 1.0 due to accrued interest not because of the
company fail to meet their short-term obligation to pay the trade creditors.

Debt Ratios
80.00
70.00 69.60
60.00
50.00 50.24
42.06
Time

40.00
30.00 29.67
20.00
15.99
10.25
10.00 9.59 7.98 5.27 4.68
-
2017 2016 2015 2014 2013
Year

Time Interest Earned Debt-to-equity

Chart 3.1.2: Debt ratio for 5-years

The debt-to-equity ratio also known as gearing ratio that used to evaluate the firm's
financial leverage. Also, it measures the firm's financing method whether through debt or
wholly equity. Debt-to-equity ratio often associated with high risk, especially in term of the
ability of shareholder equity to cover all outstanding mortgages in the event of if the
company is liquidated. The increased in debt-to-equity ratio from 4.68 times to 10.25 times in
2013 to 2017, indicates that Digi has been aggressive in financing its growth with debt.
The interest expenses keep incline from 69.60 times to 15.99 times from 2014 to 2017
as shown by the time interest earned ratio. Supported by the Chair of the Board's statement
that in 2017, Digi ventured into Islamic financing by established Sukuk Programmes of
RM5.0 million to finance capital expenditure, working capital and other general funding
necessities in help of future development opportunities. Higher ratio of debt-to-equity is
unfavorable to the shareholder because the risk faced by them is higher than the debt holder.
Since the priority of paying interest may cause, the dividend has to be reduced.
Profitability Ratios
80.0%
76.1% 75.1%
70.0% 70.6% 70.1% 69.7%
60.0%
Percentage %

50.0%
40.0% 38.2%
33.4% 35.1% 34.2% 32.4%
30.0% 28.9%
23.3% 24.7% 24.9% 25.3%
20.0%
10.0%
0.0%
2017 2016 2015 2014 2013
Year

Gross Profit Margin Operating Profit Margin


Net Profit Margin

Chart 3.1.3: Profitability ratio for 5-years

Gross profit margin measures the percentage of each dollar remaining after the firm
has paid for its goods. Based on Chart 3.1.3, Digi manages to improve the gross profit margin
to uplift year-to-year from 69.7% to 76.1% in 2013 to 2017 as a result of lower traffic cost,
contradicted with operating profit margin and net profit margin. The fluctuation of operating
and net profit margin shown by Chart 3.1.3 takes place every year but yet insignificant
changes. Dropped in the year 2013 and 2015 were due to a decrease in the cost of sales and
administrative expenses lower than the decline in revenue. In 2017, again both operating and
net profit margin declined by 1.7% and 1.4% respectively mainly because of the obligation to
pay interest as well as higher depreciation from the robust network and digital capabilities
investments as the addition in property, plant and equipment.
Total asset turnover indicates the efficiency with which the firm uses its assets to
generate sales. The reduction in total asset turnover as per Chart 3.1.4 below shown that Digi
was less efficient in using their assets to generate revenue. Although Digi invested on average
RM 240 million every year on capitalization of the provision for site decommissioning and
restoration costs but it seems does not contribute to increasing in sales. This acquisition to
support the company's core business which is to extend its 4G Plus system with more
grounded limit and quality. Digi need to relook the ability of the acquisition property, plant
and equipment to boost their revenue efficiently.
Activity Ratios - Total asset turnover

1.79
1.63
1.48
1.20
Times

1.09

2017 2016 2015 2014 2013


Year

Chart 3.1.4: Total asset turnover for 5-years

Ea rn ing p er sha re (EPS) 26.1


22.2

21.9
21.0
19.0
Sen (RM)

2017 2016 2015 2014 2013


YEAR

Chart 3.1.5: Earning per share for 5-years

Subsequent from the acquisition of debt leads to a decline in share value. Even though
EPS value remained at double-digit but yet it keeps decreasing from 2014 to 2017. It would
give the wrong impression from shareholder view as shown the company's performance was
not in a good position.
Despite using debt finance, the management of Digi could consider preparing a 5-
years financial projection to the see the capability to finance its working capital using equity.
Whilst, the cost of equity would be expensive rather than the cost of debt yet it would be
benefits to the shareholder which is less risky and could maximize the shareholder wealth.

3.2 Cross-sectional analysis

Liduidity ratios - Digi vs Maxis


0.90
0.83
0.80
0.80
0.76
0.74
0.70

0.60 0.62
0.61
0.57 0.58
0.57
0.53
0.51
0.50
0.50 0.49 0.49
Times

0.46
0.44
0.40 0.38
0.35
0.30

0.20

0.10

-
2017 2016 2015 2014 2013
Current ratio (Digi) Current ratio (Maxis)
Acid-test ratio (Digi) Acid-test ratio (Maxis)

Chart 3.2.1: Liquidity ratios - Digi and Maxis for 5-years

According to the above chart, liquidity ratios for both companies are below 1.0.
Indicates that it is typical for the telecommunication industry. The margin of liquidity ratios
of Maxis is less as compared to Digi which states that Maxis might not be able to meet their
short term obligation on time as indicated by its current ratio. Digi has a better liquidity
position compared to Maxis.
Activity ratio – Total turnover asset
Year 2017 2016 2015 2014 2013
Digi 1.0 1.2 1.4 1.6 1.79
9 0 8 3
Maxis 0.4 0.4 0.4 0.4 0.52
5 4 5 6
Table 3.2.2: Total turnover asset - Digi and Maxis for 5-years

Activity ratios enlighten us regarding the capacity of the organization to change over
its accounts mentioned in the balance sheet into cash or sales. The total turnover asset of
Maxis seems lower than Digi within 5-years. Not only that but the ratios also below 1.0.
Maxis’ efficiency of assets used to generate income is more economical as compared to Digi.
The mainly reason for Maxis was because of the acquisition of the telecommunications
licenses amounting RM10,707,381 million as part of the business combination. This asset is
classified as intangible assets.

Debt ratios
Year 2017 2016 2015 2014 2013
DIGI
Debt ratio 0.91 0.91 0.89 0.84 0.82
Times Interest 15.99 29.67 42.06 69.60 50.24
Earned
Debt to equity ratio 10.25 9.59 7.98 5.27 4.68

MAXIS
Debt ratio 0.63 0.76 0.78 0.74 0.65
Times Interest 7.50 6.82 6.25 6.75 7.97
Earned
Debt to equity ratio 1.73 3.16 3.52 2.84 1.88
Table 3.2.3: Debt ratios - Digi and Maxis for 5-years

The debt ratios of Digi is higher than Maxis. The higher the debt ratio, implies that the
company has greater financial risk. Based on the debt to equity ratio, shows that Digi has
used more debt to finance their business as compared to Maxis. Indirectly, Digi has a higher
obligation to pay interest rather than Maxis as demonstrated by the times interest earned ratio.
Profitability Ratios
Year 2017 2016 2015 2014 2013
DIGI
Gross profit margin 76.1% 75.1% 70.6% 70.1% 69.7%
Operating profit margin 33.4% 35.1% 34.2% 38.2% 32.4%
Net profit margin 23.3% 24.7% 24.9% 28.9% 25.3%
Earnings per share (EPS)
19.0 21.0 22.2 26.1 21.9
(RM sen)

MAXIS
Gross profit margin 77.5% 68.4% 68.3% 67.7% 66.0%
Operating profit margin 38.4% 37.2% 34.1% 34.1% 31.4%
Net profit margin 25.2% 23.4% 20.2% 20.5% 19.4%
Earnings per share (EPS)
28.61 26.81 23.16 22.88 23.53
(RM sen)
Table 3.2.4: Profitability ratios – Digi and Maxis for 5-years

The gross profit margin for both companies increased in slow rate from 2013 to 2017
as a result of the more gradual increase in traffic costs. Looking further to the operating and
net profit margin, Maxis shows an uplift through the five years even though in a slower rate.
Indicates that Maxis manage to monitor its administration expenses as well as taxation and
interest. Operating and net profit margin of Digi keep fluctuate and had slumped in 2017 due
to higher finance cost and depreciation cost incurred. Therefore, the probability ratios of
Maxis shows that the company is doing well as compared to Digi. The EPS of Maxis also has
higher values than Digi. A higher EPS shows more esteem since financial specialists would
pay more for the organization with higher benefit.