Download - Ratio Analysis Final
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RATIO ANALYSIS BETWEEN IJM AND GAMUDA
Group members:
1)Syahirah
2)Nordiana
3)Helmiza
Prepared for:
Dr Noryati Ahmad
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Table of Content
IJM – Background + Time Series1
Gamuda - Background + Time Series2
Cross Sectional IJM and GAMUDA 3
Conclusion4
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TYPES OF RATIO COMPARISONS
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IJM CORPORATION BERHAD
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Background of the company
IJM CORPORATION BERHAD
Listed on the KLSE in September 1986 The founder of Jurutama and Mudajaya At that point of time IGB Corporation-listed
property company saw the synergy that a combination of IGB Construction, Jurutama and Mudajaya.
In 1982, in a friendly takeover- IGB Corporation Bhd. Acquired all the share in Jurutama and Mudajaya.
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VISION AND MISSION
Vision
To be an internationally competitive Malaysian builder of world class infrastructure and buildings.
Mission
To deliver the highest standards of performance in all ventures with the IJM Mark Of Excellence
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IJM CORE BUSINESS
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TIME-SERIES ANALYSIS
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LIQUIDITY RATIOS 2006 2007 2008 2009 2010
Current Ratio 2.32 3.69 4.20 3.26 2.86
Quick Ratio 1.64 3.60 4.01 3.16 2.68
IJM can cover about 29% of its existing 1-year debt obligations with their current liquid assets. Since the ratio is more that 1.0, it indicates that IJM has provide a larger
fund of liquid assets to meet unexpected expenses.
IJM CORPORATION
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ACTIVITY RATIOS 2006 2007 2008 2009 2010
Total Asset Turnover 0.34 0.25 0.16 0.21 0.17
Inventory Turnover 4.75 6.09 5.88 6.56 6.84
Average Collection Period 51.58 29.29 91.40 128.71 135.70
Average Age Inventory 107.03 74.73 96.66 77.13 67.69
IJM is inefficient in using its assets but IJM is good in terms of inventory turnover.
IJM CORPORATION
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FINANCIAL LEVERAGE RATIOS 2006 2007 2008 2009 2010
Debt Ratio 0.70 0.45 0.48 0.46 0.62
Debt-to-Equity Ratio 0.57 0.82 0.85 0.79 1.55
Times Interest Earned 66.30 5.89 2.26 6.95 18.05
The firm’s degree of indebtedness is greater and IJM has more financial leverage. IJM’s ability to make contractual
interest payment is higher based on Times Interest Earned at 18.05.
IJM CORPORATION
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IJM CORPORATIONPROFITABILITY RATIOS 2006 2007 2008 2009 2010
Return on Assets 5.2% 2.9% -0.3% 3.5% 1.4%
Return on Equity 4.2% 5.2% -0.4% 6.0% 3.5%
Gross Profit Margin 28.2% 19.8% 35.8% 27.9% 21.2%
Net Profit Margin 15.3% 11.6% -1.6% 16.8% 8.2%
Operating Profit Margin 0.21 0.16 0.04 0.20 0.12
Earnings per share (RM) 0.05 0.06 -0.01 0.07 0.06
IJM has a poor management of assets and unfavorable net profit margin.
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MARKET RATIOS 2006 2007 2008 2009 2010
Price Earning Ratio 69.69 73.50 -54.72 49.43 65.56
The investors are willing to pay RM65.56 for each RM1.00 of earnings. It shows that the high degree of confidence
that investors have in the firm’s future performance.
IJM CORPORATION
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TREND ANALYSIS
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Current Ratio Quick Ratio
2006 2.32 1.64
2007 3.69 3.60
2008 4.20 4.01
2009 3.26 3.16
2010 2.86 2.68
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Total Asset Turnover
Inventory Turnover
Debtors Turnover
Average Collection
Period
Average Age Inventory
2006 0.34 4.75 7.08 51.58 107.032007 0.25 6.09 12.46 29.29 74.732008 0.16 5.88 3.99 91.40 96.662009 0.21 6.56 2.84 128.71 77.132010 0.17 6.84 2.69 135.70 67.69
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Debt Ratio Debt-to-Equity Ratio
Times Interest Earned
2006 0.70 0.57 66.302007 0.45 0.82 5.892008 0.48 0.85 2.262009 0.46 0.79 6.952010 0.62 1.55 18.05
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Return on
Assets Return on
Assets
Gross Profit
Margin
Net Profit Margin
Operating Profit
Margin
Earnings per share
(RM)2006 5.2% 4.2% 28.2% 15.3% 0.21 0.052007 2.9% 5.2% 19.8% 11.6% 0.16 0.062008 -0.3% -0.4% -35.8% -1.6% 0.04 -0.012009 3.5% 6.0% 27.9% 16.8% 0.20 0.072010 1.4% 3.5% 21.2% 8.2% 0.12 0.06
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Price Earning Ratio Book Value Market Book Value Ratio
2006 69.69 1.67 2.042007 73.50 1.39 3.002008 -54.72 1.37 4.352009 49.43 1.46 2.482010 65.56 1.42 2.73
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Background of the company
GAMUDA BERHAD
Gamuda was incorporated on 6 October 1976. Listed on the KLSE on August 1992 Strategies use are, concession agreement, Joint
Venture and tariff agreement. July 2002, Gamuda signed a joint venture agreement
with MMC Engineering to jointly undertake the construction of SMART - an integrated bypass tunnel-cum-motorway in Kuala Lumpur City.
Gamuda was voted Best Asian Construction Company by Euromoney magazine.
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VISION AND VALUES Vision
We deliver innovative world-class infrastructure and homes for our customers through our core businesses in infrastructure development and construction, operation and maintenance of public infrastructure concessions, and large-scale urban township development.
Value Innovation Responsible conduct Constant improvement Taking the long view
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GAMUDA CORE BUSINESS
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LIQUIDITY RATIOS 2006 2007 2008 2009 2010
Current Ratio 2.20 1.93 1.54 1.88 2.30
Quick Ratio 2.15 1.79 1.44 1.81 2.23
Gamuda can cover about 24% of its existing 1-year debt obligations with their current liquid assets. Since the ratio is more that 1.0, it indicates that Gamuda has provide a larger
fund of liquid assets to meet unexpected expenses.
GAMUDA BERHAD
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ACTIVITY RATIOS 2006 2007 2008 2009 2010
Total Asset Turnover 0.47 0.31 0.30 0.42 0.46
Inventory Turnover 16.30 17.10 12.08 19.18 25.83
Average Collection Period 45.57 47.99 42.19 33.73 28.27
Average Age Inventory 11.76 12.57 20.24 18.55 16.20
Gamuda is efficiently used their assets to generate sales and has effectively managed its credit due to the shorter
credit terms.
GAMUDA BERHAD
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FINANCIAL LEVERAGE RATIOS 2006 2007 2008 2009 2010
Debt Ratio 0.31 0.41 0.41 0.46 0.45
Debt-to-Equity Ratio 0.46 0.70 0.68 0.86 0.83
Times Interest Earned 22.90 8.91 8.42 12.92 4.10
Gamuda has financed close to 45% of its assets with the debt. Gamuda’s ability to make contractual interest
payment is low based on Times Interest Earned at 4.10.
GAMUDA BERHAD
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GAMUDA BERHADPROFITABILITY RATIOS 2006 2007 2008 2009 2010
Return on Assets 12.6% 7.1% 5.5% 8.2% 4.8%
Return on Equity 13.3% 7.9% 7.5% 10.9% 6.4%
Gross Profit Margin 18.2% 9.5% 8.1% 11.6% 5.4%
Net Profit Margin 19.4% 14.8% 14.8% 14.1% 7.5%
Operating Profit Margin 0.19 0.11 0.11 0.13 0.07
Earnings per share (RM) 0.36 0.21 0.22 0.16 0.10
Gamuda Berhad generates profits at average level with respect to its level of sales, assets and owner’s
investment.
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MARKET RATIOS 2006 2007 2008 2009 2010
Price Earning Ratio 6.11 9.36 18.83 16.76 27.37
The amount that investors are willing to pay for each RM of Gamuda’s earning is high level and boost up the
confidence level among investors.
GAMUDA BERHAD
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TREND ANALYSIS
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Current Ratio Quick Ratio
2006 2.20 2.15
2007 1.93 1.79
2008 1.54 1.44
2009 1.88 1.81
2010 2.30 2.23
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Total Asset Turnover
Inventory Turnover
Debtors Turnover
Average Collection
Period
Average Age
Inventory
2006 0.47 16.30 8.01 45.57 11.762007 0.31 17.10 7.61 47.99 12.572008 0.30 12.08 8.65 42.19 20.242009 0.42 19.18 10.82 33.73 18.552010 0.46 25.83 12.91 28.27 16.20
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Debt Ratio Debt-to-Equity Ratio Times Interest Earned
2006 0.31 0.46 22.90
2007 0.41 0.70 8.91
2008 0.41 0.68 8.42
2009 0.46 0.86 12.92
2010 0.45 0.83 4.10
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Return on
Assets Return on
Equity
Gross Profit
Margin
Net Profit Margin
Operating Profit Margin
Earnings per share (RM)
2006 12.6% 13.3% 18.2% 19.4% 0.19 0.362007 7.1% 7.9% 9.5% 14.8% 0.11 0.212008 5.5% 7.5% 8.1% 14.8% 0.11 0.222009 8.2% 10.9% 11.6% 14.1% 0.13 0.162010 4.8% 6.4% 5.4% 7.5% 0.07 0.10
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Price Earning Ratio Book Value Market Book Value Ratio
2006 6.11 3.00 0.73
2007 9.36 3.04 0.64
2008 18.83 3.05 1.34
2009 16.76 1.54 1.77
2010 27.37 1.60 1.65
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CROSS-SECTIONAL ANALYSIS
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CROSS SECTIONAL FOR 2010
• Gamuda is better than IJM in managing its assets and equity to generate profits.
The net profit margin of IJM is higher than Gamuda.
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• Investors were paying higher in IJM at RM65.56 than Gamuda which is only at RM27.37 for each RM1.00.
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• IJM is better than Gamuda in terms of financial leverage.
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• Gamuda is much better than IJM in terms of managing its assets and inventory to generate sales.
• Gamuda is also taking shorter time for collection and payment period.
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• Both companies, Gamuda and IJM have the ability to cover the debt obligations with their current liquid assets.
• As refer to the ratio, IJM is better than Gamuda in terms of liquidity.
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• The EPS in Gamuda is higher than IJM. EPS will be closely watched by investing public to indicate the successfulness of a company.
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CONCLUSION
Gamuda :1.Profitability
2.Activity3.Financial Leverage
4.Liquidity
Preferable Company: IJM
IJM :1.Profitability
2.Activity3.Financial Leverage
4.Liquidity
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