RATIO ANALYSIS

Liquidity Ratios:
Ratio Formula 2014(RM 2015(RM 2017(RM
‘000) ‘000) ‘000)
Current Ratio = Current Assets = 50830 = 55771 = 49358
Current Liabilities 16792 24633 18205
= 3.03 times = 2.26 times = 2.71 times
Quick Ratio = (Current Assets-Inventories) = (50830-517) = (55771-543) = (49358-497)
Current Liabilities 16792 24633 18205
= 3.00 times = 2.24 times = 2.68 times

Current Ratio
The current ratio is a liquidity ratio that measures a company's ability to pay short-
term and long-term obligations. To gauge this ability, the current ratio considers the current
total assets of a company relative to that company’s current total liabilities.
For every RM 1 of current debt, Dataprp Holdings Bhd has 3.03 times for the debt in
the year 2014 and 2.71 times in 2017, while only 2.26 times in 2015. It is not a good option to
invest at this time although there is an increase for the current ratio compared with the
previous year because if the current ratio is below 1, then the company may have problem
paying its bills on time. However, low values do not indicate a critical problem but should
concern the management.

Quick Ratio
Quick ratio evaluates the liquidity of a company by comparing its cash plus almost
cash current assets with its entire current financial obligations. It assists in verifying if the
business or company has the capacity to pay off its current liabilities by means of the most
liquid assets.
In the year 2014 and 2017, the quick ratio is 3.00 times and 2.24 times respectively
while 2.68 times in the year 2015. An increase in quick ratios generally indicates that a
company is experiencing solid top-line growth, quickly converting receivables into cash and
easily able to cover its financial obligations, where the company shows that there was an
increase in the quick ratio in the year 2017 compared to 2015.
Asset Management Ratios:
Ratio Formula 2014(RM 2015(RM 2017(RM
‘000) ‘000) ‘000)
Average Collection = 365 = 365 = 365 = 365
Period Receivable Turnover 2.0 2.73 1.90
= 183 days = 134 days = 192 days

Receivable =Sales = 54875 = 78234 = 45030

Turnover Account Receivables 27426 28691 23656
= 2.0 times = 2.73 times = 1.90 times
Inventory Turnover = Cost of goods sold = 44872 = 66076 = 36638
Inventory 517 543 497
= 86.79 times = 121.69 times = 73.72 times
Total Asset = Sales = 54875 = 78234 = 45030
Turnover Total Assets 53355 57236 50637
= 1.03 times = 1.37 times = 0.89 times
Fixed Asset = Sales = 54875 = 78234 = 45030
Turnover Net Fixed Assets 35703 32399 1279
= 1.54 times = 2.41 times = 35.21 times

Average Collection Period

The average collection period is the average number of days required to collect
invoiced amounts from customers. The measure is used to determine the effectiveness of
a company's credit granting policies and collection efforts.
A longer collection period may negatively affect the short-term debt paying
ability of the business. As we can see, in the year 2017, the average collection period is
192 days which is considered longer collection period compared to 2014 and 2015.
Having a longer collection period means that, the company needs better
communication with customers regarding their debts and the company’s expectation of
payment. Additionally, this high number may indicate that your customers may no longer
intend to pay or may be unable to pay, which is a serious problem for the company.

Receivables Turnover
The receivables turnover ratio is an accounting measure used to quantify a firm's
effectiveness in extending credit and in collecting debts on that credit. The receivables
turnover ratio is an activity ratio measuring how efficiently a firm uses its assets.
A high receivable turnover ratio indicates the company’s collection of accounts
receivable is efficient, and the company has high proportion of quality customers that pay off
their debts quickly, such as the increase from 2014 to 2015. On the other hand, a low ratio
shows that the company have poor collecting processes, a bad credit policy or none, or bad
customers or customers with financial difficulty. As the ratio decreased compared to 2015, it
is not advisable to invest in this company.
Inventory Turnover
Inventory Turnover Ratio is one of the efficiency ratios and measures the number of
times, on average, the inventory is sold and replaced during the fiscal year.
Low inventory turnover ratio is a signal of inefficiency since inventory usually has a
rate of return of zero. It also implies either poor sales or excess inventory. A low turnover
rate can indicate poor liquidity where the decreasing trend of 2017 from 2015 shows. In
contrast, high inventory turnover ratio implies either strong sales or ineffective buying. A
high inventory turnover ratio can indicate better liquidity, but it can also indicate a shortage
or inadequate inventory levels, which may lead to a loss in business. Although there is an
increase in the year 2015 compared to 2014, but still occurs loss for the company in the year
2015.

Total Asset Turnover

Asset turnover ratio determines the ability of a company to generate revenue from its
assets by comparing the net sales of the company with the total assets.
A higher asset turnover ratio implies that the company is more efficient at using its
assets. A low asset turnover ratio, on the other hand, reflects the bad management of assets by
the company. It may also indicate production or management problems. As we can conclude,
the company’s total asset turnover remained same on 2014 and 2015 while decreased in
2017, where it shows that signify excess production and bad inventory management.

Fixed Asset Turnover

Fixed assets turnover ratio is a commonly used activity ratio that measures the
efficiency with which a company uses its fixed assets to generate its sales revenue.

A high fixed assets turnover ratio indicates better utilization of fixed assets and a low
ratio means inefficient or under-utilization of fixed assets. Although the fixed asset turnover
remained same on 2014 and 2015, but there was a little increase in 2017 which indicates an
improvement for the company.
Leverage Ratios:
Ratio Formula 2014(RM ‘000) 2015(RM ‘000) 2017(RM ‘000)

Debt Ratio = (Asset–Equity) = (53355-35703) = (57236-32399) = (50637-32280)

Total Asset 53355 57236 50637
= 33.08% = 43.39% = 36.25%
Debt Equity = Total Debt = 14030 = 16134 = 13273
Ratio Total Equity 35703 32399 32280
= 39.30% = 49.80% = 41.12%
Time Interest = EBIT = (4491) = (3292) = (3064)
Earned Interest 194 366 140
= 23.15 times = 8.99 times = 21.89 times

Debt Ratio
The debt ratio is a financial ratio that measures the extent of a company’s leverage.
The debt ratio is defined as the ratio of total debt to total assets, expressed as a decimal or
percentage. It can be interpreted as the proportion of a company’s assets that are financed by
debt.
The higher the debt ratio, the more leveraged a company is, implying greater financial
risk. At the same time, leverage is an important tool that companies use to grow, and many
businesses find sustainable uses for debt.
From the table above, we can conclude that the company improved its performance a
little by decreasing its debt ratio in 2017 although there was an increase in the year 2015.

Debt Equity Ratio

Debt-to-equity ratio measure of a company's ability to repay its obligations. When
examining the health of a company, it is critical to pay attention to the debt/equity ratio. If the
ratio is increasing, the company is being financed by creditors rather than from its own
financial sources which may be a dangerous trend.
A high debt/equity ratio generally means that a company has been aggressive in
financing its growth with debt. This can result in volatile earnings because of the additional
interest expense.
On the table above, although the debt/equity ratio increased in the year 2015 from
2014, but the company managed to reduce it in 2017 where it indicates that the company is
financed by its own financial sources.

Time Interest Earned

The times interest earned ratio indicates the extent of which earnings are available to
meet interest payments. A lower times interest earned ratio means less earnings are available
to meet interest payments and that the business is more vulnerable to increases in interest
rates and being unable to meet their existing outstanding loan obligations.
 It shows that the company tried to maintain the time interest earned ratio although it
does not favour in the year 2015 where it was only 8.99 times but in the year 2017 the
company increased the time interest earned ratio to 21.89 times from 8.99 times.

Profitability Ratios:
Ratio Formula 2014(RM ‘000) 2015(RM ‘000) 2017(RM ‘000)

Gross Profit = Gross Profit x100 = 10003 x100 = 12158 x100 = 8392 x100
Margin Sales Revenue 54875 78234 45030
= 18.23% = 15.54% = 18.64%
Net Profit = Net Income = (4637) = (3370) = (3093)
Margin Sales 54875 78234 45030
= 8.45% = 4.31% =6.87%

Return on Asset = Net Income = (4637) = (3370) = (3093)

Total Asset 53355 57236 50637
= 8.69% = 5.89% = 6.11%
Return on = Net Income = (4637) = (3370) = (3093)
Equity Total Equity 35703 32399 32280
=12.99% = 10.40% = 9.58%

Gross Profit Margin

Gross profit margin is a financial metric used to assess a company's financial
health and business model by revealing the proportion of money left over
from revenues after accounting for the cost of goods sold (COGS). Gross profit margin, also
known as gross margin, is calculated by dividing gross profit by revenues. Also known as
"gross margin."
Generally, the higher the gross profit margin the better it is. An increasing gross profit
margin means that the company did well in managing its cost of sales. It also shows that the
company has more to cover for operating, financing and other costs, as the Dataprp
Holdings Bhd shows an increase of gross profit margin from 2015 to 2017.
However, as an example of negative effect such as decrease of gross profit in the
year 2015 compared to 2014. The negative effect may have occurred due to decrease in
sales volume due to increased prices.

Net Profit Margin

Net profit margin is the ratio of net profits to revenues for a company or business
segment . Typically expressed as a percentage, net profit margins show how much of each
dollar collected by a company as revenue translates into profit. 
As the data above, there was a decrease in net profit margin in the year 2015, while
a little increase in year 2017 which was 6.87%. It shows that the company is improving in
managing its company revenue. This takes concern because shareholders look at the net
profit margin closely because it shows how good a company is at converting revenue into
profits available for shareholders.

Return on assets
Return on assets (ROA) is an indicator of how profitable a company is relative to its
total assets. ROA gives a manager, investor, or analyst an idea as to how efficient a
company's management is at using its assets to generate earnings.
Return on assets is displayed as a percentage. Every RM that Dataprp Holdings BHD
invested in assets in 2014 generated 8.69% of net income. On the other hand, every RM used
to purchase assets in 2017 translated into a 6.11%. In the year 2016, ROA coupled with its
high total debt mean that the company is receiving little income, even though it is investing
high amount of capital into its operations.
Given that the company is not generating any increase in the profit per invested
capital since 2014 till 2017, this investment might not be a good option for investors.

Return on equity
The ROE is useful for comparing the profitability of a company to that of other firms
in the same industry. It illustrates who effective the company is at turning the cash put into
the business into greater gains and growth for the company and investors. The higher the
return on equity, the more efficient the company's operations are making use of those funds.
Every RM that Dataprp Holdings BHD invested in equity in 2014 generated 12.99%
of net income. Whereas, 2015 and 2017 with 10.40% and 9.58% respectively. The trend
shows that the return on equity is decreasing.
However, it is important to note that if the value of the total equity goes up, ROE goes
down, where the decrease on shareholders’ equity causes the total equity to decrease. Thus,
this is not good to invest in the bank for investors where the bank is making low profit
currently.
Market Value Ratios:
Ratio Formula 2014(RM 2015(RM 2017(RM
‘000) ‘000) ‘000)
Earnings Per Share = Net Income = (4637) = (3370) = (3093)
(EPS) Common Equity Shares 3486 3036 5070
Outstanding = 1.33 = 1.11 = 0.61
PE Ratio = Price Per Share = RM0.25 = RM0.25 = RM0.25
Earnings Per Share (1.33) (1.11) (0.61)
= (0.19) = (0.23) = (0.41)

Earnings Per Share

Earnings per share (EPS) ratio measures how many dollars of net income have been
earned by each share of common stock. It is computed by dividing net income less preferred
dividend by the number of shares of common stock outstanding during the period.  It is a
popular measure of overall profitability of the company and is usually expressed in dollars.
The public companies are required to report EPS figure on the income statement. It is
usually reported below the net income figure. The higher the EPS figure, the better it is. A
higher EPS is the sign of higher earnings, strong financial position and, therefore, a reliable
company to invest money, as we can see from the data that, Dataprp Holdings Bhd is
decreasing from the year 2014 till 2017, where the EPS is 1.33,1.11 and 0.61 respectively,
which indicates that the company is not performing well and its not advisable to invest.

PE Ratio
The price-earnings ratio (P/E ratio) is the ratio for valuing a company that measures
its current share price relative to its per-share earnings. The price-earnings ratio is also
sometimes known as the price multiple or the earnings multiple.
In general, a high P/E suggests that investors are expecting higher earnings growth in
the future compared to companies with a lower P/E. A low P/E can indicate either that a
company may currently be undervalued or that the company is doing exceptionally well
relative to its past trends as Dataprp Holdings Bhd because the PE ratio for 2014, 2015 and
2017 is (0.19), (0.23) and (0.41) respectively, where the trend shows that its decreasing.