Financial Statement Analysis of Dutch Lady

I. Introduction Dutch Lady Milk Industries Berhad ("Dutch Lady Malaysia"), a aggregation accustomed in 1963, is currently arch in the business of affection branded dairy in Malaysia. The company, whose captivation aggregation is Royal FrieslandCampina–a Dutch bunch corporation, one of the bigger milk companies in the world- was the aboriginal milk aggregation in Malaysia to be listed on Bursa Malaysia, the bounded Banal Exchange in 1968. Being the arch ambassador and agent of affection dairy articles and bake-apple juices for home and consign bazaar (such as Infant formula, abounding types of milk, yogurt and bake-apple abstract drinks), Dutch Lady Malaysia has a able customer afterward and represented by able brands (such as Dutch Lady, Frisolac, Completa, Omela, Friso, and Joy). In addition, it was the aboriginal aggregation in the apple to acquaint a growing-up milk crumb accurately formulated for accouchement from ages one to three (known in Malaysia as Dutch Lady 123 and Dutch Lady 456) and is the bigger client of bounded beginning milk from the Veterinary Services Department. The aggregation receives able abutment from its captivation company. It additionally believes in artefact addition and charge to its consumers, which leads it to connected efforts to advance its processes in adjustment to serve its barter with high-quality alimental products. The aggregation gives prime considerations to Affection Ascendancy and Affection Assurance. It has always accustomed accreditation of ISO 9001 back 1995. In agreement of aliment safety, it applies the HACCP (Hazard Analysis Critical Ascendancy Point) Arrangement to all its plants. Meanwhile, for its Environmental Administration Arrangement it has in abode ISO 14001 and OHSAS 18001 (Occupational Health and Assurance Assessment Series). The Company’s articles are all halal-certified. With a branch amid in Petaling Jaya that employs 600 Malaysians, Dutch Lady Malaysia fabricated an anniversary acquirement of RM692 actor in 2009. Currently, Dutch Lady Malaysia is arch in the bazaar of key milk categories such as UHT milk, Sterilised milk, and Growing-Up milk. II. Achievement Ratios II. 1. Clamminess Ratio Liquidity arrangement refers to the adeptness of the aggregation to accommodated its abbreviate appellation obligation. There are eight types of clamminess ratio: 1. Alive Basal Arrangement = Accepted Assets – Accepted Liabilities 2009 2010 2011 = 193,784 – 96,855= 96,929 = 234,244 – 106,261=127,983 = 324,466 – 135,309= 189,157 2. Accepted Arrangement = Accepted AssetsCurrent Liabilities 2009 2010 2011 = 193,78496,856=2 :1 = 234,244106,261 =2. 2 :1 = 324,466135,309 =2. 39 :1 3. Acid Test Arrangement = Quick AssetsCurrent Liabilities 2009 2010 2011 = 136,23296,855=1. 4 :1 =161,522106,261 =1. 52 :1 =230,978135,309 =1. 7 :1 4. Annual Receivable About-face = Sales on AccountAverage Accounts Receivable 2009 2010 2011 = 691,847(94,369+122,858)/2=6. 36 times = 696,625(75,176 + 94,369)/2=8. 22 times = 810,647(36,714 + 75,176)/2 =14. 56 times 5. Annual About-face = Cost of Goods SoldAverage Inventory 2009 2010 2011 = 462,510(57,552+74,902)/2= 6. 98 times = 447,961(72,722+57,552)/2=6. 88 times = 506,175(93,448+72,722)/2=6. 09 times 6. Canicule Sales Uncollected = Ending Accounts Receivable(Debtor About-face Ratio) Net Sales 2009 2010 2011 =94,369691,847 x 365=49. 7=50 days =75,176696,625 x 365=39. 3=39 days =36,714810,647 x 365=16. 5=16 days 7. Days’ Sales in Annual = Ending InventoryCost of Goods Sold 2009 2010 2011 =57,552462,510 x 365=45 days =72,722447,961 x 365=59 days =93,448506,175 x 365=67 days 8. Absolute Assets About-face = Net SalesAverage Absolute Assets =691,847(280,990+288,570)/2=2. 42 times =696,625(307,490 +280,990)/2=2. 37 times =810,647(398,514+307,490)/2=2. 30 times The accretion bulk of alive basal shows that Dutch Lady Milk Industries Berhad is able to abide their operations and it has acceptable banknote breeze to amuse both abbreviate appellation debt and accessible expenses. Dutch Lady Milk Industries Berhad adventures accretion self-support through its growing accepted assets compared to its accepted liabilities. The accepted arrangement and quick arrangement of Dutch Lady Milk Industries Berhad is added than the ideal ratio. The accretion allotment of both ratios is advertence Dutch Lady Milk Industries Berhad has the adeptness to pay its accepted obligations in time. From annual receivable turnover, in 2011 shows that Dutch Lady Milk Industries Berhad converts 14. 56 times from annual receivable into cash. In 2009 and 2010, the sales movement from annual to banknote is not absolutely acceptable because aloft 12 times. However, as we can see from annual about-face from 2009-2011, advertence that Dutch Lady Milk Industries Berhad annual administration techniques in 2010 and 2011 are beneath able as compared to that in 2009 because assembly affairs is beneath frequently and accomplish the cardinal of annual increase. The abatement in the absolute of days’ sales uncollected from 2009 to 2011 shows that Dutch Lady Milk Industries Berhad has an able annual payable procedures. It would account Dutch Lady Milk Industries Berhad because they would get banknote faster from their customers. The days' sales in annual admeasurement the clamminess of inventory, the operating aeon time for Dutch Lady Milk Industries Berhad in 2009 is beneath than 2010 and 2011, they alone charge 45 days, 22 canicule faster than in 2011. Technically absolute asset about-face shows how abounding times the aggregation can accomplish acquirement from every dollar asset that they have, it measures the adeptness of assets in bearing sales. In 2009, Dutch Lady Milk Industries Berhad can use their assets calmly compared to the years 2010 and 2011. II. 2. Solvency Ratio It measures the adeptness of a close to survive in the continued run. There are 4 types of solvency ratio: 1. Debt Arrangement = Absolute Liabilities Absolute Assets 2009 2010 2011 =101,005280,990x 100=35. 9 % =110,018307,490x 100= 35. 7 % =139,360398,514x 100=34. 9 % 2. Disinterestedness Arrangement = Absolute Disinterestedness Absolute Assets 2009 2010 2011 = 179,985280,990=64% =197,472307,490=64. 2% =259,154398,514=65% 3. Debt to Disinterestedness Arrangement = Absolute LiabilitiesTotal Equity 2009 2010 2011 =101,005179,985=56. 1% =110,018197,472=55. 7% =139,360259,154=53. 7% 4. Times Absorption Earned = Net Assets afore Absorption Expense and Assets ExpenseInterest Expense 2009 2010 2011 = 82,031 1=82 times = 89,2210=0 times = 139,368 919=152 times Based on the table above, Dutch Lady Milk Industries Berhad has a favorable debt ratio. There is a abatement in the allotment of 35. 9% (2009) to 34. 9% (2011), advertence that they accept a acceptable action in abbreviation the company’s assets that are contributed by creditors. Disinterestedness arrangement shows that they accept the addiction to depend added on the buyer for financing. Consequently, it is advised as a acceptable aftereffect for the investors as continued as the aggregation earns acceptable profits and maintains its performance. Debt to Disinterestedness Arrangement has decreased from 56. 1% to 53. 7% in 2009 and 2011 respectively, which agency that in 2011 for 1 RM of Dutch Aggregation endemic by the shareholders, they owe 53. 7 cents to creditors. This is a acceptable indicator that the aggregation is not adverse a chancy bearings as its business does not await on the costs on debt. The investors, therefore, may acquisition the aggregation as a able close to advance in. II. 3. Advantage Ratio It is acclimated to appraise a business’s adeptness to accomplish balance as compared to its costs and alternative accordant costs incurred during a specific aeon of time. There are 4 types of advantage ratios: 1. Gross Accumulation Allowance = Net Sales – Cost of Sales Net Sales 2009 2010 2011 =691,847-462,510691,847= 33% =710,588-447,961710,588=36% =810,647-506,175810,647=37% 2. Operating Accumulation Allowance = Net Assets Net Sales 2009 2010 2011 =82,031691,847=12% =89,221710,588=12. 5% =139,368810,647=17% 3. Acknowledgment on Absolute Assets = Net IncomeAverage Absolute Assets 2009 2010 2011 =60,400(280,990+288,570)/2=21. 21 % =63,887(307,490+280,990)/2=21. 71 % =108,082(398,514+307,490)/2=31. 1% 4. Acknowledgment on Accepted Stockholders’ Disinterestedness = Net Assets – Preferred DividendsAverage Accepted Stockholders’ Equity 2009 2010 2011 =60,400-0(179,985+161,585)/2=35. 37 % =63,887-0(197,472+179,985)/2 =33. 85 % =63,887-0(197,472+197,472)/2 =32. 35 % Based on the blueprint above, we can see the allotment of gross accumulation allowance has been accretion over the aftermost three years. It is a acceptable assurance for a company, as it is advised as a assurance of advantageous and growing company. Dutch Lady Milk Industries Berhad is able advance their arrival and outflow. It is able to accomplish a reasonable accumulation on sales by befitting its aerial costs in control. The operating accumulation allowance arrangement increases from 12% (2009) to 17% (2011), assuming that Dutch Lady Milk Industries Berhad has abundant administration abilities and operating efficiency. However, there is a abatement in the allotment of acknowledgment on absolute assets from 21. 50% to 20. 78% in 2009 and 2010 respectively. This reveals that year 2010 is beneath profitable. Acknowledgment on assets (RoA) declines from 21. 50% to 20. 78% in 2009 and 2010 respectively. This could be an indicator that Dutch Lady Milk Industries Berhad has spent abounding assets to do business. If they accept to pay a lot in adjustment to advance these assets, it will abatement the RoA alike lower back the aliment costs will abatement their earnings. In 2011, however, we can see in the table that there is an access to 27. 12%. This indicates that they appropriate beneath assets in that year. A aerial or low RoE needs to be interpreted in the ambience of a company's debt-equity relationship. The ascent allotment of RoE (Return on Equity) aloft RoA shows that Dutch Lady Milk Industries Berhad takes banking leverage. In 2010, by demography on debt, Dutch Lady added its asset to the banknote that came in. It may be a assurance that administration is application advantage to access profits and accumulation margins. So, debt amplifies RoE in affiliation to ROA. II. 4. Bazaar Anticipation Ratio For Dutch Lady Milk Industries Berhad, the bazaar affairs can be empiric from Balance per Share, Price-Earnings Ratio, and Allotment Yield. 1. Basal Balance per Allotment (EPS) = Net Assets – Preferred Assets Weighted-Average Accepted Shares Outstanding 2009 2010 2011 = 60,400,000-064,000,000= 99. 40 cent = 63,887,000-064,000,000= 99. 80 cent = 108,082,000-064,000,000= 168. 90 cent 2. Adulterated Balance per Share 2009 2010 2011 There were no adulterated balance per allotment for the company There were no adulterated balance per allotment for the company There were no adulterated balance per allotment for the company 3. Price-Earnings Arrangement (PE) = Bazaar Bulk per ShareEarnings per Share 2009 2010 2011 = 1162 cent99. 40 cent= 11. 69 times = 1754 cent99. 80 cent=17. 58 times = 2340 cent168,90 cent=13. 85 times 4. Allotment Crop = Anniversary Assets per ShareMarket Bulk per Share 2009 2010 2011 = 65. 63 cent1162 cent=5. 65% = 72. 50 cent1754 cent=4. 3% = 72. 50 cent2340 cent=3. 1% The advance of basal EPS for Dutch Lady Milk Industries Berhad from 99. 40 cents in 2009 to 168. 90 cents in 2011 is an adumbration that the aggregation can accomplish its allotment to accretion bigger accumulation every year. Adulterated balance per allotment are illustrated by the acceptance of the worst-case scenario, it agency if the aggregation announces any concoction it will abatement the disinterestedness position in every arising of added shares. Adulterated balance per allotment apparent as a bad affair for the shareholders because it will abate the bulk of the basal EPS that belongs to their stock. Thus, no adulterated EPS in Dutch Lady Milk Industries Berhad can be interpreted that there was no abridgement of the basal balance per allotment for every allotment issued. For Dutch Lady Milk Industries Berhad, the PE arrangement from 2009 to 2010 is accretion because the bazaar bulk per allotment in 2010 is college than that in 2009. Bazaar bulk per allotment indicates how abundant the bulk that bazaar banal is accommodating to pay or advertise for the share. Therefore, back the bazaar bulk is activity up, it agency that the banal is absolutely appreciated, added appeal that is accommodating to buy rather than to sell. Whereas, PE arrangement from 2010 to 2011 decreased from 17. 8 times to 13. 85 times because of the firm’s balance per allotment rises. In this case, however, the investors who already had aggregate in Dutch Lady Milk Industries Berhad are recommended to authority their stocks, because the bazaar bulk tends to rise. For abiding outlook, befitting the shares is still bigger than affairs them. However, the PE arrangement is not the alone advice to be advised in accustomed out banal investment. Thus, no adulterated EPS in Dutch Lady Milk Industries Berhad can be interpreted that there was no abridgement of the basal balance per allotment for every allotment issued. The allotment crop by Dutch Lady Milk Industries Berhad is crumbling from 5. 65% in 2009 to 3. 1% in 2011, because of the acceleration of its bazaar banal price. If the allotment crop increases because the bazaar banal bulk is falling, it will accomplish investors unhappy. Aerial yields can be a assurance of an unsustainably aerial dividend. Some investors apperceive that assets are important and usually their absorption is in accepting a abiding acknowledgment anniversary year. The Dutch Lady stockholders assume to be beneath anxious with the dividends. For them, the important things are the banal bulk acknowledgment and basal gains. III. Recommendation Improve a continued operating aeon ratio. Dutch Lady Milk Industries Berhad should access accumulating efforts on accounts receivable to ensure appropriate acquittal from customers, for examples are accepted announcement or added accumulating calls and correspondence. They can abatement bare annual by putting on sales or affairs overstock articles to resellers. Negotiate for added favorable acquittal agreement with creditors to accord the aggregation added time to pay bills after incurring backward acquittal penalties or added interest. Increase the clamminess of annual Dutch Lady Milk Industries Berhad should appraise their sales because the operating aeon in annual takes a best time than the antecedent year. If the sales not convalescent and alone in a abiding condition, it will access inventory, and occurs accident for the company, because their artefact will be expired. To break this problem, they can aggrandize to the new market/export, access their sales with advance and advertisement. Brand acquaintance is important to animate barter to buy the product. If they accomplish in convalescent sales, the aggregation not alone will accomplish added accumulation but additionally accept beneath inventory. Manage absolute asset about-face efficiently. The adeptness of absolute assets in bearing sales decreased from 2009 to 2011. Dutch Lady Milk Industries Berhad should admeasure their adeptness and amend technology to aerate the appliance of the asset. Furthermore, they additionally accept the abrasion of accepted assets, afore the book bulk of their accepted asset abbreviating they can advance animal resource/labor competencies to use the asset efficiently. Improving the price-earnings ratio. This arrangement reflected the aplomb of the shareholders to buy and accumulate Dutch Lady banal and will allure added big investors. If the aggregation can advance its accumulation appear the bazaar appeal in the banal market, and additionally advance the balance per allotment by accretion net income, it will access the price-earnings ratio. Because the college price-earnings arrangement agency added befalling for Dutch Lady to grow. This advance can abutment point 2 of the recommendations, the added they can accumulate the big investors happy, the added befalling Dutch Lady to aggrandize the market. IV. Conclusions The accretion bulk of alive basal shows that Dutch Lady Milk Industries Berhad is able to abide their operations and it has acceptable banknote breeze to amuse both abbreviate appellation debt and accessible expenses. The aggregation does not assume to face any accident of actuality clumsy to accommodated its accepted obligation. However, Dutch Lady Milk Industries Berhad has a botheration in the administration of annual system, the assembly accommodation is exceeded again the adeptness to advertise their product. Solvency arrangement shows that Dutch Lady Milk Industries Berhad prefers to accounts their business from the owner’s disinterestedness instead of debt. This is a favorable action for investors as their investments are not put in chancy situations. This is additionally favorable for creditors, as the aggregation provides them with assurance and aegis by its adeptness to agreement that it is able to pay off all the loans. Bazaar anticipation arrangement is acclimated to appraise the bazaar advance of the aggregation because this arrangement estimates the company’s anticipation and accident in earning reinvestment and administration to the shareholders. Dutch Lady Milk Industries Berhad can be a acceptable ambition for big investors as it is able to advance its bazaar allotment every year. The advance of basal EPS for Dutch Lady Milk Industries Berhad reveals the company’s adeptness to accomplish its shares to accretion bigger accumulation every year. In agreement of achievement in profitability, Dutch Lady Milk Industries Berhad has approved acceptable achievement in profitability. The aggregation has been able to advance its gross allowance over the aftermost three years as apparent in the blueprint above. The RoE tells accepted shareholders how finer their money is actuality employed. V. References: Loth, R. Advantage indicator ratios: acknowledgment on equity. Retrieved November 16, 2012, from http://www. investopedia. com/university/ratios/profitability-indicator/ratio4. asp#ixzz2CMaaeQwt Data acquired from Dutch Lady Milk Industries Berhad Anniversary Report 2009, 2010, and 2011. Draker, P. P. Banking Arrangement Analysis. Retrieved November 11, 2012, from http://educ. jmu. edu/~drakepp/principles/module2/fin_rat. pdf eHow. What Does the Allotment Crop Tell the Investors. Retrieved November 14, 2012, from http://www. ehow. com/facts_5192566_dividend-yield-tell-investor_. html

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