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FINANCIAL RATIO ANALYSIS

BASIC ACCOUNTING ( FNBE 0145 )

ASSIGNMENT 1

TEE SIN YI (0315689)

LEONG CHEE MUN (0316256 )

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Report Content

Brief History of YTL

3-4

Profitability of YTL (Year 2012-2013)

5-7

P/E Ratio

8

Investment Recommendation

9

Appendix

10-13

References

14

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Brief History of YTL

YTL Corporation Berhad is one of the largest companies listed on the Bursa Malaysia, and

together with its four listed entities has a combined Market Capitalisation of about RM 30.4

billion as at 30 April 2014, and has total assets of over RM53.6 billion. The company was

listed in 1985 and has also had a secondary listing on the Tokyo Stock Exchange since 1996.

YTL was the first Asian non-Japanese company to be listed on the Tokyo Stock Exchange.

The YTL Group's core businesses are ownership and management of regulated utilities and

other infrastructural assets, serving 12 million customers in three continents.

Year 1955

The YTL Corporation (YTL Corp) was founded by Tan Sri Dato' Seri Yeoh Tiong Lay aka Dr.

Yeoh Tiong Lay in 1955.

Year 1988

His oldest son, Tan Sri Dato' Seri Francis Yeoh Sock Ping aka Dr. Francis Yeoh Sock Ping,

became the Managing Director of YTL Corp in 1988. Under the stewardship of Dr. Francis,

the YTL Group grew from a single listed entity in 1985 to a group of five listed companies.

Until now…

YTL Corporation's strategy of providing "World Class Products and services at very

competitive prices" along with its history of Innovation, has led directly to it recording a

compounded annual growth rate in Pre-tax profits of 55% over the last 15 years, and an

enviable track record of creating shareholder value. It has been paying dividends every year

since it was listed on KLSE. YTL Corporation's strategy has also resulted in it and its

subsidiaries accumulating numerous International Awards in the process.

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YTL Corporation Bhd emerged in the coveted position of being the largest non-government

linked company in the 2010 MB100 survey of Malaysia's Largest Listed Companies. YTL Corp

moved up to number five from number 20 previously, and its subsidiary YTL Power

International Bhd secured the eighth spot.

YTL Logo

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Profitability of YTL

Financial Ratio

Profitability

Ratios

2012

RM’000

2013

RM’000 Interpretation

Return on

Equity (ROE)

1,835,920

13,458,095× 100

= 13.64%

1,845,782

14,968,500× 100

= 12.33%

During the 2012 to 2013

period, the ROE has

increased from 13.64% to

12.33%. This means the

owner is getting less return

from her/his investment.

Net Profit

Margin (NPM)

1,835,920

20,195,789× 100

= 9.09%

1,845,782

19,972,948× 100

= 9.24%

During the 2012 to 2013

period, the NPM has

increased from 9.09% to

9.24%. This means the

business is getting better at

controlling its overall

expenses.

Gross Profit

Margin (GPM)

4,230,374

20,195,789× 100

= 20.95%

4,156,379

19,972,948× 100

= 20.81%

During the 2012 to 2013

period, the GPM has

decreased from 20.95% to

20.81%. This means getting

work at controlling its

COGS.

Selling Exp.

Ratio (SER)

318,146

20,195,789× 100

= 1.57%

318,667

19,972,948× 100

= 1.6%

During the 2012 to 2013

period, the SER has

increased from 1.57% to

1.6%. This means the

business getting worse at

controlling its selling

expenses.

General Exp.

Ratio (GER)

1,052,069

20,195,789× 100

= 5.2%

1,075,820

19,972,948× 100

= 5.39%

During the 2012 to 2013

period, the GER has

increased from 5.2% to

5.39%. This means the

business getting worse at

controlling its general

expenses.

Financial Exp. 1,009,220

20,195,789× 100

1,001,293

19,972,948× 100 During the 2012 to 2013

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Ratio (FER) = 4.99% = 5.01% period, the FER has increase

from 4.99% to 5.01%. This

means the business getting

better at controlling financial

expenses.

Stability

Ratios

2012

RM’000

2013

RM’000 Interpretation

Working

Capital (WCR)

51,623,313

15,932,809

= 3.24:1

20,719,379

8,109,706

= 2.55:1

During the 2012 to 2013

period, the WCR decrease

from 3.24:1 to 2.55:1. This

means that the business

ability to pay current

liabilities with current asset

getting worst. In addition, the

business satisfy minimum

requirement of 2:1.

Total Debt

(DR)

37,244,057

51,623,313× 100

= 72.15%

38,061,749

53,619,494× 100

= 70.98%

During the 2012 to 2013

period, the DR decrease from

72.15% to 70.98%. This

means that the business total

debt has reduced. However,

it is still over the maximum

limit of 50%.

Stock Turnover

(STR)

365 ÷ [15,965,415

882,228]

= 20.17 days

365 ÷ [15,816,569

910,611]

= 21.01 days

During the 2012 to 2013

period, the STR has

increased from 20.17days to

21.01days. This means the

business is selling

inventories slower.

Debtor

Turnover

(DTR)

365 ÷ [10,097,894

3,547,580]

= 128 days

365 ÷ [9,986,474

3,607,394]

= 132 days

During the 2012 to 2013

period, the DTR has increase

from 128 days to 132 days.

This is means the business is

collecting debts slower.

Interest

Coverage

(ICR)

2,847,075

1,001,293

= 2.84 times

2,983,310

1,009,220

= 2.96 times

During 2012 to 2013 period,

the ICR has increase from

2.84 times to 2.96 times. This

means the business ability to

pay its interest is stronger. In

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addition, it does not satisfy

the minimum requirement of

5 times.

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P/E Ratio

P/E Ratio

= 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑆ℎ𝑎𝑟𝑒 𝑃𝑟𝑖𝑐𝑒

𝐸𝑎𝑟𝑛𝑖𝑛𝑔 𝑆ℎ𝑎𝑟𝑒 𝑃𝑟𝑖𝑐𝑒

= 1.74

0.12

= 14.5

The P/E Ratio for YTL Corporation Berhad is 14.5. This is means investor need to

wait for 14.5 years to recoup this investment.

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Investment Recommendation

A) Profitability

During the 2012 to 2013 period, YTL Corporation Berhad had experienced a

bad profitability since Return on Equity was decreased from 13.64% to

12.33%. This means the owner was getting less from her/his investment.

Although YTL Corporation Berhad had experienced bad profitability during

the year, but Net Profit Margin was increased from 9.09% to 9.24% while

Gross Profit Margin was decreased 0.14% which means they were getting

work at controlling overall expenses and Cost of Goods Sold. Conversely,

Selling Expenses, General Expenses and Financial Expenses Ratio increased

0.03%, 0.19% and 0.02% in the year. This means the business is getting better

at controlling Financial Expenses.

B) Stability

YTL Corporation Berhad has strong Financial Stability. This is because they

satisfied the minimum requirement of 2:1 for Working Capital. Besides, for

Interest Coverage they increased 0.12 times this year which means it satisfied

the minimum requirement. However, they were actually in an unsafe level for

Total Debt since they were increased by 1.17% and above 50%. In addition,

they sold its inventory and collecting debts are slower and inefficient.

C) Price

The price of YTL Corporation Berhad’s share is still considered cheap as it

P/E Ratio does not over 15, which is 14.5.

In conclusion, we do not recommend investor invest this corporation due to

the reason that it does not have good profitability, even though has strong

financial stability and cheap share price right now.

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Appendix

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References

http://www.facebook.com/l.php?u=http%3A%2F%2Fwww.ytlcommunity.com%2Fannualrep

ort%2Fpdf%2FYTL%2520Corporation%2520Berhad_Annual%2520Report%25202013.pdf&h=

jAQFRf0QR

http://www.facebook.com/l.php?u=http%3A%2F%2Fwww.ytlcommunity.com%2Fannualrep

ort%2Fpdf%2FYTL%2520Corporation%2520Berhad_Annual%2520Report%25202012.pdf&h=

jAQFRf0QR

http://www.facebook.com/l.php?u=http%3A%2F%2Fwww.thestar.com.my%2FBusiness%2F

Marketwatch%2F%3Fquote%3DYTL&h=jAQFRf0QR