Term Paper: BUS 635

Financial Analysis Report: Double A Report by Group 5
Chowdhury Farhadul Reza Mussabirul Islam Rian Binte Zaman Sifat Rabbani Md. Raihan Ali 1130347060 1130074660 1220492660 1130456060 1121040060

TERM PAPER: BUS 635

Financial Analysis Report: Double A

Executive Summary
Ratio analysis is a method of analysing data to determine the overall financial strength of a business. This tool is very crucial for a company as financial analysts takes the information off the balance sheets and income statements of a business and calculate ratios that can then be used to make assessments of the operating ability and future prospects of that business. Double A (1991) Public Company Limited operates an advanced pulp and paper manufacturer manufacturing facility, producing many types of quality writing and printing papers. Fuelled by the success, the Company is determined to become one of the world‟s leading paper manufacturers in the near future. But in the face of Global recession and in the dawn of paper less world, it will be interesting to investigate the financial performance of the company through the last few years. This report will analyse the last 5 years (2007 -2011) financial statements of the company and evaluate the key ratio analysis to determine the current financial performance of the company. In addition to that the report will also assess the companies‟ current and future plan of action and its impact on the company based on the current financial situation. Moreover the report will try to shed some lights on the overall performance over the year and provide feedback on how to improve on the financial performance of the company.

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TERM PAPER: BUS 635

Financial Analysis Report: Double A

Table of Contents
Introduction ...................................................................................................................................... 6 Company Profile ................................................................................................................................ 7 Company History ........................................................................................................................... 7 Company Vision ............................................................................................................................. 7 Company Overview ........................................................................................................................ 8 Products and Services .................................................................................................................... 9 Timeline ...................................................................................................................................... 10 Company Structure.......................................................................................................................... 13 Investment in Subsidiaries ........................................................................................................... 14 Revenue Structure ........................................................................................................................... 14 Capital Structure ............................................................................................................................. 15 Company’s securities ................................................................................................................... 15 Shareholders ............................................................................................................................... 15 Dividend Payment Policy ................................................................................................................. 16 The Company Dividend Policy ...................................................................................................... 16 Subsidiaries and Associates Dividend Policy ................................................................................. 16 Human Resource Management.................................................................................................... 16 Financial Condition Analysis............................................................................................................. 17 Financial Performance (2011) .................................................................................................... 17 Analysis of Financial Status ......................................................................................................... 18 Potential Future Operations ........................................................................................................ 19 Ratio Analysis .................................................................................................................................. 20 Liquidity Ratio.............................................................................................................................. 21 Asset Management ratio ............................................................................................................. 23 Debt Management Ratio.............................................................................................................. 27 Profitability.................................................................................................................................. 28 Market Value ............................................................................................................................... 33 Recommendation ............................................................................................................................ 36 Conclusion....................................................................................................................................... 38 Bibliography .................................................................................................................................... 39

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......................... 18 FIGURE 7 FINANCIAL HIGHLIGHTS FOR THE LAST 7 YEARS (DOUBLE A (1991) PUBLIC COMPANAY LIMITED.............2011) .................................................. 2011)......................................TERM PAPER: BUS 635 Financial Analysis Report: Double A Table of Figures FIGURE 1 COMPANY STRUCTURE OVERVIEW (DOUBLE A (1991) PUBLIC COMPANAY LIMITED.............................................................................................. 36 North South University 4 ................... 16 FIGURE 6: FINANCIAL CONDITION OVERVIEW (2007-2012) (DOUBLE A (1991) PUBLIC COMPANAY LIMITED................................................... 31 GRAPH 12 RETURN ON EQUITY (2007 .2011) .................................................... 33 GRAPH 14 DIVIDEND PAYOUT RATIO (2007 . 26 GRAPH 7 DEBT RATIO (2007 .................................................................. 19 Table of Graphs GRAPH 1 RATIO ANALYSIS FOR DOUBLE A PUBLIC COMPANY LIMITED (2007 -2011) ........................................................ 35 GRAPH 16 DIVIDEND YIELD (2007 ..2011) ............ 2011) ...........2011) ............................................2011) ............................... 2012) ....................................................... 2011) ................................................................................................................2011) ........................................................................................................ 2012).................................................................................................................................... 25 GRAPH 6 ASSET TURNOVER RATIO (2007 ................................................ 14 FIGURE 3 OVERVIEW OF REVENUE STRUCTURE 2012 (DOUBLE A (1991) PUBLIC COMPANAY LIMITED.... 24 GRAPH 5 AVERAGE COLLECTION PERIOD (2007 – 2012).................. 32 GRAPH 13 DIVIDEND AND EARNINGS PER SHARE (2007 . 34 GRAPH 15 BOOK VALUE PER SHARE (2007 .......... 30 GRAPH 11 RETURN ON ASSETS (2007 ................................... 22 GRAPH 3 INVENTORY TURNOVER (2007 – 2011) ......... 21 GRAPH 2 LIQUIDITY RATIO (2005-2011) .....................2011) ....2011) . 27 GRAPH 8 DEBT EQUITY RATIO (2007 .......... 15 FIGURE 5 OVERVIEW OF THE HUMAN RESOURCE M ANAGEMENT ...........................................................................................2011) ... 2011) ............................................................................................. 23 GRAPH 4 ACCOUNTS RECEIVABLE TURNOVER (2007 ........................ 14 FIGURE 4 DISTRIBUTION OF COMPANY SHARES (DOUBLE A (1991) PUBLIC COMPANY LIMITED.................................................... 28 GRAPH 9 PROFIT MARGIN (2007) ............ 13 FIGURE 2 INVESTMENT SUMMARY 2012 (DOUBLE A (1991) PUBLIC COMPANY LIMITED........................... 29 GRAPH 10 OPERATING EXPENSE RATIO (2007 -2011) ...............2012) ...

The graph used in these report were created by the team member using Excel worksheet. in addition to that many of the financial value were given in terms of bath and so for the ease of the reader we have converted them to US dollars using the current exchange rate. as of 2012 data.TERM PAPER: BUS 635 Financial Analysis Report: Double A Methodology The primary date for this report is acquire from the official Annual Report of Double A Public Company. The report used the financial data from 2007 to 2011. The Annual Report was obtained from the Company website. North South University 5 . Various secondary data has been used while compiling these report and related reference were given on the Reference section. it was unavailable till the end of the year.

Double A paper has been well received by consumers in these countries and this is reiterated by the fact that the purchase orders of Double A Paper have exceeded its production capacity. This report will analyse the last 5 years (2007 -2011) financial statements of the company and evaluate the key ratio analysis to determine the current financial performance of the company. with its premium quality product and effective branding has been able to spread its distribution coverage in more than 100 countries worldwide and at the same time has been well accepted by consumers across all market regions. This report has been written in regards to the requirement of the BUS 635 course. a familiar name in the paper manufacturing industry. This tool is very crucial for a company as financial analysts takes the information off the balance sheets and income statements of a business and calculate ratios that can then be used to make assessments of the operating ability and future prospects of that business.TERM PAPER: BUS 635 Financial Analysis Report: Double A Introduction Ratio analysis is a method of analysing data to determine the overall financial strength of a business. Bangladesh but also the United Arab Emirates. Moreover the report will try to shed some lights on the overall performance over the year and provide feedback on how to improve on the financial performance of the company. “Double A”. “Double A Paper”. Pakistan. These ratios are useful only when compared to other ratios. In addition to that the report will also assess the companies‟ current and future plan of action and its impact on the company based on the current financial situation. But in the face of Global recession and in the dawn of paper less world. North South University 6 . the Company is determined to become one of the world‟s leading paper manufacturers in the near future. The Company had expanded its business operations through its international marketing & services network not only in Asian countries such as the Philippines. and a few European countries. such as the comparable ratios of similar businesses or the historical trend of a single business over several business cycles. Vietnam. Fuelled by the success. it will be interesting to investigate the financial performance of the company through the last few years. has been dominating the paper industry.

2011) Central to that vision are the principles of sustainable development internationally and a commitment to faithfully and practice spearhead recognized standards environmental and social campaigns that are relevant to the development of the communities. The company has established their vast network with many factory mills and their network offices include domestic and overseas branches all over the world. Double A adheres to environmental management policies for its operation. The company was incorporated in 1991. 2011) Company Vision Double A‟s vision is to “deliver premium quality copy and office paper to consumers around the world that is produced from a sustainable source of high-fiber raw material” (Double A (1991) Public Companay Limited. (Double A (1991) Public Companay Limited. (Double A (1991) Public Company Limited. the company has received commendations/awards in Thailand and all over the world for its unwavering corporate social and environmental responsibility. The company faithfully practices international standards and spearheads significant environmental campaigns. As evidence. 2012) North South University 7 .TERM PAPER: BUS 635 Financial Analysis Report: Double A Company Profile Company History Double A (1991) Public Company Limited operates an advanced pulp and paper manufacturer manufacturing facility.000 tons of paper. the mill began operating in 1995 and has an annual capacity of 600. producing many types of quality writing and printing papers. In tune to its mission.000 tons of pulp and 600. Located in Thailand‟s central plains in the province of Prachinburi.

quality. and the company‟s sustainable environmental practices and contributions to the communities they serve. Africa. the company began to expand its international reach in 2001. Double A‟s global presence is another of its competitive advantages. value for money. From Thailand. Double A‟s presence in more than 120 countries on six continents is a testament to a truly global brand with a premium product of unmatched quality and brand awareness in its key markets around the world. marketing events and instore displays that promote the brand among consumers initiatives that have helped Double A to dominate top of mind awareness in every key market in the world. ease of use. Double A continues to set records for brand awareness. o Farmed trees for a sustainable. availability. Top quality. Double A has fostered enduring relationships with consumers based on trust.. public relations. North South University 8 . thanks to its consistent „No jam. entered Australia and the Middle East in 2007. integrated marketing communications. Singapore.TERM PAPER: BUS 635 Financial Analysis Report: Double A Company Overview Double A‟s strong brand performance can be attributed to its consistent and timely branding activities. all of which add up to total consumer value rather than the customary price concerns. and ventured into Europe. environmentally friendly paper-making process. Today. o High opacity for double-sided printing. South Asia and North America in 2011. making inroads on Hong Kong..No Stress‟ marketing campaign which has succeeded in differentiating the brand and communicating its core values: o Smoothness for jam-free copying. reliability. Taiwan and China. Malaysia. and wide availability – these are the internationally recognized characteristics that have made Double A the leading copy paper brand in Thailand and more than 100 other countries around the world.

Strategically situated 140km from Bangkok and 130km from Laem Chabang Seaport. From its beginnings. Double A products meet everyone‟s paper needs. Double A manufactures two types of printing and writing paper: North South University 9 . the company has devoted all of its considerable resources to the development of green pulp and paper manufacturing through its Paper from Farmed Trees program. in the process turning our solid waste streams into clean. The brand launched was supported by 7 unique and remarkable qualities of Double A Paper:  Printing Sharpness  Excellent Smoothness  Bright Appearance  Enhanced Copier Performance  Two-Sided Use  Longer Storage Period for Documents Double A offers a wide range of paper products to suit the needs. when Double A pioneered the research and development of tree species serigraph for an energy-intensive industry. Known for their high quality.TERM PAPER: BUS 635 Financial Analysis Report: Double A Products and Services The company‟s broad portfolio of products extends from superior quality short fiber large paper sheets to and innovative stationery products premium copy papers –all made of sustainable fiber from Double A‟s Paper Tree. superior performance and environmental friendliness. requirements and budgets of the customers around the world. the Double A mill is close to both a sustainable source of wood and a huge rainwater reservoir with a capacity of 36 million cubic meters to sustain its manufacture of pulp and paper. renewable bio-fuel power sources to generate electricity and steam to meet the country‟s rising demand sustainably. which is grown along the rice paddy ridges of more than 1.5 million farmers across Thailand through a uniquely Asian solution to the sustainable sourcing of fiber that is called Paper from Farmed Trees.

Ltd.The company started its production of uncoated printing paper in the first paper mill on November 6th.First establishment of the company.. the internationally well known pulp and paper company from Finland. Ltd. the paper is also cut into standardized sizes and sold under the Double A brand. 1993 . glossy surface. with a moisture content of 50%. this paper is available in both rolls and sheets. 1990 -99 Group Center Company Limited was established as a domestic paper distributor to end user Hi-Tech Paper Company Limited was set up to produce uncoated paper. Wet Lap Pulp accounts for about 10% of the pulp produced. Timeline The establishing and development of Double A (1991) Public Company Limited 1989 .. to be used in paper production.Coated on both sides with a white material for a smooth. 1995. Dry Pulp accounts for about 50% of the pulp produced. Available in both rolls and sheets. 1993.  Coated Paper or Art Paper .. Hi-Tech Paper Co. which produces 41. was signed.This is the paper of choice for printing and writing purposes and is produced in a variety of weights ranging from 50 to 120 grams per square meter.The contract to set up the advisory board of Project Management Service with Jaakko Pöyry Oy Ltd. it is sold to both domestic customers and a subsidiary. with a moisture content of 10%. it is sold domestically and exported. 1994 -It has been registered as a public limited company and changed its name to Advance Agro Public Company Limited 1995. the Japan‟s largest pulp and paper manufacturer.000 tons of paper per year. Double A produces three grades of pulp:    Slurry Pulp accounts for 40% of the pulp we produce and is piped to our two papermaking machines.. North South University 10 . was signed.The contract of technical production assistance with OJI PAPER Co.TERM PAPER: BUS 635  Financial Analysis Report: Double A Uncoated Wood-Free Paper . or GSM.

Korea.Advance Agro Public Company Limited was the first integrated pulp and paper manufacturer in Southeast Asia to be certified with ISO 14001 the environmental management standard from AJA EQS. STORA ENSO OYJ. the Company set up 99 Group Trading Center Company Limited to serve as a domestic paper distributor. 2001 -Advance Agro Public Company Limited was certified with ISO 9001:2000 the quality management standard from AJA EQS. Europe‟s largest pulp and paper manufacturer and OJI PAPER CO. Pulp Mill 2 Company Limited to produce bleached eucalyptus Kraft pulp.In 2004.The grand opening/introduction of Double A paper (company‟s 80 GSM paper) in BOI Fair at IMPACT Arena Muang thong thani. Advance Agro Public Company Limited strengthened its relationship with its foreign partners.000 ton per annum. 2000 . Asia‟s largest pulp and paper manufacturer.The second pulp mill under AA Pulp Mill 2 Company Limited started its operation process and pulp exportation to Europe.A.TERM PAPER: BUS 635 Financial Analysis Report: Double A 1996 -The grand opening of Advance Agro Public Company Limited at Queen Sirikit National Convention Center in July 6th. 2003 -The Company set up A. 1997. North South University 11 . AA received Industrial excellence for outstanding performance in the field of environmental conservation from Thailand‟s Industrial Department. The subsidiary sales consist of both domestic and export sales to such as China. 1996.Ltd. The Company set up a subsidiary.A. 1998. 2004 . The subsidiary is also in charge of carrying out marketing activities. The plant has production capacity of 252. England in the practice of UKAS (UNITED KINGDOM ACCREDITATION SERVICE) in March 2nd.. and Australia. 1997. Double A Copy Center Company Limited to carry out the Double A Copy Center Project.. Paper and Stationery Company Limited to manage and distribute stationeries for domestic customers. sales and promotions. The project goal is to penetrate into retail market by joining with small-scale photocopy shops. 2001. 2002 -The Company set up a subsidiary. A. England in the practice of UKAS (UNITED KINGDOM ACCREDITATION SERVICE) in November 18th.

2008.500 million THB Bond on August 27.The Board of Directors resolved the streamline operations to give a greater focus on improving Double A Paper brand expansion by dissolving 4 subsidiaries by transferring the assets to Advance Agro Public Company Limited and A. Packaging Company Limited to produce the packaging product. Moreover the company issued 5.A. This was completed on November 23. The joint venture was set up under the name Hi-Tech Specialty Mineral (Thailand) Limited. Moreover.A. The company also issued 250 million USD Bond on March 19 from its joint venture.A. 2009. A. 2007. 2006 -The Company set up Double A Paper Company Limited to conduct the feasibility of investing in additional printing and writing paper mill and its name has been changed to “Advance Paper Mill 3 Company Limited.000 million THB Bond on June 11 and 2. 2009. Double A Copy Center Company Limited.Advance Agro Holding Company Limited extended its joint-venture contract on precipitated calcium carbonate (PCC) production project with Specialty Mineral (Thailand) Company Limited. 2009. North South University 12 .99% of its shares in 99 Group Trading Center Company Limited and A.The Company listed off from SET on April 17. Advance Agro Holding Company Limited sold 99.The Company set up Biomass Steam Company Limited to produce high pressure steam (PB5A) and D. (1991) Ltd. (Thailand) on May 3. Paper and Stationery Company Limited.TERM PAPER: BUS 635 Financial Analysis Report: Double A 2005 . which the Company hold 51% interest. 2010 -The Company changed its name to Double A.A. The dissolved companies were Double A International Business Company Limited. Paper and Stationery Company Limited to Double A International Network Company Limited on December 30. Core Company Limited and Advance Paper Company Limited.

TERM PAPER: BUS 635 Financial Analysis Report: Double A Company Structure Figure 1 Company Structure Overview (Double A (1991) Public Companay Limited. 2011) North South University 13 .

TERM PAPER: BUS 635 Financial Analysis Report: Double A Investment in Subsidiaries Figure 2 Investment summary 2012 (Double A (1991) Public Company Limited. 2012) Revenue Structure Figure 3 Overview of Revenue Structure 2012 (Double A (1991) Public Companay Limited. 2011) North South University 14 .

336.890.809.TERM PAPER: BUS 635 Financial Analysis Report: Double A Capital Structure Company’s securities • The Company has registered capital of Baht 5.810 and fully paid capital of Baht 4.333. 2012) North South University 15 .505.689 ordinary shares at par of Baht 10 • Other securities that are not common-share are as follow: Shareholders Figure 4 Distribution of company Shares (Double A (1991) Public Company Limited.833. The Company has 483.

839 shares or 98. Subsidiaries and Associates Dividend Policy The Company subsidiaries and affiliates shall pay dividend not less than 100% of each company net profits after deduction of all specified reserves (if any) subject to the subsidiaries and associates investment and financing plans.63% (2) 11 Foreign shareholders with total amount of 475.446.TERM PAPER: BUS 635 Financial Analysis Report: Double A Notes: As of 31 December 2011 the Company has 255 shareholders which can be split into the following: (1) 244 Thai shareholders with total amount of 7.37% Dividend Payment Policy The Company Dividend Policy The Company shall pay dividend not less than 50% of its net profit after deduction of all specified reserves. covenants of the outstanding debenture and as the board of directors of the Company deems appropriate.850 shares or 1. covenants of the outstanding debenture and as the board of directors of the Company deems appropriate . Human Resource Management Figure 5 Overview of the Human Resource Management North South University 16 .886. subject to the Company and its subsidiaries investment and financing plans.

In addition. The paper and pulp sales volumes were not much different from 2010. the Company aggregate sales revenue as compared with 2010.713. there was a high market competition and the Company has expanded the market to global that affected the marketing expenses.80 % from the previous year. Foreign Exchange Gains The Company and its subsidiaries reported the decreased in gain from foreign exchange of THB 241 million. Hence. which decreased 0. (Double A (1991) Public Companay Limited. North South University 17 . which decreased THB 277 million from the previous year.75 million or 25. 2011) The details of revenues and expenses are as follows: a. due to the redemption of debenture in 2009. Selling and Administration Expresses (SG&A) Selling and Administration Expenses was THB 4. d. decreased from the previous year at THB1. Another reason was from the increase of asset valuation which affected to the depreciation that included in the cost. decreased by THB 148 million. b.73 % of the total revenue. SG&A in 2010 was at THB 4. This fall was due to the pulp price in market was decreased and the cost of goods sold was increased due to the rising of raw material cost.48 % of the total revenue.35 million or 25. The increase was due to the marketing expenses for promoting Double A brands to global. Revenue from sales of paper and pulp The Company and its subsidiaries report paper and pulp revenue at THB 18.13 million. 286 million and the primary earnings per share were THB 0. c. the Company and its subsidiaries reported financial expenses of THB 896. the Company has loss with the net loss at THB 153 million.26. Financial Expenses In 2011.TERM PAPER: BUS 635 Financial Analysis Report: Double A Financial Condition Analysis Financial Performance (2011) In 2011. The main reason that makes revenue dropped was from the pulp price that decreased in the market.705.317 million.

The equity book value was THB 28.000 million.051million. carried over from the previous year of THB 1. the Company had a cash balance of THB 326 million as of financial statement ending December 31.06 per share. net cash flow from investing activities of THB 3.382 million due to the increase of short term loan for investing in subsidiaries and for long term repayment. Shareholder‟s Equity Figure 6: Financial Condition overview (2007-2012) (Double A (1991) Public Companay Limited. Assets Total assets increased by THB 6. the increase of investment in subsidiaries of THB 1.563.780 million and net cash flow from financing activities of 2.60 million.24 million and share holder‟s equity of THB 13.238. decrease of cash of THB 725 million.TERM PAPER: BUS 635 Financial Analysis Report: Double A Analysis of Financial Status According to the financial statement ending of December 31.current assets of THB 6.801. 2011) Shareholder‟s Equity increased THB 2. which composed of the increase in evaluation of property. Liabilities Total liabilities increased by THB 3.993 million due to the Appraisal surplus which increased by THB 3. North South University 18 . 2011. Total net cash flow for 2011 decreased THB 725 million. 2011. b. Another reason was due to the loss from the operation. trade account receivables net decreased THB 308 million and inventory increased of THB 1. c.059 million.376 million from the previous year due to the increase in non.376 million.185 million. plant and equipment of THB 5. the Company and its subsidiaries had total assets of THB 33. the decrease of current asset of 354 million.110 million. Cash flow statement The Company and its subsidiaries had net cash flow from operating activities of THB 1.136 million. a. total liabilities of THB 20.36 million.227 million and the Investments in subsidiary decreased.

Utilize lime which the Company can produce by itself instead of order from outsource. the Company looks forward to manage costs and expenses by managing the raw materials purchase. Figure 7 Financial highlights for the last 7 years (Double A (1991) Public Companay Limited. the Company expects to increase the sale volume by expanding the international market. reduce the usage of long fibre. This is mainly due to significant rise in total liabilities and asset whereas sale revenue where not generates as much in 2011.TERM PAPER: BUS 635 Financial Analysis Report: Double A Potential Future Operations In 2012. North South University 19 . 2011) From the above Graph it is observer that the company is suffering loss in 2011. reduce the multi process of wood transportation etc.

22% 2009 1.84% 11.33% 2.95% 12.06% 0.41% 15.56% 14.08 24. efficiency.70 26.41% 6.82 4.05 0.38 32.44 3.86 0.87% 2011 0. By calculating the ratios we can assess the profitability. It is used to compare a firm‟s perfo rmance and status with that of other firms or to itself over time. Ratio analysis does not consider the non-quantitative information.94 34. ratio is considered to be the best available technique for evaluating performance. Even though Ratios helps to recognize the problems.01 13. Assisting decision making is another way to use ratio analysis.16 3. ratios are used to interpret financial statement. Ratios can also be used in forecasting and planning as well as to summarize data.75% 24.34 26.08% 2010 0.08 32.67 11. solvency and status of the organization. such as the goodwill.11 11. both of which affect performance.94% 13.55 5.97% 2008 0.96% 10. The later part of the report will comprise of detail analysis of these ratio to evaluate the performance of the Company for the last 5 years.28% 19. Nevertheless.17 0. labour relations and the Research and Development program.14% 12. The Following Graph illustrates the summarised result for the entire ratio calculated in this report. Ratios Current Ratio (times) Quick Asset Ratio (times) Inventory Turnover (times) Accounts Receivable Turnover Avg Collection Period (days) Gross Profit Margin Operating Profit Margin: Net Profit Margin Operating Expense Ratio 2007 1. however.67 26.83% 10.TERM PAPER: BUS 635 Financial Analysis Report: Double A Ratio Analysis Ratio Analysis provides us with the means by which financial information can be analysed and evaluated. Ratios can also identify problems before they became acute.10 10.73 0.91 10.88% 20 North South University . They attempt to highlight the relationships between significant items in the accounts of an organization.45% 1.32 32.67% 10.95 33.24 4. In short.64 34. It does not include some of the positive factors within a business such as the quality of the staff or the location. performance.54 0. they will not provide the business with the solutions.

49% 2.26 0.45 3.95 0.984 52.65% 0.28 48% 52% 28.673 0.92 78% 22% 25.1 1 13% 87% 24.59 2.890 61.1 1.81 11.57% 14.16 19.97 4.012346 43% 2.542 0.23% 0.90% 0.72% 0. These ratios measure the ability of a company to pay off its short-term liabilities when they fall due.87% 1.923 1% Total Asset Turnover (times) Fixed Asset Turnover (times) Debt Ratio Debt Equity Ratio (times) Earnings Per Share (Bath) Dividend Per Share (Bath) Dividend Payout Ratio Retention Ratio Book value per share Market Value ratio Dividend Yield Graph 1 Ratio analysis for Double A Public Company Limited (2007 -2011) The Ratios can be grouped into several categories: Liquidity ratio Asset Management Debt Management Profitability ratio Market Value Investors ratio Liquidity Ratio Liquidity ratios are the ratios that measure the ability of a company to meet its short term debt obligations.06 107.13% 0.93% 0.89 82% 18% 27.80% 0.TERM PAPER: BUS 635 Return On Assets Return on equity Financial Analysis Report: Double A 1.13% 10.022 49.690 1.76 8. Most common examples of liquidity ratios include current ratio.27% 1.26 1.46% 1.776 0.45% 1.49 0. acid test ratio (also known as quick ratio) Current Ratio 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠 = 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 Acid test ratio 𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑒𝑡𝑠 − 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 − 𝑝𝑟𝑒𝑝𝑎𝑖𝑑 𝑒𝑥𝑝𝑒𝑛𝑠𝑒 = 𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 North South University 21 .9683 8% 7.086 48.29% 4.99 6.22 74% 26% 20.817 1.667 59.09512 4% 4.55 34.47347 16% 0.

5 Current Ratio (times) Quick Asset Ratio (times) 0. But such an option affects the overall position of the company because if the company owns very little assets.TERM PAPER: BUS 635 Financial Analysis Report: Double A 1. Commonly accep Graph current ratio is 2. then it is said that such a company is not sGraph and may face difficulty is paying off their debts (short term).2 0 2007 2008 2009 2010 2011 Graph 2 Liquidity Ratio (2005-2011) The higher the ratio.8 0. 2011)As for Double A. If the value of the acid-term ratio is less than 1.6 0. Low values for the current ratio (values less than 1) indicate that a firm may have difficulty meeting current obligations. If the current ratio is too high (much more than 2) then the company may not be using its current assets or its short-term financing facilities efficiently. 1. However. (Ready Ratio.4 Industry Average 1. Accept Graph current ratios vary from industry to industry. This may also indicate problems in working capital management. 2011) North South University 22 .5 may be an accept Graph current ratio. it's a comfor Graph financial position for most enterprises. an investor should also take note of a company's operating cash flow in order to get a better sense of its liquidity. The biggest advantage of acid-test ratio is that it helps the company in understanding the end results very feasibly. the current ratio is below industry average as of 2011 which indicate they will face difficulties in paying out their current obligations.2 1 0. the more liquid the company is. A low current ratio can often be supported by a strong operating cash flow. In order to clear the short term debts they probably would need to sell some of their assets. For most industrial companies. (Ready Ratio.

it should be compared against industry averages. inventory turnover.00 2007 2008 2009 2010 2011 Inventory Turnover (times) Graph 3 Inventory Turnover (2007 – 2011) Inventory turnover is a measure of the number of times inventory is sold or used in a given time period such as one year. The ratio calculated by the following formula: Inventory turnover = Cost of goods sold / Average Inventory There is no general norm for the inventory turnover ratio.00 1. too high an inventory turnover that is out of proportion to industry norms may suggest losses due to shortages. accounts receivable turnover ratio and average collection period. and poor customer-service. and inventory management. According to the above graph. Asset management ratios indicate how successfully a company is utilizing its assets to generate revenues. A relatively low inventory turnover may be the result of ineffective inventory management and poor sales or carrying out-of-date inventory to avoid writing off inventory losses against income. However. the Double A inventory turnover have is on a decline path which is undesirable for the firm if continued in these pattern.00 5.00 0. Asset management ratios are computed for different assets. Normally a high number indicates a greater sales efficiency and a lower risk of loss through un-saleable stock. Common examples of asset turnover ratios include fixed asset turnover. It is a good indicator of inventory quality efficient buying practices.00 2. This ratio is important because gross profit is earned each time inventory is turned over. These ratios provide important insights into different financial areas of the company and its highlights its strengths and weaknesses.00 3.00 4.TERM PAPER: BUS 635 Financial Analysis Report: Double A Asset Management ratio Asset management (turnover) ratios compare the assets of a company to its sales revenue. Inventory turnover Inventory Turnover (times) 6. North South University 23 .

(Ready Ratio.TERM PAPER: BUS 635 Financial Analysis Report: Double A Accounts Receivable Turnover Accounts Receivable Turnover 14.00 6.00 4. preventing prime borrowing candidates from becoming customers.00 8. the receivable turnover ratio seems to be on rise as of 2011 which is a good indication for the firm‟s financial stand. It is an important indicator of a company's financial and operational performance and can be used to determine if a company is having difficulties collecting sales made on credit.00 12.00 10. 2011) For Double A Public Company. the number of times average receivables are turned over during a year. This ratio determines how quickly a company collects outstanding cash balances from its customers during an accounting period. The higher the value of receivable turnover the more efficient is the management of debtors or more liquid the debtors are. low debtors turnover ratio implies inefficient management of debtors or less liquid debtors. But in some cases too high ratio can indicate that the company's credit lending policies are too stringent. North South University 24 . the better the company is in terms of collecting their accounts receivables.00 0. it strongly depends on the industry and other factors. Similarly.2011) The receivable turnover ratio indicates the velocity of a company's debt collection. (Ready Ratio. This demonstrates that the firm is efficiently managing the debtors. 2011) Calculation (formula): Receivables turnover ratio = Net receivable sales/ Average accounts receivables There is no general norm for the receivables turnover ratio.00 2007 2008 2009 2010 2011 Accounts Receivable Turnover Graph 4 Accounts Receivable Turnover (2007 .00 2.

the ratio will be affected and may lose its significance. But if it continues to rise then the company will face problem in accumulating cash to pay up the expenses. then the business firm is likely operating over capacity and needs to either increase its asset base (plant. property. This activity ratio should be the same or lower than the company's credit terms.00 15. It is best to use average accounts receivable to avoid seasonality effects. equipment) to support its sales or reduce its capacity.TERM PAPER: BUS 635 Average Collection Period Financial Analysis Report: Double A Avg Collection Period (days) 35.00 2007 2008 2009 2010 2011 Avg Collection Period (days) Graph 5 Average Collection Period (2007 – 2012) Average Collection Period represents the average number of days it takes the company to convert receivables into cash.00 25. If the cash sales are included. Fixed and Total Asset Turnover The fixed asset turnover ratio measures the company's effectiveness in generating sales from its investments in plant.00 0. the collection period is just above the industry average of 30 days.00 20. property.00 10. North South University 25 . and equipment. collection Period = 365/Accounts receivable Turnover Average collection period measures the average number of days that accounts receivable are outstanding. For the Double A Public Company. it means that sales are low or the investment in plant and equipment is too high. As a rule. If the fixed asset turnover ratio is too high. outstanding receivables should not exceed credit terms by more than 10-15 days. If the fixed asset turnover ratio is low as compared to the industry or past years of data for the firm.00 30. This ratio takes in consideration only the credit sales.00 5. Average Collection Period formula is: Avg.

086 which reduced to .563 million baht and in 2011 it was 33.2011) North South University 26 .600 0. After that net sales started to decrease and firms fixed asset started to increase resulting in a decrease in the fixed turnover ratio which was 0.317 million baht. Companies with a declining asset turnover ratio must analyse their financial statements to understand the reason for the decline.200 0.333 million baht.400 0.984 due to decrease in the net sales in 2008. In 2007 it was 28.542 in 2011. The total asset turnover ratio measures the ability of a company to use its assets to efficiently generate sales. In 2007 net sales was 23. A higher total asset turnover ratio is more favourable than a lower one. For example. But after that it started to decrease and in 2011 it was only 18. Companies that see continual increases in turnover ratio are improving how efficiently managers use the company‟s assets to generate revenue. Asset Turnover Ratio 1. a decline in total asset turnover ratio might result from an increase in fixed assets or a decline or slow increase in revenue.802 baht. In comparison to that the total asset was increasing during the period. In 2009 it was again close to 1.200 1.TERM PAPER: BUS 635 Financial Analysis Report: Double A In 2007 Fixed Asset Turnover Ratio was 1.000 0. But it was because a decrease in the both net sales and firms fixed asset. a very low figure indeed compared to previous data of the company. That is evident from the Graph and graph.817 in 2007 to 0.000 2007 2008 2009 2010 2011 Total Asset Turnover (times) Fixed Turnover Ratio Graph 6 Asset Turnover ratio (2007 . 667 in 2011. So from the discussion above we can say that the firms total asset turnover was decreasing starting from 0.800 0.

00% 60.376 million from the previous year due to the increase in non. The higher the ratio. In 2011 total assets increased by THB 6.00% 20. Financial leverage ratios (debt ratios) indicate the ability of a company to repay principal amount of its debts.00% 0. They also give insights into the mix of equity and debt a company is using. The common examples of financial leverage ratios include debt ratio. The lower the percentage. (Ready Ratio. plant and equipment of THB 5. From the graph we can see that the debt ratio was approximately equal to 50 % in the year 2007. the decrease of current asset of 354 million and some others. 2008 and 2009. It shows how much the company relies on debt to finance assets. the less leverage a company is using and the stronger its equity position.2011) Debt ratio is a ratio that indicates proportion between company's debt and its total assets. But in 2010 and 2011 this ratio grew to around 60 % which means North South University 27 . The debt ratio gives a quick measure of the amount of debt that the company has on its balance sheets compared to its assets. the increase of investment in subsidiaries of THB 1.110 million.current assets of THB 6. capitalization ratio. pay interest on its borrowings. interest coverage ratio. and fixed assets to net worth ratio.376 million. debt-to-equity ratio.TERM PAPER: BUS 635 Financial Analysis Report: Double A Debt Management Ratio Financial leverage ratios (debt ratios) measure the ability of a company to meet its financial obligations when they fall due. the greater risk will be associated with the firm's operation. A low percentage means that the company is less dependent on leverage. Debt Ratio Debt Ratio 80.136 million.00% 40. which composed of the increase in evaluation of property. 2011)Financial leverage ratios usually compare the debts of a company to its assets. and to meet its other financial obligations.00% 2007 2008 2009 2010 2011 Debt Ratio Industry Avg: 50% Graph 7 Debt Ratio (2007 .

But the equity did not increase in proportion to that resulting in a decrease of the ratio 1. These ratios assess the ability of a company to generate earnings.49 in 2011.2011) The debt-to-equity ratio measures the relative proportion of equity and debt used to finance a company‟s assets. often the amount of money invested. Profitability Profitability ratios measure a company‟s ability to generate earnings relative to sales. In 2011 total liabilities increased by THB 3.2011.60 over the period of 2007 . Common examples of North South University 28 .59 to 1. assets and equity. Since the ratio is greater than or almost close 1 during the period the so majority of the company‟s assets are financed through debt. A high ratio typically would demonstrate that the company has aggressively financed its growth through debt.9 to 1.382 million due to the increase of short term loan for investing in subsidiaries and for long term repayment.TERM PAPER: BUS 635 Financial Analysis Report: Double A the greater risk is associated with the firm's operation in these years compared to previous years. Debt Equity Ratio Debt Equity Ratio (times) 2 1.5 Debt Equity Ratio (times) 0 2007 2008 2009 2010 2011 Graph 8 Debt Equity Ratio (2007 . Shareholder‟s Equity increased THB 2. profits and cash flows relative to relative to some metric. They highlight how effectively the profitability of a company is being managed.227 million and the Investments in subsidiary decreased. The ratio also indicates the extent to which shareholders‟ equity can fulfil the company‟s obligations to creditors if liquidated.993 million due to the appraisal surplus which increased by THB 3. From the graph we can see that the debt-to-equity ratio varies within 0.5 1 0. Another reason was due to the loss from the operation.

It is usually expressed as a percentage. Calculation (formula) Gross profit margin = Gross profit / Revenue North South University 29 . the better the company is thought to control costs. Net Profit and Operating Profit Margin 35. return on equity.00% 0. Gross Profit. The higher the percentage. the more the company retains on each dollar of sales to service its other costs and obligations.00% 5.00% 10.TERM PAPER: BUS 635 Financial Analysis Report: Double A profitability ratios include return on sales. cash return on capital invested (CROCI). All of these ratios indicate how well a company is performing at generating profits or revenues relative to a certain metric. Investors use the gross profit margin to compare companies in the same industry and also in different industries to determine what are the most profi Graph. materials. return on capital employed (ROCE).00% 30. it is a measure of how well a company controls its costs.00% 2007 2008 2009 2010 2011 Gross Profit Margin Operating Profit Margin Net Profit Margin Graph 9 Profit Margin (2007) Gross profit is the percentage by which gross profits exceed production costs. Gross margin is a good indication of how profi Graph a company is at the most fundamental level.00% 15.00% 20.00% 25. how efficiently a company uses its resources. return on investment. 2011) A company that boasts a higher gross margin than its competitors and industry is more efficient. and indicates the profitability of a business before overhead costs. and labour. Gross margins reveal how much a company earns taking into consideration the costs that it incurs for producing its products or services. gross profit margin and net profit margin. (Ready Ratio.

Net profit margin is displayed as a percentage.TERM PAPER: BUS 635 Financial Analysis Report: Double A If we observe the above graph. Operating margin gives analysts an idea of how much a company makes (before interest and taxes) on each dollar of sales. Net profit margin (or profit margin. the higher the margin the better it is for the company. we will notice that Double A Gross profit has been declining since 2009 indicating that the company control over cost is inadequate. It shows the amount of each sales dollar left over after all expenses have been paid. it is best to look at the change in operating margin over time and to compare the company's yearly or quarterly figures to those of its competitors. It is very useful when comparing companies in similar industries. If a company's margin is increasing.Net profit margin is a key ratio of profitability. A higher net profit margin means that a company is more efficient at converting sales into actual profit. it is earning more per dollar of sales.00% 5.00% 10. Hence. When looking at operating margin to determine the quality of a company.00% 2007 2008 2009 2010 2011 Operating Expense Ratio Graph 10 Operating Expense Ratio (2007 -2011) North South University 30 . return on revenue) is a ratio of profitability calculated as after-tax net income (net profits) divided by sales (revenue). Operating Expense Ratio Operating Expense Ratio 15. net margin. Calculation (formula) Net profit margin = Profit (after tax) / Revenue The Company‟s net profit was following a declining pattern since 2009 and in 2011 the net profit indicates the company is suffering loss which is very undesirable for the company as well as the shareholders.00% 0.

an investor should take it as a warning signal and look into the matter for why is the OER high. Return on Assets Return On Assets 8.2011) The return on average assets is useful in measuring profits against the assets used by a company for generating profits.00% 6. Operating Expense Ratio = Operating Expenses / Effective Gross Income The importance of operating expense ratio lies in the fact of it being an indicator of the efficiency level of managing a property. the operating expense ratio also represents individual operating expenses items in the form of a percentage of the effective gross income and is also helpful in identifying potential problems. Besides. If a particular property piece features a high OER. For Double A the OER is above industry average of 10% which quit good for the company. North South University 31 . in simple words.TERM PAPER: BUS 635 Financial Analysis Report: Double A Operating expense ratio can be explained as a way of quantifying the cost of operating a piece of property compared to the income brought in by that property. A lower operating expense ratio indicates a greater profit for the investors.00% 2. The formula for OER is. the operating expense ratio (OER) is a helpful tool in carrying out the comparisons between the expenses of analogous properties.00% 2007 2008 2009 2010 2011 Return On Assets Graph 11 Return on Assets (2007 . The ratio is an important indicator of the intensity of assets of a company.00% 0. Moreover. the operating expense ratio reflects the percentage of a property‟s income which is being utilized to pay operational and maintenance expenses. and vice versa. A lower ROA ratio reflects a higher asset-intensity of the company.00% 4. a more asset-intensive company requires a larger amount of money to continue producing revenue. As explained by Investopedia.

00% 4. Return on Equity Return on equity 16. From the graph we can see that the ROE was quite low in the year 2007 and 2008.00% 2007 2008 2009 2010 2011 Return on equity Graph 12 Return on Equity (2007 . But in 2011 this figure decreased significantly and became 1.00% 12. the return on average assets ratio is also useful for investors in assessing the financial strength and efficiency of a company for using its resources.00% 14.72% in 2010.00% 6.00% 0.00% 10.90 % which was the highest during the period of 2007-2011.TERM PAPER: BUS 635 Financial Analysis Report: Double A Moreover. In 2009 it reached 14. or market competitors. we can deduce that ROA of the company is not looking too healthy especially after 2009 and rapid fall on 2011 indicates that the company is in loss. From the above graph. After that it again started to gone down with 10. Dividend per share (DPS) is the total dividends paid out over an entire year (including interim dividends but not including special dividends) divided by the number of outstanding ordinary shares issued.00% 2. North South University 32 . It shows net income as percentage of shareholder equity.2011) Return on equity or return on capital is the ratio of net income of a business during a year to its stockholders' equity during that year.00% 8. It is also imperative for the management to determine the performance of a company against its planned business goals. Earnings and Dividend per share The sum of declared dividends for every ordinary share issued. It is a measure of profitability of stockholders' investments.13 % which was the lowest during the period due to the decrease in financial performance.

Dividend Payout and Retention Ratio Dividend policy ratios measure how much a company pays out in dividends relative to its earnings and market value of its shares. It is important that the investors do not rely on only measure of earnings per share for making investment decisions. in context of securities is quite different from the book value for it takes into consideration the future growth potential. These ratios provide insights into the dividend policy of a company. All other things being equal. the market value. or a home is determined by professional appraisers or real estate agents o the basis of a various key factors. this company is better than the other one because it is more efficient at using its capital for generating profits. They compare the dividends to the earnings to measure how much of its North South University 33 . 12 10 8 6 4 2 0 2007 2008 2009 2010 2011 Earnings Per Share (Bath) Dividend Per share Graph 13 Dividend and Earnings per share (2007 . and it is one of the most widely used measures of profitability. the market value can fluctuate spectacularly. like land. Especially in chaotic markets. sometimes. The apt definition for market value is the current quoted price at which a share of common stock or a bond is bought or sold by the investors at a specific time. also referred as “total market value”. Earnings per share are a very good indicator of the profitability of any organization. The market value is. the market value of a real property.TERM PAPER: BUS 635 Financial Analysis Report: Double A Earnings per share (EPS) are the portion of the company‟s distribu Graph profit which is allocated to each outstanding equity share (common share). Instead they should use in conjunction with other measures and financial statement analysis. It should be noted that two different companies could generate the same EPS but one could do so with a lesser equity.2012) Market Value Market value refers to the price at which an asset is traded in the competitive auction setting. Usually.

This formula can be rearranged to show that the retention ratio plus payout ratio equals 1. for Double A.TERM PAPER: BUS 635 Financial Analysis Report: Double A earnings a company is paying out in dividends. On the other hand good dividend policy ratios can increase the prices of shares and shareholder value. That is to say that the amount paid out in dividends plus the amount kept by the company comprises all of net income. Generally speaking. Poor dividend policy ratios can result in fall of market value of shares and thus loss of shareholder value. Companies need to manage their dividend policy ratios carefully to maximize the shareholder value. They also compare the dividends to share prices to see how much cash flow the investors get for their investments in the company‟s shares. It is the opposite of the dividend payout ratio. Unfortunately. Retention Ratio = 1 . Retention Ratio indicates the percentage of a company's earnings that are not paid out in dividends but credited to retained earnings. the dividend payout ratio is extremely low in 2011and hence will have adverse effect on the market value of the share. so that also called the retention rate.Dividend Payout Ratio = Retained Earnings / Net Income The payout ratio is the amount of dividends the company pays out divided by the net income.2011) North South University 34 . 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2007 2008 2009 2010 2011 Dividend Payout Ratio Retention ratio Graph 14 Dividend Payout Ratio (2007 . Market value of shares is greatly affected by the dividend policy ratios. or essentially 100%. the investors usually look for high dividend policy ratios therefore the companies should manage their dividend policies carefully.

It is calculated as “Annual Dividend Per Share” divided by “Current Market Value Per Share”. or firm value.TERM PAPER: BUS 635 Book Value per share Financial Analysis Report: Double A Book value per share is just one of the methods for comparison in valuing of a company. The book value of the shares for Double has been good over the 5 years period. Owners/Directors of the company may leak out some fake information to play with the market value of shares. meaning it is assets minus debt. Conceptually. Book value per share (bath) 30 25 20 15 10 5 0 2007 2008 2009 2010 2011 Book value per share (bath) Graph 15 Book Value per share (2007 . what would actually occur if a company did sell all of their assets. Calculation (formula) Dividend Yield Ratio = Dividend per Share / Market Value per Share Market value of shares affect dividend yield ratio.2011) Dividend Yield Dividend yield is the amount that a company pays to its share holders annually for their investments. enterprise value would look at the market value of the company's equity plus its debt. Enterprise value. book value per share is similar to net worth. Once the market North South University 35 . It is expressed as a percentage and indicates attractiveness of investing in a company‟s stocks. For example. One must consider that the balance sheet may not reflect with certain accuracy. market capitalization. This is a favourable sign for the financial condition of the company. and other methods may be used in different circumstances or compared to one another for contrast. Dividend yield is considered as ROI for income investors who are not interested in capital gains or long-term earnings. and may be looked at as though what would occur if operations were to cease. market value. whereas book value per share only looks at the equity on the balance sheet.

The lower the operating efficiency ratio the better since it indicates that the firm is generating enough revenue to cover the expenses. The volatility in the ratio needs to be stabilized. This may include a group that has several technology stocks etc. Dividend yield ratio is useless for companies that do not pay dividends to share holders. but it rapidly drops throughout the following year and drop down to 1%. In short Double A needs to decrease its operating expense more and at the same time improve gross income. To further improve its efficiency. In 2007. Double A management needs to adopt a cost control strategy. This indicates that company is not maintaining sufficient liquidity. Its market price of share is decreasing and the firm should try to increase the price by efficient management and thereby increasing the operating profits and hence the shareholders confidence will be regained. Company should focus more on reducing current liabilities but paying of some of the liabilities and cutting operating cost. dividend yield ratio gets adjusted accordingly. North South University 36 .2011) Recommendation The Company‟s net liquid position has gradually declined over the years.TERM PAPER: BUS 635 Financial Analysis Report: Double A value of share fluctuates. Dividend Yield 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 2007 2008 2009 2010 2011 Dividend Yield Graph 16 Dividend Yield (2007 . the dividend yield of the company was very high.

However debt capital is the cheapest source of fund and hence increasing equity capital might affect profitability. It may not mean that the firm is performing poorly or is unprofitable. Thus. North South University 37 . A rising ROE suggests that a company is increasing its ability to generate profit without needing as much capital. and the higher its ROE is for the firm. this points that there have been some fluctuations in the value of the share. Firm may reinvest by accumulating funds from giving low dividends. In recent years. expense management and asset management. the more debt a firm has the fewer shareholders equity it has as a percentage of total assets. write-downs and share buybacks can artificially also boost ROE. Likewise.Hence existing and potential lose motivation to invest into Double A‟s share. Therefore. In general. It also indicates that the falling market price of the shares is causing the ratio to deteriorate over time. the firm is facing a declining ROE which is not a good sign for the firm since its shows how Double A‟s management is deploying the shareholders' capital. after all. a high level of debt can artificially boost ROE.TERM PAPER: BUS 635 Financial Analysis Report: Double A Double A‟s market-book ratio has been quite inconsistent over the years. The bank needs to improve its market to book ratio by increasing its market price of stock by adopting measures which will increase the shareholders confidence. this can be found from ROA since this ratio helps to measure the profit and efficiency of the firm. it's considered a sign of good management when a company's performance over time is at least as good. To increase the value of ROE. The bank therefore needs to increase its equity capital and decrease its dependency on debt. A declining return on assets usually leads to a fall in the stock price as investors become aware that earnings of the firm is going down . Thus investors need to consider a number of issues before coming to a decision. Even though Double A‟s dividend per share ratio is gradually decreasing over the years. By reinvesting the firm may be able to provide higher dividends in the long run. Double A‟s is incurring high debt/equity ratio over the years which indicates that the bank has been financing its growth mostly with debt. firm can reduce the value of the shareholders' equity. Double A needs to increase its efficiency on tax management.

TERM PAPER: BUS 635 Financial Analysis Report: Double A Conclusion Since its establishment. This will consequently improve the confidence of the shareholders as well as the investment future. So to conclude. The firms should allocate more resources towards research and development and cut down operating cost and other expenses in order to improve the current financial condition. Since 2008 the company revenue gradually declined and on top of that the company invested a lot of money on acquiring fixed and current assets for future development. Moreover the firm brand name has significant effect on the market making them one of the leaders in the paper manufacturing industry. Double A should focus on improving the current financial status by increasing sales and by cutting cost which will result in increased market share value. Despite all the challenges. One of the key reasons is the Global recession that hit the business industry in 2008 and the adverse affect of this recession on the firm‟s financial performance can be noted in the ratio analysis. Double A company were able to make name for themselves as a leading paper manufacturer by providing high quality paper and services. In addition to that the company must focus their attention to the growing concern over environments and the world going paper less day by day. Double A is a still financially sound company as the demand for quality paper is ever growing. Despite their strong market position. the firm‟s financial position in the current years has not been healthy. North South University 38 .

(2011.readyratios. Annual Report 2010. Retrieved 12 13.answers.com/en/profile.com: http://corp.corp.doubleapaper. 12 13).asp Ready Ratio. thesaurus. from www. and encyclopedias. 2012. Vault cash financial definition of Vault cash.html "Debt/Equity Ratio: Definition from Answers.thefreedictionary.readyratios. North South University 39 . 2012. <http://www." Answers.doubleapaper." Financial Dictionary. and encyclopedias.com: Wiki Q&A combined with free online dictionary.com/topic/debt-equity-ratio>. Retrieved 12 12.com: http://www. 12 01).TERM PAPER: BUS 635 Financial Analysis Report: Double A Bibliography Double A (1991) Public Companay Limited. thesaurus.com/Vault+cash Answers. <http://financial-dictionary. (2011).com: Wiki Q&A combined with free online dictionary. Vault cash finance term by the Free Online Dictionary.com>. <http://www. Ready Ratios. from www. Environment Care Mission.answers.com/reference/liquidity/acid_test_ratio.com. Double A (1991) Public Company Limited. (2012.

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