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1.

0 INTRODUCTION

Spritzer is a market leader in bottled drinking and mineral water with an annual
production capacity of 650 million liters from 15 production lines in three of its plants in
Taiping, Shah Alam and Yong Peng. Everyone knows Spritzer as Malaysias best-selling
natural mineral water. Since the late 1980s, Spritzer Group of Companies, which consist
of eight (08) subsidiaries, have been specialized in manufacturing and distribution of
natural mineral water, sparkling natural mineral water, distilled drinking water, carbonated
fruit flavored drink, non-carbonated fruit flavored drink, functional drink, toothbrushes,
preforms and packaging bottles.

It may sound simple, but the difficult part is making sure that nothing gets in
natures way. They go to great lengths to look after their vast 330-acre site of natural
mineral water sources here at Taiping, Perak like watchful guardians, keeping the water
sources pure and clean protected from anything that could potentially pollute and
damage them.

Manned by highly qualified professionals while equipped with automated and


advanced bottling technology, you can be rest assured that every Spritzer product is
exceptional of its class, which explains why Spritzer has garnered many awards throughout
the years.

This case will tell on Spritzer company through methodology, finding and analysis,
and conclusion and recommendation. This analysis it will be able to see Spritzer company
business fluctuation condition.
2.0 METHODOLOGY

Liquidity Ratio

Liquidity ratio is a calculation that is used to evaluate the ability of a company to pay its

short-term debts. It determines the non-cash assets which can be converted to cash for the financial

obligations. There are two common calculations which fall under the same category of liquidity

ratio which are the current ratio and quick ratio. The larger the liquidity ratio, the better the position

of the firms liquidity.

3.1.1 Current Ratio

Current ratio is a calculation that computes the ability of a company to pay its current

liabilities from its current assets that should be paid within the year. The larger ratio, the better the

business financial where it has enough liquidity assets for the companys operations.

CURRENT ASSETS
Current Ratio = CURRENT LIABILITY

3.1.2 Quick Ratio

Quick ratio is also known as the acid ratio. It is a ratio that determines how a company meet its

short-term obligation with most of its liquidity assets. Larger ratio shows that the business will

have enough quick assets to pay its short-term debt immediately.

CURRENT ASSETS - INVENTORY


Quick Ratio = CURRENT LIABILITY

3.2 ASSET MANAGEMENT RATIO


Asset management ratio is a ratio that determines how successful a company is utilizing its

assets to generate the revenue. Assets management ratio is also used to determine the efficiency

and effectiveness in making basic decision about total investment in the account receivable,

inventory and fixed assets.

3.2.1 Average collection period (ACP)

Average collection period (ACP) determines the duration of time for the firm to collect its

account receivable from customers. The shorter the time duration, the faster for the company to

get its money.

365
=

3.2.2 Account receivable turnover (ARTO)

Account receivable turnover (ARTO) determines the ability of the business to collect debt

from customers. Receivable turnover can be computed by dividing the next value of credit sales.

The time period of account receivable turnover should be high enough to make sure that the firms

credit and collection policy are on target.


=

3.2.3 Inventory turnover

Inventory turnover is used to record the flow of a firms inventory which are sold and

replaced within a year. The higher turnover represents that the firm has better position of the quick

inventory movement.

COST OF GOODS SOLD


Inventory turnover = INVENTORY

3.2.4 Total asset turnover

Total asset turnover indicates the efficiency of the companys used of its assets in

generating sales revenue. The total asset turnover should be higher to show a better companys

effectiveness.

SALES
Total Asset Turnover = TOTAL ASSETS

3.2.5 Fixed assets turnover

Fixed assets turnover is used to measure the abiliy of a company to generate net sales from

its fixed asset investment. The higher the fixed asset turnover indicates the higher effectiveness of

the company to produce sales.

SALES
Fixed Asset Turnover = TOTAL FIXED ASSETS
3.3 LEVERAGE RATIO

Leverage ratio is a ratio which observes how much capital comes in the form of debt or

assesses the ability of a company to meet its financial obligation. It is also used to determine the

effectiveness of management.

3.3.1 Debt ratio

Debt ratio is defined as the ratio of total of the long-term and short-term debts to total

assets, expressed as a decimal or percentage. The lower the ratio represents the lesser total debt

the business has compared to asset base.

TOTAL DEBT
Debt Ratio = TOTAL ASSETS

3.3.2 Debt equity ratio

Debt equity ratio is a ratio that is used to compute a companys financial leverage, and is

calculated by dividing a companys total liabilities by its stockholders equity. The lower ratio

indicates a safer investment to potential owner of the firm.

TOTAL DEBT
Debt Equity Ratio = TOTAL EQUITY
3.3.3 Time interest earned (TIE)

Time interest earned (TIE) is usually quoted as a ratio. It shows how many times a company

can cover interest changes on a basis. The higher the ratio represent the higher ability of a firm to

pay the interest expenses.

EBIT
Time Interest Earned (TIE) = INTEREST EXPENSES

3.4 PROFITABILITY RATIO

Profitability ratio is used to assess a business ability to generate earnings as compared to

the companys efficiency and other relevant cost incurred during a specific time period.

3.4.1 Gross profit margin

Gross profit margin is defined as the source for paying additional expenses and future

saving. The higher gross profit margin indicates that the firm is operating efficiently after sales

costs are subtracted.

GROSS PROFIT
Gross Profit Margin = SALES

3.4.2 Operating profit margin

Operating profit margin measures how effective the companys revenue is left after paying

variable costs. The higher ratio shows that the firm managing its operating expenses efficiency.

Operating Income
Operating profit Margin =
Revenue
3.4.3 Net profit margin

Net profit margin is defined as the profit that is earned from the sales after all expenses.

Net profit margin shows how much dollar earned by the company. The higher ratio is better

because the expenses or cost in producing sales are reduced.

3.4.4 Return on asset (ROA)

Return on asset (ROA) determines the effectiveness of management in using their assets to

generate income. The higher the ratio means the firm is more effective in using their assets.

3.4.5 Return on equity (ROE)

Return on equity (ROE) determines the amount of net income returned as a percentage of

shareholders equity. The firm is able to produce higher profit to its owners if the ratio of return is

high.

ROE = Annual Net Income


Average Stockholders' Equity
3.5 MARKET VALUE RATIO

Market value ratio determines the exchange traded instruments such as stocks and futures.

It is obtained by multiplying the number of its outstanding shares by the current share price.

3.5.1 Earnings per share (EPS)

Earnings per share (EPS) is a serve as an indicator of a firms earnings which is allocated

to each share of common stock. The higher EPS represents the higher capability for firm to

generate a significant dividend for inventors.

NET INCOME
EPS = NUMBER OF SHARE OUTSTANDING
3.0 FINDING AND ANALYSIS (INTERPRETATION)

3.1 Liquidity Ratios


CURRENT ASSETS
3.1.1 Current Ratio = Current Ratio = CURRENT LIABILITY

Year 2012 2013 2014

Current Assets 83679 97727 106200


71467 80724 85917

Answer 1.17 1.21 1.24

Current Ratio

1.24
1.21

1.17

2012 2013 2014

Current ratio
3.2 Asset Management Ratios
365
3.2.1 Average Collection Period (ACP) =

Year 2012 2013 2014

ACP

365 365 365


3.72 3.32 3.59

Answer 98.11 109.94 101.67

Average Collection Period

109.94

101.67
98.118

2012 2013 2014

Average Collection Period


CREDIT SALES
3.2.2 Account Receivable Turnover (ARTO) = ACCOUNT RECEIVABLE

Year 2012 2013 2014

ACP

100 100 100


18.82 16.88 19.53

Answer 5.31 5.92 5.12

Account Receiveable Turnover

5.92

5.31
5.12

2012 2011 2010

Account Receiveable Turnover


COST OF GOODS SOLD
3.2.3 Inventory Turnover = INVENTORY

Year 2012 2013 2014

Inventory Turnover 115855 70862 44100


20980 17975 16792

Answers 5.52 3.9422 2.6262

Inventory Turnover

5.52

3.9422
2.6262

2012 2011 2010

Inventory Turnover
SALES
3.2.4 Total Asset Turnover =TOTAL ASSETS

Year 2012 2013 2014

Total Asset Turnover 178208 201935 238750


272082 284125 307622

Answers 0.65 0.71 0.78

Total Asset Turnover

0.78

0.71

0.65

2012 2013 2014

Total Asset Turnover


SALES
3.2.5 Fixed Asset Turnover = TOTAL FIXED ASSETS

Year 2012 2013 2014

Fixed Asset Turnover 178208 201935 238750


8950 8825 23687

Answers 19.911 22.48 10.08

Fixed Asset Turnover

22.48
19.911

10.08

2012 2013 2010

Fixed Asset Turnover


3.3 Leverage Ratios

TOTAL DEBT
3.3.1 Debt Ratio = TOTAL ASSETS

Year 2012 2013 2014

Debt Ratio 53388 53564 55018


100 x 100 x 100
272082 284125 307622

Answer 0.196% 0.19% 0.2%

Debt Ratio

0.2

0.196

0.19

2012 2013 2014

Debt Ratio

The debt ratio of DiGi.Com Berhad in year 2012 is 0.196. However it decrease to 0.19 in
year 2013. From the graph above, we can see the debt ratio of the company is not consistency. It
increase to 0.2 on years. This situation shows the ability of the company to manage the debt are
not consistency
TOTAL DEBT
3.3.2 Debt Equity = TOTAL EQUITY

Year 2012 2013 2014

Debt Equity

53388 53564 55018


150207 167018 187792

Answer 0.36 3.20 2.93

Debt Equity

3.2
2.93

0.36

2012 2013 2014

Debt Equity

The debt equity ratio for Spritzer Berhad in year 2012 is 0.36%. From the table above, this
situation shows the ability of the company to manage the debt are not consistency. The debt equity
ratio of the DiGi.Com Company had dramatically increase at 3.2% in year 2013. But surprisingly
its goes down to 2.93% on year 2014. This situation will make investors no confidence to invest
in this company.
EBIT
3.3.3 Time Interest Earned (TIE) = INTEREST EXPENSES

Year 2012 2011 2010

TIE

29217 52,555,000 51,495,000


4684 3,747,000 2,276,000

Answer 6.238 14.025 22.62

Time Interest Earned

22.62

14.025

6.238

2012 2011 2010

Time Interest Earned

The time interest earned (TIE) for Spritzer Berhad from 2010 to 2012 is showing decrease
dramatically. Spritzer Berhad need 14.025 times to pay interest expenses at 2011 and its decrease
to 6.238 at 2012. This company time interest earned keep on going decreasing growth in year
2010 which is 22.62 times too and 14.025 times in year 2011.
4.4 PROFITABILITY RATIOS
Gross profit
4.4.1 Gross Profit Margin = Sales

Year 2012 2013 2014


62 353 79 640 93 731
Gross Profit 178 208 201 935 238 750
Margin

Answers 0.35 0.40 0.39

Gross Profit Margin

0.4
0.39

0.35

2012 2013 2014

Gross Profit Margin

The gross profit margin Spritzer Berhad from 2012 to 2014 is showing sequence
of ascending and slightly descending year, looked goes up in 2012 and 2013 which is
from 0.35 % to 0.40% and slightly down at year 2014 which is 0.39% from. This is
because the company had up the cost of good sold, cheaper price of goods will attract
customer and also will increase the sale of company. But for year 2014, the cost slightly
down are not affecting the sale of company.


4.4.2 Operating Profit Margin =
Year 2012 2013 2014

Operating 4 684 4 079 3 503


Profit
Margin 178 208 201 935 238 750

Answers 0.026 0.020 0.015

Operating Profit Margin

0.026
0.02
0.015

2012 2013 2014

Operating Profit Margin

The Operating Profit Margin for Spritzer Berhad from 2010 to 2012 is showing
descending from year 2012 to 2014. In other word, Spritzer Berhad at 2012 is 0.026%
increased to 0.020% in year 2013 and down to 0.015% in year 2014. This is might be
because of the department of operation management is unable to control the using cost
given and cause the happening of over cost in the period.
NET INCOME
4.4.3 Net Profit Margin = SALES

Year 2012 2013 2014


10 586 19 283 21 566
Net Profit
Margin 10 305 17 659 6 575

Answers 1.03 1.09 3.28

Net Profit Margin

3.28

1.03 1.09

2012 2013 2014

Net Profit Margin

The higher net profit margin shows that a business is reducing in expenses or
cost in producing sales. In 2012, the company shows 1.03% in net profit margin, then
increase slightly 1.09% in 2013, and then directly increasing significantly to 3.28% in year
2014. The increase of net profit margin for the company is caused by low expenses in all
year. A high net profit margin of the company is because of the inventory turnover is not
efficient. This result is also because of the cost is lower.
4.4.4 Return On Asset (ROA) = ANUAL NET INCOME
AVERAGE TOTAL ASSETS

Year 2012 2013 2014

Return On 10 586 19 233 21 566


Asset
272 082 284 125 307 622

Answers 0.039 0.068 0.070

Return On Asset

0.068 0.07

0.039

2012 2013 2014

Return On Asset

The return on asset in the company is 0.039% in 2012 and then increased to 0.068%
in 2013. For year 2015, the return on asset slightly goes up in 0.070%. The ROA is higher
because the company has high asset insensitive. The increasing trend show that the profit
ability is progressive. The company is successful to manage its assets because the assets of
these three years have more assets. The high return caused by high basic earning power.
4.4.5 Return on Equity (ROE) = ANNUAL NET INCOME
AVERAGE STOCKHOLDERS' EQUITY

Year 2012 2013 2014

Return On 10 586 19 233 21 566


Equity
150 207 167 018 187 792

Answers 0.0704 0.1151 0.1148

Return On Equity

0.1151 0.1148
0.0704

2012 2013 2014

Return On Equity

The return on equity of the company in 2012 is increase in 0.0704% and decreased
slightly from 0.1151% to 0.1148% in year 2013 and 2014. The graph is increase shown that
the company in the good well company's management in deploying the shareholders'
capital even in year 2014 the graph shown that decreased slight are not affect the sale of the
companys products. Net income is increased in because the tax income is increased.
4.5 Market Value Ratio
Net income
4.5.1 Earning Per Share (EPS) = Number of share outstanding

Year 2012 2013 2014

21 566
ACP
10 586 19 233 132 510
130 635 130 884

Answer 8. 10 14.69 16.26

Market Value ratio

16.26
14.69

8.1

2012 2013 2014

Market Value ratio

The graph above shown the earning per share of the Spritzer Berhad company
is RM8.10 in 2012 and up sharply to RM14.69 in 2013 . However, in years 2014 the
earning was increase slightly to RM16.26. It is because the company have bought back
its own shares in the open market to number of share outstanding.
5.0 CONCLUSION AND RECOMMENDATION

Ratios are just one number divided by another and as such really dont mean much. The
trick is in the way ratios are analyzed and used by the decision maker. A good strategy is to
compare the ratios to some sort of benchmark, such as industry averages or to what a company
has done in the past, or both. Once ratios are calculated, an analyst needs some benchmarks to
find out where the company stands at that particular point. Useful benchmarks are industry
comparisons and company trends.

It may be useful to compare a company to certain industry averages to get a feel for how
the company is performing. In that case it is necessary to obtain industry performance
measures. One of the ways in which financial statements can be put to work is through ratio
analysis. Ratios are simply one number divided by another; as such they may or not be
meaningful. In finance, ratios are usually two financial statement items that may be related to
one another and may provide the prudent user a good deal of information. Of the myriad of
ratios that could be generated, some will be more meaningful than others. Generally, ratios are
divided into four areas of classification that provide different kinds of information: liquidity,
turnover, profitability and debt.

However, this company also need reduce amount of the debt for the company performance
in the future. If the company has a lot of debt, it will make the investor do not want to invest
in this company.

.
REFERENCE

Current Ratio. (2011). Retrieved 11 October 2016, from

http://www.readyratios.com/reference/liquidity/current_ratio.html

Earnings Per Share. (2016). Retrieved 11 October 2016,

http://www.myaccountingcourse.com/financial-ratios/earnings-per-share

Earnings Per Share EPS. (2016). Retrieved 15 October 2017, from

http://www.investopedia.com/terms/e/eps.asp

company profile. 2010. [online]. [Accessed 29 April 2012]. Available from World Wide Web:
http://www.spritzer.com.my/html/company_profile.aspx

Gross profit Ratio. 2011. [online]. [Accessed 28 April 2012]. Available from World Wide
Web: http://www.accountingformanagement.com/gross_profit_ratio.htm

JWILKINSON. 2011. Operating Profit Margin. [online]. [Accessed 28 April 2012]. Available
from World Wide Web:
http://www.wikicfo.com/wiki/Operating%20Profit%20Margin%20Ratio.ashx

Retun on Equity. 2012. [online]. [Accessed 28 April 2012]. Available from World Wide Web:

http://www.investopedia.com/terms/r/returnonequity.asp#ixzz1tQ9vpsqe

spritzer. 2011. [online]. [Accessed 29 April 2012]. Available from World Wide Web:
http://www.scribd.com/doc/87070989/Chapter-3T

The street wall Journal. 2017. [online]. [Accessed 19 april 2017]. Available from World Wide

Web: http://quotes.wsj.com/MY/SPRITZER/financials/annual/balance-sheet