FINANCIAL RATIO

2.0) HORIZONTAL ANALYES

A. DRB-HICOM BERHAD

Financial Formula Year

2017 2018 2019
ratio
1. Current current assets RM 15,506,354 RM 15,791,300 RM 14964,060
current liability RM 28,637,210 RM 27,127,322 RM 27,349,586
Ratio
= 0.54 = 0.58 = 0.54

The current ratio for DRB-HICOM Company was increase from 0.54 in year 2017 to 0.58 in year 2018 and drop to 0.54 in
year 2019. The ratio has increase from year 2017 to year 2018 but decrease in year 2019 due to DRB-HICOM Company with the
ratio below than 1.00, it mean that the company is not able to pay off their short-term liabilities on times.

Financial Formula Year

2017 2018 2019
ratio
2. Quick current assets−inventory RM 15,505,354−RM 2,285,452 RM 15,791,300−RM 1,640,454 RM 14,964,060−RM 2,550,799
current liability RM 28,637,210 RM 27,127,322 RM 27,349,586
Ratio
= 0.46 =0.52 = 0.45

The quick ratio for DRB-HICOM Company was 0.46 in year 2017 and rise to 0.52 in year 2018. But the quick ratio decline to
0.45 in the 2019. The ratio shows increase from year 2017 to year 2018 due to the DRB-HICOM Company has improved its
 liquidity, but it was decrease from year 2018 to year 2019. It shows the company still need to improve their quick ratio which is
greater than 1.00 so they can maintain the ability to pay its short term obligations to creditor without rely on inventory.

Financial Formula Year

2017 2018 2019
ratio
3. Net Current asset – current RM15,506,354-RM28,637,210 RM 15 , 791,300−RM 27,127,322 RM14,964,060-RM27,349,586
Working liability = - RM 13,130,856 = - RM 11,336,022 = - RM 12,385,526
Capital

In these three years, DRB-HICOM Company shows a negative net working capital. In shows that the net working capital was
increased from –RM 13,130,856 in year 2017 to –RM 11,336,022 in year 2018 but it has declined to –RM 12,385,526 in year 2019.
To get positive of net working capital, the amount of current asset must excess the amount of liability. It shows that the company is
weak financial strength in cover current liability for growing their company performance.

Financial Formula Year

2017 2018 2019
ratio
4. Inventory COGS∨Sales RM 897,315 RM 1,069,412 RM 644,254
Inventories RM 2,285,452 RM 1,640,454 RM 2,550,799
Turnover
= 0.39 times =0.65 times = 0.25 times

The inventory turnover was increased from 0.39 times in year 2017 to 0.65 times in year 2018. In year 2019, the inventory
has drop to 0.25 times. The increase of inventory turnover in year 2017 to year 2018 reflect that the company was increase
effectiveness in manage the inventory. However, the ability of company in selling the inventory has drop in year 2018 to year 2019,
it reflect the ineffectiveness of inventory in generate sales.
Financial Formula Year
2017 2018 2019
ratio
5. Fixed Sales RM 897,315 RM 1,069,412 RM 644,252
¿ Asset RM 28,341,495 RM 27,404,133 RM 27,712,766
Asset
= 0.0317 =0.0390 = 0.0232
turnover

The fixed asset turnover of DRB-HICOM Company was increased from 0.0317 in year 2017 to 0.0390 in year 2018 and drop
to 0.0232 in year 2019. The increase of total asset turnover shows that DRB-HICOM Company in year 2017 to year 2018 has
increased in investment of fixed asset. Unfortunately, the total asset turnover has drop in year 2018 to year 2019 due to the
company has over-invested in fixed asset.

Financial Formula Year

2017 2018 2019
ratio
6. Total Asset Sales RM 897,315 RM 1,069,412 RM 644,254
Total Asset RM 43,847,849 RM 43,195,433 RM 42,676,826
turnover
= 0.0205 =0.0248 = 0.0151

The total asset turnover in year 2017 is 0.0205 and increase to 0.0248 in year 2018. However it drops to 0.0151 in year
2019. It show DRB-HICOM Company has used asset efficiently to generate sales from year 2017 to year 2018, but company didn’t
used the asset wisely to generate sales in year 2018 to year 2019
Financial Formula Year
2017 2018 2019
ratio
7. Debt Ratio Total Debt RM 33,709,334 RM 32,909,561 RM 32,660,932
Total Asset RM 43,847,849 RM 43,195,433 RM 42,676,826
= 0.7688 =0.7619 = 0.7653
= 76.88% =76.19% = 76.53%

The debt ratio in year 2017 is 76.88% decrease to 76.19% in year 2018 and increase to 76.53% in year 2019. The decrease
of debt ratio in year 2017 to year 2018 shows that DRB-HICOM Company has taken less risk in their business activities to avoid the
increase of debt in company. However in year 2018 to year 2019 increase of debt ratio reflect the higher amount of debt to finance
asset.

Financial Formula Year

2017 2018 2019
ratio
8. Debt to Total Debt RM 5,072,124 RM 5,782,239 RM 5,311,346
Equity RM 9,838,515 RM 10,285,872 RM 10,015,894
Equity
= 0.5003 =0.5622 = 0.5303
= 50.03% =56.22% = 53.03%

Financial Formula Year

2017 2018 2019
ratio
9. Time EBIT RM 15,437 RM 530,487 RM 14,115
Interest RM 2297 RM 18,753 RM 1820
Interest
= 6.72 = 28.29 times = 7.76
Earned
Financial Formula Year
2017 2018 2019
ratio
10. Gross Gross Profit RM 897,315 RM 1,069,412 RM 644,254
Sales RM 897,315 RM 1,069,412 RM 644,254
Profit Margin
=1 =1 =1
= 100% =100% = 100%

Financial Formula Year

2017 2018 2019
ratio
11. Operating EBIT RM 15,437 RM 530,487 RM 14,115
Sales RM 897,315 RM 1,069,412 RM 644,254
Profit Margin
= 0.0172 = 0.4961 = 0.0219
= 1.72% = 49.61% = 2.19%

Financial Formula Year

2017 2018 2019
ratio
12. Net Profit Earning After Tax RM 356,519 (RM 1,199,529) RM 15,706
Sales RM 897,315 RM 1,069,412 RM 644,254
Margin
= 0.3973 = 1.12 = 0.0244
= 39.73% =112% = 2.44%
Financial Formula Year
2017 2018 2019
ratio
13. Return on Earning After Tax RM 356,519 (RM 1,199,529) RM 15,706
Total Asset RM 43,849,849 RM 43,195,433 RM 42,676,826
Asset
= 0.0081 = 0.0278 = 0.0003
= 0.81% = 2.78% 0.03%

Financial Formula Year

2017 2018 2019
ratio
14. Return Earning After Tax RM 356,519 (RM 1,199,529) RM 15,706
Total Equity RM 10,138,515 RM 10,285,872 RM 10,015,894
On Equity
= 0.0352 = 0.1166 = 0.0016
= 3.52% = 11.66% = 0.16%