4.

0 Shareholders Roles and Responsibilities

A shareholder may be an individual, company, or organization in a given company that holds

stock. In order to be a partial owner, a shareholder must own at least one share in the stock
or mutual fund of a company. Commonly, shareholders receive declared dividends if the firm
does well and succeeds. Within this thought it is to be said that there are two types of
shareholders which is common shareholders and preferred shareholders. Shareholders
usually take responsibility for checking and approving the company's financial statements
and shareholders can make decisions on instances over which the directors have no
authority, including making changes to the company's constitution. Shareholders are always
looking at the company's profitability ratio to understand how well the company is doing. This
is to ensure that they will be able to receive the profit in the form of dividend.
4.1 Probability Ratio of Sime Darby (2018-2019)

GROSS PROFIT MARGIN (GPM)

Gross Profit Margin = (Gross Profit / Sales) x 100

Gross Profit Margin (2019) = (1542/36156) x 100

= 4.26 %

Gross Profit Margin (2018) = (1102/33828) x 100

= 3.26%

TREND ANALYSIS OF GPM

GROSS PROFIT MARGIN (GPM)

4.4

4.2

3.8

3.6

3.4

3.2

3
2018 2019

Series 1

Based on the calculation and the graph above. It shows that the gross profit margin in 2018
is 3.26% while the gross profit margin 2019 is 4.26%. The trend shows that the gross profit
margin is increasing steadily from 2018 to 2019. For every RM 100 sales, the gross profit is
RM 3.26 for 2018, meanwhile in 2019 the gross profit is RM 4.26.
OPERATING PROFIT MARGIN (OPM)

Operating Profit Margin = (Earnings before interest and taxes / total sales) x 100

Operating Profit Margin (2019) = (1383/36156) x 100

= 3.83%

Operating Profit Margin (2018) = (1074/33828) x 100

= 3.17%

TREND ANALYSIS OF OPM

GROSS PROFIT MARGIN (GPM)

4
3.9
3.8
3.7
3.6
3.5
3.4
3.3
3.2
3.1
3
2018 2019

Series 1

The calculation above proves that the OPM for Sime Darby in 2018 is 3.17% while in 2019 is
3.83%. This graph illustrate that the trend is increasing by 0.66%. For every RM100 sales,
the operating profit is RM 3.17 (2018) and RM 3.83 (2019). It proves that the business is
able to control their spending in their operating expenses very well and able to improve it
from 2018 to 2019.
NET PROFIT MARGIN (NPM)

Net Profit Margin = (Earning after tax / Net Sales) x 100

Net Profit Margin (2019) = (1010/36156) x 100

= 2.79%

Net Profit Margin (2018) = (685/33828) x 100

= 2.02%

TREND ANALYSIS OF NPM

NET PROFIT MARGIN

2.9
2.8
2.7
2.6
2.5
2.4
2.3
2.2
2.1
2
2018 2019

Series 1

The net profit margin for 2018 is (2.02%) meanwhile in 2019, the net profit margin increasing
to (2.79%). This shows that for every RM100 sales, Sime Darby makes net profit of RM2.02
in 2018 and increase to RM2.79 in 2019 after deducting operating and non-operating
expenses.
RETURN ON TOTAL ASSETS (ROA)

Return on assets = (Earning after tax / Total Assets) x 100

Return on assets (2019) = (1010/25516) x 100

= 3.96 %

Return on assets (2018) = (685/24873) x 100

= 2.75 %

TREND ANALYSIS OF ROA

RETURN ON TOTAL ASSETS (ROA)

4.5
4.3
4.1
3.9
3.7
3.5
3.3
3.1
2.9
2.7
2.5
2018 2019

Series 1

Based on the trend above, it shows that the return on total assets for 2018 (2.75%) and the
return on total assets in 2019 (3.96%). The graph shows that return on total assets increase
by 4.33%. For every RM100 assets invested, the return is RM2.75 (2018) and RM3.96
(2019). This shows that the company was able to generate higher net earnings in 2019.
RETURN ON COMMON EQUITY (ROE)

Return on common equity = (Earning After Tax / Equity) x 100

Return on common equity (2019) = (1010/15118) x 100

= 6.68 %

Return on common equity (2018) = (685/14759) x 100

= 4.64 %

TREND OF ANALYSIS OF ROE

RETURN ON COMMON EQUITY (ROE)

7

6.5

5.5

4.5
2018 2019

Series 1

Based on the graph and calculations above the return on common equity in 2018 is (4.64%),
where as in 2019 it is (6.68%). For every RM100 capital that is invested in equity, the
company manages to generate a profit of RM 4.64 in 2018 and RM 6.68 in 2019.
4.2 Average Industry Ratio and Sime Darby company Profitability Ratio (2019)

Comparison of Profitability Ratio between Sime Darby and Industry

Average Ratio
50
45
40
35
30
25
20
15
10
5
0
Gross Profit Margin Operating Proft Net Profit Margin Return on Asset Return on Equity
(GPM) Margin (OPM) (NPM) (ROA) (ROE)

Sime Darby (2019) Industry Average Ratio

Analysis:

For comparison between industry average ratio and Sime Darby Profitability Ratio, the gross
profit margin in the industry is 44.9% and the gross profit in Sime Darby in 2019 is 4.26%.
This illustrates that Sime Darby gross profit margin is much lower than the industry average
ratio and shows show that Sime Darby has a lower ability to control cost of goods sold
relative to its sales revenue. Furthermore, on the operating profit margin of industry average
is 7.8% while Sime Darby has 3.83%. This shows that industry average has higher
productivity of assets in providing return to both their creditors and stockholders rather than
Sime Darby. Moreover, the net profit margin of industry average ratio is 3.3% and Sime
Darby has 2.79%. In this case, average industry has higher net profit margin than Sime
Darby. Then, the return on assets on average industry is 2.4% while Sime Darby has 3.96%,
this shows that Sime Darby has higher productivity in producing revenues and ability to
control costs in its operations rather than average industry. Lastly, return on equity which
average industry has 3.2% and Sime Darby has 6.68%. This indicates that Sime Darby has
higher rate of the return on investment of the equity than average industry.