ANALISIS KEUANGAN

FINANCIAL RATIO ANALYSIS

GROUP TEAM : 5AKMA

 Abdul Qaadir Malik (1842058)

 Aling (1842207)
 Chairunnisah (1842089)
 Charles (1842129)
 Niko Neris (1842195)
 Windy Anastasya (1842168)

PROGRAM STUDI AKUNTANSI

Universitas Internasional Batam
2020
 Financial Ratio Analysis

1. (Dobbins, 2013)
This journal will discuss the return on equity and will describe the details of the
calculation and calculation procedures for return on equity. The return on an investment
adequately summarizes the outcome of the investment, and investors visualize a probability
distribution of rates of return.
Return on equities comes in two forms — dividends and capital gains. The return on
an individual security or portfolio can be measured as follows:

Rt is the periodic return,

Pt is the price at the end of the period,
Pt_1 is the price at the beginning of the period,
Pt-Pt_1 is the capital gain or loss,
and Dt is the dividend received at the end of the period.

The standard deviation (or variance) of return measures the total risk of an investment. It is
not necessary for an investor to accept the total risk of an individual security. The expected
return on a portfolio comprising n securities in simply the weighted average of the expected
return on each security in the portfolio:

where E(R) is the expected return on the portfolio

Xi is the proportion of security i in the portfolio
µi is the expected return on security i.

2. (Khamidah et al., 2016)

This study aims to analyze the factors that affect Return On Assets (ROA). Namely: Gross
Profit Margin (GPM), Earning Per Share (EPS), Debt to Equity Ratio (DER), Net Profit
Margin (NPM), Asset Return (ROA).

A. GrossProfit Margin (GPM) is a percentage gross profit when compared to

achievements sales. The state of operation of the company will be indicated good if
the amount of GPM is getting better, this thing prove that the total cost of goods sold
tends to be lower when compared to sales price, and vice versa where increasingly
lower GPM then has an effect on getting the company operation is not good.

Gross Profit Margin (GPM) or profit gross is used to find out profit gross
company that comes from every sale the product. This ratio is strongly influenced by
value cost of goods sold. Gross profit margin increasing is an indication that it is
getting the rate of return on the gross profit has acquired the company against sales
 clean. The more efficient the costs incurred companies to support sales activities so
that the income earned becomes increased
Mathematically Gross Profit Margin (GPM) can be formulated as follows :

B. The better the ROA value the company's profitability will also be better because
every existing asset will generate profit. Negative ROA is due to profit the company
is also in a negative condition or loss, it shows the capability of that capital invested
as a whole have not been able to to make a profit. As for that formula used is as
follows:

The level of return on assets depending on the management of company

assets by management that describes the efficiency of company operations. The
higher the ROA the more efficient the company's operations and conversely, low
ROA can be caused by the number of company assets idle, investing in inventory too
many, excess banknotes, fixed assets operate under normal and others.

C. Earning Per Share (EPS) is a comparison between net income after tax in one
financial year with the amount issued shares. Earning mathematically Per Share
(EPS) can be formulated as follows:

D. The Debt to Equity Ratio (DER) will be different depending on the nature of the
business and variability of flows cash. DER comparison for a company with other
similar companies gives us a general indication of credit scores and the financial risk
of the company itself (Brigham and Huston, 2009: 209). In Mathematically the Debt
to Equity ratio can be formulated as follows :

3. (Julianti, 2014)
Effect of Current Ratio (CR), Debt To Equity Ratio (DER), Total Asset Turnover
(TATO), Net Profit Margin (NPM), and Return On Equity (ROE) Against Profit Growth in
Property & Real Companies Estates listed in IDX Period 2010-2013
A. Current Ratio ( CR )
The current ratio is the most commonly used measure for ability to meet
short-term obligations. Current ratio (current ratio) is a commonly used measure of
short-term solvensi, the ability of a company to meet the needs of obligations when it
falls tempo (Fahmi 2012:121)
 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑅𝑎𝑡𝑖𝑜 = 𝑋100%
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑦

B. Debt to Equity Ratio (DER)

Debt to Equity Ratio (DER) is a measure used in financial statements to show
the amount of collateral for creditors (Fahmi,2012:128). This ratio can be calculated
by dividing the total liabilities with equity. This ratio is useful for knowing the
amount of funds provided creditors with the owner of the company, and each rupiah
of its own capital for guarantee of liability. For creditors, the greater der will be
increasingly unprofitable. This is because if the DER gets bigger then risks incurred
for failures that may occur by the company as well as will get bigger.

𝑇𝑜𝑡𝑎𝑙 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑒𝑠
𝐷𝑒𝑏𝑡 𝑡𝑜 𝐸𝑞𝑢𝑖𝑡𝑦 𝑅𝑎𝑡𝑖𝑜 = 𝑋100%
𝑆ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟 𝐸𝑞𝑢𝑖𝑡𝑦

C. Total Assets Turn Over (TATO)

Total Asset Turnover is also called total asset turnover. This ratio see the extent to
which all assets owned by the company occur effective turnaround (Fahmi,
2012:135). The company's ability to effectiveness of using assets in generating sales
and measure the turnover of all assets owned by the company and measure how much
the amount of sales earned from each rupiah of the asset.

𝑆𝑎𝑙𝑒𝑠
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 𝑇𝑢𝑟𝑛 𝑂𝑣𝑒𝑟 = 𝑋100%
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠

D. Net Profit Margin (NPM)

Net Profit Margin (NPM) is also referred to as the ratio of income to Sales.
Net profit margin equals net income divided by sales (Fahmi,2012:136). This ratio
shows how much the percentage of obtained from each sale. High Net Profit Margin
indicates the company's ability to make high returns at a high level of specific sales.
Low Net Profit Margin indicates strong sales too low for a certain level of cost or too
high a fee to level of sales, or a combination of the two.

𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡
𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 𝑀𝑎𝑟𝑔𝑖𝑛 = 𝑋100%
𝑇𝑜𝑡𝑎𝑙 𝑆𝑎𝑙𝑒𝑠

4. (Jewell & Mankin, 2011)

Return on assets (ROA) is a popular and well-known ratio. It is used by analysts to
measure the profitability of a firm and by researchers to make predictions on financial
variables and events. However, the current study shows that there are eleven different
versions of ROA in current business textbooks. One of the problems with the existence of so
many disparate In the Mankin and Jewell (2010) study, 70 of the 77 textbooks included ROA.
The study found eleven different versions of ROA in business textbooks versions is that it
makes comparability between versions more difficult.
All eleven versions of ROA can be economically and mathematically different in different
situations, sometimes by large amounts. impact of averaging the denominator versus not
averaging. Denominator Advantages
Average Total Assets
a. Preserves the matching principle
b. Less affected by "random" changes in total assets
c. Higher ROA when assets are rising

Total Assets
a. Simplicity
b. Requires less data to calculate ROA
c. Quicker to react to trends
d. Higher ROA when assets are falling

The various numerators are all measuring something slightly different. summarizes the
advantages of each numerator.
Operating Profit
a. Unaffected by non-operating items, debt levels, taxes, or dividends
b. Useful for comparing firms with different exposure to non-operating items

EBIT
a. Unaffected by debt levels, taxes, and dividends
b. Useful for comparing pre-tax returns of firms with different capital structures

EBT
a. Unaffected by taxes and dividends
b. Useful for comparing firms with different tax situations

(NI + IntExp)
a. Measures "all investors" ROA
b. Shows the total ROA available to "pay" investors a return

[NI + IntExp(1-T)]
 a. Eliminates the effects of different debt levels and interest expense
b. Useful for comparing after-tax returns of firms with different debt levels

Net Income
a. Simplicity
b. The "bottom line" ROA for all equity holders

EACS
a. The only version that considers preferred dividends
b. The "bottom line" ROA for common shareholders

Therefore, based on the analysis above, it is appropriate not to think of ROA as a

single ratio but as a “category of ratios.” This category includes almost any ratio that
compares an earnings related number from the income statement to Total Assets or
Average Total Assets. This study shows each of the eleven versions of ROA can have
a valid use in the proper context, but that none should be presented as the only or the
definitive version of ROA.

5. (Zamfir et al., 2016)

ROI (Return On Investment) is a concept of performance in any form of investment.
For shareholders the ultimate goal of the company is expressed in ROI. ROI is an indicator
that shows to which extent a specific business produce gain from the use of capital. It shows
the extent to which the amount invested in a particular action returns as profit or loss. ROI is
calculated as the ratio between operating profit obtained after the action of investment and the
total amount invested (or the total investment costs). The result being a percentage the
relation obtained is multiplied by 100. The calculation formula is:

It is a formula that can be applied to all types of investments. ROI is used by investors to
select an investment project of several possible. As well it can be used after completion of the
investment, to measure its profitability. ROI is an indicator frequently used in performance
analysis and decision making.
Analysis of the investment project based on ROI
In Table 4 ROI is calculated both before and after making the investment.
 1. 13.215 = 13.425 – 210 (cost savings)
2. depreciation of the new machinery is considered:
975 = 825 + 750/5 years
3. Invested capital IC = Fixed assets FA + Working capital WC
WC = Current assets CA – Short term debts STD
If the fixed assets are considered at their net value, the results are:
 before investment:
FA = 4.950 lei
WC = (450 + 375 + 525) – 510 = 840 lei
IC = 4.950 + 840 = 5.790 lei
 after investment:
IC = ICbefore investment + New investment = 5.790 + 750 = 6.540 lei
4. ROI = (Profit : Invested capital) x 100
 before investment: ROI = (750 : 5.790) x 100 = 12,95%
 after investment: ROI = (810 : 6.540) x 100 = 12,38%

For a correct calculation of ROI, an important role is assigned to the accountant.

The accountant’s role in decision-making is to provide timely, accurate information in a
useful form. To achieve this, the accountant should collect appropriate information, to
restate them where appropriate, and to report them in a relevant way for managers and
investors. Even if measuring return on invested capital through ROI can raise several
issues, ROI remains one of the indicators most commonly used by investors in decision
making.
From researches carried out I found that ROI is an indicator that cannot be fully
controlled from a single department of the company. Calculated as a rate, ROI can be
decomposed into other indicators drawn from the financial statements of the company,
the research hypothesis is thus validated.

6 . (Warrad, L. (2015).) .

Net Profit Margin is the ratio of net income to revenue. Analyst should be
concerned if this ratio is too low. It should be based on net income from continuing
operations, because analysts should be primarily concerned about future
expectations.(Financial Reporting and Analysis, SchweserNotes TM for the CFA Exam,
2012). The formula of Net Profit Margin is :

New profit margin = Net Income

Net Revenues
This ratio gives a measure of net income dollars generated by each dollar of revenue.
Although it is desirable for this ratio to be high, competitive forces within an industry,
economic conditions, use of debt financing, and operating characteristics such as high
fixed costs will be cause the net profit margin to vary between and within industries.

Current ratio is This ratio expresses current assets in relation to current

liabilities. A higher ratio indicates a higher level of liquidity, a lower ratio indicates
less liquidity, implying a greater reliance on operating cash flow and outside
financing to meet short-term obligations. Liquidity affects the company’s capacity to
take on debt. The current ratio implicitly assumes that inventories and accounts
receivable are indeed liquid. It can be calculated as follow:
 Current Assets
Current Liabilities

Simple Regressions

Model Sum of squares df Mean square F Sig.

Regression 332299.407 1 332299.407 .061 .805a
Residual 4.181E8 77 5429501.321
Total 4.181E8 78
a. Predictors: (Constant), net profit margin
b. Dependent variable: current ratio

By reviewing the table above we find that the P value= (.805) >.5% is highly
not significant, and this supports accept of the main null hypothesis.
There is no significant effect of independent variable current ratio on
dependent variable net profit margin.

Statistical Analysis
This section presents the results of descriptive statistic for the study variables

Table 1: Current Ratio - continued

The Investors and Eastern Arab 4.25 6.08

For Industrial and Real Estate
Investments.

Arab east for real estate

investments co. 4.59 . 2.08

Int'l arabian development and

investment trading. 1.67 0.32

Jordanian realestate for

development. 0.36 2.78

Amad investment & real estate 17.31 19.58

development.
Emmar investments & realestate 8.11 13.24
development.
Contempro for housing projects. 18.86 6.89

Deera investment & real estate 4.79 3.72

development co.
Comprehensive land 1.30 1.31
development and investment.
Ad-dulayl industrial park & real 1.60 1.31
estate.
 As can be seen from table (1) that the Real Estate& Investment Portfolio CO has
highest Mean ratio, and Arab Real Estate Development has the highest Standard
Deviation.

Table 2: Profit Margin

Beit al-mal saving&investment for -69.60 243.91

housing.
Alshamekha for realestate and 188.68 210.33
financial investments.
Jordan dubai properties. -13.68 66.21
Resources company for development 157.86 452.18
& investment plc.
Union land development corporation. 24.61 17.46
4.70 18.33
Al-tajamouat for catering and
housing.
Specialized investment compounds. 30.97 21.72
Real estate development. 498.08 1278.38
Arab real estate development. 46.49 224.08
The real estate & investment -87.49 178.44
portfolio co.
The Investors and Eastern Arab For 47.78 143.60
Industrial and Real Estate
Investments.
Arab east for real estate investments 11967.55 23973.47
co.
Int'l arabian development and 101.86 26.65
investment trading.
Jordanian realestate for development. 79.23 26.14
32.31 11.92
Amad investment & real estate
development.
Emmar investments & realestate 43.56 41.45
development.
Contempro for housing projects. 21.94 7,84
Deera investment & real estate 12.36 68.66
development co.
Comprehensive land development 15.34 48.12
and investment.
Comprehensive land development 33.29 62.33
and investment.
Ad-dulayl industrial park & real 33.29 62.33
estate

As can be seen from table (2) that the Arab East for Real Estate Investments CO and
has highest Mean ratio, and Arab Real Estate Development has the highest Standard
Deviation.
 Summary and Conclusion

This study is carried out to investigate if there is effect liquidity through quick ratio
on Jordanian Real Estate sector’s profitability presented by net profit margin. A simple liner
regression used to cover the study period from 2005 to 2008 to examine the extent that the
current ratio affects the net profit margin in Jordanian Real Estate sector

Through the analysis of main hypothesis, we conclude that there is no significant

effect of current ratio on net profit margin among Jordanian Real Estate sector.
The theory suggest the same results for this study, that current ratio has no significant effect
net profit margin as Sumaira, Bet al. (2013) which showed that growth opportunity and
liquidity are no significant determinants of profitability, also Innocent, E., et al. (2013) study
revealed that asset turnover ratio and debtors’ turnover ratio as an important factors to
determine liquidity and creditors’velocity have no significant relationship with profitability
,on the other hand some literature such as Al-Nimer, M., et al. (2013) study approved that
profitability through return on assets (ROA) in Jordanian banks is significantly influenced by
liquidity through quick ratio, also Lartey V., et al. (2013) study revealed that there was weak
positive relationship between the liquidity and the profitability of the listed banks in Ghana.
Finally some studies suggested a negative effect of liquidity n profitability such as B.
Charumathi, (2012) study
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