PT Cahaya Kalbar Terbuka
Business Description:
PT Cahaya Kalbar Terbuka. The Group's principal activity is producing vegetable and specialty oil used in food industry and general trading including export and import. It produces various ingredients for a range of food products, including chocolate and cocoa confectionary industries, icing coating and confectionary filling. It also produces aloe vera concentrates and powder for functional food, cosmetics and pharmaceutical industry. The Group operates in Indonesia. (Source: www.corporateinformation.com)
2. Analysis of financial condition
2.1. Liquidity analysis
This ratio will show how liquid are assets owned by the company. If we look on year 2004, the company has current ratio of 1, 4708 which is mean this company has Rp. 1, 4708 in current assets for every Rp.1 in current liabilities, or we could say that PT. Cahaya Kalbar has its current liabilities covered 1,4708 times over.
Here, to determine the quick ratio we assume that the half of current ratio is one indicator whether this company has more liquidity asset or not and also for the “save condition” indicator. So if we look at the calculation from 2004 until 2008, we can see that the quick ratio for 2004, 2005 and 2007 are below the half of current ratio. This calculation shows that this company’s inventories are bigger than the other account in current asset or the changes of inventories increased significantly and it makes the liquidity of this company become low.
The cash ratio is an indicator of a company's liquidity that further refines both the current ratio and the quick ratio by measuring the amount of cash; cash equivalents or invested funds there are in current assets to cover current liabilities.
2.2. Efficiency analysis
What we are intended to describe is how efficiently or intensively a firm uses its assets to generate sales. (Ross: 2003). Efficiency measures the degree to which the business is effectively utilizing its resource in generating sales and profit for the business. The longer credit sales are exist, the more dangerous the company’s situation. This calculation will show how long the company will collect their credit sales in average. So that the company can make financial decision due to their credit sales condition.
From our calculation, we find that in year 2004 the average collection period is 45.0381 days. From this figure we know that PT. Cahaya Kalbar will collect their credit sales in 45.0381 days in average. As we know that if the average collection period result is lower, it is mean that the company will collect their credit sales sooner.
2.3. Leverage analysis
Leverage analysis is usually used by a shareholder to analyze whether he should invest money to the company or not. The using of this analysis is by looking the debt, the higher the ratio of the debt, the more risk that the shareholder has. Simply said, if a company has many debts then the risk of bankruptcy is also greater than the less one. However, to calculate this analysis or ratio, three items are needed. Those are assets, debt, and equity. Each of them has different formula to calculate and they also have different meaning to interpret.
For debt ratio and debt to equity ratio, the higher the ratio, the higher the risk is. While for the equity ratio, the higher the ratio, the lower the risk is. The example can be taken from PT Cahaya Kalbar in 2004. It is said that in that year the debt ratio of that company is 13.74%; the equity ratio is 70.45%; and the debt to equity ratio is 40.61%. From the ratio above, it can be concluded that the risk of the company is low because the debt and debt to equity ratio of the company is also low and for the equity ratio can be seen in other way; the risk of the company is low because the equity ratio of the company is high.
2.4. Profitability analysis
For the profit margin we can see the number about -13.38 % in average, this is tell us that the firm spent a little less than Rp 14 for every rupiah in sales. But if we look at the profit margin per year the highest profit margin was happened in year 2006 for 4.97 %, this number shows that the profit margin at 2006 is better than the others. In operating income return on investment we find the average number 18.34 %, this number means that the company get Rp 18 in profit for every rupiah investment in the company. The highest number of operating income return on investment happened in 2008 at 14.50 %.
For the times interest earned ratio we have found the average in 2.9607 times, it’s belong in a good condition because it’s higher than 1. The last in this analysis is earnings per share. In earnings per share we can see that the average number is Rp 14.7920, it means that in every stock that company have and sold to the other company, the company itself (PT Cahaya) will receive Rp 14.7920 as the profit.
2.5. DuPont analysis
The DuPont analysis is a method used to analyze a firm's profitability, ROE and potential growth. Companies that boast a high return on equity with little or no debt are able to grow without large capital expenditures, allowing the owners of the business to withdrawal cash and reinvest it elsewhere or in the other words with higher rate of DuPont ratio the wealth of owner wealth is increasing. The increasing or decreasing of DuPont value itself depend on the how good and effective company use their capital and asset in the business activities.
3. Conclusion
For liquidity ratio analysis, the higher this ratio, the better financial condition. From the calculation we can find that overall the company has an increase along 2004 – 2006 and show a better performance of the financial condition. In fact, in 2007 this company experienced decreasing liquidity ratio, but in 2008 there is a significant increase. In 2008 we can say that the company has the best record of financial condition.
For average collection period, the lower this ratio, it is meant that the company has better financial condition. In this ratio, the company has the best record in 2007. For account receivable turnover, total asset turnover, inventory turnover, and fixed asset turnover, the higher this ratio, the better condition for the company, because of that, the company has the best efficiency in 2008.
In 2007 the company is in the most risky condition because it has the lowest ratio for equity ratio and highest ratio for debt to equity ratio. Whereas in 2008 the company is in the risky condition in debt ratio sector because it gives the highest ratio in this year.
Profitability ratio in this company is very varying in each sector and each year. But from the calculation we can say that in 2007 is the worst condition for the company because the company did not make any profit from its business.
Based on our calculation, we find that there is no significant difference between our calculation with usual formula and DuPont. The advantage of using DuPont is this formula will break ROE into three parts, operating efficiency, asset use efficiency, and financial leverage. So, we can interpret what is influence ROE from those three sectors.
Formulas that we use in this calculation:
>> Liquidity Ratio
Current Ratio
Current Ratio= (current assets)/(current liabilities)
Quick Ratio
Quick Ratio= (current assets-inventories)/(current liabilities)
Cash Ratio
Cash Ratio= (cash+marketable securities)/(current liabilities)
>>Efficiency Ratio
Average Collection Period
Average Collection Period=(accounts receivable)/(daily credit sales)
Account Receivable Turnover
Account Receivable Turnover=(360 days)/(Average Colection Period)
Total Assets Turnover
Total Assets Turnover=sales/(total assets)
Inventory Turnover
Inventory Turnover=CoGS/inventory
Fixed Assets Turnover
Fixed Assets Turnover=sales/(fixed assets)
>>Leverage Ratio
Debt Ratio
Debt Ratio=(total debt)/(total assets)
Equity Ratio
Equity Ratio=(total equity)/(total assets)
Debt to Equity Ratio
Debt to Equity Ratio=(total debt)/(total equity)
>>Profitability Ratio
Operating Profit Margin
Operating Profit Margin=(operating income)/sales
Net Profit Margin
Net Profit Margin=(net income)/sales
Operating Income Return on Investment (OIROI)
OIROI=(operating income)/(total assets)
Return on Equity (ROE)
ROE=(net income)/(common equity)
Return on Assets (ROA)
ROA=(net income)/(total assets)
Times Interest Earned Ratio
Times Interest Earned Ratio=(operating income)/(interest expense)
Earnings Per Share (EPS)
EPS=(net income)/(shares outstanding)
>>DuPont
Return on Equity=(net income/sales)x(sales/total assets)÷(1-(total debt)/(total assets))
