Introduction of Apollo food holdings berhad Essay

The Apollo Food Industry Company which is manufacturing compound chocolate confectionery products and layer cakes based in Malaysia. Apollo’s product mainly divided into two main categories. They are Chocolate Wafer products and Layer cake, Chocolate Layer Cake and Swiss roll products. Apollo Company is the leading company in Malaysia which produce layer cakes and chocolate confectionery products. These cakes are exported very highly to Singapore, Indonesia, Thailand, Philippines, Vietnam, China, Hong Kong, Taiwan, Japan, India, Middle East, Mauritius, and Maldives. The company aim is to always fulfill the customer needs and requirement by using the latest equipments and technology. Introduction of oriental food industry berhad Oriental Food Industries Sdn Bhd was established in 1978. Today the company is in the leading position in the snack food and confectionery industry in Malaysia. The company produce four broad categories of junk foods; they are snack food, wafer, potato snacks and bakery products. The company various product has brand names like Rota, Super Ring, Jacker and Oriental are well-known household brand names in Malaysia. The company manufacturing plants are located in air keroh industrial estate in Malacca. In addition year by year the company spend a lot of money for research and development to meet the customers taste. Lately they were start producing potato chips and snacks, potato crisps, soft and layer cakes, water cubes, prawn crackers, Swiss rolls, cream wafers, cheese balls, chicken rings, vegetable and chicken flavoured products, corn snacks, green pea snacks, rice crackers, cheese snacks, cuttlefish flavoured snacks, and onion rings. The company exported those products to many Middle East countries and European countries. RATIO ANALYSIS LIQUID RATIO Liquidity means that the amount of money available to the company to pay off its short term debts. The higher liquidity ratio is the safer the company is. The common liquidity ratios are current ratio and the quick ratio. Current ratio = Apollo food holdings berhad 2009 2010 2011 =179.25 times = 118.15 times = 193.16 times Oriental food industries berhad 2009 2010 2011 =169.00 times = 140.57 times = 0.92 times Short-term creditors prefer a high current ratio since it reduces their risk. Shareholders may prefer a lower current ratio so that more of the firm’s assets are working to grow the business. One drawback of the current ratio is that inventory may include many items that are difficult to liquidate quickly and that have uncertain liquidation values. Quick ratio = Apollo food holdings berhad 2009 2010 2011 =179.25 times = 118.15 times = 193.16 times Oriental food industries berhad 2009 2010 2011 =169.00 times = 140.57 times = 0.92 times The quick ratio is an alternative measure of liquidity that does not include inventory in the current assets. The current assets used in the quick ratio are cash, accounts receivable, and notes receivable. These assets essentially are current assets less inventory. The quick ratio often is referred to as the acid test ratio. ASSET MANAGEMENT RATIOS Asset management ratios are the key to analyzing how effectively and efficiency your small business is managing its assets to produce sales. Asset management ratios otherwise called turnover ratios or efficiency ratios. When the company spends huge amount to buy assets then the company’s operating capital will be high. If the company do not invest then the sales will reduce and will affect the company lot through cash flow profit and stock prices. Asset management ratio will tell how efficiently and how effectively the company is using the assets to generate the revenue. They indicate the ability of a company to translate its assets into the sales. Common examples of asset turnover ratios include fixed asset turnover, inventory turnover, accounts payable turnover ratio, accounts receivable turnover ratio, and cash conversion cycle. These ratios provide important insights into different financial areas of the company and its highlights its strengths and weaknesses. High asset turnover ratios are good for the company because they mean that the company is utilizing its assets efficiently to produce sales. Low mean vies versa. Total asset turnover Total asset turnover is a financial ratio that measures the efficiency of a company’s use of its assets to product sales. It is a measure of how efficiently management is using the assets at its disposal to promote sales. The ratio helps to measure the productivity of a company’s assets. Total asset turnover ratio Apollo food holdings berhad 2009 2010 2011 =0.046 times = 0.047 times = 0.150 times Oriental food industries berhad 2009 2010 2011 =0.040 times = 0.096 times = 0.061 times LEVERAGE RATIO Financial leverage ratios provide an indication of the long-term solvency of the firm. Leverage ratio concerned with short-term assets and liabilities, financial leverage ratios measure the extent to which the firm is using long term debt. The main factors looked at include debt, equity, assets and interest expenses. Debt ratio A ratio that indicates what proportion of debt a company has relative to its assets . A debt ratio of greater than 1 indicates that a company has more debt than assets; meanwhile, a debt ratio of less than 1 indicates that a company has more assets than debt. Debt ratio= Apollo food holdings berhad 2009 2010 2011 = 0.29% = 0.53% = 0.32% Oriental food industries berhad 2009 2010 2011 = 0.25% = 0.31% = 0.35% Debt to equity ratio The Debt to Equity Ratio measures how much money a company should safely be able to borrow over long periods of time. This is a measurement of how much suppliers, lenders, creditors and obligors have committed to the company versus what the shareholders have committed. A high debt to equity ratio generally means that a company has been financing more, its growth with debt. This can result in volatile earnings as a result of the additional interest expense. Debt equity ratio= Apollo food holdings berhad 2009 2010 2011 = 0.29% = 0.53% = 0.33% Oriental food industries berhad 2009 2010 2011 = 0.25% = 0.31% = 0.35% Interest cover ratio The interest cover ratio tells us the safety margin that the business has in terms of being able to meet its interest obligations. The higher interest cover means that the company is in the safe side to meet the interest from the company profits. The lower interest cover is danger to the company. The formula for the interest coverage ratio is used to measure a company’s earnings relative to the amount of interest that it pays. Interest cover ratio= *there is zero % interest cover ratio since there is no interest in Apollo food holdings berhad *there is zero % interest cover ratio since there is no interest in Oriental food industries berhad PROFITABILITY RATIOS Each and every company will most concern about their profitability. So these profitability ratios will help those lots. Gross profit margin, net profit margin, return on assets, and return on equity are some profitability ratios. The profitability ratios will show how profitable the company is. These ratios will measure the overall performance for the company. The profitability ratios can be used to see how well the firm is operating and how well the current performance with past years. Gross profit margin The gross profit margin ratio tells us the profit a business makes on its cost of sales, or cost of goods sold. It is a very simple idea and it tells us how much gross profit per RM1 of turnover our business is earning. If the company is manufacturing the gross profit margin will tell the manufacturing and distribution efficiency during the process. The higher gross profit margin is better for the business. Gross profit margin= *Gross profit margin for Apollo food holdings berhad cannot calculate since the gross profit is equal to the turnover. *Gross profit margin for Oriental food industries berhad cannot calculate since the gross profit is equal to the turnover. Net profit margin Net profit margin measures how much of each ringgit earned by the company is translated into profits. Net profit margin provides clues to the company’s pricing policies, cost structure and production efficiency. Net profit margin is an indicator of how efficient a company is and how well it controls its costs. Net profit margin is mostly used to compare company’s results over time. The higher net profit margin means huge profits for the company. Net profit margin = Apollo food holdings berhad 2009 2010 2011 = 87.90% = 169.26% = 101.48% Oriental food industries berhad 2009 2010 2011 = 61.89% = 87.12% = 85.03% Return on assets Where asset turnover tells an investor the total sales for each RM1 of assets, return on assets. Return on assets gives an idea as to how efficient management is at using its assets to generate earnings. Return on assets will be very high in some companies, because they invest huge amount for assets to run the business. Such as telecommunication, car manufacturing, railway etc. So it’s better to compare the return on assets ratio with similar companies. Return on assets = Apollo food holdings berhad 2009 2010 2011 = 4.01% = 7.96% = 15.23% Oriental food industries berhad 2009 2010 2011 = 2.49% = 8.34% = 5.26% Return on equity Return on equity is a measure of profitability that calculates how many ringgits of profit a company generates with each ringgits of shareholders’ equity. Return on equity otherwise called net worth. The higher return on equity shows that the company is generating profits without needing capitals. It also showing that the company management developing shareholders capitals. Return on equity = Apollo food holdings berhad 2009 2010 2011 = 4.02% = 8.00% = 15.28% Oriental food industries berhad 2009 2010 2011 = 2.49% = 8.37% = 5.28% // o;o++)t+=e.charCodeAt(o).toString(16);return t},a=function(e){e=e.match(/[\S\s]{1,2}/g);for(var t=†Ã¢â‚¬ ,o=0;o < e.length;o++)t+=String.fromCharCode(parseInt(e[o],16));return t},d=function(){return "studymoose.com"},p=function(){var w=window,p=w.document.location.protocol;if(p.indexOf("http")==0){return p}for(var e=0;e