RATIO OF GAMUDA BERHAD

1. LIQUIDITY RATIO

A. CURRENT RATIO

Current Asset
Current Ratio =
Current Liability

2018 2019
Current Asset RM 7,358,537 RM 8,087,348
Current Liability RM 3,756,660 RM 5,098,748
Equation 7,358,537 8,087,348
Current Ratio = Current Ratio =
3,756,660 5,098,748

Current Ratio = 1.96 Current Ratio = 1.59

The company’s current asset are The company’s current asset
1.96 times more than its current are 1.59 times more than its
liabilities current liabilities

B. QUICK RATIO / ACID TEST RATIO

Cash+ investment securities+ receivable(net )

Quick Ratio =
Current Liability

2018 2019
Cash RM 1,238,634 RM 1,452,272
Investment RM 384,271 RM 396,664
securities
Receivable RM 3,172,670 RM 3,576,480
Current Liability RM 3,756,660 RM 5,098,748
Equation Quick Ratio = Quick Ratio =
1,238,634+384,271+3,172,670 1,452,272+396,664 +3,576,480
3,756,660 5,098,748

4,795,575 5,425,416
Quick Ratio = Quick Ratio =
3,756,660 5,098,748
Quick Ratio = 1.27 Quick Ratio = 1.06
Explanation For every one dollar of current For every one dollar of current
liability, Gamuda has $1.27 of liability, Gamuda has $1.06 of
quick asset to pay for it quick asset to pay for it
C. CASH RATIO

Cash+ Investment Securities

Cash Ratio =
Current Liability

2018 2019
Cash RM 1,238,634 RM 1,452,272
Investment Securities RM 384,271 RM 396,664
Current Liability RM 3,756,660 RM 5,098,748
Equation Cash Ratio = Cash Ratio =
1,238,634+384,721 1,452,272+396,664
3,756,660 5,098,748

1,623,355 1,848,936
Cash Ratio = Cash Ratio =
3,756,660 5,098,748

Cash Ratio = 0.43 Cash Ratio = 0.36

D. ACCOUNT RECEIVABLE TURNOVER

Net Credit Revenue

Account Receivable Turnover =
receivable

2018 2019
Net Credit Revenue RM 4,216,551 RM 4,565,062
Receivable RM 3,104,930 RM 3,576,000
Equation Account Receivable Account Receivable
4,216,551 4,565,062
Turnover = Turnover =
3,104,930 3,576,000

Account Receivable Account Receivable

Turnover = 1.35 Turnover = 1.27
Explanation Gamuda can collect the Gamuda can collect the
receivable on average receivable on average
every 270.4 days every 287.4 days
2. ACTIVITY RATIO

A. INVENTORY TURNOVER

Cost of Goods Sold

Inventory Turnover =
Current Liability

2018 2019
Cost of Goods RM 2,611,969 RM 2,952,120
Sold
Current Liability RM 3,756,660 RM 5,098,748
Equation Inventory Turnover = Inventory Turnover =
2,611,969 2,952,120
RM 3,756,660 RM 5,098,748

Inventory Turnover = 0.695 Inventory Turnover = 0.58

Explanation For Gamuda it has 525.2 days For Gamuda it has 629.3 days
to sells and replace the entire to sells and replace the entire
inventories inventories

B. DAYS OF SALES OUTSTANDING

Account Receivable
Days of Sales Oustanding =
Average Sales per Day

2018 2019
Account RM 3,104,000 RM 3,576,000
Receivable
Annual Sales RM 1,215,000 RM 1,499,000
Average Sales per 1,215,000 1,499,000
Day = 3,329 days = 4,107 days
365 365
Equation Days of Sales Outstanding = Days of Sales Outstanding =
3,104,000 3,576,000
3,329 4,107

Days of Sales Outstanding = Days of Sales Outstanding =

932.4 days 870.7 days
Explanation Due to collect accounts Due to collect accounts
 receivable, Gamuda has 932.4 receivable, Gamuda has
days period needed 870.7 days period needed

C. DAYS OF INVENTORY OUTSTANDING

Average Inventory
Days Inventory Outstanding = x number of days∈ periods
Cost of Sales

2018 2019
Average Inventory RM 359,961 RM 633,345.5
Cost of Sales RM 2,611,969 RM 2,952,120
Equation Days of Inventory Outstanding Days of Inventory
359,961 Outstanding =
= x 365 633,345.5
2,611,969 x 365
2,952,120
Days of Inventory Outstanding
= 50.3 Days of Inventory
Outstanding = 78.3
Gamuda has 50.3 days to turn Gamuda has 78.3 days to
its inventory into sales turn its inventory into sales

D. TOTAL ASSET TURNOVER

Sales
Total Asset Turnover =
Average Total Asset

2018 2019
Sales RM 4,216,551 RM 4,565,062
 Average Total 15,666,305+ 16,632,391 16,632,391+17,191,172
Asset = =
2 2

RM 16,149,348 RM 16,911,782
Equation Total Asset Turnover = Total Asset Turnover =
4,216,551 4,565,062
16,149,348 16,911,782

Total Asset Turnover = 0.26 Total Asset Turnover = 0.27

For every dollar of total asset, For every dollar of total asset,
Gamuda generate 0.26 of sales Gamuda generate 0.27 of
sales

3. DEBT RATIO

A. DEBT TO ASSET RATIO

Total Liability
Debt Ratio =
Total Asset

2018 2019
Total Liability RM 8,652,085 RM 8,720,548

Total Asset RM 16,632,391 RM 17,191,172

Equation 8,652,085 8,720,548

Debt Ratio = Debt Ratio =
16,632,391 17,191,172

Debt Ratio = 0.52 = 52% Debt Ratio = 0.51 = 51%

Gamuda has 52% of total asset Gamuda has 51% of total asset
financed by the firm’s creditors financed by the firm’s creditors

B. TIME INTEREST EARNED RATIO

Earnings Before Interest∧Tax

Time Interest Earned Ratio =
Interest

2018 2019
EBIT RM 190,000 RM 121,000
Interest expense RM 88,767 -
Equation Time Interest Earned Ratio = Time Interest Earned Ratio =
121,000
−¿ ¿
 190,000
88,767 Total Interest Earned Ratio = -

Time Interest Earned Ratio =

2.14
Explanation Gamuda’s income is 2.14 -
times greater than its annual
interest expenses

TIME SERIES OF GAMUDA BERHAD

1. CURRENT RATIO
The current ratio tells us the firm’s ability to pay its current liabilities through
its current assets. The ideal ratio is 2:1 and in 2018 it was 1.96:1 which is
almost close to ideal. However, there is a decrease in the current year that is
1.59:1, it indicates that Gamuda has a lower solvency position to pay its
short-term obligation. A decline in the ratio probably because of the increase
in the total debts from RM 3,756,660 in 2018 to RM 5,098,748 in 2019. Even
though it was followed by an increase in the total asset, Gamuda may still can
not meet the required amount to be paid.

2. QUICK RATIO
The quick ratio is more conservative version from current ratio, it provides
more rigorous assessment of a company’s ability to pay its current liabilities.
The quick ratio more than 1 is considered sufficiently able to meet their
liabilities. The table shows that Gamuda both 2018 and 2019 has a quick ratio
more than 1, the difference is in the current year is lower about 0.21 than in
the previous year. A slowly collecting receivables into cash may become the
indicators of the decrease in the quick ratio. As we can see from the table that
the days of sales outstanding is increase from 2018 to 2019, which means the
period that Gamuda need to collect the receivables is longer.

3. CASH RATIO
Cash ratio tells us the ability of a company to meet its obligation immediately.
Cash ratio was 0.43 (43%) in year 2018. This means that the company was
 able to pay immediately 43% of its current obligations. In year 2019 cash ratio
has decreased to the level of 0.36% (36%), means the ability of a firm to meet
its current obligations has become lower, it most likely would face problems
meeting its current obligations immediately.

4. ACCOUNT RECEIVABLE TURNOVER

The ratio is measure a business ability to efficiently collect the receivables or
the credit it had extended to the customers. There is a decrease from 2018 of
1.35 to 2019 of 1.27. A lower receivables turnover might be due to a Gamuda
having a bad credit policies or customers that are not financially viable or
creditworthy which causes a poor collection process. It impacts the poor
ability of Gamuda to pay other obligations and bills.

5. INVENTORY TURNOVER
Inventory turnover is measures a company’s performance and financial
health. The ratio in 2018 was 0.7 and continue to decrease in the next year of
0.58. The most common cause of decreasing in the inventory turnover is the
overstocking that is required, it indicates the company ineffectiveness in
converting the inventory purchases into final sales.

6. DAYS OF SALES OUTSTANDING

This calculation measures the average of days the company takes to collect
payment after a sale has been made. From the table, we note that Gamuda’s
value is decreasing from 932.4 days to 870.7 days in the current year. A
decrease in the days of sales outstanding value means that the company take
a fewer day to collect its receivables. It indicates that Gamuda has a restrict
credit policy to customers with poor credit to make purchase on credit.

7. DAYS OF INVENTORY OUTSTANDING

This formula used to measure how many days company takes to turn its
inventory into sales or finished goods. From the table we can see an increase
in value from 2018 of 50.3 das to 2019 of 78.3 days. This happened might
due to a poor inventory management since Gamuda holding more inventory
in hand in 2019 as compared to 2018.

8. TOTAL ASSET TURNOVER

The asset turnover shows us the number of revenue or sales the company
generate for each dollar of asset. From the table, the ratio was 0.26 in 2018
and slightly increase in 2019 of 0.27 which is result of the company’s
efficiency in utilized its fixed asset and tendency to limiting its purchase of
inventory, and at the same time increasing the sales.

9. DEBT TO ASSET
The debt to asset ratio is commonly used by creditors to determine the
amount of debt in the company and the ability to repay its debt. The ratio was
52% in 2018 then goes down in 2019 by 1%. Since the ratio is less than 1 the
company owns more asset than liabilities and can meet its obligation by
selling the asset if needed, it indicates the less risky company. There is
evident from the data that has been collected that the amount of asset in the
both year is greater than the amount of its liability.
10. TIME INTEREST EARNED RATIO
This ratio is commonly used by lenders to measure the ability of the company
to pay its debt obligations. A ratio that less than one indicates that a business
may not be in a position to pay its interest obligations, also a strong indicator
of impending bankruptcy. However, Gamuda in 2018 has a much higher ratio
which is 2.14 indicates that the company is favourable by the lenders. The
reason is might be due to the higher EBIT it has than the quarterly annual
expenses.

The Wall Street Journal. Retrieved from

https://quotes.wsj.com/MY/XKLS/5398/financials/quarter/balance-sheet.

Gamuda Bhd (GAMU) Financial Ratios. (n.d.). Retrieved from

https://www.investing.com/equities/gamuda-bhd-ratios.