Background of Dutch Lady Milk Industries Berhad

Every company or an organization have its own mission and vision. So here, I will be
mentioned what is the mission and vision of Dutch Lady Milk Industries.

Mission of the company: Is helping Malaysians move forward in life with trusted
dairy nutrition

Visions of the company: Is to further strengthen our position as the leading dairy
company, diving growth.

Based on the annual report of Dutch Lady Milk Industries, we can found that who
is the board of director of this company. Let me introduce all of them to you. The top
person is chairman name Dato’ Zainal Abidin bin Putih. The following person called
as Executive Director is Tarang Gupta. Independence non-executive director is Mr.
Boey Tak Kong, Mr. Foo Swee Leng , Mr. Piet Hilarides, Dato’ Dr Mhd NordinBin
Mohd Nor and Ms. Jaska de Bakker.

Dutch Lady Milk Industries Berhad was incorporated on 28 May 1963 and it’s
a publicly traded company in this world of industry business. It was the first milk
company in Malaysia which has been listen on Bursa Malaysia and the local stock
exchange in 1968. Dutch Lady Milk Industries Berhad is a quality and successful
branded in daily business. According to the Dutch Lady Milk Industries company
website, we know during the time of incorporate, company as name as Pacific Milk
Industries (Malaya). Besides that, according the company websites have stated Dutch
Lady Milk Industries Company is under a Netherlands-based multinational
cooperative, Royal Friesland Foods on 1879. In year 1968, Dutch Lady Milk
Industries has its own factory which is located in Petaling Jaya to produce sweetened
condensed milk.

In year 1975, the company has changed its company name as Dutch Baby
Milk Industries Berhad after that in year 2000 the company has changed its name
again to Dutch Lady Milk Industries Berhad. In year 1983, the company has been
introduced a sterilized milk into Malaysia market, the sterilized milk which is put into
a plastic bottle and packaging in a nice bottle and sold it to the consumer in that time.
After a short while, Dutch Lady Milk Industries is a winner of the 2004 Productivity
Award, this award was given by the National Productivity Corporation. In the
particular year, Dutch Lady Milk Industries is a one milk branded are successful in
the Malaysia market.

The product of Dutch Lady Malaysia is all halal-certified whereby Muslim can
consume their products without worrying. Besides that, their product also fulfills
quality standards like ISO 9001. In 2010, Halal Policy statement was introduced by
Dutch Lady Malaysia. This is because the company wishes to outline the commitment
to provide Halal products to Muslim consumers by adhering to Halal requirements
which set high standards for hygiene, quality, safety and sanitary conditions. Besides
that, the Company’s halal food sourcing and production throughout the supply chain
are in compliance to DLMI Halal standards and Jabatan Kemajuan Islam Malaysia
(JAKIM) requirements.

Dutch Lady Malaysia manufactures and sells a wide range of quality dairy
products and fruit juices for the home and export market such as Growing-up Milk,
Powdered Milk, Condensed Milk, Culture Milk, Yoghurt and Fruit Juice Drinks.
Besides that, the company also introduces the growing up milk powder specifically
for children like Dutch Lady 123 and Dutch Lady 456.

Dutch Lady Milk Industries Berhad is an international corporation that

manufacture and distribute dairy product and juice fruit. The company product line
was included powders for instant, children and adults, packaging milk, yoghurt.
Besides that, newspaper have written which is The Star online, Dutch Lady Milk
Industries Berhad is the first milk company that used UHT which is Ultra-High
Temperature packaging in the country of the milk market.
 UHT and Sterilized milk have 3 type which is dutch lady purefarm milk, dutch
lady purefarm UHT milk and dutch lady purefarm sterilized milk.

Diagram 1 show dutch lady purefarm UHT milk

Diagram 2 show Dutch Lady purefarm sterilized milk

Besides that, Dutch Lady Milk Industries Berhad also produce others
besides purefarm milk and UHT sterilized milk which is yogurt, milk powder, milky
and flavored drink. For product line of powder, each of this kind of powder are
provided to different level of consumer which is for pregnant women, growing
children, family and senior citizens. There served in different area of consumer and
considered different situation that consumer faced so they have different need.
Diagram 3 show Dutch Lady flavored drink and yogurt

Diagram 4 show Dutch Lady milk powder

Diagram 5 show Dutch Lady milky
Liquidity Ratio

Current Ratio 2015 2016

Dutch Lady Industries Current assets Current assets

Milk Current liabilitie s Current liabilitie s
316,595 419,377
 
248,912 348,390
 1.27  1.20

Current ratio is one of the most fundamental liquidity ratio. It measures the
ability of a business to repay current liabilities with current assets.

From the table, we known that 1.20 represent 2015 and 1.27 represent 2016. In
current ratio, higher the figure shows the business has enough quick assets to cover its
short-term debt immediately. So, based on the figure that we calculated, company has
enough ability to cover its short-term debt.

In year 2015, the results indicate that for every RM1 of current liabilities that
Dutch Lady Company, it has RM 1.20 worth of current assets to cover debt itself. The
same results indicate that for every RM1 of current liabilities that Dutch Lady
Company has at this present point in time, it has RM 1.27 worth of current assets in
year 2016.

Alternation interpretation would be that the company has current assets that
can cover 1.20 times the current liabilities balance in year 2015 and 1.27 times the
current liabilities balance in year 2016. This means that the company appears to have
more than adequate liquid assets to meet its short-term liabilities.

At the end of the results show, year 2016 is perform better than year 2015
because 1.27 > 1.20. It is some of the improvement of this ratio between this 2 years.
 Quick Asset Ratio 2015 2016

Dutch Lady Industries Current assest - Inventory Current assets - Inventory

Milk Current liabilitie s Current liabilitie s
316,595  99,067 419,377  112,993
 
248,912 348,390
 0.87  0.88

Quick ratio offers another way to determine the adequacy of working capital. It is
also determined how company’s financial strength and weakness as we see from short
term liquidity. Based on the above table, it shows Dutch Lady Company quick ratio is
less than the average quick ratio of 1, additionally this can identify that Dutch Lady
Company is quick hard to convert its assets into cash in short term period.

But as we can see that based on the results in the table, quick ratio of Dutch Lady
Company still increases from 0.87 to 0.88, its different between 0.01. From the table,
0.87 represent 2015 and 0.88 represent 2016. For every RM1 of current liabilities, it
has worth RM0.87 worth of “current assets less stock” in year 2015. Besides that, for
every RM1 of current liabilities, it has worth RM0.88 worth of “current assets less
stock” in year 2016.

One of the major reasons that led to increase of Dutch Lady Company quick ratio
is that in the company’s balance sheet, it shows that at the first three years, they did
not borrow much.
 Cash Ratio 2015 2016

Dutch Lady Industries Cash and cash equivalent s Cash and cash equivalent s
Milk Current liabilitie s Current liabilitie s
160,391 213,619
 
248,912 348,390
 0.64  0.61

The cash ratio is the ratio of cash and cash equivalents of a company to its current
liabilities. It measures the ability of a business to repay its current liabilities by only
using its cash and cash equivalents and nothing else.

The higher the cash ratio, the better the performance of a company. A cash ratio
of 1.00 and above means that the business will be able to pay all its current liabilities
in immediate short term. But, businesses usually do not plan to keep their cash and
cash equivalents at level with their current liabilities because they can use a portion of
idle cash to generate profits. This means that a normal value of cash ratio is
somewhere below 1.00.

From the table, Dutch Lady Company’s cash ratio for 2015 and 2016 are 0.61 and
0.64 respectively. So, Dutch Lady Company are performing not very ideal in 2015
and 2016 because below in 1.00.
Profitability Ratio

Gross Profit Margin 2015 2016

Dutch Lady Industries Sales - Cost of goods sold Sales - Cost of goods sold
Milk Sales Sales
420,716 443,873
 100  100
1,001,663 1,047,725
 42.00%  42.37%

It is a measure of how much the company is earning from its revenue (sales or
turnover) after deducting (accounting) for the cost of goods sold. Alternatively, it is
also a measure of how much pf each Ringgit of revenue of a company that is available
to meet the non-product costs, which is mainly the operating costs.

By referring the table, we note that revenue was RM1,001,663 represent 2015 and
RM1,047,725 represent 2016 and cost of goods sold was RM580,947 represent 2015
and RM603,852 represent 2016. Since the cost of sales is less than revenue, Dutch
Lady Company has earned sufficient revenue to more than cover the cost of sales,
hence the positive gross profit margin, i.e. RM0.4200 represent 2015 and RM0.4237
represent 2016 of gross profits for every RM1 of revenue made by Dutch Lady
Company.

Alternatively, for every RM1 of revenue earned by company, it has earned

RM0.4200 represent 2015 and RM0.4237 represent 2016 of gross profits to cover its
operating expenses, after providing for its cost of sales.
Operating Profit Margin 2015 2016

Dutch Lady Industries EBIT EBIT

Milk Sales Sales
188,491 196,594
 100  100
1,001,663 1,047,725
 18.82%  18.76%

The operating profit margin is a profitability ratio that measures what percentage
of total revenues is made up by operating income. The operating profit margin ratio is
a key indicator for investors and creditors to see how businesses are supporting their
operations.

A higher operating margin is more favorable compared with a lower ratio

because this shows that the company is making enough money from its ongoing
operations to pay for its variables costs as well as its fixed costs.

For every RM1 of revenue earned by the Dutch Lady Company, the revenue is
enough to cover up to RM0.8118 represent 2015 and RM0.8123 represent 2016 of the
company’s total operating expenses.

For the operating profit margin, in year 2015 is performing better than year
2016.
 Net Profit Margin 2015 2016

Dutch Lady Industries Net income Net income

Milk Sales Sales
140,940 149,074
 100  100
1,001,663 1,047,725
 14.07%  14.23%

Net profit margin is the most basic profitability ratio that measures what
percentage of each dollar earned by a business ends up as profit at the end of the year.
It can also be used to determine the profitability potential of different company.

A higher the net profit margin is always better than a lower net profit margin
because it means that the company is able to translate more of its sales into profits at
the end of the period.

For every RM1 of revenue of Dutch Lady Company earns, it earns a net profit
RM0.1407 represent 2015 and RM0.1423 represent 2016.

So, from the results we known that year 2016 is better than year 2015
performance.
 Return on Assets 2015 2016

Dutch Lady Industries Net income Net income

Milk Average total assets Average total assets
140,940 149,074
 
(412,525  345,507) (520,841  412,525)
2 2
149,940 149,074
 
379,016 466,683
 37.20%  31.94%

Return on assets (ROA) is use to indicate how profitable a company is relative

to its total assets.

The return on assets (ROA) figure gives investors an idea of how effective the
company is in converting the money it invests into net income. The higher the return
on assets (ROA) is better because the company is earning more money on less
investment. Which means the higher values of return on assets show that company is
more profitable.

It indicates that for every RM1 of assets that is made available to the company
or that the company invest in the management of Dutch Lady Company is able to
generate a return after tax of RM0.3720 represent 2015 and RM0.3194 represent
2016.

Based on the results shows, the performance of Dutch Lady Company in year
2015 is better than year 2016 because company are more profitable on that year.
 Return on Equity 2015 2016

Dutch Lady Industries Net income Net income

Milk Average common equity Average common equity
140,940 149,074
 
(157,219  157,039) (165,493  157,219)
2 2
149,940 149,074
 
157,129 161,356
 89.72%  92.39%

The return on equity (ROE) is a profitability ratio that measures the ability of a
company to generate profits from its shareholders investments in the company.
Shareholder may also seek to identify the level of returns they are getting for every
RM1 of funds that they have invested in the company.

So, the higher ratio is better because it shows that the company can generate
better return to the owner of the company.

Above the table shows that, 89.72% represent 2015 and 92.39% represent
2016. Between this two years, year 2016 is performing a better financial ratio in
Dutch Lady Company.
Asset Management Ratio

Average Collection 2015 2016

Period

Dutch Lady Industries Average receivable s Average receivable s

Milk Sales 365 Sales 365
(55,172  37,346) (90,581  55,172)
 2  2
1,001,663 1,047,725
365 365
46,259 72,876.5
 
2,744.28 2,870.48
 16.86  25.39

=16.86 days =25.39 days

The average collection period is a strong indication of a company’s liquidity over

the accounts receivable, which is the money that customers owe to the company, as
well as of the company’s credit policies.

This figure tells us the average number of days for which receivables are
outstanding before being collected.

Average collection period of Dutch Lady Company for 2015 and 2016 are 16.86
days and 25.39 days respectively. So, Dutch Lady Company has performing better in
year 2015 because 16.86 days is shorter than 25.39 days.
 Inventory Turnover 2015 2016

Dutch Lady Industries Cost of goods sold Cost of goods sold

Milk Average inventory Average inventory
580,947 603,852
 
(99,067  92,545) (112,993  99,067)
2 2
580,947 603,852
 
95,806 106,030
 6.06  5.70
=6.06 days =5.70 days

Stock turnover ratio indicates the relative liquidity of stocks in a company, as

measured by the number of times a firm’s stocks are replaced during the year.

Higher figure shows that the company’s inventory moves more quickly,
meaning that inventory will be sold and replaced more frequently.

This means that on average, the stocks produced and sold by Dutch Lady
Company need to be replenished 6.06 times in year 2015 and 5.70 times in year 2016
a year.
 Cash Conversion Cycle 2015 2016

Dutch Lady Industries Invertory processing days Inventory processing days

Milk  Average collection period  Average collection period
- Payables payment period - Payables payment period
(99,067  92,545) (112,993  99,067)
 2  2
580,947 605,852
365 365
(55,172  37,346) (90,581  55,172)
 2  2
1,001,663 1,047,725
365 365
(231,136  176,496) (335,360  231,136)
 2  2
580,947 603,852
365 365
95,806 46,259 106,030 72,876.50
   
1,591.64 2,748.28 1,654.39 2,870.48
203,816 283,248
 
1,591.64 1,654.39
 60.19  16.86  128.05  64.09  25.39  171.21
 51.00  81.73

Cash conversion cycle is a measure the number of days a company’s cash is tied
up in the production and sales process of its operations and the benefit it derives from
payment terms from its creditors.

Cash conversion cycle is an important ratio, particularly for companies that carry
significant inventories and have large receivables, because it highlights how
effectively the company is managing its working capital.

Based on the table shows, Dutch Lady Company got negative figure in both years
which (51.00) and (81.73) in represent year 2015 and 2016. But, it is good for Dutch
Lady Company because the lower the cash cycle the better it looks for a company’s
finances, so a negative cash cycle is very desirable. So, year 2016 is perform better
than year 2015.
 Fixed Asset Turnover 2015 2016

Dutch Lady Industries

Milk Sales
Sales
Average net fixed assets
Average net fixed assets
1,001,663
 1,047,725
(90,831  82,811) 
(95,657  90831)
2
2
1,001,663
 1,047,725
86,821 
93,244
 11.54
 11.24

Fixed asset turnover is a commonly used activity ratio that measures the
efficiency with which a company uses its fixed assets to generate its sales revenue.
The usefulness of this ratio can be increased by comparing it with the ratio of other
companies, industry standards and past years.

Generally, a high fixed assets turnover ratio indicates better utilization of fixed
assets and a low ratio means inefficient or under0utilization of fixed assets. Which
means, a higher the fixed assets turnover ratio is better for Dutch Lady Company
because it gives higher returns on asset investment.

The figure tell that Dutch Lady Company has most efficiently used its fixed
assets in year 2015 because it generated RM11.54 of revenue per RM1 of its net fixed
assets over the year. But, when come to year 2016, it generated RM11.24 of revenue
per RM1 of investment in fixed assets. So, we can say that, Dutch Lady Company has
performed better in year 2015 rather than year 2016.
 Total Asset Turnover 2015 2016

Dutch Lady Industries Sales Sales

Milk Average total assets Average total assets
1,001,663 1,047,725
 
(412,525  345,507) (520,841  412,525)
2 2
1,001,663 1,047,725
 
379,016 466,683
 2.64  2.25

The total asset turnover ratio is a measure of how efficiently a company’s assets
generated revenue. It measures the number of dollar of revenue generated by one
dollar of the company’s assets or how much of sales can be generated from every
dollar of the company’s assets.

Higher results shows that the company managers its asset effectively. So, a higher
turnover ratio means the company is using its assets more efficiently. Lower ratios
mean that the company isn’t using its assets efficiently and most likely have
management or production problems.

Based on the table shows the ratio performance of Dutch Lady Company in two
years. In year 2015 shows 2.64 and year 2016 shows 2.45. Which means, for every
RM1 in assets, Dutch Lady Company generated RM2.64 in sales during year 2015
and for every RM1 in assets, Dutch Lady Company generated RM2.45 in sales during
year 2016. So, the performance of this ratio, year 2015 is more better than year 2016.
Leverage Ratio

Debt Ratio 2015 2016

Dutch Lady Industries Total debt Total debt

Milk Total asset Total assets
255,306 355,348
  100  100
412,525 520841
 61.89%  68.23%

Debt ratio is a financial leverage ratio that tells the investment community the
amount of funds that have been contributed creditors instead of the shareholders.

So, the lower the debt ratio is better. It means more coverage earn by creditors if
the company goes bankrupt. A lower debt ratio usually implies a more stable business
with the potential of longevity.

Based on the table, the debt ratio of Dutch Lady Company is 61.89% and 68.23%
for 2015 and 2016 respectively. This indicates that the long-term borrowings amount
to about 61.89% of the company’s total equity and same explanation for 2016 as well,
that long-term borrowings amount to about 68.23% of the company’s total equity.

In other words, Dutch Lady Company has 0.6189 for every RM1 assets for 2015.
Besides that, Dutch Lady Company has 0.6823 for every RM1 assets for 2016. So, in
here, Dutch Lady Company are performing well in 2015 rather than 2016.
 Interest Cover 2015 2016

Dutch Lady Industries EBIT EBIT

Milk Interest charge Interest charge
192,345 201,102
 
3,608 3,120
 53.31  64.46

The interest cover ratio is used to determine how easily a company can pay their
interest expenses on outstanding debt. Which means, is a measure of a company’s
ability to meet its interest payments.

A higher ratio indicates a better financial health as it means that the company is
more capable to meeting its interest obligations from operating earnings. On the other
hand, a high interest cover ratio may suggest a company is “too safe” and be able to
service its interest expenses without any difficulty.

Based on the above table, 53.31 times represent year 2015 and 64.46 times
represent year 2016. This indicates that the Dutch Lady Company has earnings before
interest and tax that currently covers up to 53.31 times its existing interest expenses in
year 2015. Besides that, Dutch Lady Company has earnings before interest tax that
currently covers up to 64.46 times its existing interest expenses in year 2016.
Valuation Ratio

Price/Earnings Ratio 2015 2016

Dutch Lady Industries Market price per share Market price per share
Milk Earnings per share Earning per share
47.76 55.56
 
2.20 2.33
 21.71  23.85

Price earnings ratios (P/E ratio) measures how many times the earnings per share
(EPS) has been covered by current market price of an ordinary share.

Company with high P/E ratios are generally taken as company with bright future
prospects. Of course, care must be exercised when attempting to interpret this ratio as
if a company has low or zero earnings, the P/E ratio compared will be high, which can
be meaningless.

Based on the above table shows, the price/ earnings ratio of Dutch Lady
Company in year 2015 represent 21.71 times and year 2016 represent 23.85 times.

This means that Dutch Lady Company’s share currently sell for 21.71 times its
earnings or that the shares currently sell at a P/E multiple of 21.71 ratios indicate how
much investors are willing to pay per RM of earnings in a firm. Besides that, Dutch
Lady Company’s share currently sell for 23.85 times its earnings or that the shares
currently sell at a P/E multiple of 23.85 ratios indicate how much investors are willing
to pay per RM of earnings in a firm.
 Price/Book Value Ratio 2015 2016

Dutch Lady Industries Market price per share Market price per share
Milk Book value per share Book value per share
47.76 55.56
 
157,219 165,493
64,000 64,000
47.76 55.56
 
2.4565 2.5858
 19.44  21.49

The price to book ratio, also called the P/B or market to book ratio, is a financial
valuation tool used to evaluate whether the stick a company is over or undervalued by
comparing the price of all outstanding shares with the net assets of the company.

So, for this price/ book value ratio, the lower the price/ book value ratio (PBV),
the better the value is. Traditionally, any value under 1.0 is considered a good P/B
value, indicating a potentially undervalued stock, while a ratio of greater than 1.0 may
indicate that a stock is overvalued.

Based on the above table shows, price/ book value ratio of Dutch Lady Company
is 19.44 which represent to year 2015 and 21.49 which represent to year 2016.

The results show to us, we know that, in year 2015 and 2016 are in above 1.0
which is considered a good P/B value. But in details, Dutch Lady Company are
performing better in year 2015 because the lower the P/B ratio, the better the
company is.
 Price//Cash Flow Ratio 2015 2016

Dutch Lady Industries Market price per share Market price per share
Milk Cash flow per share Cash flow per share
47.76 55.56
 
200,5992 209,691
64,000 64,000
47.76 55.56
 
3.1342 3.2764
 15.24  16.96

Price/ cash flow ratio (P/CF) is a valuation ratio used to assess whether a
company is a good investment or not. Price/ cash flow is one of the most used
multiple in the investment industry. So, the company with a lower price to cash flow
is considered a good investment.

What is a good price/ cash flow ratio which is a lower the price/ cash flow
ratio, the better value that stock is. A high price/ cash flow ratio may indicate that a
company is trading at an overvalued range and is not generating enough cash flow to
support the multiple. So, typically good rule of P/CF ratio below 10 is considered a
good value.

Based on the table shows, Dutch Lady Company has performed a good
financial ratio for this price/ cash flow ratio because both of this two years are
performing in below 10 which is considered a good value. For year 2015 is represent
15.24 and year 2016 is represent 16.96. But, in year 2015 is better the year 2016
because 2015 are slightly lower a bit than year 2016.
 Dividend Yield 2015 2016

Dutch Lady Industries Dividend per share Dividend per share

 100  100
Milk Market price per share Market price per share
140,800 140,800
64,000 64,000
  100   100
47.76 55.56
2.20 2.20
  100   100
47.76 55.56
 4.61%  3.96%

Dividend yield is a financial ratio that measures the amount of cash dividends
distributed to common shareholders relative to the market value per share. It is a
measure of dollars of dividends received by investors per hundred dollars of their
investments in the stock.

In general, well-established company may have higher dividend yield, while

growing company may have lower ones. Higher dividend yield provide more income,
but higher dividend yield often comes with greater risk.

Based on the table shows, dividend yield of Dutch Lady Company is 4.61% and
3.96% which represent in year 2015 and 2016. In details, the dividend yield ratio is
4.61% in year 2015, it means an investor would earn 4.61% on his investment in the
form of dividend if he/ she buys the company common stock at current market price.

When comes to year 2016, the dividend yield ratio is 3.96%, it means an investor
would earn 3.96% on his investment on the form of dividend if he/she buys the
company common stock at current market price.
 Summary of ratio analysis of Dutch Lady Company

2015 2016

Liquidity Ratio

Current ratio 1.27 1.20

Quick asset ratio 0.87 times 0.88 times

Cash ratio 0.64 0.61

Profitability Ratio

Gross profit margin 42.00% 42.37%

Operating profit margin 18.82% 18.76%

Net profit margin 14.07% 14.23%

Returns on assets (ROA) 37.20% 31.94%

Returns on equity (ROE) 89.72% 92.39%

Asset Management Ratio

Average collection period 16.86 days 25.39 days

Inventory/ stock turnover 6.06 times 5.70 times

Fixed asset turnover 11.54 times 11.24 times

Total asset turnover 2.64 times 2.45 times

Cash conversion cycle (51.00) (81.73)

Leverage Ratio

Debt ratio 61.89% 68.23%

Interest cover ratio 53.31 times 64.46 times

Valuation Ratio

Price/ earnings ratio (P/E) 21.71 23.85

 Price/ book value ratio (P/B) 19.44 21.49

Price/ cash flow ratio (P/CF) 15.24 16.96

Dividend yield 4.61% 3.96%

.
Conclusion

Dutch Lady Milk Industries Berhad is still in its growth phase. Looking at the
business cycle, it could be said that over coming years the corporation could work
more channels of generating revenue. The total revenue increased over the year from
2015 to 2016.

By looking at various financial ratios analysis is evident that the firm is not so
efficient in generating liquidity and efficiency in operations in FY16. Dutch Lady is
quickly in converting its current assets such as inventories into cash.

Debt management ratios determined how the firm can use other people’s money to its
own advantage. Since most of the debt management ratios has increased from FY15
to FY2016, it means that the firm does not used other people’s money in the best way
to generate profit. The company borrowed more so they have to pay more the cash
outflows for interest and repayment.

Cash Conversion Cycle (CCC) measures the days a company takes to convert cash
into inventory and back to cash. The lower the CCC, the more efficient a company is
at converting their inventory into cash fast. In 2015-16, Dutch Lady’s CCC is
negative which means they collect cash even faster than they can spend it on
inventory. In other words, Dutch Lady’s working capital is financed by its suppliers

When examine Dutch Lady, they are able to consistently generate increasing
ROE without any debt. In fact, Dutch Lady has ZERO debt on their balance sheet.
This reflects how strong their business model must be in order to generate such a high
and consistent return on equity. Dutch Lady will be attracted by more investors in the
future as its earnings increased year by year and expected to have higher earnings
growth in the future.

The profitability of a Dutch Lady is being effectively managed. Dutch Lady Malaysia
has able to increase their net profit margin from 14.07% (2015) to 14.23%
(2016).They achieved this due to management initiatives to operate a much leaner
cost structure with lower operating costs.
 To conclude, Dutch Lady’s performance is at good financial health. While its
growth may be slightly limited, it’s an extremely stable company which would
investors who prefer less volatile and steady investments.

References:
Analysis Of Dutch Lady Milk Industries Berhad Finance Essay (no date). Available at:
https://essays.pw/essay/analysis-of-dutch-lady-milk-industries-berhad-finance-essay-1
44323 (Accessed: 5 March 2018).

Debt ratio - Wikipedia (no date). Available at:

https://en.wikipedia.org/wiki/Debt_ratio (Accessed: 5 March 2018).

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