Professional Documents
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GROUP’S MEMBERS:
AZDZAM ASYRAF BIN MALEK (BF099962)
FATIN DAMIA BINTI ZAINUDDIN (BF0100012)
AIREEN RAZLEEN BINTI A RAZU (BF098884)
NUR ATIKAH BINTI ISMAIL (BF098769)
CASE STUDY 4:
12,000,000
3.5
3
10,000,000
2.5
8,000,000
2
6,000,000 1.5
1
4,000,000
0.5
2,000,000
0
2006 2007 2008 2009 2010
Current ratio 2.02 4.12 1.09 1.29 1.47
0 Working Capital Ratio 0.23 0.53 0.017 0.04 0.07
2006 2007 2008 2009 2010 Quick Ratio 1.94 4.05 1.02 0.86 1.08
Curent Asset Current Liabilities Total asset Total Liabilities Current ratio Working Capital Ratio Quick Ratio
2. Solvency Ratio For Air Asia Berhad (2006-2010)
(Debt)
16,000,000
Solvency Ratio
6
14,000,000
5
12,000,000 4
3
10,000,000
2
8,000,000 1
0
6,000,000
-1
-2
4,000,000
-3
2,000,000
-4
2006 2007 2008 2009 2010
Debt Equity Ratio 1.31 1.86 4.88 1.65 2.72
0 Debt Asset Ratio 0.57 0.65 0.83 0.38 0.73
2006 2007 2008 2009 2010 Interest Coverage Ratio 0.9 2.67 -2.92 1.92 2.88
Curent Asset Current Liabilities Total asset Total Liabilities Debt Equity Ratio Debt Asset Ratio Interest Coverage Ratio
3. Profitability Ratio For Air Asia Berhad (2006-2010)
(Profit)
4,500,000
Profitability Ratio
4,000,000 0.4
3,500,000 0.3
3,000,000 0.2
2,500,000 0.1
2,000,000
0
1,500,000
-0.1
1,000,000
-0.2
500,000
-0.3
0
2006 2007 2008 2009 2010 -0.4
2006 2007 2008 2009 2010
-500,000 Profit Margin 0.095 0.313 -0.188 0.163 0.273
Return on equity 0.08 0.3 -0.306 0.19 0.29
-1,000,000 Return on Asset 0.0095 0.059 -0.06 0.06 0.13
Sales/ Revenue Net Income Profit Margin Return on equity Return on Asset
4. Efficiency Ratio For Air Asia Berhad (2006-2010)
(Expenses & Collect)
8,000,000
Efficiency Ratio
250
7,000,000
212.82
6,000,000
200
186.08
5,000,000
4,000,000 150
135.09
3,000,000
100
2,000,000 75.79
1,000,000
50 38.54
0
2006 2007 2008 2009 2010
Sales/ Revenue 839,007 1,593,978 2,635,978 3,072,099 3,864,459 0.8 0.95 1.63 0.43 1.06
0
Net Asset 1,049,368 1,671,945 1,615,478 7,071,712 3,640,405 2006 2007 2008 2009 2010
Operation Expenses 587,996 1,156,344 2,635,977 2,061,137 2,839,209 Asset Turnover 0.8 0.95 1.63 0.43 1.06
Inventory 9,868 8,962 20,137 20,316 17,005 Inventory Turnover 38.54 75.79 212.82 135.09 186.08
Sales/ Revenue Net Asset Operation Expenses Inventory Asset Turnover Inventory Turnover
Analysis Based on Financial Ratio Result:
For the liquidity ratio (current ratio, working capital ratio and quick ratio) there was an increasing
result for 2 years before 2008 (2006 &2007) but otherwise for 2008 liquidity ratio for Airasia Berhad
significantly drop and recover back for two years after 2008 (2009 &2010). Hence, higher liquidity ratio
indicates that AirAsia Berhad was more liquid and has better coverage of outstanding debts.
If Airasia Berhad has lower solvency ratio, the company has greater probability for default on its debt
obligations. As shown on the graph, Debt equity ratio for 2008 indicates that larger debt a company is
using to finance its assets relative to the value of shareholders' equity with higher value of D/E ratio
(4.88). For the year 2008, Airasia Berhad has lower interest coverage ratio which is (-2.92) shown that
Airasia Berhad company has lower ability to meet its interest payments.
To be analyzed, 2008 result shown that profitability significantly drop to negative value instead of two
years before 2008 (2006 & 2007) and two year after 2008 (2009 & 2010) which is in positive value. If
we’re looking at the sales/revenue during 2008, it quite high but profitability still low/negative
because net income maybe lower due to the high expenses instead of income.
For the efficiency ratio, inventory turnover ratio for Airasia Berhad shows that how many times a
company's inventory is sold and replaced over a period of time. Thus, 2008 shown that the greater the
time company’s inventory sold and replaced over a period of time. In other hand, Companies with low
profit margins tend to have high asset turnover, while during 2008 indicate lowest profit margins with
highest asset turnover (1.63) among the other years.
RECOMENDATION
Airasia Berhad should consider the risk exposure towards the company such as political risk, foreign
exchange risk, interest rate risk and so on.
Conclusion