d.).
2.0 Ratio Analysis.
Financial ratio is one of the ways for an investor to determine whether the company is worth to invest since an ounce of evidence is worth a pound of presumption. Investor may calculate the ratio from the annual report provided by the company and thus analysis the financial information in order to clearly understand the performance of the company. Therefore, it might be one of the considerations for the investor to make a decision for whether investing the company. Most of the time, investor will comparing the different company for the purpose of getting a view to predict about the company's earning potential as well as the company prospect. Furthermore, it also can provide assessable cues about the financial health of an organization. IOI Group is a large company that there is only Sime Darby can be comparable with its and both of them are quite similar at their business area. According to the annual report that provided by IOI Group and Sime Darby, we can conclude the financial information via calculating the profitability ratio, gearing ratio, liquidity ratio and efficiency ratio.
Table 1.
Profitability Ratios.
IOI Group.
Sime Darby.
2011.
2012.
2013.
2011.
2012.
2013.
Gross Profit Margin.
=.
21.11%.
20.93%.
18.12%.
25.82%.
23.02%.
22.68%.
Net Profit Margin.
= .
17.73%.
15.21%.
13.11%.
13.02%.
12.02%.
9.53%.
Net Operating Profit Margin.
= .
17.43%.
15.13%.
14.06%.
13.10%.
12.21%.
9.91%.
Return on Assets (ROA).
= .
11.65%.
7.93%.
8.35%.
8.98%.
9.03%.
7.91%.
Return on Equity (ROE).
= .
19.16%.
13.17%.
29.91%.
15.50%.
16.16%.
13.69%.
Return on Capital Employed (ROCE).
= .
17.20%.
12.08%.
7.99%.
18.86%.
18.64%.
12.79%.
2.1 Profitability Ratio.
Firstly, a profitable organization can attract the more investors since this is the most that an investor concerned with, so profitability ratio is always use as a method to determine the performance of a company and also how fast it return to its investor. Thus, we usually separate the profitability ratio into two divisions which included the margins and returns.
Table 1 that had presented above show that the gross profit margin of IOI Group had fallen since the year of 2011.
