Business Ratio Essay

The bring in margin is mostly used for inner(a) comparison. Individual businesses operating and financing arrangements vary so much that contrastive entities are bound to have different levels of expenditure, so that comparison of unrivalled with another give the axe have little meaning. Digi has a gameyest net addition margin proportionality among the 3 company which is 21.03%, while Axiata and YTL have 14.26% and 7.87%. YTL with a lowest profit margin indicates a low margin of sentry duty higher venture that a decline in sales will erase profits and result in a net loss. do good margin is an indicator of a companys pricing strategies and how comfortably it controls costs. Differences in competitive strategy and product mix cause the profit margin to vary among different companies.Liquidity balance ( oc flow rate dimension) The current ratio is an indication of a firms marketplace lucidity and dexterity to meet creditors demands. Acceptable current ratios vary fro m effort to industry and are generally between 1.5 and 3 for healthy businesses. Axiata and YTL have a current ratio that is 1.1632 and 1.3149 is near to this range, it generally indicates moderate short-term pecuniary strength. Digi has a current ratio that below 1, the current liabilities exceed current summations. Digi may have problems meeting its short-term obligations. Low values for the current ratios indicate that Digi may have difficulty meeting current obligations. precisely if inventory work ons over much more rapidly than the accounts payable rick due, then the current ratio will be less than one. This can allow Digi to operate with a low current ratio.Leverage ratio (Debt ratio) YTL debt ratio is 0.7403 which is higher than Axiata and Digi which is 0.4826 and 0.7098. The higher the ratio means the greater risk will be associated with the firms operation. In addition, high debt to assets ratio may indicate low borrowing capacity of a firm, which in turn will unho rse the firms financial flexibility. The debt ratio shows the proportion of a companys assets which are financed through debt. The ratio of Axiata is less than 0.5, most of the companys assets are financed through equity. Companies with high debt ratios are said to be highly leveraged, not highly liquid as stated above. Digi and YTL with a high debt ratio could be in danger if creditors start to demand repayment of debt.Activity ratio (Total assets turn over) Asset dollar volume is a financial ratio that measures the efficiency of a companys use of its assets in generating sales revenue or sales income to the company. Companies with low profit margins tend to have high asset turnover, while those with high profit margins have low asset turnover. Digi has a profit margins which is 1.193times is much higher than Axiata and YTL, 0.4182times and 0.3892times. These show that Digi has a high asset turnover while Axiata and YTL have low asset turnover. Companies in the sell industry ten d to have a very high turnover ratio due mainly to cutthroat and competitive pricing.Market Ratio (Earnings per Share ratio) Earnings per share are the amount of earnings per to each one prohibitedstanding share of a companys stock. In the unify States, the Financial Accounting Standards Board (FASB) requires companies income contentions to report EPS for each of the major categories of the income statement continuing operations, discontinued operations, extraordinary items, and net income. Axita has the highest market ratio which is 28sen out of every ordinary share. Digi and YTL have lower market ratio, 16.1sen and 11.53sen. Compare with Digi and YTL, Axiata has the highest market value. Axiata earn 28sen out of every ordinary share.Days Sales bully (DSO) Ratio Day sales outstanding are a computer science used by a company to estimate their come allurement period. It is a financial ratio that illustrates how well a companys accounts receivables are being managed. The days sales outstanding psychoanalysis provides general information about the number of days on average that customers take to pay invoices. YTL has higher DSO ratio, 72.72days can indicate a customer base with credit problems and is deficient in its collections activity. Digi and Axiata which have a lower ratio, 27.96days and 46.74days may indicate that firms credit policy is likewise rigorous, which may be hampering sales.