Question

please compare 2 companies 5 ratios and analysis which is better

2017		Brahim's Holdings Bhd BRAHIMS (Malaysia)A	Saudee Group Bhd SAUDEE (Malaysia)B
Liquidity	Current Ratio=Current Asset/Current Liability
	Current Assets	98,028.00	76,041.80
	Current Liabilities	59,232.00	51,821.10
	Current Ratio(times)	1.65	1.47
	Quick Ratio=(Current Asset-Inventories)/ Current Liability
	Inventories	6,259.00
	Quick Ratio(times)	1.55	0.74
Asset Management	Inventory Turnover Ratio=Sales/Inventories
	Sales	291,563.00	133,510.70
	Inventories	6,259.00	37,813.70
	Inventory Turnover Ratio	46.58	3.53
	Days Sales Outstanding=Account Receivables/Average Sales Per Day
	Receivables	63,138.00
	Average Sales Per Day=Sale/365	798.80	365.7827397
	DSO(days)	79.04	74.02
Debt Management	Debt Ratio=Total Liabilities/Total Assets
	Total Liabilities	128,923.00	64,155.50
	TOTAL Assets	372,277.00	122,333.10
	Debt Ratio	0.35	0.52
	Total Liabilities	128,923.00	64,155.50
	Total Equity	243,354.00	58177.6
	Debt To Equity Ratio	0.53	1.10
Profitability	Net profit Margin=Net income/Sales
	Net income	-6,937.00	1,211.40
	Sales	291,563.00	133,510.70
	Net Profit Margin	-0.02	0.00907343
	Operating Profit Margin=EBIT/Sales
	EBIT	15,550.00	3,767.80
	Sales	291,563.00	133,510.70
	Operating Profit Margin	0.05	0.028220959

2017		Brahim's Holdings Bhd BRAHIMS (Malaysia)	Saudee Group Bhd SAUDEE (Malaysia)
Market Value	Book Value Per Share=Common Equity/Shares Outstanding
	Common Equity	98,812.00	58,177.60
	Shares Outstanding	236,286.00	60,000.00
	Book Value Per Share	0.42	0.97
	Market/Book Ratio=Market Price Per Share/ Book Value Per Share
	Book Value Per Share	0.47	0.97
	Market Price Per Share	0.42	0.46
	Market/Book Ratio	1.11	0.47

Answer 1

Current Ratio

Current ratio of 1.65 is better than 1.47. Current ratio of more than 1.5 is an ideal ratio. it indicates that more is the current ratio, the firm is more comfortable to pay its short term obligations. so a higher current ratio is always better.

Quick Ratio

Quick ratio is an indicator that indicates about very quick liquidity position of the firm. ratio of more than 1.0 is a healthy quick ratio. So ratio of 1.55 is better than ratio of .74 always. So firm having more quick ratio can meet its short term obligation more quickly.

Inventory Turn Over (T.O.) Ratio

Inventory TO ratio is a measure of how much inventory is turning of in a particular period of time. So a higher inventory TO ratio is always good for the firm and indicates lower inventory holding cost. So inventory TO ratio of 46.58 is far better than 3.53

Days Sales Outstanding (DSO)

Low DSO indicates that firm receives its accounts receivables more quickly. So a low DSO for a firm is always good. So DSO of 74.02 is better than 79.04. Low DSO indicates that firm is efficient on front of account receivables.

Debt Ratio

Low debt ratio indicates that liabilities of the firm is less than total assets. so a low debt ratio indicates towards a efficient firm. So debt ratio of 0.35 is better than 0.52. it indicates that firm has sufficient assets to pay off its liabilities.

Debt to equity ratio

A Low debt to equity ratio indicates towards efficiency of the firm to pay its liabilities. So a lower debt to equity ratio is always preferable. So debt to equity ratio of 0.53 is always better than 1.10. it indicates that how much equity is behind of debt.

Net Profit Margin

High net profit margin is a indicator of high profit earning capacity of the firm on turnover. it tells about the how much profit can a firm earn by achieving a certain turnover. so a firm with nigh net profit margin can earn high profit on same turnover of having low net profit margin. So a higher net profit margin is preferable. So a ratio of 0.00907 is better than (-) 0.02

Operating Profit Margin

It indicates the profitability from operating activities. So a higher operating profit margin is always preferable. So Ratio of 0.05 is better than 0.02822.

It indicates that firm having more operating profit ratio can earn more operating profit.

Book Vale Per Share

Book value per share is a measure of worth per share. So a higher book value per share rather than market value per share indicates that share is under valued in market and can be a good investment. So a higher book value per share is always preferable and book value of 0.97 is better than 0.42

Market Book Ratio

A higher market book ratio indicates towards that the market price is greater than book value. So higher Market book ratio indicates a overpriced shares. so a lower market / book ratio is always preferable.

Here is a calculation mistake in the question and the ratio will be 0.89 instead of 1.11

So market book ratio of .47 is always good than ratio of .89

because share having ratio of .47 above is under priced in comparison of 0.89.