Quick as to how efficient a company’s management is

ratio can also known as the acid test ratio, it can use to measure how well a
company can meet its short term financial liabilities. The quick ratio is a
more conservative ways compare to current ratio. Although the two are quite
similar, but the quick ratio provide a more accurate assessment of a company
ability to pay its current liabilities. The inventory has to deduct out from
the calculation because it is not as rapidly convertible
to cash and is often sold on credit. In year 2014, Axiata Bhd quick ratio is
0.78:1. In year 2015, Axiata Bhd remain the company quick ratio in 0.78:1 same
as last year. Although there is no any increase in this year but also known as
a good news for no decline too. But Axiata Bhd should also put more effort to
ensure the quick ratio is above 1 because there is not enough quick asset to
pay off the current debts. In year 2016, Axiata Bhd quick ratio has drop to
0.52:1. The ratio is bad than last two year. Although the quick ratio is fall
till 0.52 but this does not means that the company is going into default or bankruptcy,
it maybe just the company is relying heavily on inventory or other assets to
pay it short term liabilities. A higher ratio can show better company liquidity
position, but if got too high of quick ratio it doesn’t mean a good standing
because may indicate that the company has too much cash
sitting in its reserves and also mean that the company
has a high accounts receivables, indicating that the company may be having problems
collecting on its account receivables. 

Return on assets (ROA) is a financial ratio
that shows the percentage of profit a company earns in relation to its overall
resources. ROA gives a manager, investor, or
analyst an idea as to how efficient a company’s management is at using its
assets to generate earnings. The ROA figure gives investors an idea of how
effective the company is in converting the money it invests into net income.
The higher the ROA number, the better, because the company is earning more
money on less investment. In both year of 2014 and 2015 Axiata Bhd get 6% of
ROA. In year of 2016, Axiata Bhd ROA has decrease to only 1%. The Axiata Bhd
should reducing asset cost to increase the ROA. The
company can keep asset costs down by monitoring the asset expenses monthly. For
instance, inventory counts as an asset for the ROA calculations. Reduce the
inventory levels to our sales expectation this is because excessive inventory
can raise assets cost without producing more income. Other than that, the
Axiata Bhd should find ways to increase the company revenue
without increasing the assets cost. Its also can increase revenue through
improved customer services or by exploring market segment that have not sold to
in previous.

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Return on equity (ROE) is
the amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation’s
profitability by revealing how much profit a company generates with the money
shareholders have invested. In year 2014, Axiata Bhd get 11% of ROE. This means
that the shareholders will get the 11% of net income in order for their
investment. In year 2015 the Axiata Bhd ROE has increase 1% to 12%. This seems
to be a good news to all investor as increase in their investment.
Unfortunately, in year 2016 the ROE of Axiata Bhd has decrease to 3%. This is
happens maybe due to paying higher tax, a business
should take advantage of any government policies, subsidies or incentives that
favor its industry. For example, the government allows the information
technology industry certain tax breaks to encourage growth in the IT field. As
a result, many IT companies have improved their return on equity. Furthermore,
Operating efficiency can be measured by the net profit margin of a company, so
businesses trying to increase their return on equity should focus on improving
and widening their margins by increasing their return on sales. That means
companies need to increase their return on sales at a rate faster than the rise
in their operating costs. Operating costs include everything from employee
payrolls to the raw materials needed to make goods, and inflation often
increases these costs.



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