Group's Conclusion for INCO, tbk.

There are various advantages of financial statements analysis. The major benefit is that the investors get enough idea to decide about the investments of their funds in the specific company. Secondly, regulatory authorities like International Accounting Standards Board can ensure whether the company is following accounting standards or not. Thirdly, financial statements analysis can help the government agencies to analyze the taxation due to the company. Moreover, company can analyze its own performance over the period of time through financial statements analysis.

            Overall, INCO is a company that has a good performance. We can see it because although the stock price is quite fluctuated, INCO still be one of the top gainers.

            We also can see that INCO have an ability to solve its problem, internal and external one. The stock price is also stable. The financial analysis is also good and increasing.

RELATION BETWEEN FINANCIAL STATEMENT AND STOCK PRICE

To know performance of a company (how good the shares the sell) we look at which group the company belongs to. For instance, these are the shares of the companies that include in top gainers shares: CMPP, PTIS, BTON, INDY, STTP, GIAA and INCO. On the other hand in some periods shares of PTSN, MTFN, COWL, SSIA, EXCL, JECC, MYOH, TRST, BCIP and SIMP goes fluctuated until classified as the lowest one.

Financial condition of a company affects the stock prices. For example for October 28 2011, the target or stock price that INCO had to achieve is IDR 3.830. In fact, the closing price of INCO was just IDR 3.725. Although INCO stock price can’t reach 3.830, but we can see on the graph that the volume of shares sold at that moment still high. This is caused by a good company performance of INCO that make it still settle on the top gainers.

The things that can cause a fluctuating stock price are from internal and external. The internal one is because in a time INCO staff reshuffled. But as we know that INCO is one of the best, that’s just affects some aspects.

Although INCO classified as a good company, but there’s a time that when INCO stock closing price is high, there are no many people buy their stocks. Related to the previous passage, it caused by the external and internal factors.

Analysis of PT INCO, tbk's Financial Performance

Financial Statement Analysis

We use Ratio Analysis and calculate it from INCO's financial report in 2005 up to 2010

• Liquidity Ratios:

Liquidity ratios measure the short term solvency of financial position of a firm. These ratios are calculated to comment upon the short term paying capacity of a concern or the firm's ability to meet its current obligations. 

		2005	2006	2007	2008	2009	20010	Assesment
Current Ratio :	Current assets Current liabilities	3,6453	4,5987	2,5282	4,8908	7,2358	4,5016	good
Quick Ratio :	Current assets -  Inventories Current liabilities	2,9194	3,9819	1,9809	3,4453	5,8829	3,8565	good
Cash Ratio :	Cash + Marketable Securities Current Liabilities	1,9805	2,4274	2,3391	1,6332	3,0019	3,5562	good

• Efficiency Analysis:

Activity ratios are calculated to measure the efficiency with which the resources of a firm have been employed. These ratios are also called turnover ratios because they indicate the speed with which assets are being turned over into sales.

		2005	2006	2007	2008	2009	20010	Assesment
Inventory turnover	Cost of goods sales Average inventory	4,8466	4,6933	4,9561	5,4992	4,3864	6,3954
Day’s sales inventory	365 days          Inventory turnover	75,3196	77,7704	72,6466	66,3727	83,2112	57,0719
Accounts receivable turnover	Net sales            Account Receivables	38,2011	65,1854	11,4877	14,6461	5,3966	117,1691	fluctuated
Day’s sales outstanding	365 days       Account receivable  turnover	9,5547	5,5994	3,2739	24,9213	67,6348	3,1151
Total asset turnover	Sales      Total assets	0,5389	0,6302	1,2324	0,7121	0,3734	0,5827	not good
Fixed-asset turnover	Sales   Fixed assets	0,7513	1,1049	1,8692	0,982	0,5518	1053,9413	good

• Leverage Ratios:

Long term solvency or leverage ratios  convey a firm's ability to meet the interest costs and payment schedules of its long term obligations. 

		2005	2006	2007	2008	2009	2010	Assesment
Debt ratio	Total debt Total assets	0,215	0,2073	0,2653	0,1194	0,1814	0,2653	low risk
Debt-to-equity ratio	Total debt Total equity	0,2739	0,2614	0,3611	0,1446	0,2338	0,3611	low risk
Equity ratio	Total equity Total assets	0,785	0,7927	0,7344	0,8254	0,7759	0,7344	high risk
Equity multiplier	Total assets Total equity	1,2739	1,2614	1,3616	1,2115	1,2888	1,3616	low risk
Time interest earn ratio	Operating income Interest expense	76,9641	369,668	1061,5256	790,5091	1220,3947	-	good

• Profitability Ratios:

Profitability ratios measure the results of business operations or overall performance and effectiveness of the firm.

2005 2006 2007 2008 2009 2010 Gross profit margin Net sales - Cost of goods sold Net sales 0,4999 0,574 0,7064 0,3838 0,3218 0,4889 Operating profit margin Operating Income Sales 0,4765 0,5499 0,6859 0,3645 0,3047 0,4672 Net profit margin Net income Net sales 0,3038 0,3838 0,5043 0,2738 0,224 0,3427 Operating income return on investment Operating income Total assets 0,2568 0,3466 0,8451 0,2596 0,1138 0,3159 ROA Net income Total assets 0,1637 0,2418 0,6213 0,195 0,0836 1,2317 ROE Net income Total equity 0,2086 0,3051 0,846 0,2363 0,1078 0,3603

Analysis of PT INCO, tbk's Stock Price

PRICE STOCK INTERNATIONAL NICKEL INDONESIA, Tbk ANALYSIS

Here is a stock price chart of PT INCO, tbk from Jan 2 – Oct 31, 2011 

 

(data source: http://finance.yahoo.com/q/hp?s=INCO.JK+Historical+Prices)

This price chart can offer plenty of valuable information. The price chart is an easy to read historical account of a security's price movement over a period of time. Charts are much easier to read than a table of numbers. Volume bars are displayed at the bottom. And a red line show the movement of closing price.

INCO stock price decline in the last few months so deeply despite.

As we know, the price of the stock always changes everyday because of the market forces that happen in the world. We can determine the stock price by looking at these factors:

1. Market Psychological
we can now look at the issues that happen in the world that can affect the economic performace of the company. For example: INCO H1 NET PROFIT RISES 9 PCT (August). Nickel producer International Nickel Indonesia (Inco) posted a 9 percent rise in first-half net profit from a year ago due to increasing sales and higher production. Source: http://www.reuters.com/article/2011/08/02/indonesia-factors

From this issue we can compare to the graph. The graph shows to us that the price is quite high. The calculation also show that the average price is Rp. 3,811

2. The performance of the industry

The better the performance of the company, the higher stock price of the company. We can see that the performance of the INCO is good because the net profit of INCO in the last two years are increased. The financial statement shows that:

- 2009: Rp. 170,417

-2010: Rp. 437,363

The net earnings from the 1 year movement are increased.

3. Share-buy-back

The act of share buy-back by a company will reduce the number of share available in the open market. Due to the law of supply and demand, a reduction in share available for trading in this case will cause a drop in supply; this will normally help increase the share price. Also, the continuing buying back of share of a company will also acts as a support for the share price that helps to maintain or increase the share price. The investors may also see the share buy-back by company as a confidence booster for them in the company itself. Therefore, share buy-back is quite often used as a tool to deliver value to the investors. 

4. Others

These include news about new technology, patent approval, war, natural disaster, product recalls and lawsuits that shall have positive and negative impact to the relevant company stocks. The health or mishap of a key leader in a company may also affect the stock price of the company.

Last 2 years fixed asset data:

2009: 1,398,320

2010: 1,478,520

From data above we can see that the fixed asset of INCO increased. It means that the stock price can increase too affected by the increasing of fixed assets.