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