QUESTION 1

LIQUIDITY RATIOS

2013

CALCULATIONS & ANSWER

2014

YEARS
2015

TYPES OF RATIO
i.

Current Ratio
189,779,586

39,974,819

202,186,975

35,429,982

225,213,978

41,690,275

4.75

5.71 times

times

5.40

Current asset
Current liabilities

times

In 2014, the ratio goes up to 5.71 as compared to 4.75 in 2013 which means that
Ajinomoto is improving their liquidity and efficiency. In 2015, the ratio goes down
to 5.40 as compare to 2014, however, company still has the ability to pay its
liabilities because of higher current assets.
ii.

Quick Ratio

189,779,58670,907,069
39,974,819

202,186,97559,391,807
35,429,982

118,872,517

39,974,819

142,795,168

35,429,982

2.97

4.03

225,213,97863,181,733
41,690,275

162,032,245
41,690,275
3.89

times

times

times

Current asset Inventory

Current liabilities

In 2014, the ratio goes up to 4.03 as compared to 2.97 in 2013 which means that
Ajinomoto is improving their ability to pay off its debts. In 2015, the ratio goes
down to 3.89 as compare to 2014, however, company still has the ability to pay its
liabilities through its most liquid assets.
QUESTION 2
ACTIVITY RATIOS

2013

CALCULATIONS & ANSWER

2014

YEARS
2015

TYPES OF RATIO
i.

Inventory Turnover

200,188,515
70,907.069

196,359,968
59,391.807

180,259,168
63,181.733

2.82 year

3.31 year

2.85 year

Comparison between 2.82 on 2013, 3.31 on 2014 and 2.85 on 2015 shows that
how many days, on average, before inventory is turned into account receivable
through sales. In 2014, the inventory turnover was faster than 2013 and 2015. It is
shows how effectively the firm managing inventory and also to gain an indication
of the liquidity of inventory.

Cost of Goods Sold

Inventory

ii.

Average age of Inventory

70,907,069

200,188,515 365

59,391,807

196,359,968 365

63,181,733

180,259.168 365

70,907,069
548,461.6849

129.3 days

59,391,807
537,972.5151

110.4 days

Inventories
Cost of Goods Sold 365

63,181,733
493,860.7342

127.9 days

Average age of inventory is the shortest with 110.4 days in 2014 and 127.9 days in
2015 compare to 129.3 days. This shows unused inventory stored is the lowest in
year 2014. More less the days is better because the turnover of inventory is faster.
iii.

39,370,912
332,908,276 365

37,223,414
345,350,917 365

38,902,249
340,375,936 365

39,370,912
912,077.4682

37,223,414
946,166.8959

38,902,249
932,536.811

43.2 days

39.3 days

41.7 days

Average Collection Period

Account Receivable
Sales Daysa Year

The ability of the firm of collecting the receivables in the specific time. Here in the
year 2013 the turnover in days was almost 44, but the collecting decrease in the
year 2014 to 39 days and turn increase in the year of 2015 with the collection
period of approximately almost 42 days is well within the 60 days allowed in the
credit terms.
iv.

Total Asset Turnover

332,908,276

294,403,603

345,350,917

308,019,011

340,375,936

332,945,544

1.13 year
1.12 year

Sales
Total Assets

1.02 year

The ratio is supposed to be high. Here we can see that the Ajinomoto companys
total asset turnover ratio in 2013 was 1.13, which means that the company
generated more revenue per ringgit of asset investment. The ratio then comes
slightly down in 2014 by 1.12 and 2015 by 1.02.

QUESTION 3
DEBT RATIOS

2013

CALCULATIONS & ANSWER

2014

YEARS
2015

TYPES OF RATIO

i.

Debt Ratio
50,059,757

249,403,603

45,943,156

308,019,011

53,423,049

332,945,544

0.170 @17.0

0.149 @14.9

Total Liabilities
Total Assets

0.161@ 16.0

The ratio shows the companys ability to cover its debts through its total assets.
The higher the debt ratio means that the company in in bad shape, once a
company reaches an extremely high debt ratio, the creditors may demand
repayment which may lead to bankruptcy. Typically a debt ratio which is lower
than 1 or 100% means that the company need less debt to finance its assets. In
2013, 2014 and 2015 which is 17.0%, 14.9% and 16.0% is doing the best in
terms of the debt ratio because of lower percentage of debt ratio.
ii.

Debt Equity Ratio

50,059,757
244,343,846

45,943,156
262,075,955

53,423,049
279,522,495

0.191@ 19.1
0.205 @20.5

0.175 @17.5

These ratios are lower than 100% and the lower ratio indicate that the company
may be able to generate enough cash to satisfy its debt obligation.
iii.

Total Liabilities
Common Stock Equity

28,085,465
1,880,849

14.9

37,596,153
2,563,660

14.7

40,596,457
3,433,560
11.8

Time s Interest Earned

Earning Before Interest Taxes

Interest

In 2013 Ajinomoto has a ratio of 14.9 which is a large increase from 2014 and
2015 with their ratio been 14.7 and 11.8. This means that they have a lower
coverage of interest, and that the coverage has decreased from the previous
year.
QUESTION 4
PROFITABILITY RATIOS

2013

CALCULATIONS & ANSWER

2014

YEARS
2015

TYPES OF RATIO
i.

EPS

19,403,596
60,798,534

28,041,173
60,798,534

29,733,379
60,798,534

0.3191@ 31.91

0.4612@ 46.12

0.4890 @48.90

Earning Per Share is the amount of income earned during a period per share of
common stock. However, the companys earning per share 0.4890 in 2015 is
slightly better than 0.3191 in 2013 and 0.4612 in 2014. Which means more

Earnings available for common stockholders

Number of shares of common outstanding

higher is more valuable for that company.

ii.

ROA

19,403,596
294,403,603

28,041,173
308,019,011

Earnings available for common stockholders

Total Assets

29,733,379
332,945,544

0.0893 @8.93
0.0659 @6.59

0.0910 @9.10

The decrease in Return on Assets indicates that the company is generating less
profit from all of its resources in the year 2015 as compared to the year 2014.
The higher this ratio in 2014 is the better for the company. Therefore this
decrease in Ajinomotos ratio is indicating that the company is not that much
prospering.
iii.

ROE

19,403,596
244,343,846

28,041,173
262,075,955

29,733,379
279,522,495

0.1064 @10.64
0.0794 @7.94

0.1070 @10.70

The ratio should be higher. Here starting from 2013, the ratio was 7.94% then,
goes up in 2014 to 10.70% and goes down to 10.64% in 2015. This increase in
Return on Equity is a good thing for stockholders and indicates that Ajinomoto is
using the equity by stockholders during the specific year effectively and using it

Earnings availabfor common stockholders

Common Stock Equity

to generate more equity for the owners.

QUESTION 5
MARKET RATIOS

2013

4.42
31.92

0.1385 @13.85

CALCULATIONS & ANSWER

2014

5.10
46.12

0.1106 @11.06

YEARS
2015

6.30
48.90

0.1288 @12.88

Ajinomotos price-earnings ratio has decreased 2.79 times in 2014, because in

2013 the ratio was 13.85 but in 2014 it become 11.06 times which suggests that
investors may be looking less favourably at the Ajinomoto. However, the ratio
increase in 2015 becomes 12.88. this ratio should be high, because the higher
the P/E ratio means that the more money the investor is expecting for return.

TYPES OF RATIO
i.

P/ E Ratio

Market price per share of common stock

Earnings per share

ii.

4.42
244,343,846 60,798,534

5.10
262,075,955 60,798,534

4.42

4.0189

5.10

4.3106

1.10

1.18

6.30
279,522,495 60,798,534

6.30
4.5975
1.37

Market Book Rati o

Book value per share of common stock
Common Stock Equity

Market price per share of common stock

( Number of shares of CommonStock Outstanding)

This market to book ratio means that the investors are currently paying RM1.10
in 2013, RM1.18 in 2014 and RM1.37 in 2015 for each RM1.00 of book value of
Ajinomotos stock. We can say that Ajinomotos future prospects are being
viewed favourably by investors, who are willing to pay more than their book
value for the firms shares.
INTRODUCTION
Ajinomoto (Malaysia) Berhad is engaged in manufacturing and selling of monosodium glutamate and other related products.
The company is engaged in two areas of activity. Umami segment consists of products, which are derived from fermentation
process, such as monosodium glutamate (MSG) and related products. The food and seasoning consists of products derived
from extracting and mixing process, such as industrial seasoning, tumix and related seasonings. Other products sold by the
company consist of trading goods, such as industrial sweetener, feed-use amino acids and frozen food.
CONCLUSION
After applying all the ratios we got an idea that the Ajinomoto Company is a profitable firm. Because through out the analysis
of three years, we found that the company is getting profitable return on short term and long term investment, their profit
margin has been increased as well and they are in the position to pay their debts with in their resources.