Modas MK Super Fix 4 31217

MODULE ASSIGNMENT
PT. NIPPON INDOSARI

CORPINDO
PREFACE
Praise God’s blessing that has given the mercy and might to finish this Module
Assignment for Principal of Managerial Finance which is analyzes the financial
statement ratios and risk and return in PT. Nippon Indosari Corpindo, Tbk. This
Module Assignment is arranged in order to complete our final task. We would like to
thank our lecturer Mrs. Reniati Karnasi , SE, MM and Dra. Hartini, MM whom has
given their time, thoughts, and support to guide us patiently and perseveringly to
finished this module assignment. Also we would like to thank other parties that have
been helping us to finish this task.
During the process of arranging this module, we have faced a few obstacles.
Fortunately we managed to overcome the obstacles and finished this module
assignment. We aware that our module assignment is still far from perfect. Also we
look forward to any critics and suggestions that can help us revise and make a lot
more improved module assignment in the future. We hope that our module
assignment would be helpful to others to gain more knowledge about Finance
Managerial.
Jakarta, December
Authors
TABLE OF CONTENTS
CHAPTER I
INTRODUCTION
1.1. Background
Financial reporting is the process of producing statements that disclose an
organization’s financial status to management, investors and the government.
Financial reporting serves two primary purpose. First, it helps management to
engage in effective decision-making concerning the company's objectives and
overall strategies. The data disclosed in the reports can help management discern the
strengths and weaknesses of the company, as well as its overall financial health.
Second, financial reporting provides vital information about the financial health and
activities of the company to its stakeholders including its shareholders, potential
investors, consumers, and government regulators. It's a means of ensuring that the
company is being run appropriately.
1.2. Purpose of Writing

Our purpose of writing this Module Assignment is to finished the Final project od
the Finance Managerial and to learn about the performance about the company that
based on our studies of this subject.
1.3. Methodology
To obtain the data required in completing this module assignment, we take the data
based on literature in particular by:
 Using the source from the book titled “Principles of Managerial Finance:, 14
edition by Lawrence J. Gitman and Chad J. Zutter
 Using the source from internet
1.4. Systematization
The format of our module assignment is as follows:
 Chapter I:
Consists of four major sub chapter, there are background, purpose of
writing, methodology and systemization.
 Chapter II:
Consists of two majors sub chapter, there are theories and company profile.
 Chapter III:
Consists of four majors sub chapter. There are our calculation and analysis
 Chapter IV:
Consists of two major sub chapter, there are conclusion and suggestion.
CHAPTER II
THEORIES
2.1. Definition of Financial Analysis

Financial statement analysis involves gaining an understanding of an
organization's financial situation by reviewing its financial statements. This
review involves identifying the following items for a company's financial
statements over a series of reporting periods:
 Trends. Create trend lines for key items in the financial statements over
multiple time periods, to see how the company is performing. Typical trend
lines are for revenues, the gross margin, net profits, cash, accounts
receivable, and debt.
 Proportion analysis. An array of ratios are available for discerning the
relationship between the size of various accounts in the financial statements.
For example, one can calculate a company's quick ratio to estimate its
ability to pay its immediate liabilities, or its debt to equity ratio to see if it
has taken on too much debt. These analyses are frequently between the
revenues and expenses listed on the income statement and the assets,
liabilities, and equity accounts listed on the balance sheet.
There are several general categories of ratios, each designed to examine a

different aspect of a company's performance. The general groups of ratios
are:
 Liquidity ratios. This is the most fundamentally important set of ratios,

because they measure the ability of a company to remain in business.
 Activity ratios. These ratios are a strong indicator of the quality of
management, since they reveal how well management is utilizing company
resources.
 Leverage ratios. These ratios reveal the extent to which a company is
relying upon debt to fund its operations, and its ability to pay back the
debt.
 Profitability ratios. These ratios measure how well a company performs in
generating a profit.
 Market Ratio. Relate a company’s market value, as measured by its current
share price, to certain accounting values.
2.2. Types of Ratio Comparisons

 Cross-Sectional Anlysis is a type of analysis that an ivestor, analyst or
portofolio manager may conduct on a company in relation to that company’s
industry or industry peers. The analysis compares one company against the
insustry in which it operates, or directly against certain competitors within the
same industry, in an attempt to assess performance and investment
oppurtunities.
 Time Series Analysis can be useful to see how a given asset, security or
economic variable changes over time. It can also be used to examine how the
changes associated with the chosen data point compare to shifts in other
variables over the same time period.
2.3. Liquidity Ratio
The liquidity of a firm is measured by its ability to statisfy its short-term
obligation as they come due. Liquidity refers to the solvency of the firms’s
overall financial postion , or the ease with which it can pay its bills.
2.3.1. Current Ratio
Current Ratio measures the firm’s ability to meet its short-term
obligations.
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑅𝑎𝑡𝑖𝑜 =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
A higher current ratio indicates a greater degree of liquidity. How much
liquidity a firm needs depends on a variety of factors, including the
firm’s size, it’s access to short-term financing sources.
2.3.2. Quick-Acid Ratio
The quick (acid-test) ratio is similar to the current ratio except that it
excludes inventory, which is generally the least liquid current asset.
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡 − 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦

𝑄𝑢𝑖𝑐𝑘 𝑅𝑎𝑡𝑖𝑜 =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑙𝑖𝑡𝑖𝑒𝑠
2.4. Activity Ratio
Activity ratios measure the speed with which various account the converted into
sales or cash, or inflows or outflows. In a sense, activity ratios measure how
efficiently a firm operates along variety of dimensions such as inventory
management, disbursement, and collections.
2.4.1. Inventory Turnover
Inventory turnover commonly measure the activity, or liquidity, of a
firm’s inventory. It calculated as
𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 = 𝐶𝑜𝑠𝑡 𝑜𝑓 𝑔𝑜𝑜𝑑𝑠 𝑠𝑜𝑙𝑑 ÷ 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦
2.4.2. Average Collection Period

The average collection period is useful in evaluating credit and
collection policies.
𝐴𝑐𝑐𝑜𝑢𝑛𝑡 𝑟𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐶𝑜𝑙𝑙𝑒𝑐𝑡𝑖𝑜𝑛 𝑃𝑒𝑟𝑖𝑜𝑑 =
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑠𝑎𝑙𝑒𝑠 𝑝𝑒𝑟 𝑑𝑎𝑦
𝐴𝑐𝑐𝑜𝑢𝑛𝑡 𝑟𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒
= 𝐴𝑛𝑛𝑢𝑎𝑙 𝑠𝑎𝑙𝑒𝑠
365
2.4.3. Average Payment Period

The average payment period or average age of accounts payable, is
calculated in the same manner as the average collection period
𝐴𝑐𝑐𝑜𝑢𝑛𝑡 𝑝𝑎𝑦𝑎𝑏𝑙𝑒
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑃𝑎𝑦𝑚𝑒𝑛𝑡 𝑃𝑒𝑟𝑖𝑜𝑑 =
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑝𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑠 𝑝𝑒𝑟 𝑑𝑎𝑦
𝐴𝑐𝑐𝑜𝑢𝑛𝑡 𝑃𝑎𝑦𝑎𝑏𝑙𝑒
=
𝐴𝑛𝑛𝑢𝑎𝑙 𝑝𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑠
365
2.4.4. Total Asset Turnover

The total asset turnover indicates the efficiently with which the firm uses
its assets to generate sales.
𝑆𝑎𝑙𝑒𝑠
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 =
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡
2.5. Debt Ratio
These ratio reveal the extent to which a company is relying upon debt to fund its
operations, and its ability to pay back the debt.
2.5.1. Debt Ratio
The debt ratio measures the proportion of total assets financed by the
firm’s creditors. The higher this ratio, the greater the amount of other
people’s money being used to generate profits.
𝑇𝑜𝑡𝑎𝑙 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
𝐷𝑒𝑏𝑡 𝑅𝑎𝑡𝑖𝑜 =
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡
2.5.2. Debt to Equity Ratio

The debt-to equity ratio measures the realtive proportion of total
liabilities to common stock equity used to finance the firm’s assets. As
with debt ratio, the higher this ratio, the greater the firm’s use of
financial leverage.
𝑇𝑜𝑡𝑎𝑙 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
𝐷𝑒𝑏𝑡 𝑡𝑜 𝐸𝑞𝑢𝑖𝑡𝑦 𝑅𝑎𝑡𝑖𝑜 =
𝐶𝑜𝑚𝑚𝑜𝑛 𝑆𝑡𝑜𝑐𝑘 𝐸𝑞𝑢𝑖𝑡𝑦
2.5.3. Times Interest Earned Ratio

The times interest earned ratio, sometimes called the interest coverage
ratio, measures the firm’s ability to make contractual interest payments.
The higher its value, the better ablethe firm is to fulfill its interest
obligations.
𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑏𝑒𝑓𝑜𝑟𝑒 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑎𝑛𝑑 𝑡𝑎𝑥𝑒𝑠

𝑇𝑖𝑚𝑒𝑠 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐸𝑎𝑟𝑛𝑒𝑑 𝑅𝑎𝑡𝑖𝑜 =
𝑇𝑎𝑥𝑒𝑠
2.6. Profitability Ratio

As a group, these measures enable analyst to evaluate the firm’s profits with
respect to a given level of sales, a certain level of assets, or the owner’s
investment. Without profits, a firm could not attract outside capital. Owners’s
creditord and managemet pay close attention to boosting profits because of the
great importance the market places on earnings.
2.6.1. Gross Profit Margin
The gross profit margin measures the precentage of each sales dollar
remaining after the firm has paid for its goods. The higher the gross
profit margin,the better.
𝑆𝑎𝑙𝑒𝑠 − 𝐶𝑜𝑠𝑡 𝑜𝑓 𝑔𝑜𝑜𝑑𝑠 𝑠𝑜𝑙𝑑
𝐺𝑟𝑜𝑠𝑠 𝑝𝑟𝑜𝑓𝑖𝑡 𝑚𝑎𝑟𝑔𝑖𝑛 =
2.6.2. Net Profit Margin
The net profit margin measures the precentage of each sales dollar
remaining after all costs and expenses, including interest, taxes, and
preferred stock dividends, have been deducted. The higher the firm’s net
profit margin, the better.
𝑒𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑎𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 𝑓𝑜𝑟 𝑐𝑜𝑚𝑚𝑜𝑛 𝑠𝑡𝑜𝑐𝑘ℎ𝑜𝑙𝑑𝑒𝑟𝑠

𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 𝑀𝑎𝑟𝑔𝑖𝑛 =
2.6.3. Return on Total Assets

The return on total assets measures the overall effectiveness of
mangement in generating profits with its available assets. The higher
firm’s return o total assets, the better.
𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑎𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 𝑓𝑜𝑟 𝑐𝑜𝑚𝑚𝑜𝑛 𝑠𝑡𝑜𝑐𝑘ℎ𝑜𝑙𝑑𝑒𝑟

𝑅𝑂𝐴 =
𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠
2.6.4. Return on Equity

The return on equity measures the return earned on the common
stockholders investment in the firm. Generally, the owners are better of
the higher is this return.
𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑎𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 𝑓𝑜𝑟 𝑐𝑜𝑚𝑚𝑜𝑛 𝑠𝑡𝑜𝑐𝑘ℎ𝑜𝑙𝑑𝑒𝑟𝑠

𝑅𝑂𝐸 =
𝐶𝑜𝑚𝑚𝑜𝑛 𝑠𝑡𝑜𝑐𝑘 𝑒𝑞𝑢𝑖𝑡𝑦
2.6.5. Operating Profit Margin

The operating profit margin measures the precentage of each sales dollar
remaining after all costs and expenses other than interest, taxes, and
preferred stock dividend are deducted.
𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑃𝑟𝑜𝑓𝑖𝑡
𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑝𝑟𝑜𝑓𝑖𝑡 𝑚𝑎𝑟𝑔𝑖𝑛 =
2.6.6. Earning Per Share

The firm’s EPS is generally of interest to present or prospective
stockholders and management.
𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑃𝑒𝑟 𝑆ℎ𝑎𝑟𝑒𝑠

𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑎𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 𝑓𝑜𝑟 𝑐𝑜𝑚𝑚𝑜𝑛 𝑠𝑡𝑜𝑐𝑘ℎ𝑜𝑙𝑑𝑒𝑟𝑠
=
𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑠ℎ𝑎𝑟𝑒𝑠 𝑜𝑓 𝑐𝑜𝑚𝑚𝑜𝑛 𝑠𝑡𝑜𝑐𝑘 𝑜𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔
2.7. Market Ratio

Market ratios relate the firm’s maret value, as measure by its current share
price, to certain accounting values. These ratio give insight into how investors
in the marketplace believe that the firm is doing in terms of risk and return.
They tend to reflect, on a relative basis, the common stockholder’s assessment
of all aspects of the firm’s past and expected future performance.
2.7.1. Price/ Earnings (P/E) Ratio
The price/earnings (P/E) ratio is commonly used to assess owners
appraisal of share value. The P/E ratio measures the amount that
investors are willing to pay for each dollar of a firm’s earnings.
Book value per share of common stock
𝑀𝑎𝑟𝑘𝑒𝑡 𝑝𝑟𝑖𝑐𝑒 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒 𝑜𝑓 𝑐𝑜𝑚𝑚𝑜𝑛 𝑠𝑡𝑜𝑐𝑘

=
𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒
2.7.2. Market/ Book (M/B) Ratio

The market/book (M/B) ratio provides an assessment of how investors
view the firm’s performance. It relates the market value of firm’s shares to
its book strick accounting value. To caluculate the firm’s M/B ratio, we
first need to find the book value per share of common stock :
𝐵𝑜𝑜𝑘 𝑣𝑎𝑙𝑢𝑒 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒 𝑐𝑜𝑚𝑚𝑜𝑛𝑠𝑡𝑜𝑐𝑘
𝐶𝑜𝑚𝑚𝑜𝑛 𝑠𝑡𝑜𝑐𝑘 𝑒𝑞𝑢𝑖𝑡𝑦
=
𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑠ℎ𝑎𝑟𝑒𝑠 𝑜𝑓 𝑐𝑜𝑚𝑚𝑜𝑛 𝑠𝑡𝑜𝑐𝑘 𝑜𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔
the formula for the market/book ratio is
𝑀𝑎𝑟𝑘𝑒𝑡 𝑝𝑟𝑖𝑐𝑒 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒 𝑜𝑓 𝑐𝑜𝑚𝑚𝑜𝑛 𝑠𝑡𝑜𝑐𝑘

Market/book (M/B) Ratio = 𝐵𝑜𝑜𝑘 𝑣𝑎𝑙𝑢𝑒 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒 𝑜𝑓 𝑐𝑜𝑚𝑚𝑜𝑛 𝑠𝑡𝑜𝑐𝑘
The stock of firms that are expected to perform well-improve profits,increase

their market share, or launch successful products-typically sell at higher
Market/Book ratios than the stock of firms with less attractive outlooks. Simply
stated, firms expected
2.8. Cash Conversion Cycle

2.8.1. Calculating the Operating Cycle
A firm’s operating cycle(OC) is the time from the beginning of the
production process to collection of cash from the sale of finished
product. The operating cycle encompasses two major short-term asset
categories,inventory,and accounts receivable. It is measured in elapsed
time by summing the average age of inventory (AAI) and the average
collection period (ACP) :
𝑂𝐶 = 𝐴𝐴𝐼 + 𝐴𝐶𝑃
2.8.2. Calculating Cash Conversion Cycle

However,the process of producing and selling a product also includes
the purchase of production inputs (raw materials) on account, which
results in account payable. Account payable reduce the number of days a
fim’s resources are tied up in the operating cycle. The time it takes to
pay the account measured in days, in the average payment period
(AAP). The operating cycle less the average of payment period yields
the cash conversion cycle. The formula for the cash conversion cycle is
𝐶𝐶𝐶 = 𝑂𝐶 − 𝐴𝑃𝑃
𝐶𝐶𝐶 = 𝐴𝐴𝐼 + 𝐴𝐶𝑃 − 𝐴𝑃𝑃
Clearly if a firm changes any of these time periods, it changes the
amount of resources tied up in the day-to-day operation of the firm
2.9. Risk and Return

2.9.1. Risk and Return Fundamentals
A firm’s risk and expected return directly affect its share price.
Risk and return are the two key determinants of the firm’s value. It is
therefore the financial manager’s responsibility to assess carefully the risk
and return of all major decisions to ensure that the expected returns justify
the level of risk being introduced.
The financial manager can expect to achieve the firm’s goal of increasing
its share price (and thereby benefiting its owners) by taking only those
actions that earn returns at least commensurate with their risk. Clearly,
financial managers need to recognize, measure, and evaluate risk-return
trade-offs to ensure that their decisions contribute to the creation of value
for owners.
In order to find return, here is the equation that we need in calculating the
return and risk.
𝐶𝑡 + 𝑃𝑡 − 𝑃𝑡−1
𝑟𝑡 =
𝑃𝑡−1
where:
𝑟𝑡 = actual, expected, or required rate of return during period t
𝐶𝑡 = cash (flow) received from the asset investment in the time period t – 1
to t
𝑃𝑡 = price (value) of asset at time t
𝑃𝑡−1= price (value) of asset at time t – 1
That equation is used to determine the rate of return over a time period as
short as 1 day or as long as 10 years or more. In most cases, t is one year,
and r therefore represents an annual rate of return.
2.9.2. Risk and Return Single Asset
The risk of a single asset is measured in much the same way as the risk of
a portfolio of assets. Scenario analysis and probability distributions can be
used to assess risk. The range, the standard deviation, and the coefficient
of variation can be used to measure risk quantitatively.
 Risk Assessment
The nation that risk is somehow connected to uncertainty is intuitive.
The more uncertain you are about how an investment will perform, the
riskier that investment seems. Scenario analysis provides a simple way
to quantify that intuition, and probability distributions offer an even
more sophisticated way to analyze the risk of an investment.
 Scenario analysis
An approach for assessing risk that uses several possible alternative
outcomes (scenarios) to obtain a sense of the variability among returns.
One common method involves considering pessimistic (worst), most
likely (expected), and optimistic (best) outcomes and the returns
associated with them for a given asset. In this one measure of an
investment’s risk is the range of possible outcomes. The range a
measure of an asset’s risk, which is found by subtracting the return
associated with the pessimistic (worst) outcome from the return
associated with the optimistic (best) outcome. The greater the range,
the more variability, or risk, the asset is said to have.
 Probability Distributions
Probability distributions provide a more quantitative insight into on
asset’s risk. The probability is the chance that a given outcome will
occur. A probability distribution is a model that relates probabilities to
the associated outcomes. The simplest type of probability distribution
is the bar chart; shows only a limited number of outcomes and
associated probabilities for a given event.
Most investment have more than two or three possible outcomes. In
fact, the number of possible outcomes in most cases is practically
infinite. If we knew all the possible outcomes and associated
probabilities, we could develop a continuous probability distribution.
Continuous probability distribution is a probability distribution
showing all the possible outcomes and associated probabilities for a
given event. This type of distribution can be thought of as a bar chart
for a very large number of outcomes.
 Risk Measurement
The most common statistical indicator of an asset’s risk; it measures
the dispersion around the expected value. The expected value of a
return, 𝑟̅ , is the average return that an investment is expected to
produce over time. For an investment that has j different possible
returns, the expected return is calculated as:
𝑛
𝑟̅ = ∑ 𝑟𝑗 𝑥 𝑃𝑟𝑗
𝑗=1
where
𝑟𝑗 = return for the jth outcome
𝑃𝑟𝑗 = probability of occurrence of the jth outcome
n= number of outcomes considered
 Standard Deviation (𝜎𝑟 )
The expression for the standard deviation of returns, 𝜎𝑟 , is
𝜎𝑟 = √∑(𝑟1 − 𝑟̅ ) 𝑥 𝑃𝑟𝑗
𝑗=1
In general, the higher the standard deviation, the greater the risk.
 Coefficient of Variation: Trading Off Risk and Return

The coefficient of variation, CV, is a measure of relative dispersion
that is useful in comparing the risks of assets with differing expected
returns. The expression for the coefficient of variation can be given by
𝜎𝑟
𝐶𝑉 =
𝑟̅
A higher coefficient of variation means that an investment has more
volatility relative to its expected return. Because investors prefer higher
returns and less risk, one might intuitively expect investors to gravitate
towards investments with a low coefficient of variation.
2.9.3. Risk of a Portofolio

The return of a portfolio is calculated as the weighted average of returns
on the individual assets from which it is formed. The portfolio standard
deviation is found by using the formula for the standard deviation of a
single asset.
Correlation—the statistical relationship between any two series of
numbers—can be positively correlated, negatively correlated, or
uncorrelated. At the extremes, the series can be perfectly positively
correlated or perfectly negatively correlated.
 Portfolio Return and Standard Deviation

The return on a portfolio is a weighted average of the returns on the
individual assets from which it is formed. To find the portfolio return, 𝑟𝑝 :
𝑛
𝑟𝑝 = (𝑤1 𝑥 𝑟1 ) + (𝑤2 𝑥 𝑟2 ) + ⋯ + (𝑤𝑛 𝑥 𝑟𝑛 ) = ∑ 𝑤𝑗 𝑥 𝑟𝑗

𝑗=1
where
𝑤𝑗 = proportion of the portfolio’s total dollar value represented by asset j
𝑟𝑗 = return on asset j
Of course, ∑𝑛𝑗=1 𝑤𝑗 = 1, which means that 100 percent of the portfolio’s
assets must be included in this computation.
The standard deviation of a portfolio’s returns is found by

applying the formula for the standard deviation of a single asset.
 Correlation
Correlation is a statistical measure of the relationship between any two
series of numbers. If two series tend to vary in the same direction, they are
positively correlated. If the series vary in opposite directions, they are
negatively correlated.
The degree of correlation is measured by the correlation coefficient,
which ranges from +1 for perfectly positively correlated series to -1 for
perfectly negatively correlated series.
 Diversification
The concept of correlation is essential to developing an efficient portfolio.
To reduce overall risk, it is best to diversity by combining, or adding to
the portfolio, assets that have the lowest possible correlation. Combining
assets that have low correlation with each other can reduce the overall
variability of a portfolio’s returns.
Some assets are uncorrelated; there is no interaction between their returns.
Combining uncorrelated assets can reduce risk, not as effectively as
combining negatively correlated assets but more effectively than
combining positively correlated assets. The correlation coefficient for
uncorrelated assets is close to zero and acts as the midpoint between
perfectly negative correlation.
The creation of a portfolio that combines two assets with perfectly
correlated returns results in overall portfolio risk that at minimum equals
that of the least risky asset and at maximum equals that of the most risky
asset. However, a portfolio combining two assets with less than perfectly
positive correlation can reduce total risk to a level below that of either of
the components.
 The risk and return characteristics of a portfolio in terms of correlation
and diversification and the impact of international assets on a portfolio.
Diversification involves combining assets with low correlation to reduce
the risk of the portfolio. The range of risk in a two-asset portfolio depends
on the correlation between the two assets. If they are perfectly positively
correlated, the portfolio’s risk will be between the individual assets risks.
If they are perfectly negatively correlated, the portfolio’s risk will be
between the risk of the more risky asset and zero.
International diversification can further reduce a portfolio’s risk. Foreign
assets have the risk of currency fluctuation and political risks. Political
risk is risk that arises from the possibility that a host government will take
actions harmful to foreign investors or that political turmoil will endanger
investments. Political risks are particularly acute in developing countries,
where unstable or ideologically motivated governments may attempt to
block return of profits by foreign investors or even seize (nationalize)
their assets in the host country.
CHAPTER III
COMPANY PROFILE
3.1. Company Profile Overview
3.2. Vision and Mission
3.3. Brief History and Business Activities
3.4. Range of Product
CHAPTER IV
IMPLEMENTATION AND ANALYSIS
4.1. Analysis of Financial Statement
4.1.1. Liquidity Ratio
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠
𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑹𝒂𝒕𝒊𝒐 =
219.818.034.145
 𝟐𝟎𝟏𝟐 = 195.455.567.772 = 1,12
363.881.019.917
 2013 = 320.197.405.822 = 1,14
420.316.388.535
 2014 = 307.608.669.233 = 1,37
812.990.646.097
 2015 = 395.920.006.814 = 2,05
949.414.338.057
 2016 = 320.501.824.382 = 2,96
2012 2013 2014 2015 2016 Industry Cross- Time- Overall

average sectional series
2016 analysis 2012-
2016 2016
1,12 1,14 1,37 2,05 2.96 2,24 Good Good Good
Current Ratio
3
2.5 2.96
2
1.5 2.05
1 1.37
1.12 1.14
0.5
0
2012 2013 2014 2015 2016
Time-Series Analysis
 2012 : The result implies the company has the current ratio as
much as 1,12 times from the total of current liabilities (1,12:1),
or in the other words that Rp 1 of current liabilities is
guaranteed by Rp 1,12 of currrent assets
 2013: The result implies the company has the current ratio as
much as times from the total of current liabilities (2,05:1), or
in the other words that Rp 1 of current liabilities is guaranteed
by Rp 2,05 of currrent assets
much as times from the total of current liabilities (2,96:1), or
in the other words that Rp 1 of current liabilities is guaranteed
by Rp 2,96 of currrent assets
Cross Sectional Analysis

The result shows higher than the industry average for a company to
meet its short term obligations are immediately due to the use of total
current assets available. But it means that the company probably easier
getting short term loan s from lenders
Interpretation
The current ratio from year 2012 to 2016 shows good. Because the
difference from each year is quite significant, so it gives a big impact
to the company. As conclusion, the level of liquidity of the company in
2016 is higher if compared with other similar companies because of the
magnitude ratio of 2,96 is higher the industry average.
4.1.2. Quick-Acid Ratio
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 − 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦
=
219.818.034.145−22.598.712.855
 2012 = = 𝟏, 𝟎𝟏
195.455.567.772
363.881.019.917− 36.523.703.417
 2013 = = 𝟏, 𝟎𝟐
320.197.405.822
420.316.388.535−40.795.755.774
 2014 = = 𝟏, 𝟐𝟑
307.608.669.233
812.990.646.097−43.169.425.832
 2015= = 𝟏, 𝟗𝟒
395.920.006.814
949.414.338.057−50.746.886.585
 2016= = 𝟐, 𝟖𝟎
320.501.824.382

2016 analysis 2012-
2016 2016
1,01 1,02 1,23 1,94 2,80 1,64 Good Good Good
Quick-Acid Ratio
3
2.5 2.8
2
1.5 1.94
1
1.23
0.5 1.01 1.02
0
2012 2013 2014 2015 2016
 2012 : The result implies the company has the liquid assets as
much as 1,01 times from the total of current liabilities (1,01:1), or
in the other words that Rp 1 of current liabilities could be covered
by Rp1,01 of liquid assets
 2013: The result implies the company has the liquid assets as
by Rp1,02of liquid assets
 2014 :The result implies the company has the liquid assets as

The result shows higher than the industry average. From this calculation,
we conclude that the company is able to settle its current liabilities
instantaneously, because the current assets that are readily to be
converted to cash is higher compared to the short-term obligations of the
company.
Interpretation
Quick (acid) ratio from year 2012 to 2016 shows good. As conclusion,
the company has ability to meet its short-term obligations because of the
magnitude ratio for 2016 is 2,80 and is still higher than the industry
average. But it also means that the company investing too many
resources in the working capital of the business which may more
profitably be used elsewhere.
4.2. Activity Ratio

4.2.1. Inventory Turnover
𝑪𝒐𝒔𝒕 𝑶𝒇 𝑮𝒐𝒐𝒅𝒔 𝑺𝒐𝒍𝒅
=
𝑰𝒏𝒗𝒆𝒏𝒕𝒐𝒓𝒚
𝟔𝟑𝟒.𝟒𝟏𝟐.𝟗𝟖𝟓.𝟐𝟗𝟓
 2012 = = 𝟐𝟖, 𝟎𝟕 𝒕𝒊𝒎𝒆𝒔
𝟐𝟐.𝟓𝟗𝟖.𝟕𝟏𝟐.𝟖𝟓𝟓
𝟖𝟎𝟔.𝟗𝟏𝟕.𝟓𝟓𝟖.𝟗𝟔𝟑
 2013 = = 𝟐𝟐, 𝟎𝟗 𝒕𝒊𝒎𝒆𝒔
𝟑𝟔.𝟓𝟐𝟑.𝟕𝟎𝟑.𝟒𝟏𝟕
𝟗𝟕𝟖.𝟖𝟓𝟎.𝟒𝟏𝟓.𝟑𝟎𝟑
 2014 = = 𝟐𝟑, 𝟗𝟗 𝒕𝒊𝒎𝒆𝒔
𝟒𝟎.𝟕𝟗𝟓.𝟕𝟓𝟓.𝟕𝟕𝟒
𝟏.𝟎𝟏𝟗.𝟓𝟏𝟏.𝟒𝟑𝟑.𝟖𝟑𝟎
 2015 = = 𝟐𝟑, 𝟔𝟐 𝒕𝒊𝒎𝒆𝒔
𝟒𝟑.𝟏𝟔𝟗.𝟒𝟐𝟓.𝟖𝟑𝟐
𝟏.𝟐𝟐𝟎.𝟖𝟑𝟐.𝟓𝟗𝟕.𝟎𝟓𝟓
 2016 = = 𝟐𝟒, 𝟎𝟔 𝒕𝒊𝒎𝒆𝒔
𝟓𝟎.𝟕𝟒𝟔.𝟖𝟖𝟔.𝟓𝟖𝟓

2016 analysis 2012-
2016 2016
28,07 22,09 22,99 23,62 24,06 8,45 Good Good Good
Inventory Turnover Ratio

30
25 28.07
23.62 24.06
20 22.09 22.99
15
10
2012 2013 2014 2015 2016
 2012 : The company's ability to measure the funds that are
invested in the inventory will be rotated in one period about
18,07 times per year
 2013: The company's ability to measure the funds that are invested
in the inventory will be rotated in one period about 22,09 times per
year
year
year
year

The result shows higher than the industry average and the difference is
big. That’s why the company has Good performance in 2016. Because
the higher the inventory turnover ratio indicates that the company has
had unexpectedly strong sales it means a good sign, but the company is
not managing its buying as well as it might and is having difficulty in
administering its inventory.
Interpretation
4.2.2. Average Collection Period
𝑨𝒄𝒄𝒐𝒖𝒏𝒕 𝑹𝒆𝒄𝒆𝒊𝒗𝒂𝒃𝒍𝒆
𝑨𝒗𝒆𝒓𝒂𝒈𝒆 𝑺𝒂𝒍𝒆𝒔 𝒑𝒆𝒓 𝑫𝒂𝒚
𝟏𝟑𝟑.𝟒𝟖𝟎.𝟎𝟎𝟓.𝟗𝟑𝟏
 2012 = = 𝟒𝟏 days
𝟑.𝟐𝟔𝟐.𝟓𝟑𝟔.𝟔𝟗𝟒
𝟏𝟕𝟖.𝟏𝟐𝟎.𝟓𝟓𝟎.𝟏𝟔𝟎
 2013 = = 𝟒𝟑 days
𝟒.𝟏𝟐𝟒.𝟕𝟏𝟐.𝟏𝟓𝟖
𝟏𝟏𝟏.𝟓𝟑𝟐.𝟗𝟑𝟏𝟑.𝟗𝟑𝟐
 2014 = = 𝟐𝟐 days
𝟓.𝟏𝟓𝟏.𝟒𝟎𝟓.𝟐𝟏𝟎
𝟏𝟐𝟖.𝟕𝟕𝟖.𝟕𝟔𝟏.𝟖𝟏𝟎
 2015 = = 𝟐𝟐 days
𝟓.𝟗𝟓𝟕.𝟓𝟑𝟖.𝟗𝟑𝟗
𝟏𝟑𝟖.𝟖𝟓𝟎.𝟖𝟓𝟔.𝟒𝟗𝟒
 2016 = = 𝟐𝟎 days
𝟔.𝟗𝟎𝟗.𝟑𝟕𝟐.𝟓𝟏𝟔

2016 analysis 2012-
2016 2016
41 43 22 22 20 50,38 Good Poor Ok
 2012:The average length of time the company must wait after
making a sale before receivingcash is about 41 days
 2013: The average length of time the company must wait after
The result shows a good performance for the company in collecting
the account receivable of the vendor faster in days comparing to the
industry average. They don’t need much time to collect it. So, we
think that it’s good.
Interpretation
The result shows that the performance of the company for 5 years in
collecting the account receivable is ok. This indicates that the
organization is collecting payment faster and its credit terms are too
strict.
Average Collection Period

45
40
43
35 41
30
25
20
22 22
15 20
10
2012 2013 2014 2015 2016
4.2.3. Average Payment Period

𝑨𝒄𝒄𝒐𝒖𝒏𝒕 𝑷𝒂𝒚𝒂𝒃𝒍𝒆
𝑨𝒗𝒆𝒓𝒂𝒈𝒆𝑷𝒖𝒓𝒄𝒉𝒂𝒔𝒆 𝒑𝒆𝒓 𝑫𝒂𝒚
𝟓𝟗.𝟒𝟓𝟎.𝟒𝟔𝟑.𝟗𝟕𝟒
 2012 = = 𝟒𝟗 days
𝟏.𝟐𝟏𝟔.𝟔𝟖𝟐.𝟒𝟑𝟖
𝟗𝟖.𝟗𝟐𝟏.𝟓𝟎𝟒.𝟐𝟑𝟔
 2013 = = 𝟔𝟒 days
𝟏.𝟓𝟒𝟕.𝟓𝟏𝟑.𝟏𝟐𝟕
75.575.779.566
 2014 = = 𝟒𝟎 days
𝟏.𝟖𝟕𝟕.𝟐𝟒𝟕.𝟑𝟕𝟐
𝟏𝟎𝟓.𝟑𝟐𝟖.𝟎𝟓𝟔.𝟓𝟑𝟓
 2015 = = 𝟓𝟒 days
𝟏.𝟗𝟓𝟓.𝟐𝟐𝟕.𝟒𝟎𝟕
𝟏𝟏𝟎.𝟕𝟕𝟕.𝟗𝟒𝟖.𝟖𝟏𝟑
 2016= = 𝟒𝟕 days
𝟐.𝟑𝟒𝟏.𝟑𝟐𝟐.𝟕𝟖𝟗

2016 analysis 2012-
2016 2016
49 64 40 54 47 51,45 Ok Ok Ok
Average Payment Ratio
70
55 64
54
40 49 47
40
25
10
2012 2013 2014 2015 2016
 2012 : The average length of time that PT Nippon Indosari
Corpindo need to pay accounts payable is about 49 days
 2013: The average length of time that PT Nippon Indosari
The result shows that the company has ok performance in paying
accounts payable. Comparing to the industry average, the company only
needs a little time to pay for about 3 days faster than the average. It
might happen because the company has more current assets or
inventories that could be converted into cash faster.
Interpretation
4.2.4. Total Asset Turnover

𝟏.𝟏𝟗𝟎.𝟖𝟐𝟓.𝟖𝟗𝟑.𝟑𝟒𝟎
 2012 = = 𝟎, 𝟗𝟗 𝒕𝒊𝒎𝒆𝒔
𝟏.𝟐𝟎𝟒.𝟗𝟒𝟒.𝟔𝟖𝟏.𝟐𝟐𝟑
𝟏.𝟓𝟎𝟓.𝟓𝟏𝟗.𝟗𝟑𝟕.𝟔𝟗𝟏
 2013 = 𝟏.𝟖𝟐𝟐.𝟔𝟖𝟗.𝟎𝟒𝟕.𝟏𝟎𝟖 = 𝟎, 𝟖𝟑 𝒕𝒊𝒎𝒆𝒔
𝟏.𝟖𝟖𝟎.𝟐𝟔𝟐.𝟗𝟎𝟏.𝟔𝟗𝟕
 2014 = 𝟐.𝟏𝟒𝟐.𝟖𝟗𝟒.𝟐𝟕𝟔.𝟐𝟏𝟔 = 𝟎, 𝟖𝟖 𝒕𝒊𝒎𝒆𝒔
𝟐.𝟏𝟕𝟒.𝟓𝟎𝟏.𝟕𝟏𝟐.𝟖𝟗𝟗
 2015= 𝟐.𝟕𝟎𝟔.𝟑𝟐𝟑.𝟔𝟑𝟕.𝟎𝟑𝟒 = 𝟎, 𝟖𝟎 𝒕𝒊𝒎𝒆𝒔
𝟐.𝟓𝟐𝟏.𝟗𝟐𝟎.𝟗𝟔𝟖.𝟐𝟏𝟑
 2016 = 𝟐.𝟗𝟏𝟗.𝟔𝟒𝟎.𝟖𝟓𝟖.𝟕𝟏𝟖 = 𝟎, 𝟖𝟔 𝒕𝒊𝒎𝒆𝒔

2016 analysis 2012-
2016 2016
0,99 0,83 0,88 0,8 0,86 1,04 Ok Ok Ok
Total Asset Turnover

1
0.99
0.8
0.83 0.88 0.86
0.8
0.6
0.4
0.2
0
2012 2013 2014 2015 2016
 2012 : The result implies the company's ability to use the available
funds to generate sales is about 0,99 times per year or in the other
words that every Rp 1 of total assets contibutes to create Rp 0,99
of sales
 2013: The result implies the company's ability to use the available
of sales
funds to generate sales is about 0,88times per year or in the other
of sales
of sales
of sales
The result shows lower than the industry average, but difference
isn’t that big. So, the performance is still ok rather than poor. It
might happen because companies have advantages in total assets ,
total assets in which there is not yet fully utilized to create sales .
Interpretation
4.3. Debt Ratio

4.3.1. Debt Ratio
𝟓𝟑𝟖.𝟑𝟑𝟕.𝟎𝟖𝟑.𝟔𝟕𝟑
 2012 = 𝟏.𝟐𝟎𝟒.𝟗𝟒𝟒.𝟔𝟖𝟏.𝟐𝟐𝟑 =0,45 = 45%
𝟏.𝟎𝟑𝟓.𝟑𝟓𝟏.𝟑𝟗𝟕.𝟒𝟑𝟕
 2013= 𝟏.𝟖𝟐𝟐.𝟔𝟖𝟗.𝟎𝟒𝟕.𝟏𝟎𝟖 =0,57 = 57%
𝟏.𝟏𝟖𝟐.𝟕𝟕𝟏.𝟗𝟐𝟏.𝟒𝟕𝟐
 2014 = =0,55 =55%
𝟐.𝟏𝟒𝟐.𝟖𝟗𝟒.𝟐𝟕𝟔.𝟐𝟏𝟔
𝟏.𝟓𝟏𝟕.𝟕𝟖𝟖.𝟔𝟖𝟓.𝟏𝟔𝟐
 2015= 𝟐.𝟕𝟎𝟔.𝟑𝟐𝟑.𝟔𝟑𝟕.𝟎𝟑𝟒 =0,56 = 56%
𝟏.𝟒𝟕𝟔.𝟖𝟖𝟗.𝟎𝟖𝟔.𝟔𝟗𝟐
 2016 = 𝟐.𝟗𝟏𝟗.𝟔𝟒𝟎.𝟖𝟓𝟖.𝟕𝟏𝟖 =0,51 =51%

2016 analysis 2012-
2016 2016
45% 57% 55% 56% 51% 52% Ok Ok Ok

Debt Ratio
60
57 55 56
45 51
45
30
15
0
2012 2013 2014 2015 2016
 2012 :The result implies 45% the company’s total assets is funded
by total liabilities and the rest about 55% by total equity, or in the
other words that every Rp 1 of total assets, Rp 0,45 is funded by
total liabilities and Rp 0,55 by total equity. This ratio shows that
every Rp 1 of total assets, Rp 0,45 to guarantee the liabilities (to
creditors) and Rp 0,55 to guarantee the equity (to owner and
investors)
 2013 :The result implies 57% the company’s total assets is funded
investors)
 2014: The result implies 55% the company’s total assets is funded
investors)
investors)
investors)

The result shows an ok performance for the company because
comparing to the industry average, it indicates that percentage of
the company's assets are financed by debt or the obligation to repay
is large
Interpretation
4.3.2. Debt to Equity Ratio

538.337.083.673
 2012 = 666.607.597.550 = 𝟎, 𝟖𝟏
1.035.351.397.437
 2013 = = 𝟏, 𝟑𝟐
787.337.649.671
1.182.771.921.472
 2014 = = 𝟏, 𝟐𝟑
960.122.354.744
1.517.788.685.162
 2015 = 1.188.534.951.872 = 𝟏, 𝟐𝟖
1.476.889.086.692
 2016 = 1.442.751.772.026 = 𝟏, 𝟎𝟐
2016 analysis 2012-
2016 2016
0,81 1,32 1,23 1,28 1,02 1,07 Ok Ok Ok
Debt to Equtiy Ratio
1.2
1.32 1.28
1.23
0.8 1.02
0.81
0.4
0
2012 2013 2014 2015 2016
 2012: The result implies the company has total liabilities about
0,81 times from common stock equity (0,81:1) or in the other
words that every Rp 1 of total liabilities is guaranteed by Rp 0,81
of common stock equity
1,32 times from common stock equity (1,32 :1) or in the other
1,28 times from common stock equity (1,28 :1) or in the other
 2016:The result implies the company has total liabilities about


The result shows that the magnitude debt to equity ratio in 2016 is lower
than the industry average, but the difference is not that big. So, the
performance is still ok. It indicates that the company usually implies a
more financially stable business and a creditor financing (bank loans) is
less used than investor financing (shareholders)
Interpretation
4.3.3. Times Interest Earned Ratio

199403319484
 2012= =
−
232.391.343.341
 2013= = 𝟗, 𝟓𝟑
24.397.393.935
298.628.692.557
 2014= = 𝟔, 𝟑𝟖
46.835.971.511
453.658.490.001
 2015= = 𝟓, 𝟎𝟑
90.239.459.054
443.044.977.388
 2016 = = 𝟒, 𝟖𝟒
91.584.597.849
20 analysis 20 2012-
2016
- 9,53 6,38 5,03 4,84 4,26 Good Poor Ok
Times Interest Earned Ratio

10
8 9.53
6
6.38
4 5.03 4.84
2
0
2012
0 2013 2014 2015 2016
 2012
 2013: The result shows the interest could be closed 9,53 times
from the earning before interest and tax or in the other words that
the company has the ability to pay the interest about 9,53 times
from earning before interest and tax

The result shows that the company perfoemance in 2016 is Good. It
indicates that company is managing it’s debt repayment or its financial
leverage in the most efficient way.
Interpretation
4.4. Profitability ratio

4.4.1. Gross Profit Margin
1.190.825.893.340
 2012 = = 𝟎, 𝟒𝟕
634.412.985.295
1.505.519.937.691
 2013 = = 𝟎, 𝟒𝟔
806.917.558.963
1.880.262.901.697
 2014= = 𝟎, 𝟒𝟖
978.850.415.303
2.174.501.712.899
 2015 = 1.019.511.433.830 = 𝟎, 𝟓𝟑
2.521.920.968.213
 2016= 1.220.832.597.055 = 𝟎, 𝟓𝟐

2016 analysis 20 2012-
2016
47% 46% 48% 53% 52% 31% Good Good Good
Gross Profit Margin
60
45 53 52
47 46 48
30
15
0
2012 2013 2014 2015 2016
 2012: The percentage of its sales Rupiah remaining after PT.
Nippon Indosari Corpindo has paid for its goods is 47% of total
net sales. In the other words, the percentage of cost of goods sold
is 53% of total net sales. Every Rp 1 of net sales, there exists Rp
0,53 cost of goods sold and contributes to create Rp 0,47 of gross
profit

profit
 2014 : The percentage of its sales Rupiah remaining after PT.
profit
profit
profit

The result shows a good performance for the company and the
difference with industry average is significant. It indicates that the
company can make a reasonable profit on sales, as long as it keeps
overhead costs in control.
Interpretation
4.4.2. Net profit Margin

149.150.998.800
 2012 = 1.190.825.893.340 = 𝟎, 𝟏𝟑
158.029.396.000
 2013= 1.505.519.937.691 = 𝟎, 𝟏𝟎
188.602.668.000
 2014 = 1.880.262.901.697 = 𝟎, 𝟏𝟎
270.553.210.000
 2015 = 2.174.501.712.899 = 𝟎, 𝟏𝟐
279.968.158.000
 2016 = 2.521.920.968.213 = 𝟎, 𝟏𝟏

2016 analysis 2012-
2016 2016
13% 10% 10% 12% 11% 8% Good Ok Good

Net Profit Margin
20
15
10 13 12
10 10 11
5
0
2012 2013 2014 2015 2016
 2012 : The result implies the amount of net income of its sales
rupiah of PT. Nippon Indosari Corpindo remaining after all costs
and expenses, including interest, and taxes have been deducted is
13% of total net sales. In the other words, every Rp 1 of total net
sales contributes to create Rp 0,13 of total net income
2013: The result implies the amount of net income of its sales
10 % of total net sales. In the other words, every Rp 1 of total net
12 % of total net sales. In the other words, every Rp 1 of total net
The result shows higher than the industry average with a significant
number in 2016. It might be happen because the company is efficient at
converting sales into actual profit
Interpretation
4.4.3. Operating profit Margin

199.403.319.484
 2012 = 1.190.825.893.340 = 𝟎, 𝟏𝟕
232.391.343.341
 2013 = 1.505.519.937.691 = 𝟎, 𝟏𝟓
298.628.692.557
 2014 = 1.880.262.901.697 = 𝟎, 𝟏𝟔
453.658.490.001
 2015= = 𝟎, 𝟐𝟏
2.174.501.712.899
443.044.977.388
 2016 = 2.521.920.968.213 = 𝟎, 𝟏

20 analysis 20 2012-
2016
17% 15% 16% 21% 18% 13% Good Ok Good
Operating Profit Margin
25
20
21
15 18
17 16
15
10
0
2012 2013 2014 2015 2016
 2012 : The result implies that the amount of operating profit from
each sales rupiah of PT. Nippon Indosari Corpindo remaining after
all costs and expenses other than interest, and taxes are deducted is
sales contributes to create Rp 0,17 of operating profit
 2013: The result implies that the amount of operating profit from

The result shows higher operating profit margin compared to the
industry average with 5% gap which shows a good performance for the
company. This indicates that more proportion of revenue is converted to
operating income.
Interpretation
4.4.4. Earnings Per Share

149.150.998.800
 2012= = 𝟏𝟒𝟕, 𝟑𝟑
1.012.360.000
158.029.396.000
 2013 = = 𝟑𝟏, 𝟐𝟐
5.061.800.000
188.602.668.000
 2014 = = 𝟑𝟕, 𝟐𝟔
5.061.800.000
270.553.210.000
 2015 = = 𝟓𝟑, 𝟒𝟓
5.061.800.000
279.968.158.000
 2016= = 𝟓𝟓, 𝟑𝟏
5.061.800.000

2016 analysis 2012-
20 2016
Rp Rp Rp Rp Rp Rp
147.33 31.22 37.26 53.45 55.31 192,46 Poor Good Ok
Earnings Per Share (EPS)
150
130 147.33
110
90
70
50
30 53.45 55.31
10 31.22 37.26
-10
2012 2013 2014 2015 2016
 2012 : : The result shows that the amount of net income earned per
share of common stock outstanding is Rp 147,33
 2013: : The result shows that the amount of net income earned per
 2014: The result shows that the amount of net income earned per
 2015: The result shows that the amount of net income earned per
 2016: : The result shows that the amount of net income earned per

The result shows a very low result comparing to the industry average
with a significant gap, which shows a poor performance of the company. From
the shareholder’s point of view, this indicates that the company is not too
profitable and doesn’t have more profits to distribute to its shareholders.
Interpretation
4.4.5. Return on Assets
149.150.998.800
 2012= 1.204.944.681.223 = 𝟎, 𝟏𝟐
158.029.396.000
 2013= 1.822.689.047.108 = 𝟎, 𝟎𝟗
188.602.668.000
 2014= 2.142.894.276.216 = 𝟎, 𝟎𝟗
270.553.210.000
 2015 = 2.706.323.637.034 = 𝟎, 𝟏𝟎
279.968.158.000
 2016 = 2.919.640.858.718 = 𝟎, 𝟏𝟎

2016 analysis 2012-
2016 2016
12% 9% 9% 10% 10% 8% Ok Ok Ok
Return On Asset (ROA)

0.2
0.15
0.1 0.12
0.09 0.09 0.1 0.1
0.05
0
2012 2013 2014 2015 2016
 2012 : The result shows that every Rp 1 of total assets contributes
in creating Rp 0,12 net income
 2013:The result shows that every Rp 1 of total assets contributes
 2014: The result shows that every Rp 1 of total assets contributes

The result shows higher return on total assets ratio compared to the
industry average with not significant gap which shows a ok performance
for the company. This indicate that the higher return on total assets
means that the higher amount of the net profit generated from each
rupiah funds that are embedded in total assets.
Interpretation
4.4.6. Return on Equity

149.150.998.800
 2012 = 666.607.597.550 = 𝟎, 𝟐𝟐
158.029.396.000
 2013 = 787.337.649.671 = 𝟎, 𝟐𝟎
188.602.668.000
 2014= 960.122.354.744 = 𝟎, 𝟐𝟎
270.553.210.000
 2015= 1.188.534.951.872 = 𝟎, 𝟐𝟑
279.968.158.000
 2016= 1.442.751.772.026 = 𝟎, 𝟏𝟗

2016 analysis 2012-
2016 2016
22% 20% 20% 23% 19% 38% Poor Ok Ok

Return On Equity (ROE)
30
20
22 23
20 20 19
10
0
2012 2013 2014 2015 2016
 2012 : The result shows that every Rp 1 of common stock equity
contributes in creating Rp 0,22 net income
 2014: The result shows that every Rp 1 of common stock equity
 2016: The result shows that every Rp 1 of common stock equity
The result shows lower return on total equity ratio compared to the
industry average with a very significant gap by 19% which shows a poor
performance for the company.
Interpretation
4.5. Market Ratio

4.5.1. Price/ Earning Ratio
3325
 2012 = 147,33 = 𝟐𝟐, 𝟓𝟕
6900
 2013= 31,22 = 𝟐𝟐𝟏, 𝟎𝟏
1020
 2014 = 37,26 = 𝟐𝟕, 𝟑𝟖
1385
 2015= 53,45 = 𝟐𝟓, 𝟗𝟏
1020
 2016= 55,31 = 𝟏𝟖, 𝟒𝟒

2016 analysis 2012-
2016 2016
22,57 221,01 27,38 25,91 18,44 16,05 Ok Poor Ok
Price/Earning Ratio
221.01
200
150
100
50
22.57 27.38 25.91 18.44
0
2012 2013 2014 2015 2016
 2012 : This data indicates that the investor will pay Rp 22,57 for
each Rp 1 of the firm’s earnings
 2015: This data indicates that the investor will pay Rp 25,91 for
 2016: This data indicates that the investor will pay Rp 18,44 for
eachRp 1 of the firm’s earnings
The result shows higher price/earning ratio compared to the industry
average with a difference of 2,39% which shows an ok performance for
the company. This indicates that many investors are willing to pay for
each rupiah worth of a company's earnings
Interpretation
4.5.2. Market/Book Ratio

3325
 2012 = 658,,47 = 𝟓, 𝟎𝟓
6.900
 2013= 𝟏𝟓𝟓,𝟓𝟒 = 𝟒𝟒, 𝟑𝟔
𝟏.𝟎𝟐𝟎
 2014 = 𝟏𝟖𝟗,𝟔𝟖 = 𝟓, 𝟑𝟖
𝟏.𝟑𝟖𝟓
 2015= 𝟐𝟑𝟒,𝟖𝟎 = 𝟓, 𝟗𝟎
𝟏.𝟎𝟐𝟎
 2016= 𝟐𝟖𝟓,𝟎𝟑 = 𝟑, 𝟓𝟖

2016 analysis 2012-
2016 2016
5,05 44,36 5,38 5,90 3,58 2,86 Good Ok Good

Market/Book (M/B) Ratio
50
44.36
40
30
20
10
5.05 5.38 5.9 3.58
0
2012 2013 2014 2015 2016
 2012 : This data means that investor are currently paying Rp 5,05
for each Rp 1 of book value of PT Nippon Indosari Corpindo’s
stock
 2013: This data means that investor are currently paying Rp 44,36
stock
stock
stock
stock

4.5.3. The result shows that the company performance in 2016 is good. The
Market/Book Ratio is higher than the industry average with a difference
of 0,72%. This indicates that It will affect the company’s to earn high
returns with a lower risk.
Interpretation
4.6. Cash Conversion Cycle
 2012
365 𝐷𝑎𝑦𝑠
Average Age of Inventory = 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑅𝑎𝑡𝑖𝑜
365
= = 13 𝐷𝑎𝑦𝑠
28,07
Operating Cycle = AAI + ACP
= 13 Days + 41 Days = 54 Days
Cash Conversion Cycle = AAI + ACP – APP
= 13 Days + 41 Days – 49 Days
= 6 days
Analysis:
…………………
Time line for PT. Nippon Indosari Corpindo Cash Conversion Cycle
Operating Cycle
AAI (13 Days ) ACP ( 41 Days )
Cash Inflows
APP ( 49 Days )
Cash Outflows
The resources of PT Nippon Indosari Corpindo had invested in this cash
conversion cycle are:
Inventory = Cost of Goods Sold x (AAI/365days)

= Rp 634.412.985.295 x (13/365 days)
= Rp 22.595.530.983
+Account Receivable = Annual sales x (ACP/365days)

= Rp 1.190.825.893.340 x (41/365 days)
=Rp 133.764.004.457
-Account Payable = Annual Purchase x (APP/365days)
= Rp444.089.089.707 x (49/365 days)
= (Rp 59.617.439.440)
Resources Invested = Rp 96.742.096.000
 2013
Average Age of Inventory =
𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑅𝑎𝑡𝑖𝑜
365
= = 17 𝐷𝑎𝑦𝑠
22,09

= -5 Days
Analysis:
…………………
Operating Cycle
AAI ( 17 Days ) ACP ( 44 Days )
Cash Inflows
APP ( 64 Days )
Cash Outflows


= Rp 806.917.558.963 x (17/365 days)
= Rp 37.582.461.650

= Rp 1.505.519.937.691 x (44/365 days)
=Rp 181.487.334.954

= Rp564.842.291.274 x (64/365 days)
= (Rp 99.040.840.113)

 2014
365
= = 16 𝐷𝑎𝑦𝑠
23,99

= 16Days + 22 Days – 41 Days
= -4 Days
Analysis:
…………………
Operating Cycle
Cash Inflows
APP ( 41 Days )
Cash Outflows

= Rp 978.850.415.303 x (16/365 days)
= Rp 42.908.511.355

= Rp 1.880.262.901.697 x (22/365 days)
=Rp 113.330.914.622
= Rp685.195.290.712 x (41/365 days)
= (Rp 76.967.142.244)
 2015
365
= = 16 𝐷𝑎𝑦𝑠
23,62

= 16D ays + 22 Days – 54Days
= -17 Days
Analysis:
…………………
Operating Cycle
Cash Inflows
APP ( 54 Days )
Cash Outflows


= Rp 1.019.511.433.830 x (16/365 days)
= Rp 44.690.912.167

= Rp 2.174.501.712.899 x (22/365 days)
=Rp 131.065.856.667
= Rp713.658.003.681 x (54/365 days)
= (Rp 105.582.279.996)
 2016
365
= 24,06 = 16 𝐷𝑎𝑦𝑠

= -13 Days
Analysis:
…………………
Operating Cycle
Cash Inflows
APP ( 48 Days )
Cash Outflows


= Rp 1.220.832.597.055x (16/365 days)
= Rp 53.515.949.459

= Rp 2.521.920.968.213 x (20/365 days)
=Rp 138.187.450.313
= Rp854.582.817.938 x (48/365 days)
= (Rp 112.383.493.865)

4.7. Risk and Rate Return
a. Single Asset of PT. Nippon Indosari Corpindo, Tbk
Year Stock Price Dividend Paid

Beginning End
2012 Rp650 Rp1.380 Rp28,63
2013 1.380 1.020 36,83
2014 1.020 1.385 3,12
2015 1.385 1.265 5,53
2016 1.265 1.600 10,61
Year Returns
2012 [Rp28,63 + (Rp1.380 – Rp650)] ÷ Rp650 = 116,71%
2013 [Rp36,83 + (Rp1.020 – Rp1.380)] ÷ Rp1.380 = -23,41%
2014 [Rp3,12 + (Rp1.385 – Rp1.020)] ÷ Rp1.020 = 36,09%
2015 [Rp5,53 + (Rp1.265 – Rp1.385)] ÷ Rp1.385 = -8,26%
2016 [Rp10,61 + (Rp1.600 – Rp1.265)] ÷ Rp1.265 = 27,32%
 The Average Return, 𝒓̅𝟐𝟎𝟏𝟎−𝟐𝟎𝟏𝟒
𝑟̅ 2012 − 2016= [ 116,71% + (-23,41%) + 36,09% + (-8,26%) + 27,32% ] ÷ 5

= 29,69%
 The standard deviation, 𝝈𝒓𝟐𝟎𝟏𝟐−𝟐𝟎𝟏𝟔
𝜎𝑟2012−2016 =
2 2 2 2 2
(116,71% − 29,69%) + (−23,41% − 29,69%) + (36,09% − 29,69%) + (−8,26% − 29,69%) + (27,32% − 29,69%)
√
5 −1
= 54,39%
 Varians
V = 𝝈𝟐 = (54,39)2 = 2.958,27
 Coefficient of Variation, CV
CV = 54,39% ÷ 29,69% = 1,83%

Years r( % ) (𝐫 − 𝒓̅)𝟐
2012 116,71 7.527,48
2013 (23,41) 2.819,61
2014 36,09 40,96
2015 (8,26) 1.440,20
2016 27,32 5,62
Total 148,45 11.833,87
𝒓 29,69%
Varians 2.958,27
Stadard Deviation 54,39
CV 1,83%
b. Single Asset of PT. Astra International, Tbk

Beginning End
2012 Rp7.370 Rp7.600 Rp204
2013 7.550 6.800 214
2014 6.800 7.425 216
2015 7.425 6.000 216
2016 6.000 8.275 168
Year Returns
2012 [Rp204 + (Rp7.600 – Rp7.370] ÷ Rp7.370 = 5,88%
2013 [Rp214 + (Rp6.800 – Rp7.550)] ÷ Rp7.550 = -7,1%
2014 [Rp216 + (Rp7.425 – Rp6.800)] ÷ Rp6.800= 12,36%
2015 [Rp216 + (Rp6.000 – Rp7.425)] ÷ Rp7.425 = -16,28%
2016 [Rp168 + (Rp8.275 – Rp6.000)] ÷ Rp6.000 = 40,71%
 The Average Return, 𝒓̅𝟐𝟎𝟏𝟎−𝟐𝟎𝟏𝟒
𝑟̅ 2012 − 2016= [5,88%+(-7,1%)+12,36%+(-16,28%)+40,71%] ÷ 5

= 7,11%
 The standard deviation, 𝝈𝒓𝟐𝟎𝟏𝟐−𝟐𝟎𝟏𝟔
𝜎𝑟2012−2016 =
2 2 2 2 2
(5,88% − 7,11%) + ((−7,1%)% − 7,11%) + (12,36% − 7,11%) + ((−16,28%)% − 7,11%) + (40,71% − 7,11%)
√
5 −1
= 19,00%
 Varians
V = 𝝈𝟐 = (19,00%)2 = 361
CV = 19,00% ÷ 7,11% = 2,67%
Years r( % ) (𝐫 − 𝒓̅)𝟐
2012 5,88 1,51
2013 (7,1) 202
2014 12,36 27,6
2015 (16,28) 84,09
2016 40,71 1129
Total 35,57 1444,2
𝒓 7,11
Varians 361
Stadard Deviation 19,00%
CV 2,67%
c. Single Asset of PT. Kimia Farma Tbk

Beginning End
2012 Rp340 Rp740 Rp6,87
2013 740 590 5,54
2014 590 1465 9,66
2015 1465 870 4,22
2016 870 2750 8,96
Year Returns
2012 [Rp6,87+(Rp740-Rp 340)÷Rp340 =119,66%
2013 [Rp5,54+(Rp590-Rp740) ÷Rp740=−19,52%
2014 [Rp9,66+(Rp1465-Rp590) ÷Rp 590=149,94
2015 [Rp4,22+(Rp870-Rp1465) ÷Rp1465=−40,32%
2016 [Rp8,96+(Rp2750-Rp870) ÷Rp870=217,12%
 The Average Return, 𝒓̅𝟐𝟎𝟏𝟐−𝟐𝟎𝟏𝟔
𝑟̅2012−2016 = 119,66%+(-19,54%)+149,94%+(-40,32%)+217,12%)÷5= 85,37%
 The standard deviation, 𝜎𝑟2012−2016
𝜎𝑟2012−2016
2 2 2 2 2
(119,66% − 85,37%) + ((−19,54%) − 85,37%) + (149,94% − 85,37%) + ((−40,32%) − 85,37%) + (217,12% − 85,37%)
√
5 −1
= 232,06%
 Varians
V = 𝜎 2 = (232,06%)2 = 53.851,84
CV = 232,06% ÷ 85,37% = 2,71%

Years r( % ) (𝐫 − 𝒓̅)𝟐
2012 119,66 1175,80
2013 (19,54) 11.006,10
2014 149,94 4169,28
2015 (40,32) 15.797,97
2016 217,12 17.358,06
Total 426,86 49.507,21
𝒓̅ 85,37%
Varians 53.851,84
Standar Deviasi 232,06%
CV 2,71%
4.7.4. Risk of Portofolio {PT. Nippon Indosari Corpindo (x) and Pt Astra
International(y)}
Rate of Return (r) (%) Portofolio
Years PT Nippon
PT Astra
Indosasri Corpindo
International 𝒓̅ 𝒑 𝒓 𝟐
(𝒓̅ − 𝑨𝒗𝒆𝒓𝒂𝒈𝒆̅̅̅)
Tbk
(60%)
(40%)
2012 116,71% 5,88% 50% 0,1106
2013 (23,41%) (7,1%) -14% 0,0944
2014 36,09% 12,36% 23% 0,0039
2015 (8,26%) (16,28%) -15% 0,1007
2016 27,32% 40,71% 39% 0,0495
Total 148,45% 35,57% 84% 0,3591
Average 0,167382
Variance
0,089775
Portofolio
Standard
30%
Deviation
CV 179%
4.7.5. Risk of Portofolio { PT. Nippon Indosari Corpindo (x) and PT Kimia
farma Tbk
Rate of Return (r) (%) Portofolio
Years PT Nippon
Indosasri Corpindo PT Kimia Farma
𝒓̅ 𝒑 𝒓 𝟐
(𝒓̅ − 𝑨𝒗𝒆𝒓𝒂𝒈𝒆̅̅̅)
Tbk (30%)
(70%)
2012 116,71% 119,66% 118% 1,9044
2013 (23,41%) -19,54% -22% 7,7284
2014 36,09% 149,94% 70% 3,4596
2015 (8,26%) 40,32% 6% 6,25
2016 27,32% 217,12% 84% 2,9584
Total 148,45% 507,50% 256% 22,3008
Average 0,51233
Variance
5,5696
Portofolio
Standard
236%
Deviation
CV 461%
Analysis for Single Asset

Analysis for Risk Portofolio

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MODULE ASSIGNMENT

PT. NIPPON INDOSARI

1.2. Purpose of Writing

2.1. Definition of Financial Analysis

There are several general categories of ratios, each designed to examine a

 Liquidity ratios. This is the most fundamentally important set of ratios,

2.2. Types of Ratio Comparisons

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡 − 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦

𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 = 𝐶𝑜𝑠𝑡 𝑜𝑓 𝑔𝑜𝑜𝑑𝑠 𝑠𝑜𝑙𝑑 ÷ 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦

2.4.2. Average Collection Period

2.4.3. Average Payment Period

2.4.4. Total Asset Turnover

2.5.2. Debt to Equity Ratio

2.5.3. Times Interest Earned Ratio

𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑏𝑒𝑓𝑜𝑟𝑒 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑎𝑛𝑑 𝑡𝑎𝑥𝑒𝑠

2.6. Profitability Ratio

𝑒𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑎𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 𝑓𝑜𝑟 𝑐𝑜𝑚𝑚𝑜𝑛 𝑠𝑡𝑜𝑐𝑘ℎ𝑜𝑙𝑑𝑒𝑟𝑠

2.6.3. Return on Total Assets

𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑎𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 𝑓𝑜𝑟 𝑐𝑜𝑚𝑚𝑜𝑛 𝑠𝑡𝑜𝑐𝑘ℎ𝑜𝑙𝑑𝑒𝑟

2.6.4. Return on Equity

𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑎𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 𝑓𝑜𝑟 𝑐𝑜𝑚𝑚𝑜𝑛 𝑠𝑡𝑜𝑐𝑘ℎ𝑜𝑙𝑑𝑒𝑟𝑠

2.6.5. Operating Profit Margin

2.6.6. Earning Per Share

𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑃𝑒𝑟 𝑆ℎ𝑎𝑟𝑒𝑠

2.7. Market Ratio

Book value per share of common stock

𝑀𝑎𝑟𝑘𝑒𝑡 𝑝𝑟𝑖𝑐𝑒 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒 𝑜𝑓 𝑐𝑜𝑚𝑚𝑜𝑛 𝑠𝑡𝑜𝑐𝑘

2.7.2. Market/ Book (M/B) Ratio

the formula for the market/book ratio is

𝑀𝑎𝑟𝑘𝑒𝑡 𝑝𝑟𝑖𝑐𝑒 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒 𝑜𝑓 𝑐𝑜𝑚𝑚𝑜𝑛 𝑠𝑡𝑜𝑐𝑘

The stock of firms that are expected to perform well-improve profits,increase

2.8. Cash Conversion Cycle

2.8.2. Calculating Cash Conversion Cycle

2.9. Risk and Return

The expression for the standard deviation of returns, 𝜎𝑟 , is

 Coefficient of Variation: Trading Off Risk and Return

2.9.3. Risk of a Portofolio

 Portfolio Return and Standard Deviation

𝑟𝑝 = (𝑤1 𝑥 𝑟1 ) + (𝑤2 𝑥 𝑟2 ) + ⋯ + (𝑤𝑛 𝑥 𝑟𝑛 ) = ∑ 𝑤𝑗 𝑥 𝑟𝑗

The standard deviation of a portfolio’s returns is found by

2012 2013 2014 2015 2016 Industry Cross- Time- Overall

1,12 1,14 1,37 2,05 2.96 2,24 Good Good Good

Cross Sectional Analysis

2012 2013 2014 2015 2016 Industry Cross- Time- Overall

1,01 1,02 1,23 1,94 2,80 1,64 Good Good Good

Cross Sectional Analysis

4.2. Activity Ratio

2012 2013 2014 2015 2016 Industry Cross- Time- Overall

28,07 22,09 22,99 23,62 24,06 8,45 Good Good Good

Inventory Turnover Ratio

Cross Sectional Analysis

2012 2013 2014 2015 2016 Industry Cross- Time- Overall

41 43 22 22 20 50,38 Good Poor Ok

Average Collection Period

4.2.3. Average Payment Period

2012 2013 2014 2015 2016 Industry Cross- Time- Overall

4.2.4. Total Asset Turnover

2012 2013 2014 2015 2016 Industry Cross- Time- Overall

0,99 0,83 0,88 0,8 0,86 1,04 Ok Ok Ok

Total Asset Turnover

4.3. Debt Ratio

2012 2013 2014 2015 2016 Industry Cross- Time- Overall

45% 57% 55% 56% 51% 52% Ok Ok Ok