Asia Water Technology Ltd. ( AWT ) is an technology company specialized chiefly in the field of H2O purification and effluent intervention in the Peoples Republic of China ( PRC ) . AWT has foremost had good repute in providing H2O decontamination intervention systems to the power coevals industry for more than a decennary. AWT is one of the lone three H2O decontamination intervention system suppliers for atomic power workss that receive licenses in the PRC.
( www.asiawatertech.com/ ? asiawater.listedcompany.com/newsroom/ ? Pressrelease ) .
AWTs technological expertness and investing capacity were strong foundation for the company to actively prosecute in H2O decontamination and effluent intervention industry. Nowadays, AWT offers inclusive and incorporate technology solutions for H2O refinement, H2O supply and effluent intervention systems. The services it provides include the design, procurance, installing and direction of H2O refinement, H2O supply and effluent intervention systems and installations. While growing is ever its extreme end, the companys primary mission is to equilibrate between growing and environmental protection and saving of H2O resource. ( hypertext transfer protocol: //www.asiawatertech.com/index.html ) .
The company was put on the list of Singapore. Exchange in 2005. AWT is non merely seen as a specializer in the filed of H2O intervention and direction but besides an efective investor in environmental substructure assets. New investors including S.I. Infrastructure Holdings, Ltd. and Litebay Pte, .Ltd. ventured with AWT in 2010. This creates favorable conditions for AWT to further develop its potency in this immense potency market.
AWTs gross really is derived from five chief concern sections. They include 1 ) power works EPC ( Engineering, Procurement and Construction contract ) , 2 ) municipal EPC, 3 ) H2O decontamination intervention, 4 ) effluent intervention and 5 ) consulting services. The company obtains a stable and turning income by supplying long term effluent intervention and H2O refinement undertakings chiefly to municipal authoritiess and major industrial countries ( hypertext transfer protocol: //www.asiawatertech.com/corporate_profile.html ) .
For more information on the company, please visit: hypertext transfer protocol: //www.asiawatertech.com
For more information, please contact:
WeR1 Advisers Pte Ltd
29 Scotts Road
Singapore 228224 Tel: ( 65 ) 6737-4844 Facsimile: ( 65 ) 6737-4944
Roger Ng rogerng @ wer1.net or Yim Jeng Yuh yimjy @ wer1.net.
RMBmil
Net incomes per portion
RMB cents
( Adapted from AWTs Annual Reports 2009,2010 and 2011 )
2. The fiscal ratio
2.1. Liquidity ratios
Liquidity ratios show the abilities of the company to run into its duties and to pay its liabilities utilizing different types of assets ( hypertext transfer protocol: //www.financialratioss.com/liquidity-ratios )
1.1.1. Current ratio:
Current ratio shows the ability of the company to pay for its short-run debts. It is acceptable if the current ratio ranges from 1.2 to 2, it is good if the ration is 2 to 3. Although lower value proves that the company may hold troubles in covering its duties, higher value indicates that the company may non utilize its assets efficaciously.
Formula
hypertext transfer protocol: //www.financialratioss.com/liquidity-ratios-1/current-ratio-definition
AWTs current ratio from 2009 -2011 ( utilizing informations from its fiscal statements and balance sheets over this period )
Amount expressed in RMB,000
Current ratio ( 2009 ) = 550,894/866,975 = 0.64
Current ratio ( 2010 ) = 454,982/633561= 0.72
Current ratio ( 2011 ) =948,955/1,256,469= 0.76
AWTs current ratio is less than 1 over the examined period. This shows that the company got jobs in covering its short-run debt. However, this index has risen from 0.64 ( 2009 ) to 0.76 ( 2011 ) . This indicates that the companys capacity to pay off its short term liabilities is better but it is still less than 1. This could make uncertainty from its creditor and coerce them to take aggregation actions hence may take the company to fiscal crisis.
2.1.2. The speedy ratio
Quick ratio assesses the plus more purely by excepting the stock list which is really hard to hard currency in the short period of clip, without sing losingss from current assets. As such it is a liquidness index that farther polish the current ratio by mensurating the sum of the most liquid current assets the company has to cover current liabilities ( Richard Loth, 2011 )
Formula
hypertext transfer protocol: //www.financialratioss.com/liquidity-ratios-1/quick-ratio-definition
AWTs speedy ratio from 2009 -2011 ( utilizing informations from its fiscal statements and balance sheets over this period )
Quick ratio ( 2009 ) = ( 550,894 – 8,353 ) /866,975 = 0.63
Quick ratio ( 2010 ) = ( 454,982 7,215 ) /633561= 0.71
Quick ratio ( 2011 ) = ( 948,955 16,749 ) /1,256,469 = 0.74
There is a really light difference between the companys current ratio and speedy ratio over the studied period, this means stock list is non a chief cause of the companys deficiency of capacity to cover its short-run liabilities.
2.2. Asset direction ratio
2.2.1. Inventory turnover ratio
Inventory turnover ratio ( stock turnover ) shows how many times the companys stock list is sold and replaced over a period of clip. This ratio can be calculated for the period of one twelvemonth or for other periods. It is of import for the companys proprietors because it indicates how effectual their assets are used in a signifier of stock list. High degrees of stock list indicate that a stock is being good managed while low value may ensue in an uneffective direction of stock list ( hypertext transfer protocol: //www.financialratioss.com/efficiency-ratios-1/inventory-turnover-ratio-definition )
Formula
( hypertext transfer protocol: //www.investopedia.com/terms/i/inventoryturnover.asp # ixzz1y7zOdu4y )
AWTs stock list turnover ratio from 2009 – 2011 ( utilizing informations from its fiscal statements and balance sheets over this period )
Inventory turnover ratio ( 2009 ) = 264,089 /8,353= 31.6
Inventory turnover ratio ( 2010 ) = 205,016 /7,215= 28.4
Inventory turnover ratio ( 2011 ) = 331,231 /16,749= 19.8
It seems that AWT has efficaciously managed its stock over this period. This effectivity seems to worsen over the studied period.
2.2.2. Dayss Gross saless Outstanding – DSO
This ratio calculates the mean figure of yearss the company needs to roll up gross after it has sold a product/service.A lowDSO figure means that the company takes fewer yearss to roll up its histories receivable. On the reverse a high DSO numbershows that the company is sellingits merchandise to clients on recognition and taking longer to collectmoney.
In general there is no norm for this ratio, as it depends on the industry. A really low value of this ratio shows that the company chiefly works on hard currency footing.
( hypertext transfer protocol: //www.investopedia.com/terms/d/dso.asp # ixzz1y7yE3Rgt ; hypertext transfer protocol: //www.financialratioss.com/efficiency-ratios-1/day-sales-outstanding-definition )
Formula
hypertext transfer protocol: //www.financialratioss.com/efficiency-ratios-1/day-sales-outstanding-definition )
Note: Histories receivable here means the mean histories receivable
AWTs DSO from 2009 – 2011 ( utilizing informations from its fiscal statements and balance sheets over this period )
DSO ( 2009 ) = ( 4,785+3,456+ 64,831+ 111,972+ 600 + 67,281+ 64,265 ) /2/321,889 /365 = 359.67
DSO ( 2010 ) = ( 4,666+4,785+59,781+64,831+5,540+600+75,831+67,281 ) /2/382,394
/365= 270.43
DSO ( 2011 ) =37,135+4,666+229,719+59,781+10,518+5,540+43,837+75,831 ) /2/519,464 /365 = 328,16
In the period of 2009-2011, AWTs DSO ranges from 270 yearss to 356 yearss, this means that AWT takes comparatively long yearss ( about a twelvemonth ) to roll up its debts ( selling merchandises in recognition ) . This implies that AWTs ability to turn gross revenues into hard currency is weak therefore less opportunity to set the hard currency to utilize once more.
2.2.3. Fixed-Asset Employee turnover
Fixed plus turnover is to cipher the productiveness of a company ‘s fixed assets ( belongings, works and equipment or PP & A ; E ) .It shows how much gross revenues ( grosss ) are generated for one dollar of fixed assets ( efficiency of the usage of PP $ E ) . There are no common norms for the ratio, nevertheless the higher value of this ratio is better ( Richard Loth, 2011 ; hypertext transfer protocol: //www.financialratioss.com/efficiency-ratios-1/fixed-asset-turnover-ratio-definition )
Formula:
hypertext transfer protocol: //www.investopedia.com/university/ratios/operatingperformance/ratio1.asp # ixzz1y7xdQUIU
AWTs fixed plus turnover from 2009 – 2011 ( utilizing informations from its fiscal statements and balance sheets over this period )
Fixed plus turnover ratio ( 2009 ) = 319,276 /45,492= 7.02
Fixed plus turnover ratio ( 2010 ) = 282,394/35,391= 7.98
Fixed plus turnover ratio ( 2011 ) = 519,464 /109,624= 4.74
AWT seems to expeditiously utilize their fixed assets ( one RMB of fixed plus generated more than 7RMB of gross revenues in 2009-2010 ) . AWT by its nature of concern is non really capital intensive therefore being able to bring forth good degree of gross revenues on a comparatively low base of capital investing. In 2011, it seems that AWT invests more in undertakings that need more PP & A ; E. As a consequence, the ratio is down to merely 4.74.
2.2.4. Entire plus turnover
Entire plus turnover is a ratio to mensurate the productiveness of the companys entire assets. This ratio shows how much grosss ( gross revenues ) are generated for one dollar of entire assets. In other words it measures the ability of a company to utilize its assets to expeditiously bring forth gross revenues – the higher the figure the better. This ratio considers all assets, current and fixed. It besides indicates pricing scheme: companies with low net income borders tend to hold high plus turnover, whilethose with high net income borders have low plus turnover.
( hypertext transfer protocol: //www.investopedia.com/terms/a/assetturnover.asp # ixzz1y7zs1RRt )
Formula
( hypertext transfer protocol: //www.financialratioss.com/leverage-ratios-1/total-asset-turnover-definition )
Note: entire assets here mean mean entire assets
AWTs entire plus turnover from 2009 – 2011 ( utilizing informations from its fiscal statements and balance sheets over this period )
Entire plus turnover ratio ( 2009 ) = 319,276 / ( 867,806+871,629 ) /2 + ( 647,002+550,894 ) /2 = 0.37 or 37 %
Entire plus turnover ratio ( 2010 ) = 282,394/ ( 983,387+871,629 ) /2+ ( 454,982+550,894 ) /2= 0.30 or 30 %
Entire plus turnover ratio ( 2011 ) = 519,464/ ( 2,471,719+983,387 ) /2+ ( 948,955+454,982 ) /2 = 0.30 or 30 %
In contrast to the fixed plus turnover ratio, the entire plus turnover ratio is comparatively low. This reveals that AWT puts its capital to a great extent into other assets instead than in PP & A ; E such as intangible assets and non-current fiscal receivables.
2.3. Debt direction ratio
2.3.1. Entire debts to entire assets or the debt ratio
The debt ratio is used to compare the company ‘s entire debt to its entire assets. It shows the proportion of assets, bought from borrowed financess. It is an utile index while analysing companys capital construction. This ratio is used to measure company ‘s fiscal hazard, because the more financess the company is borrowing, the greater concern hazard appears. . A low per centum means that the company is less dependent on purchase, i.e. , money borrowed from and/or owed to others. The lower the per centum, the less purchase the company is utilizing and the stronger its equity place. ( http: //www.financialratioss.com/leverage-ratios-1/debt-ratio-definition )
.
Formula:
hypertext transfer protocol: //www.investopedia.com/university/ratios/debt/ratio2.asp # ixzz1y7wjiJFE
Note: entire assets here mean mean entire assets
AWTs debt ratio from 2009 – 2011 ( utilizing informations from its fiscal statements and balance sheets over this period )
Debt ratio ( 2009 ) = 1,196,400/ ( 867,806+871,629 ) /2 + ( 647,002+550,894 ) /2 = 0.54 or 54 %
Debt ratio ( 2010 ) = 1,004,100/ ( 983,387+871,629 ) /2+ ( 454,982+550,894 ) /2= 0.47 or 47 %
Debt ratio ( 2011 ) = 2,123,300/ ( 2,471,719+983,387 ) /2+ ( 948,955+454,982 ) /2 = 0.67 or 67 %
AWT debt ratio ranges from 47 % to 67 % in the period of 2009-2011 which is non excessively high taking into history the range of concern the company is carry oning. This ratio has been increased quickly from 2010 to 2011 possibly the company has to borrow more money for the new undertakings it has obtained during this period.
2.3.2. Timess Interest Earned – Necktie
TIE is a ratio to mensurate the capableness of the company to pay off short term fiscal liabilities such as involvement payments. If the company fails to run into these duties it could be forced into bankruptcy. This ratio is an of import information for the companys creditors when they are to do a determination for the extension of the companys loans. In short, TIE helps to understand how many times the company can cover its involvement payments. hypertext transfer protocol: //www.investopedia.com/terms/t/tie.asp # ixzz1y839gBol
By and large talking, if the ratio value is equal to or below 1.5, it is likely that the companys ability to cover its involvement payment is unsure. If TIEval ue is less than it is likely that the company can non cover its involvement payments, because it makes less money than the sum it has to pay as involvements ( hypertext transfer protocol: //www.financialratioss.com/leverage-ratios-1/times-interest-earned-definition )
Formula
( hypertext transfer protocol: //www.financialratioss.com/leverage-ratios-1/times-interest-earned-definition )
AWTs TIE from 2009 – 2011 ( utilizing informations from its fiscal statements and balance sheets over this period )
TIE ( 2009 ) = ( 168,993 ) / 181,087 = – 0.93
TIE= ( 2010 ) = 32,573/ 60,903 = 0.53
TIE ( 2011 ) = 150,206/ 75,049 = 2.00
The TIE from 2009-2011 shows that AWT has stunningly moved from a really critical fiscal hazard in 2009 where they experienced a dramatic loss and were incapable of paying the involvements of their debts to a comparatively healthy fiscal state of affairs in 2011 where the TIE ratio is about 2, bespeaking that the company is now able to cover its short term liabilities.
2.4. Profitableness ratios
Profitability ratios show how successfully the company is running its activities, how profitable are its procedures and what the farther inclinations of its concern are. The most common used profitableness ratios are as follows:
– Net income border on gross revenues or Gross Profit Margin
– Tax returns on assets ( ROA )
– Tax returns on equity ( ROE ) and
– Interruption even point ( BEP )
2.4.1. Net income border on gross revenues or Gross Profit Margin
Gross Profit Margin is the most general profitableness ratio. It is the comparing between the gross of the sale of the merchandise or service and the cost needed to bring forth it. This is seen as the first index of the company net income. Investors use this ratio to compare companies in different industries to find what are the most profitable. Directors largely use it to compare companies in the same industry to cognize about their competitory degree ( hypertext transfer protocol: //www.investopedia.com/terms/p/profitmargin.asp # ixzz1y812H0gQ ) .
By and large talking, the higher the gross border values the more competitory the company is.
Formula
hypertext transfer protocol: //www.financialratioss.com/profitability-ratios-1/return-on-assets-definition
AWTs Gross Profit Margin from 2009 to 2011 ( utilizing informations from its fiscal statements and balance sheets over this period )
Gross Profit Margin ratio ( 2009 ) = 55.2/ 319.3 = 0.17 or 17 %
Gross Profit Margin ratio ( 2010 ) = 77.4/ 282.4 = 0.27 or 27 %
Gross Profit Margin ratio ( 2011 ) = 188.3/ 519.5 = 0.36 or 36 %
The stable addition of GPM ratios over this period ( 17 % to 36 % ) shows that AWT becomes more profitable over the last three old ages. This besides means that the company is now more competitory in the field of H2O purification and effluent intervention.
2.4.2. Tax returns on Assetss ( ROA )
This index shows the company ‘s ability to turn assets into net income. This is a really common and simple ratio picturing the relationship between companys income and the assets used to bring forth this income.
It is an of import ratio for companys proprietors, investors and creditors, as it is one of the most general ratios that shows how expeditiously the plus is being managed. It indicates how much net income is generated per one dollar of assets. As for investors and directors, it is non acceptable if ROA is less than 5 % . As for Bankss that are interested merely in safety of their credits, a value of ROA every bit low as 1.5 % is instead sensible hypertext transfer protocol: //www.financialratioss.com/profitability-ratios-1/return-on-assets-definition
Formula
hypertext transfer protocol: //www.financialratioss.com/profitability-ratios-1/return-on-assets-definition
Note: Assetss here mean mean entire assets
AWTs ROA from 2009 to 2011 ( utilizing informations from its fiscal statements and balance sheets over this period )
ROA ratio ( 2009 ) = ( 180.5 ) / ( 1,514.8 +1,422.5 ) /2 = -0.12 or -12 %
ROA ratio ( 2010 ) = 19.9/ ( 1,422.5+1,438.4 ) /2 = 0.01 or 1 %
ROA ratio ( 2011 ) =136.2/ ( 3,420.7+1,438.4 ) /2= 0.05 or 5 %
AWTs ROA ratios over the past three old ages show that the company experienced a really hard fiscal state of affairs in 2009 with a negative per centum of ROA ( -12 % ) . This means that its usage of assets was non efficient and the company suffered from a heavy loss of net income. The income statement of 2009 reveals that although the company received a positive gross net income, it had to pay off really high sum of suspended involvements to its creditors ( about three times of its gross net income ) . The state of affairs was improved in the undermentioned two old ages. In 2010, ROA rose to 1 % , which still was non acceptable by both the Bankss and its creditors. The company may hold trouble in borrowing money. Nevertheless, in 2011 this ratio reached 5 % , an obvious grounds of efficient direction of AWTs assets. This per centum would do its creditors and Bankss feel more secure about their credits to this company.
2.4.3. Return On Equity ( ROE )
ROE ratio shows how profitable the company is in runing its assets. It besides indicates how much income a company receives in comparing with the stockholders equity. This ratio is indispensable to the companys owners/shareholders since it reveals how much they earn from their investing in the company ( company net incomes public presentation ) . The higher the ratio per centum, the more efficient direction is in using its equity base and the better return is to investors. ROE is usually expressed in per centums. By and large talking, a ROE of at least 10 % per twelvemonth is non bad, 15 % is good ( Richard Loth, 2011 ) .
ROE norms can differ depending on the industry the company is runing in. Besides it depends on the economic state of affairs of the specific state. During the economic crisis, ROE value of 5 % can be consider as a good consequence.
Formula
hypertext transfer protocol: //www.financialratioss.com/profitability-ratios-1/return-on-equity-definition
Note: Equity here means mean stockholders equity
AWTs ROE from 2009 to 2011 ( utilizing informations from its fiscal statements and balance sheets over this period )
ROE ratio ( 2009 ) = ( 180.5 ) / ( 405.5+226.1 ) /2 = – 0.3 or – 30 %
ROE ratio ( 2010 ) = 19.9/ ( 226.1+434.3 ) /2 = 0.03 or 3 %
ROE ratio ( 2011 ) =136.2/ ( 434.3+1,297.4 ) /2= 0.08 or 8 %
AWTs ROE over the past three old ages one time once more reaffirms the loss the company underwent in 2009 ( ROE was -30 % ) and its dramatic attempt to resuscitate its concern in the undermentioned two old ages and finally came up with a promising ROE per centum of 8 % in 2011. However, an ROE of 8 % in 2011 was still low turn outing that the company needs to do more attempt to pull off and use its equity
2.4.4. BEP ( interrupt even point )
BEP is the place where the company is able to cover its costs but makes neither a net income nor a loss. To set up the BEP, the nature and extent of the companys costs ( variable costs and fixed cost ) should be determined.
( hypertext transfer protocol: //www.ehow.com/info_8327916_breakeven-point.html )
Formula
Break-Even ( Quantity ) Point is the volume of gross revenues for the entire gross to be to entire operation costs ( gross net income is zero ) .
QBE = FC / ( P-V )
QBE: volume of gross revenues at the BEP
FC: fixed cost
Phosphorus: monetary value per unit
Volt: variable cost per unit
Break-Even ( Gross saless ) Point is calculated based on dollar gross revenues alternatively of units. It is utile when it is impossible to come up with Break-Even ( Quantity ) Point because the company sells assorted merchandises and/or services.
SBE = FC [ 1- ( VC/S ) ]
South by east: gross revenues at the BEP
FC: fixed costs
VC: entire variable costs
Second: gross revenues
( J.Horne and J. M.Wachowicz, 2008 )
In the instance of AWT its concern involves with the execution of H2O purification and effluent intervention undertakings and confer withing services, it is impossible to utilize QBE but SBE.
AWTs Break-Even ( Gross saless ) Point from 2009 to 2011 ( utilizing informations from its fiscal statements and balance sheets over this period )
SBE ( 2009 ) = 264.1 [ 1- ( 11.4+79.4 ) /319.3 ) ] = 369.05
SBE ( 2010 ) = 205.0 [ 1- ( 14.0+38.6 ) /282.4 ) ] = 237.5
SBE ( 2011 ) = 331.2 [ 1- ( 17.2+90.4 ) /519.5 ) ] = 417.7
The BEPs ( Gross saless ) of AWT shows that the company went through a loss in 2009 since its gross was less than the SBE ( 2009 ) while it made net income both in 2010 and 2011 since its grosss were higher than the SBE in 2010 and 2011. In 2011, the operation of AWT was better as the positive distance between its gross and the BEP is larger than that of 2010 ( 519.5- 417.7= 101.8 ( 2011 ) and 282.4-237.5= 44.9 ( 2010 ) ) .
2.5. Market value ratio
2.5.1. Monetary value to net incomes ratio
Monetary value to net incomes ratio shows the sum of net income ( net incomes ) per one portion. This ratio is of import for the proprietors and investors because it indicates how much the investor pays for one dollar of the earning of the companys portion she/he is buying. The higher value of the ratio enables portion purchasers to anticipate a possible growing of the companys market value ( http: //www.investopedia.com/terms/p/price-earnings-ratio ) .
Formula
Share monetary value shows the current market monetary value of the portion.
hypertext transfer protocol: //www.financialratioss.com/value-ratios-1/price-to-earnings-ratio
AWTs P/E from 2010 to 2011 ( utilizing informations from its fiscal statements and the balance sheets over this period to cipher the portion monetary value of the several old ages ) .
Share monetary value ( 2009 ) = no available
Share monetary value ( 2010 ) = 2.44
Share monetary value ( 2011 ) = 2.68
P/E ratio ( 2011 ) = 2.44/1.14 = 2.14
P/E ratio ( 2011 ) = 2.68/3.2 = 0.84
In 2009, although the informations of the companys stock monetary value is non available, from the income statement and balance sheet of this twelvemonth, it shows that the company endured a heavy loss and stockholders might non acquire any income from their shares.even loss. In 2010, to derive one RMB of the net incomes of the companys portion the investor is purchasing, she/he has to pay 2.14 RMB. In 2011, this ratio was down to 0.84 screening that stockholders can derive one RMB of the net incomes of the purchased portion by merely paying 0.84 RMB ( really profitable ) .
2.5.2. Monetary value to book value ratio definition
This ratio shows the companys portions value by comparing market value with its book value. For investors who own or wish to ain stocks, this index is indispensable because it shows the proportion between the stocks monetary value and the book value. This ratio can be calculated utilizing a conservative method by subtracting intangible assets from the companys assets.
In general, there are no norms for this ratio.A lower P/B value ratio could intend that the stock is undervalued. However, it could besides connote that there is something basically incorrect with the company..
Formula
hypertext transfer protocol: //www.financialratioss.com/value-ratios/price-to-book-value-ratio-definition
AWTs P/B from 2010 to 2011 ( utilizing informations of net incomes per portion, net net income from its fiscal statements and entire equity from the balance sheets over this period to cipher equity per portion of the several old ages ) .
Share monetary value ( 2009 ) = non available Equity per portion ( 2009 ) = 11.42
Share monetary value ( 2010 ) = 2.44 ; Equity per portion ( 2010 ) = 2.55
Share monetary value ( 2011 ) = 2.68 ; Equity per portion ( 2011 ) = 3.06
P/B ( 2010 ) = 2.44/2.55 = 0.96
P/B ( 2011 ) = 2.68/3.06 = 0.86
In this period, AWTs P/B was less than 1. This means that either the plus value was overstated or it was gaining a hapless return on its plus. Look back the ROA over this period, it was 1 % ( 2010 ) and 5 % ( 2011 ) which are comparatively low but non excessively much to take to P/B ratios less than 1. Therefore, it could be either its stock was undervalued or its assets were overstated.
3. Description and rating of AWT public presentation in the period 2009-2011
By and large talking, AWT Ltd. encountered hard fiscal state of affairs in 2009 where its gross decreased 16.8 % to RMB 319.2 million compared to that of 2008 and the company suffered from a heavy loss of RMB180.5 million due to really high finance disbursals reflecting tightened liquidness conditions within the industry and the hazard premiums being demanded by loaners. However, the company went through a singular direction and fiscal reform in 2010 and as a consequence its fiscal state of affairs becomes healthier in 2011.
Lashkar-e-taibas look at the companys fiscal public presentation more in inside informations utilizing the chief fiscal ratios.
In footings of liquidness direction, AWTs current and speedy ratios are less than 1 in malice of a important addition of those ratios over this period. This implies that AWTs ability to cover its short term liabilities is debatable, therefore making uncertainty from its creditors and may coerce them to take aggregation action taking the company back to fiscal crisis. The comparing between current and speedy ratios indicates that stock list is non a chief cause of the companys deficiency of capacity to cover its short-run liabilities.
The stock list turnover ratios over this period besides shows that AWT managed rather good its stock although this effectivity of stock list direction seemed to worsen over clip. A deeper expression at AWTs DSO besides reveals that it took long times for the company to roll up its debts ( 270-356 yearss ) . It is clear that AWT was selling its merchandise chiefly in recognition. That explains why it face trouble in paying off its sort-term debts.
Sing its plus direction, AWT seems to expeditiously utilize their fixed assets ( one RMB of fixed plus generated more than 7RMB of gross revenues in 2009-2010 ) . However, the comparatively low entire plus turnover depicts that AWT puts its capital to a great extent into other assets instead than in PP & A ; E such as intangible assets and non-current fiscal receivables.
As for debt direction, the debt ratio implies that AWTs demand on capital investing has been dramatically increased over this period, from 47 % ( 2009 ) to 67 % ( 2011 ) . However, this per centum rate is still acceptable for a company with large-scale and long-run investing undertakings as AWT. Looking more deeply to the TIE ratio, it reflects the immense attempt and effectual structural and fiscal reform of the company to travel from a critical fiscal hazard in 2009 where TIE is negative to a comparatively healthy state of affairs in 2011 where the TIE is about 2, demoing that the company is now able wage off their due involvements. However, the demand of hard currency to cover short-run liabilities is ever a high concern of the company.
With respects to profitableness, the steady rise of Gross Profit Margin ratio from 17 % ( 2009 ) to 36 % ( 2011 ) was a good grounds of the companys increasing profitableness. This besides reflects higher fight of the company in this industry. The ROA and ROE ratios by contrast reveal the trouble the company encountered in pull offing its assets and equity. Low return of its assets in 2009 and 2010 might make trouble for the company to borrow money from its creditors and /or Bankss. Fortunately, ROA ratio in 2011 of 5 % seems to assist the company to recover the trust of its creditors and/or Bankss. Although ROE ratios moved from negative ( 2009 ) to 8 % ( 2011 ) this return is still low that it can non pull possible investors. A deeper consideration of AWTs profitableness utilizing BEP ( gross revenues ) reconfirms the moneymaking state of affairs of the company, the gross made in 2011 is far beyond the SBE ( 2011 ) which is 101.8 RMB million.
To analyze the market value of AWT, P/E and P/B ratio are used. P/E ratio shows that the company did get the better of the fiscal crisis in 2009 and in 2011, investor could derive 1 RMB from the portion by merely paying 0.84 RMB. This means the value of portion is rather high therefore pulling more investors. By contrast, the P/B ratio was less than 1 over the studied period. This means that either the plus value was overstated or it was gaining a hapless return on its plus. Looking back the ROA over this period, it was 1 % ( 2010 ) and 5 % ( 20121 ) which are comparatively low but non excessively much to take to P/B ratios less than 1. Therefore, it could be either its stock was undervalued or its assets were overstated.
In decision, AWT, by their attempt and smart scheme of organisational restructuring has overcome the really critical fiscal crisis in 2009 and moved to a fitter fiscal state of affairs in 2011. This will supply the company with more favorable conditions to pull more investors and better entree to creditors and Bankss. However, liquidness, assets and equity direction is the country the company needs to concentrate on for farther betterments.
