Financial Analysis of Coca Cola Amatil and Garuda Indonesia

September 15, 2017 | Author: Putika Nuralida Herdin | Category: Investing, Equity (Finance), Financial Statement, Revenue, Debt
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Analysis on financial statement of both companies to get a better understanding on how the company handle their financia...

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FINANCIAL ANALYSIS OF COCA COLA AMATIL AND GARUDA INDONESIA Putika Nuralida Herdin (13/344099/HK/19388) and Nadiya Hanifah (13/350321/HK/19674)

1. Coca Cola Amatil From the summarized income statement, it can be derived that there has been an increase on the trading revenue from 4.9 to 5.09. Although it’s not quite significant, but it shows the hike of performance of corporate finance. Furthermore, Coca Cola Amatil has finally delivered profit growth of 4.8% after two years of decline in the performance. This profit growth is caused by the reduction of most the company’s liability, up to $35.7. The balance sheet also remains in a very strong position due to the net debt decreased by $725 million to $1,146.3 million, which was driven by the receipt of the equity injection by TCCC in Indonesia, and makes the company has sufficient cash on hand. Aside from that, to see whether the company is in a safe position and has enough cash to pay its short term debt, we should look to the current ratio. Coca Cola Amatil’s current ratio has increased from 1.53 to 1.56, showing its good position. The debt equity ratio also remains in healthy condition as its DER is around 1.77, which is far from the maximum limit required by the banks. From the statement of cash flow, we can see that all of the operating, investing and financing cash flows have been doing well. In 2015, the statement shows that the company has a positive balance to fund the investing activity. Payment to suppliers and employees is increased, while income taxes paid is decreased from 148.2 to 179 which results to an increase of net operating cash flows. In short, between 2014 and 2015, there is no significant change within the financial statements. However, we may highlight the increase of net sales in 2015. If the increase of net sales is accompanied by the decrease of liability in a big amount, profits gained in 2015 could be high. Coca Cola Amatil Limited as a profit company limited by shares, which incorporated and domiciled in Australia, whose

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shares are publicly traded o the Australian Securities Exchange, remains in a good condition. This company is able to pay its debt, and the performance in the industry is above average. In conclusion, Coca Cola Amatil has a very good potential, considering that people tend to choose ready to drink products nowadays. However, if the company is willing to keep up in the business, it has to develop the strategies against competitors within the same business area.

2. Garuda Indonesia This analysis is obtained and concluded from the financial statements of PT Garuda Indonesia, which ended on December 31, 2015. Garuda provides a complete, user-friendly and complex financial review to help the readers determining its financial condition. Starting from the financial highlights, particularly on consolidated statements of profit or loss and other comprehensive income, it shows that Garuda Indonesia has been experiencing a fluctuate performance of corporate finance. The company’s operating revenues in 2015 decreased by 3.01% due to a decline in scheduled airline services of 5.19%. However, the business development strategy through the Quick Wins program by conducting Company’s cost driver (efficiency) was able to record more profits for Garuda Indonesia. From the consolidated statements of financial position, total assets of the company in 2015 grew by 6.33%, mainly due to an increase in Current Assets compared to 2014. However, we can see that the company also recorded an increase in total liabilities amounted to 5.63%. Meaning that the company does not have enough assets over its short term liabilities. In 2015, the debt to equity ratio has also increased to 1,43x due to the increase on liabilities. Currently, the company still maintains a good solvency. It’s worth noting that almost 70% of company’s expenses are paid in dollars, while the revenues are gained in rupiah. The company must be able to keep the normal threshold, particularly when rupiah is weak. The statement of cash flows in 2015 shows that the company has sufficient positive cash to fund the investing activity. The growth of cash flows from operating activities up to 431%, which is a good news. On the other hand, cash flows used in investing activities dropped by 21.83% due to lower advance

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payments of the aircraft purchase of 58.40%. The decrease also found in cash flows from financing activities that decreased by 28.28% compared to 2014. According to the analysis conducted, we can conclude that Garuda Indonesia’s financial condition was not in a good potential at that time, due to the high development on air transport industry and high demand on low cost flight, causing a tight competition within the industry. Even though in 2015 Garuda Indonesia has successfully increased by 33% due to the increase of frequency and flight capacity, this number was not satisfying. Garuda Indonesia should use the growth in the number of foreign tourists in 2016 as the impact of the free visa policy to attract more investors. In addition, downward trend on jet fuel and infrastructure development acceleration in Indonesia should also be a good trigger for Garuda to achieve its financial and operational targets set in 2016.

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