Financial Statement Analysis

Comparative Two-year Financial Report Analysis of Astra International

Tbk. and Comparative Financial Report with Indomobil Sukses
International Tbk. and Miscellaneous Industry 2018-2019

By:
Fathiya Rachmasari
Melinda Lastri Susetyo

Manajemen Wiyata 84
PPM School of Management
November 2020
Introduction
At the end of 2019, every emitent listed in Indonesia Stock Exchange released its annual
company’s performance, including Astra International Tbk. as one of the companies whose
position in the main board of the exchange. The stock moved dynamically as in the first quarter
of 2019, the highest price reached 8,475 per share and the closing price hit 7,325 with average
daily trading volume of more than 42 millions of shares. However, the stock performance for the
following quarters slowly decreased. The data showed that the highest prices of following
quarters decreased until more than 600 IDR and the average daily trading volume also faced the
same situation. It did not mean Astra did not perform well during 2019. There were many factors
that could influence the overall business activities. Stock movement could be one of ways to
determine market prospects for investors and creditors. Thus, it needed in-depth research and
understanding about a financial condition of one company through its annual financial statement.
For one company, to evaluate their growth and financial condition was one essential step.
Without them, the shareholders and banks would be blindfoldedly invested and approving their
loans. One annual financial statement could tell the whole condition of the company whether the
company is on the edge of bankruptcy due to debt or on their productive years. Astra
International proved their performance as one of the top notch as they joined the LQ45
composite and their financial condition supported the fact they deserved to be the part of it. It
indicated that the share was the most liquid or frequently transacted by investors. It needed to
accentuate that trading volume and prices were only a small part of the bigger picture of financial
condition.

Theoretical Framework
According to Weygandt, Kimmel, and Kieso, there are five different types of Financial
Statement of a company, which summarized the financial condition, inter alia, Income
Statement; Retained Earning Statement; Statement of Financial Position; Statement of Cash
Flows; and Comprehensive Income Statement. The one that was commonly released annually in
Indonesia via the Indonesia Stock Exchange website was the Consolidated Financial Statements,
meaning all of the statements were released in a single document. In this case, the basic
accounting equation which included Asset, Liabilities and Equity, and its respective accounts. If
the company consisted of a parent company and subsidiaries, there would be separate
information for the parent company only and the overall company.
To measure the company’s growth, it needs a comparative analysis. The bases could be
taken from within the company, the overall industry, and the competitor. While the bases could
be taken from internal and external, the analysis tool could vary from Horizontal or time-based
analysis, Vertical that focused on the percentage of each item in the financial statement, and
Ratio analysis emphasized the relationship between selected items of financial statement data.
For this analysis, the Ratio Analysis method would be applied as the perspective in interpreting
the data and its relationship.
In Ratio Analysis, three ratios could be evaluated: liquidity, profitability, and solvency.
Liquidity was to measure the ability of the company to pay its obligations in a short time and
how they meet their need for cash. It became one of many things that short-term creditors, such
as banks, need to consider before approving the credit proposal. It was obvious that every
company must produce a profit to survive. Profitability was to evaluate the potential to produce
income at a certain time. It would have a significant relationship with liquidity and solvency
since both of them required an obligation to pay. Solvency indicated the capacity of the company
in surviving for a longer period. Each analysis divided up to six different ratios, depending on the
category.
To measure the liquidity of the company and test the ability to pay the short-term debt,
the ratios that could be put in use were the current ratio, acid-test ratio, account receivable
turnover, and inventory turnover. The current ratio is commonly used to quantify the short-term
debt-paying capacity. To compute it, the current assets were divided by current liabilities. The
Acid-test ratio was complimentary to the current ratio, which computes the sum of cash, net of
account receivable, and short-term investments, and later divided by current liabilities. The
turnover of account receivable was to evaluate the average number of collecting receivables in a
single period. In addition to that, the equation required data from net credit sales and average net
accounts receivable. Besides account receivable turnover, there was another turnover in
assessing liquidity of the company. It's called Inventory Turnover which focuses on the overall
number of inventory sold. Since it involved the inventory, cost of goods sold became a part of
the equation. Liquidity indeed highly related to profitability due to the source of funds to pay
short-term debt came from income made.
 There were many ways to determine the ratio of the profitability of the company. The
easiest to determine whether the company made income or not was comparing previous year’s
profit with current year’s by percentage. The other way was asset turnover that mainly calculated
the efficiency of the company in utilization of their profit. To enumerate the profitability on the
average or return of assets, the net income is divided by the average total asset. The shareholder
could also measure how the company where they invested their capital to produce income. By
deducing the preference dividend, if any, from net income and later divided by average
shareholders’ equity, it would produce the number of percentage of return of equity from the
ordinary shareholders’ perspective. If the investors’ want to further assess the profit-generating
aspect by emphasizing the share they had, the generated ratio would be price-earnings. It
described the perspective of the investors regarding the future performance of the company.
Other market prospect related ratios would be payout ratio or dividend yield. This ratio would
mainly be about the percentage of dividend distributed to the investors. The profit made would
not only to pay the short-term debt but also long-term borrowings.
The debt to asset ratio helped the creditor to calculate the degree of leverage and signal
the company’s resilience towards the losses without compromising the interest. It computed the
total liabilities divided by total assets. The ideal condition for the creditor would be the ratio stay
low. Last but not least, times interest earned was like the deadline of an assignment for students.
It measured the capability of one company in paying debt before the due date by dividing the
sum of net income, interest expense, and income tax expense by interest expense. Therefore, it
could conclude that there were many ways to assess the company’s capacity to generate income
and pay its debt, including through the ratio method. It helped the internal users to evaluate their
past and current performances and provide them with prediction for future performance while for
the external users would help them to strategize the amount of capital to be invested and reduce
the possibility of losses.

Company’s General Information

Astra International Tbk. was established in 1957 as a trading company and started its
business activities as an official distributor of Toyota in 1969. A year later, Astra became the
sole legal distributor for the Xerox printing machines and Honda motorcycles. Ever since then,
Astra expanded its business range through the establishment of subsidiaries into trade, finance,
heavy equipment, services, construction, agriculture, mining, and industry, with the main scope
of business as automotive and components. The holding company was not the only one who
initiated the public offering, some of its subsidiaries, such as Astra Otoparts (automotive
manufacture), Astra Agrolestari (agriculture), and Astra Graphia (printing), also recorded their
names in the Indonesia Stock Exchange (IDX).
The parent company listed its Initial Public Offering (IPO) in 1990 with the opening price
reached 14,850. By the time Astra International listed, 30,000,000 or less than 5 percent per
person of shares were traded to the public. Despite the IPO in 1990, the dividend was not
immediately distributed to the public investors. It took Astra another 5 years to ensure
themselves to distribute their dividend. The highest dividend ever issued was in the second term
of 2011 with 1,380.00 per share, which was distributed in June 2012 as the final dividend. Until
31 January 2019, the Market Capitalization of Astra reached 342 trillion IDR.

Analysis
a. Two-Year Comparison Reports (2019-2018)
- Balance Sheet
In 2019, Astra International or known as ASII on Indonesia Stock
Exchange (IDX) released its annual Financial Statement. Based on the report
including the subsidiaries, they experienced an increase in Asset, both Current
and Noncurrent, and total Liabilities and Equities. In their total consolidated
Assets, ASII documented the amount of increase worth of 7,247 billion IDR,
meaning their Assets reached more than 350,000 billion IDR. As for the total
liabilities and equities, they also scored an increase in the same number as their
increase in the Assets.
As stated in their Balance Sheet, the Non-Current Assets underwent a
9,369 billion IDR of raise while the current diminished 2,122 billion IDR. It was
caused by a reduction in cash and its equivalents, other investments, other assets
and trade receivables, and an increment in financing receivables, other
receivables, inventories, and prepaid taxes. Although the non-current Assets
performed better than the current, it did not alter the fact that not every aspect
 accrued. For instance, Other Receivables from Third Party stated a 1,105 billion
IDR of decrement; Inventories also faced the same situation as the previous
account with 230 billion IDR. Other aspects such as Fixed assets after
depreciation and impairment, Investments, Concession Rights after depreciation,
and impairment had a different situation unlike the accounts before. They
encountered a significant change in the number. These assets played a major role
in the company as the user of sources of funds and revenue generators.
The change was applied in Liabilities and Equities as the source of funds
for Astra International. On current liabilities, Astra International highlighted its
achievement in reducing it from 116,467 billion IDR to 99,962 billion IDR. On
the other hand, the company converted its deduction to the non-current liabilities.
It was worth taking into account that despite having a decrease in short-term and
overall liabilities, Astra took an extra 11352 billion IDR worth of long-term debt.
Equities also made its contribution up to 12,400 billion IDR and mainly from
Unappropriated Retained earnings. All of the accounts signified the stagnant
condition, except for other reserves that endure a loss. Therefore, it emphasized
the importance of the details of each account to describe their financial condition
and how they affect the overall financial health of Astra.

- Statement of Income
Astra International Tbk experienced a decrease in comprehensive income
in 2019 by Rp 4.971 billion. In 2018, Astra International Tbk recorded a total
comprehensive income of Rp 28.250 billion, while in 2019 it was 23.279 billion
rupiahs. Based on the Statement of Income, Astra International recorded sales and
revenue in both comparative years with approximately the same amount with a
small margin, but in 2019, Astra International experienced a decrease of Rp 2.039
billion.
A significant difference in Astra International’s Income Statement lies in
their income for the remeasurements of post-employment benefit obligation and
adjustment to other comprehensive income. From those two aforementioned
accounts, they recorded a total of Rp 595 billion as comprehensive income that
 will not be reclassified to profit or loss which reduced the amount of
comprehensive income considerably in 2019.
Furthermore, in 2019 Astra International recorded a loss of Rp 1.020
billion on exchange difference on the translation of financial statements in foreign
currencies and also Rp 1.817 billion loss on cash flow hedges.

b. Ratio Analysis (in Billion Rupiah)

Financial reports are important medium for assessing the company's
financial performance and condition. Through the company's financial statements,
we able to make decisions that are important to the company.
The method used in this financial statement analysis is horizontal
(dynamic) analysis using ratio analysis techniques, namely analysis techniques to
determine the relationship of certain items in the balance sheet or income
statement individually, or a combination of the two reports.
The company performance of PT Astra International Tbk is measured
based on the Liquidity Ratio to evaluate the ability to meet short-term liabilities.
The liquidity ratio consists of:
- Liquidity and Efficiency
a) Current Ratio
The current ratio is used to determine the ability to meet short-term
obligations because this ratio shows how far the demands of short-term
creditors are fulfilled by assets that are estimated to be cash in the same
period as the due date of the debt. The formula to calculate the current
ratio is:
Current Assets
Current Ratio =
Current liabilities
b) Quick Ratio / Acid Test Ratio
The quick ratio is an indicator of a company’s short-term liquidity position
and measures a company’s ability to meet its short-term obligations with
its most liquid assets. Since it indicates the company’s ability to instantly
use its near-cash assets (assets that can be converted quickly to cash) to
 pay down its current liabilities, it is also called the acid test ratio. The
Liquidity Ratio 2019 2018
Current Ratio 129.058
= 1,25
99962
Quick Ratio 24.330+400+70.602
99.962
=
0,954
Collection Period
Days to Sell Inventory
higher the ratio result, the better a company's liquidity and financial
health; the lower the ratio, the more likely the company will struggle with
paying debts. The formula to calculate the quick ratio is:

Cash+ Short −term investments +Current receivables

Quick Ratio =
Current liabilities

c) Collection Period
This ratio should be compared with competitors to see if the credit
provided, and the customer risk, is in line with the industry. A high
collection period indicates high costs in extending credit to customers.
Collection Period can be calculated using the following formula:
Average Accounts Receivable
Collection Period =
Net Sales/365
d) Days to Sell Inventory
A measure of a company's financial performance that gives investors an
idea of how long it takes the company's inventory to turn over to sales.
Generally, the lower the better the impact on the company. Days to Sell
Inventory can be calculated using the following formula
Inventory
Days to Sell Inventory =
Cost of Good Sold /365

The liquidity ratio based on the financial statements of PT Astra

International for the 2018 and 2019 periods can be seen in the table below
- Solvency Ratio
The solvency ratio (leverage ratio) is to determine to what extent the company's
assets are capitalized by loan capital. This ratio illustrates the relationship
between a company's debt to capital and assets, or in other words a company's
ability to pay all its debts, both long-term debts. The solvency ratio consists of:
a) Debt to Equity Ratio
This ratio illustrates the ratio between debt and equity in company funding
and shows the company's own capital ability to meet all its obligations.
Debt to Equity Ratio can be calculated using the following formula:
Total Liabilities
DER =
Total Equity

b) Times Interest Earned

This ratio is used to show the extent to which profit is available to meet
interest payments. Times Interest Earned can be calculated using the
following formula:
Income before interest expense∧income taxes
TIE =
Interest Expense

The results of calculation of the solvency ratio based on the financial

statements of Astra International Tbk for the period 2018 and 2019 can be
seen in table below

Solvency Ratio 2018 2019

 165.195
186.763
= 0,88
Debt to Equity Ratio

34.054
Times Interest Earned
4259
= 7.9

- Profitability Ratio
Profitability ratios are used to assess a business's ability to generate earnings
relative to its revenue, operating costs, balance sheet assets, or shareholders'
equity over time, using data from a specific point in time. For most profitability
ratios, having a higher value relative to a competitor's ratio or relative to the same
ratio from a previous period indicates that the company is doing well. Profitability
ratios are most useful when compared to similar companies, the company's own
history, or average ratios for the company's industry. The profitability ratio
consists of:
a) Profit Margin
Profit margin is one of the commonly used profitability ratios to gauge the
degree to which a company or a business activity makes money. It
represents what percentage of sales has turned into profits. Profit margins
are used by creditors, investors, and businesses themselves as indicators of
a company's financial health, management's skill, and growth potential.
Profit margin commonly expressed in percentage can be calculated using
the following formula:

Net Profit
Profit Margin =
Net Sales

b) Return on Total Assets

Return on assets (ROA) is an indicator of how profitable a company is
relative to its total assets. ROA gives a manager, investor, or analyst an
idea as to how efficient a company's management is at using its assets to
generate earnings. Return on assets is displayed as a percentage. This ratio
can be calculated using the following formula:
 Net Profit
ROA =
Total Assets

c) Return on Equity
Return on equity (ROE) is a measure of financial performance calculated
by dividing net income by shareholders' equity. Whether an ROE is
considered satisfactory will depend on what is normal for the industry or
company peers. ROE is expressed as a percentage and can be calculated
for any company if net income and equity are both positive numbers. Net
income is calculated before dividends paid to common shareholders and
after dividends to preferred shareholders and interest to lenders. ROE can
be calculated using the following formula:

Net Profit−Preference Dividend

Return on Equity =
Average ordinary shareholders ' equity

The profitability ratio calculation based on the financial statements

of PT Astra International for the 2018 and 2019 periods can be seen in the
table below
Profitability Ratio 2018 2019
Profit Margin 23.279
237.166
= 0,1
ROA 23.379
= 0,066
351.958
ROE 23.279−0
= 11,5
2024

- Market Prospect
a) Price-Earnings Ratio
Market price per ordinary s h are
Price-Earnings Ratio =
Earnings per s h are
50
Price-Earnings Ratio =
535
= 0.09
 c. Comparison with Major Competitor (Indomobil Sukses Internasional Tbk. (IMAS))
in 2019

Ratio ASII IMAS

Current Ratio 1.25

Quick Ratio 0.954

NPM 8% 6%

CAGR Earnings 4.6% 2.5%

CAGR Net Profit 8% 5%

ROE 14% 11%

ROA 6,6%

PER 1.9x 0.5x

d. Industry Standard Comparison

Industri : AUTO, SMSM, BRAM, BOLT, GJTL, INDS

No Ratio Astra Standard Industry

International 2019
2019

1 Current Ratio

2 Quick Ratio

3 DER

4 ROA

Conclusion
Bibliography

Buku/Bab
Chapter 14: Financial Statement Analysis. Financial Accounting: IFRS 3rd edition. 2015.
Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso.

Laporan dan Pengumuman

Company Performance Summary: ASII. 2019. Indonesia Stock Exchange. PDF.
Pengumuman: Evaluasi Minor Indeks LQ45 No. Peng-00513/BELPOP/10-2019 tanggal
25 Oktober 2019. Bursa Efek Indonesia.
Laporan Keuangan Konsolidasian PT ASTRA INTERNATIONAL Tbk. DAN ENTITAS
ANAKNYA. 31 Desember 2019 dan 2018
Laporan Keuangan Konsolidasian PT INDOMOBIL SUKSES INTERNASIONAL Tbk.
DAN ENTITAS ANAKNYA. 31 Desember 2019.