Current ratiorepresents an efficiency and liquidity ratio that measures the Group’s abilityto offset its current liabilities with its current assets.
Every company wouldlikely to have a higher current ratio because it shows that the company canmore easily make current debt payments. In year 2014, Axiata Bhd current ratiois 0.79:1. In year 2015, Axiata Bhd current ratio is 0.79:1.
There got goodnews and bad news, good news is this year current ratio same with last yeardidn’t have too much change and the bad news is the current didn’t more than 1which means Axiata Bhd didn’t have enough current assets to cover its companycurrent liabilities. In year 2016, Axiata Bhd current ratio is 0.53:1.
Theratio is worst than last year, this means that Axiata Bhd only has enoughcurrent assets to pay off 53 percent of his current liabilities and it has acritical problem in settled their current liabilities. If Axiata Bhd want toborrow a loan from bank, their may cannot have approved from the bank, becausebank would prefer a current ratio of at least 1 or 2, so that all the currentliabilities would be covered by the current assets. At the end, Axiata Bhd mayneed to sell off their non-current assets to have more cash and Axiata Bhd haveto give some pressure to their receivables in order to receive back theirmoney.Debt ratio is asolvency ratio that measures a company has enough ability to pay off itsliabilities with its assets.
Companies that with higher ratio are considered ashighly leveraged and riskier for lenders, companies that with lower ratio aremore safety. In year 2014, Axiata Bhd debt ratio is 0.54:1. In year 2015,Axiata Bhd debt ratio is 0.54:1. There is no need to compare with last yearbecause both year debt ratio is same, and company has enough assets to settleall its liabilities.
In year 2016, Axiata Bhd debt ratio is 0.59:1. There alsohas good news and bad news, good news is that Axiata Bhd still have enoughassets to settle their company liabilities, bad news is this year debt ratioincrease 0.05 compare with last year, its means that Axiata Bhd has more debtcompared with last year.
Axiata Bhd has to sell more assets to cover itscompany liabilities. If Axiata Bhd want to borrow money from lenders or bank,its shouldn’t have any problem getting approved for its loan, because AxiataBhd has enough ability to pay off its company debt.Equity ratio isan investment leverage or solvency ratio that measures the company’s assetsfinanced by owners’ investments by comparing the total equity in the company tothe total assets.
Generally, higher equity ratios are favourable for everycompanies. A higher ratio shows that the company has potential creditors thatthe company is more sustainable and less risky to lend future loans. In year2014, Axiata Bhd equity ratio is 0.47:1. In year 2015, Axiata Bhd equity ratiois 0.
46:1. It shows that equity ratio of Axiata Bhd is decreasing and this abad situation for Axiata Bhd. In year 2016, Axiata Bhd equity ratio is 0.41:1.Equity ratio of Axiata Bhd is continue decreasing, it means that Axiata Bhdcreditors are continue increasing is going to more than its shareholders.
Axiata Bhd now has more financing and debt service costs than companies withhigh ratios.