Financial Statement- Saltiah

FINANCIAL ANALYSIS STATEMENT PAPER

PT GLOBAL MEDIACOM Tbk

CURRENT RATIO METHOD

SALTIAH (36110018)

ACCOUNTING DEPARTMENT

STATE POLYTECHNIC OF UJUNG PANDANG

2013

A.    Defenition Of Financial Statement Analysis

Financial statement analysis is the process of reviewing and evaluating a company's financial statements (such as the balance sheet or profit and loss statement), thereby gaining an understanding of the financial health of the company and enabling more effective decision making. Financial statements record financial data; however, this information must be evaluated through financial statement analysis to become more useful to investors, shareholders, managers and other interested parties.

B.     Purpose Of Financial Statement Analysis

1.      Method used by the user of financial statement to know more about the company.

2.      Use to analyse the position and performance of company’s financial in the period and to the future.

3.      Compare financial performance between company at the same product and to evaluate the company activity for some period.

4.      Help management to identify an in-efeciency, and to take an action to make company’s performance better.

C.     Types Of Financial Statements Analysis

1.      Liquidity Analysis is kind of financial statement analysis with short-term perspective. Generally, as an analysis about company’s ability to fulfill their short-term liability.

2.      Solvency Analysis is can also be described as the ability of a corporation to meet its long-term fixed expenses and to accomplish long-term expansion and growth.

3.      Profitability Analysis is the process of comparing income to output and determining how much profit was made during a specific time period.

4.      Cash Flow Analysis is the study of the cycle of your business' cash inflows and outflows, with the purpose of maintaining an adequate cash flow for your business, and to provide the basis for cash flow management.

5.      Risk Analysis is the review of the risks associated with a particular event or action. It is applied to projects, information technology, security issues and any action where risks may be analyzed on a quantitative and qualitative basis. Risk analysis is a component of risk management

6.      Bankruptcy Analysis is an anlysis to predit company’s bankruptcy and to take some action to avoid it.

7.      Investment Analysis is an examination and assessment of economic and market trends, earnings prospects, earnings ratios, and various other indicators and factors to determine suitable investment strategies.

D.    Current Ratio Method

Current ratio is a financial ratio that measures whether or not a company has enough resources to pay its debts over the next 12 months. It compares a company's current assets to its current liabilities. Purpose of current ratio is to know how much the company’s ability to pay their debt. Normative standard about the liquidity assesment use current ratio is 2,0. Its means that Rp 1 of liability will guaranteed by Rp 2 of current asset or the safety margin is Rp 1. The formula of current ratio is:

E.     Analysis Result

In balance sheet of PT Global Mediacom Tbk showed the current asset about:

2009 (000)	2010 (000)
Rp 5.919.321	Rp 5.937.277

For current liability showed:

2009 (000)	2010 (000)
Rp 1.952.037	Rp 3.197.581

For this information we can count the current ratio about:

                            Rp 5.919.321

CR for 2009  =

                            Rp  1.952.037

          =  3,03

                             Rp  5.937.277

CR for 2010  =

                             Rp  3.197.581

                      = 1,85

Explanation:

a.       Current ratio amount 3,03 for 2009 show that for Rp 3 of liability will guaranteed by Rp 3,03 current asset or have the safety margin about Rp 0,03. For 1,85 for 2010 show that for Rp 1 of liability will guaranteed by Rp 1,85 current asset or have safety margin about Rp 0,85.

b.       Because the normative standard for liquidity assessment using current ratio is 2,0. So in PT Global Mediacom Tbk and subsidiaries for year 2009 is liquid because the current ratio is more than 2,0 its means the company be able to fulfill the current liability using the current asset. But, in year 2010 showed that the company was inliquid because the current ratio is less than 2,0, its means that the company can’t pay the debt or short-term liability using the current asset eventhough the company performance was improve in 2010. 

F.      Conclusion

A high current ratio to be better than a low current ratio, because a high current ratio means that the company is more likely to meet its liabilities which fall due in the next 12 months. We should view the relation between the operation cycle period and the current ratio.