| Wilmar Int | Golden Agri | IndoFood Agri | First Res | Kencana Agri | |
|---|---|---|---|---|---|
| Current Ratio | 1.24 | 1.53 | 1.34 | 3.62 | 1.35 |
| Quick Ratio | 0.86 | 0.95 | 0.97 | 3.35 | 1.12 |
| Debt Ratio (Total Liabilities / Total Assets) | 51.3% | 30.0% | 45.2% | 41.3% | 44.8% |
| Equity Ratio (Equity / Total Assets) | 48.7% | 70.0% | 54.8% | 58.7% | 55.2% |
| Short term debt / Equity | 73.4% | 5.7% | 13.5% | 1.8% | 10.6% |
| Long term debt / Equity | 10.6% | 6.7% | 40.2% | 46.3% | 42.3% |
| Total Debt / Equity | 83.9% | 12.3% | 53.7% | 48.1% | 53.0% |
| Current Assets / Total Assets | 54.9% | 14.0% | 16.5% | 20.5% | 16.0% |
| Cash / Total Assets | 21.9% | 3.6% | 7.6% | 17.8% | 2.1% |
| Biological / Total Assets | 4.9% | 67.8% | 40.1% | 53.1% | 60.3% |
| Intangibles / Total Assets | 17.2% | 1.5% | 13.3% | 3.7% | 0.0% |
| PPE / Total Assets | 16.7% | 14.0% | 17.9% | 18.3% | 19.5% |
| Inventories / Total Assets | 16.8% | 5.3% | 4.6% | 1.5% | 2.7% |
| Receivables / Total Assets | 13.5% | 4.2% | 3.2% | 0.4% | 9.1% |
| Current Liabilities / Total Liabilities | 86.1% | 30.6% | 27.4% | 13.7% | 26.4% |
In terms of ranking of balance sheet size, the 5 palm oil stocks have been listed from biggest to smallest, from left to right - the biggest being Wilmar International and the smallest being Kencana Agri.
The current ratio is mainly used to give an idea of the company's ability to pay back its short-term liabilities (debt and payables) with its short-term assets (cash, inventory, receivables). The higher the current ratio, the more capable the company is of paying its obligations. As measured by this ratio, the ranking of financial strength from strongest to the weakest is as follows:
- First Resources
- Golden Agri
- Kencana Agri
- Indofood Agri
- Wilmar International
The quick ratio measures a company's ability to meet its short-term obligations with its most liquid assets. The higher the quick ratio, the better the position of the company. As measured by this ratio, the ranking of financial strength from strongest to the weakest is as follows:
- First Resources
- Kencana Agri
- Indofood Agri
- Golden Agri
- Wilmar International
The Debt ratio indicates what proportion of debt a company has relative to its assets. The measure gives an idea to the leverage of the company along with the potential risks the company faces in terms of its debt-load. The lower this ratio, the better. As measured by this ratio, the ranking of financial strength from strongest to the weakest is as follows:
- Golden Agri
- First Resources
- Kencana Agri
- Indofood Agri
- Wilmar International
Overall Balance Sheet Strength Rankings as indicated by the above rankings is as follows, using an inverse scoring system (1st = 5 points, 2nd = 4 points etc.):
- First Resources (14 points)
- Golden Agri (11 points)
- Kencana Agri (11 points)
- Indofood Agri (7 points)
- Wilmar International (3 points)
Biological assets are defined as living animals or plants. In an agricultural environment, biological assets are produced, sold or transformed into additional biological assets from controlled processes that manage their growth and maturation. Wilmar International has a surprisingly low % of total assets as biological assets at 4.9%. This is far lower than the other four companies, which have biological assets of between 40% and 70%.
Where, then do Wilmar's assets show up? Wilmar's assets appear to show up has abnormally high inventories and receivables as % of total assets. In contrast to its peers, Wilmar appears to have about 3-4 times the amount of inventories and receivables as a proportion of total assets. High levels of inventory and receivables may imply poor working capital efficiency. However, Wilmar's current ratio is the lowest of all the 5 companies. What this suggests is that Wilmar has amazing working capital management, especially since its short term longs and borrowings are very high!
More to come in later posts when we consider the balance sheet in conjunction with the income statement.
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