Asset quality and financial ratios Proportion of assets 2012 2013 2014 Net trade receivables Outstanding inventory Investment & loans – net Land, building & equipment- net Insurance Others Operational efficiency Ratios 2012 2013 2014 Return on assets (%) Return on Fixed Assets (%) 13% 23% 18% 44% - 5% 3.7 8.3 12% 22% 21% 43% - 2% 1.9 4.3 9% 17% 26% 44% - 4% 1.4 3.2 PAGE 044 / 045 TIPCO FOODS PUBLIC COMPANY LIMITED Net profit margin Lower net profit margin in 2014 resulted from higher sales of ready-to-drink business supported by promotional campaigns for newly launched products while higher management expenses was attributed to reserve allocation for asset depreciation and product life expiry. Return on Equity ROE declined in line with the proportionate decrease in net profit that ex-ceeded proportionate decrease in shareholders’ equity. In 2014 the proportion of trade receivables decreased from the previous year’s level, with an average debt collection period of 26 days compared to 39 days in 2013, partly attributed to lower sales turnover, prudential credit control and stringent debt collection. Continuous decline in inventory holdings since 2013 was due to raw material shortage. As output fell short of production targets, the company was forced to make delivery by instalment, with the result that the number of days of inventory holding in 2013 dropped to 121 days. Apart from persistent raw ma-terial shortage in 2014, the company also adjusted inventory management system by disposing of raw material inventory that do not generate income, with the result that outstanding inventory in 2014 declined sharply to 89 days. Investments represent funds invested in TIPCO Asphalt PCL. in line with the policy to maintain the proportion of shareholding at 20-25%. This item was recorded as investment by applying the stakeholding method in accordance with general accounting principle. Actual cost of acquisition appears as foot-note of the Financial Statements. The company’s land, buildings and equipment undergo regular annual main-tenance and repair. In 2014, the beverage factory installed a new production line to increase capacity while the mineral water factory’s new machinery installation was completed in April 2014. Rates of return in 2014 continued to decline in line with the previous year’s trend, reflecting the deteriorating operating results of the Canned Pineapple business.
EN_Tipco_Annual Report 2014
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