7.1 Initial Steps of Krakatau Steel’s Financial Analysis

 

The three most important lines of balanced sheets are assets, liabilities and equities (Ross, 2021). Figure 1-3 reports the balanced sheet of Krakatau Steel Inc as the chosen manufacturing company for the most recently reported 5 years data (Journal, 2020).  Figure 1 mentioned the information that trends of the total asset increase or have positive growth percentage from 2016 to 2017, decrease or have linearly negative percentage from 2017-2019, and increase or have positive growth percentage again in the year of 2019 to 2020. The values of relatively equal size of the total asset which can be seen in the blue right tabular figure and the amount difference are in the year of 2016 and 2017.

Figure 1. Krakatau steel’s assets obtained from balanced data (Journal, 2020)

 

Figure 2 mentioned the information that trends of the total current liabilities increase or have positive growth percentage from 2016 to 2019, decrease or have linearly negative percentage from 2019-2020. The values of relatively equal size of the total current liabilities which can be seen in the blue right tabular figure and the amount difference are in the year of 2016 and 2017.

Figure 2. Krakatau steel’s current liabilities obtained from balanced data (Journal, 2020)

Figure 3 mentioned the information that trends of the total equity increase or having positive growth percentage from 2016 to 2017, decrease or having linearly negative percentage from 2017-2019, and increase or having positive growth percentage again in the year of 2019 to 2020. The values of relatively equal size of the total equity which can be seen in the blue right tabular figure and the amount difference are in the year of 2016 and 2017.

 Figure 3. Krakatau steel’s total equity obtained from balanced data (Journal, 2020)

The three most important lines of income statements are revenues, expenses and net profits. Over all expenses, I choose SG&A expenses as the most important one. The following figure reports the income statement of Krakatau Steel Inc as the chosen manufacturing company for the most recently reported 5 years data (Journal, 2020). Figure 4 mentioned information that the trends of the sales /revenue from 2016 to 2018 is linearly increasing and from 2018 to 2020 is linearly decreasing with subsequent positive growth until 2018 and negative growth afterwards. The values of relatively equal size of revenues are in the year of 2020 and 2017 with the difference in the amount of (19684467 – 19390485 = 293982) millions of IDR. The SG&A expenses get more and more expensive from 2016 to 2019 also depicted in the SG&A’s positive growth until the corresponding year which continues to fall down or negatively grows in the next year 2019 to 2020. The values of relatively equal size of SG&A expenses which can be seen in the blue right tabular figure and the amount difference are in the year of 2017 and 2018.     

Figure 4. Sale revenues and SG&A expenses obtained from Krakatau Steel’s Income Statement (Journal, 2020)

Figure 5 mentioned the information that the trends of the net income increase or have positive growth percentage from 2016 to 2017, decrease or have linearly negative percentage from 2017-2019, and increase or have positive growth percentage again in the year of 2019 to 2020. The values of relatively equal size of net income which can be seen in the blue right tabular figure are in the year of 2016 and 2018.     

Figure 5. Net income obtained from Krakatau Steel’s Income Statement (Journal, 2020)

Overall, the steps in completing a thorough financial analysis can be performed by using some ways including absolute decreases and increases, negative and positive growth percentages  of an item periodically as we did in the above analysis. Therefore the next step should be the percentage of the single items to the aggregated total and the so-called financial ratios (Boundless, n.d.)

References

Ross, S. (2021, October 14). The main focus points when analyzing a balance sheet. Investopedia. Retrieved October 19, 2021, from https://www.investopedia.com/ask/answers/050615/what-items-balance-sheet-are-most-important-fundamental-analysis.asp. 

Journal, W. S. (2020). Kras.id | Krakatau Steel annual income statement - WSJ. The Wall Street Journal. Retrieved October 19, 2021, from https://www.wsj.com/market-data/quotes/ID/XIDX/KRAS/financials/annual/income-statement. 

Boundless. (n.d.). Boundless accounting. Lumen. Retrieved October 19, 2021, from https://courses.lumenlearning.com/boundless-accounting/chapter/next-steps-in-financial-statement-analysis/.