Financial Statements Analytics Dashboard: Comparing Financial Performances of IDX Listed Agriculture Company in 2022
A. INTRODUCTION
In 2022, Indonesia Economic Recovery Program after Covid-19 pandemic crisis is success to make Indonesia GDP growth rate back to normal as pre-Covid-19 pandemic condition. Agriculture sector become one of the keys of Indonesia Economic Recovery Program as it continues positive growth despite social restriction that caused by Covid-19 pandemic (Catriana E., 2021). Agriculture sector can growth 2.25 % in 2022 (Rummi J.,2023). In stock market perspective, IDX Agriculture index can grow 66.7 % in April 2021 after the market crash in march 2020. It is better than IDX Manufacture and IDX Mining those only grow 21,5% and 63% respectively. It shows that Indonesian Agriculture Companies looks promising to invest.
In investment decision, picking the good company to invest is a must. The risk of taking bad company is losing the money. One of consideration to determine how good or bad the company is by see their financial performances. From our perspective, good financial performances of the company in 2022 show that it can survive after Covid-19 pandemic crisis by utilizing their resource efficiently. It can be sign that those company are worth to invest.
This dashboard is designed for helping the investor in making investment decision by giving financial performance information of agricultural companies those are listed in Indonesia. We create comparation of companies in several important financial metrics, the rank of financial performance based on Entropy-weight TOPSIS model, and the more detail information about the financial condition in each company.
B.USER PERSONA, GOALS, SCENARIO, and USER FLOW
B. 1 User Persona
This financial statement analytics can be used by investor for investment consideration in agricultural companies those are listed in IDX.
What investor need:
- Investor need to choose the right company that will give them best return on investment in their portfolio.
- Investor need to evaluate performance of companies those are already invested by read company’s financial statement.
- Read the financial statement is time consuming, investor need financial metrics that are related with their investment decision.
B. 2 Goals
- Give Investor list of company that have good profitability, and good financial health.
- Give Investor list of company top company that have the best financial performances based on objective score.
- Give investor financial statement information briefly.
B. 3 Scenario
An investor wants to add agriculture company in his portfolio. He needs to select agriculture company that will give best return on investment. He needs information of financial performances of some agricultural companies as consideration in selection of agriculture company. He can decide which company he wants to invest by see in profitability rank, solvency rank, liquidity rank, or more comprehensive in financial performances rank. He can also get more detail financial statement information and can track trend of profitability and solvency of selected company by see in Detail Page.
B. 4 User Flow
Align Business Problems & Solution Statement
Determine Who’s the user of the Dashboard
Create a User Story Line
Create a User Flow
C. DATASET
C. 1 Dataset Description
Dataset was collected by scrape Quarterly Financial Statements of IDX listed Agriculture Companies in Yahoo Finance website. Scrape was conducted in 22 April 2023. The coverage of the data is only for 2022. Several attributes from income statement, balance sheet, and cash flow statement were selected to make financial ratio calculation and cleaned by removing outliers. Debt to Equity Ratio, Debt to Asset Ratio, Current Ratio, Return on Equity and Return on Asset were used in Entropy-weight TOPSIS model to make score of financial performances.
Main dataset:
- Time: Period of publish Financial Statements.
- Company: The name of company represent in company code (e.g AALI.JK for Astra Agro Lestari).
- Performance Scores: Score that is generated by using Entropy-weight TOPSIS to make Rank of Financial Performances of Agricultural Companies.
- Return on Asset Ratio: Measure how profitable a company is in relation to its total assets.
- Return on Equity Ratio: Measure of financial performance calculated by dividing net income by shareholders’ equity.
- Debt to Equity Ratio: Measure of the degree to which a company is financing its operations with debt rather than its own resources.
- Debt to Asset Ratio: Measure how much debt a company owns compared to its assets.
- Current Ratio: Measures a company’s ability to pay off its current liabilities (payable within one year) with its total current assets such as cash, accounts receivable, and inventories.
Suplementary dataset:
- Total Revenue : Money generated from normal business operations.
- Cost of Goods Sold : Direct costs of producing the goods sold by a company.
- Gross Margin Ratio : Measure of profitability that shows the percentage of revenue that exceeds the cost of goods sold (COGS).
- EBITDA : Represent cash profit generated by the company’s operations.
- Net Income: Measure how much revenue exceeds the expenses of an organization.
- Net Profit Margin: Measure much of each dollar collected by a company as revenue translates to profit.
- Total Assets: Resource with economic value that an individual, corporation, or country owns or controls with the expectation that it will provide a future benefit.
- Total Liabilities: The combined debts and obligations that an individual or company owes to outside parties.
- Acid Test Ratio: Measures a company’s ability to meet its short-term obligations with its most liquid assets and therefore excludes inventories from its current assets.
- Cash Ratio: Evaluates company’s ability to repay its short-term debt with cash or near-cash resources, such as easily marketable securities.
- Financing Cashflow: Net flows of cash that are used to fund the company and its capital.
- Investing Cashflow: Describes how much cash has been generated or spent from various investment-related activities in a specific period.
- Operating Cashflow: Describes money flows involved directly with the production and sale of goods from ordinary operations.
C. 2 Data Cleaning
Data cleaning was conducted to eliminate duplicated data, NaN data, and Outlier. First, We need to cleaning dataset that contain selected attributes from financial statements. It will used for making metric dataset.
In this dataset there is no duplicate data, so cleaning duplicate data is not required.
There are 1 NaN value in current liabilitites, current assets, inventories, cash&cash equivalent, total assets, shareholder equity, operating cash flow, investing cashflow, and financing cashflow.
This NaN value is related to data from CBUT.JK in finance statements period of 30 March 2022. Since all attributes is important for metrics calculation and the source of NaN value is from unavailable data from Yahoo Finance, we drop this data.
57 NaN values of EPS data is related to unavailable data in specific period of financial statements. So we decided to not use EPS in detail information of company.
Most of data have right-skewed distribution. It is an indication that the data has outliers. By using IQR based outlier check, we check the cause of outlier data.
After checking the cause of outlier data, the outlier data are related to specific company and has consistent value over time. Since the cause of outlier is not from miss calculation of those attributes, we didn’t remove outlier.
After that, we make financial metrics calculation to generate metrics dataset.
The distribution of these metrics data is related with distribution in previous data. Eventhough the outlier checking was already done in previous data, we still conduct outlier check metrics data to find data that seems irrational due to miss calculation.
We found one data that seems have irrational net profit margin. Net profit margin range is from -1 to 1. After we check the cause of this irrational values, this is can happen because the net income data is higher than total revenue in Yahoo Finance website. We drop this data because the miss calculation was happened in data source.
C.3 Metrics:
1. Profitability Metrics
Profitability is an important metrics for choosing the right company because it is related with earning amount of investor that will get through dividen. The company with good profitability will generate more return for investor. Profitability metrics that will be used in this dashboard is Return on Equity and Return on Assets. Both metrics are good in compare profitability of company and it used in many studies (Amalia et. al., 2021; Pradesyah R. and Putri S., 2021 ; Daryanto, W.M. and Nurfadilah D., 2018, Myskova et. al., 2017;).
2. Solvency and Liquidity Metrics
Solvency and Liquidity metrics can measure the condition of financial health of the company.
Solvency ratio is a key metric used to measure an enterprise’s ability to meet its long-term debt obligations and is used often by prospective business lenders (Hayes, 2023). Agriculture company is belongs to cyclical sector that need to consider solvency ratio. Furhmann (2022) emphasized that cyclical firms must be pay attention on solvency ratio because a recession can hamper their profitability and leave less cushion to cover debt repayments and related interest expenses during a downturn.
Liquidity is the ability to convert assets into cash quickly and cheaply (Hayes, 2023). In contrast to solvency, liquidity focuses more on current or short-term financial accounts. Liquidity is important because businesses need enough liquidity on hand to cover their bills and obligations so that they can pay vendors, keep up with payroll, and keep their operations going day-in and day out.
In this dashboard we use debt to equity ratio, debt to asset ratio (Solvency ratio) and Current ratio (Liquidity) to measure financial health of the company.
3. Metrics for Financial Performances Rank
We make financial performances rank by using Entropy-weight TOPSIS Model. Metrics that are consider in TOPSIS Rank are weight based on entropy in those metrics. Below is weight of the metrics that are used in this model:
The assumption of this method is metric that has more diversity can separate company into good-bad company. Weighing in those metrics will give good separation of the company and it is important since TOPSIS use Euclidean distance to rank company from good to bad.
D. DASHBOARD VISUALIZATION & INSIGHT
This dashboard has 3 pages (Ratio, Rank, and Detail).
In ratio page, you can get information about 5 companies that have good profitability based on average return on asset and return on equity in 2022. As you can see that PT Triputra Agro Persada Tbk(TAPG.JK) is the most profitable agriculture company in 2022. PT Triputra Agro Persada Tbk is palm oil and rubber plantation company that has business spread in some provinces in Indonesia, namely Jambi, Central Kalimantan, and East Kalimantan. Those strategic location could be the factor why the company could be the most profitable company in 2022.
You can also get information about 5 companies that have good financial health based on solvency ratio and liquidity ratio. PT PP London Sumatra Indonesia Tbk (LSIP.JK) is the best agricultural company in financial health in 2022. PT PP London Sumatra Indonesia Tbk business activities consist of plant breeding, planting, harvesting, processing and the selling of palm products, rubber, oil palm seeds, cocoa and tea. Rocca et. al. (2009) study revealed that a related-diversification strategy, which is associated with lower debt ratios, has a negative influence on leverage. This could be factor that related-diversification strategy of PT PP London Sumatra Indonesia Tbk (LSIP.JK) could make this company get good financial health.
In the Rank Page, you can get 10 companies that has good financial performances in 2022. This is comprehensive rank that include both profitability and financial health of the agriculture company. This rank was built by using Entropy-Weight TOPSIS Model. You can get detail Entropy-Weight TOPSIS Model in Metrics section on this article.
As you can see in rank page, PT Salim Ivomas Pratama Tbk (SIMP.JK) is the best agricultural company in financial performances in 2022. PT Salim Ivomas Pratama Tbk is one of Indonesia’s largest vertically integrated agribusiness companies. This vertically integrated agribusiness can make this company has efficient supply chain and resulted in good financial performance despite the Covid-19 pandemic crisis.
In the Detail page, you can see glimpse of financial statements for each company that includes income statement, balance sheet, and cash flow statement information. You can change the company and period of financial statements.
As you can see, as the best agricultural company in financial performances , PT Salim Ivomas Pratama Tbk (SIMP.JK) has relatively high gross margin ratio and current ratio in first quartal of 2022, decline trend in debt to equity. It is a sign that operation work efficiently despite the crisis of COVID-19 Pandemic.
You can check the dashboard on this link below:
Limitation and Further Analysis
The dashboard has limitation in time range of data. It could only cover data in 2022. More time range data could make this comparation of financial performance better. Scrape more complete data from another source could be solution of this limitation.
If the limitation of time range data solved, we can make financial metrics forecasting using ARIMA so it could also give predictive analytics of agriculture company financial performances.
E. CONCLUSION
This dashboard can be useful for investment portfolio manager for investment decision consideration based on financial performances. It could reduce time in agricultural company financial performances comparation that need read of financial statements in each company. Based on this financial statements analysis, PT Salim Ivomas Pratama Tbk (SIMP.JK) could be good candidate for investment since it has good financial performances in 2022. More time range of data could make this consideration better.
REFERENCES
Amalia, S.; Nugraha, N.M. The impact of financial ratio indicators on banking profitability in Indonesia. Turk. J. Comput. Math. Educ. 2021, 12, 580–588.
Catriana, Elsa. (2021, May 27). Sri Mulyani: Pertanian Menjadi Kunci Pemulihan Ekonomi Indonesia. Kompas. https://money.kompas.com/read/2021/05/27/131933826/sri-mulyani-pertanian-menjadi-kunci-pemulihan-ekonomi-indonesia
Daryanto, W.M.; Nurfadilah, D. Financial performance analysis before and after the decline in oil production: Case study in Indonesian oil and gas industry. Int. J. Eng. Technol. 2018, 7, 10–15. [CrossRef]
Furhmann, Ryan.2022. Analyzing Investments With Solvency Ratios. https://www.investopedia.com/articles/investing/101613/analyzing-investments-solvency-ratios.asp
Hayes, Adam. 2023. What Is a Solvency Ratio, and How Is It Calculated?. https://www.investopedia.com/terms/s/solvencyratio.asp
Investopedia.com
Myskova, R.; Hajek, P. Comprehensive assessment of firm financial performance using financial ratios and linguistic analysis of annual reports. J. Int. Stud. 2017, 10, 96–108. [CrossRef]
Nugraha, N.M.; Puspitasari, D.M.; Amalia, S. The effect of financial ratio factors on the percentage of income increasing of automotive companies in Indonesia. Int. J. Psychosoc. Rehabil. 2020, 24, 2539–2545.
Pradesyah, R.; Putri, S. Trend of Sharia banking financial performance in the pandemic time COVID-19. Proc. Int. Semin. Islamic Stud. 2021, 2, 36–46.
Rummi, Jalaludin.(2023, February 23).Meski di Era Krisis, Sektor Pertanian Tahun 2022 Tumbuh 2,25 Persen.https://suarapemerintah.id/2023/02/meski-di-era-krisis-sektor-pertanian-tahun-2022-tumbuh-225-persen/2/
Github Repository of Data Collection and Cleaning:
Github Repository of Yahoo Finance Scraper Module:
Documentation of Yahoo Finance Scraper Module:
