ggish economic situation in the Asian region. However in 1999, the ratio rose to 7.68%. On an overall, Kao Corporation has been able to maintain profitable performance over the past 5 years. This shows that the strategies of Kao Corporation have been successful. However, while Kao has positive returns, if it is insufficient to cover the cost of capital, then it is not sufficiently profitable. Earnings per Share (Refer to Appendix D) The earnings per share of the company has shows significant increase over the years. The high was in 1999 with 55.98 per share while the low was in 1995 with 39.49 per share. This shows that Kao has been successful in creating value for the company. Kao has been able to protect the shareholder’s interest in the company. This means that management does not just look after their own interest but also take into the consideration of the shareholders. Inventory Turnover (Refer to Appendix E) Kao Corporation’s Inventory Turnover has been maintained above 4 times per annum over the past 5 years. This means that Kao Corporations stock are moving relatively fast. The public largely accepts its products and the company does not face the problem of slow moving stocks. Acid Test Ratio (Refer to Appendix F) Kao Corporation’s acid test ratio has been on the rise over the past 5 years. In 1995 the ratio stood at 55.41% whereas by 1999, the ratio was at 101.67%. This means that Kao’s liquidity has been improving. An acid ratio of 101% would mean that the company is able to meet any short-term obligation and it has sufficient funds to cover all its current liabilities. This shows that the company is in no danger of liquidation in the near future. Debt Ratio (Refer to Appendix G) Over the past 5 year, Kao’s debt ratio has been decreasing. Currently the debt ratio stands at 39.18%. This means the company is reducing its leverage. Lower leverage would mean less financial risk and creditor commitmen...
