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BM057-3.

5-2 Financial Reporting


BONIA Corporation Bhd.

Question 1
Introduction about the Company
BONIA established on 10974 by Mr Chiang. He started the business in designing, promoting, and manufacturing of a leather goods in Singapore. On 1997 Mr Chiang visited the Leather Trade Fair in Bologna (Italy) and he was inspired by the artwork of Giambologna, a 16th century sculptor and registered BONIA as a brand name. BONIA was entered in Malaysia market on 1978, and on 23rd April 2007, BONIA transferred to the Main Board of Bursa Malaysia. BONIA CORPORATION BERHAD, an investment holding company, engages in designing, promoting, and marketing apparels, footwear, accessories, and leather goods for men and women primarily in Malaysia and Singapore. It is also manufactures and markets fashionable leather good through catalogue selling; franchises leather goods and apparels; and wholesales, retails, imports, and exports leather goods, apparels and accessories. BONIA is based in Kuala Lumpur, Malaysia. There are several board and committees established in BONIA CORPORATION BERHAD with certain responsibilities assigned to them. Each board committee obey the set of terms of reference that is set out in BONIAs code of conduct. Each board committee have to submit to the BOD including all the reports and recommendations.

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BONIA CORPORATION BERHAD Committees:
Committees (i) Audit Committee Roles, Duties, and Responsibilities To assist the Board to review the adequacy and integrity of internal control system and management information system of the Group and the Company. (ii) Nomination Committee The responsibilities of the Nomination Committee are to identify skill and expertise that are relevant to the effective functioning of the Board, to review the Board structure, size and composition, to select and propose suitable candidates for appointment to the Board. Assesses the contribution of each individual Director and recommends the Board to fill the seat in the respective Committees. Nomination Committee shall annually review its required mix of skills and experience and other qualities. (iii) Committee Remuneration Responsible for considering and recommending revision of fees payable to the Board of Directors, Fees payable to the members of the committees of the Board, Reimbursement of expenses incurred in attending the Board and its Committee meeting, Develop a remunerate ion policy sufficient to attract and retain high calibre and experience directors to successfully manage the business of the Group and of the Company.

Question 2
All figures are RM000

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Firm Liquidity
1) Current ratio Current Ratio = (Current Assets Current Liability): 1
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2010.31.12 : (185,538 41,247) = 4.49 2011.31.12 : (218,408 79,775) = 2.74

2) Acid-test ratio Acid-test Ratio = [(Current Assets Inventory) Current Liabilities]:1


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2010.31.12 : [(185,538-57,869) 41,247] = 3.09 2011.31.12 : [(218,408-81,464) 79,775] = 1.72

3) Average Collection Period Average collection period = (current Assets Current Inventory) / Current Liabilities -

2010.31.12: (81,042 57,869)/ 41,247 = 0.56 2011.31.12: (154,842 81,464)/ 79,775 = 0.92

4) Account Receivable Turnover Account Receivable turnover = Net Credit Sales / Average Accounts Receivables Net Credit Sales = Sales on Credit Sales Returns Sales Allowances Bonia doesnt have Sales Returns and Sales Allowances 2010.31.12 : 2011.31.12 :

Operating profitability
1) Operating return on Assets Operating return on assets = (Net Income Total Assets)
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2010.31.12 = ( 32,030 266,580 ) = 0.12 2011.31.12 = ( 44,927 373,250 ) = 012

2) Operating profit margin Operating profit margin = (EBIT Total Revenue)


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2010.31.12 = ( 61,047 360,099 ) = 0.16 2011.31.12 = ( 80,286 461,381 ) = 0.17

3) Inventory Turnover Inventory Turnover = (Cost of sales Average Inventory) Average Inventory = (Opening Inventory +Closing Inventory) 2 2010.31.12 Average Inventory = (57,869+60,685) 2 = 59,277 Inventory Turnover = (154,639 59,277) = 2.61 times
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2011.31.12 Average Inventory = (81,464+57,869) 2 = 69,666.5 Inventory Turnover = (194,232 69666.5) = 2.79 times Average days to sell the inventory = 365 days inventory turnover - 2010.31.12 = (365 2.61) = 139 days - 2011.31.12 = (365 2.79) = 130 days

4) Total Assets Turnover Total assets turnover = (Sales Revenue Total Assets)
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2010.31.12 = (360,099 266,580) = 1.3


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2011.31.12 = (461,381 373,250) = 1.2

5) Fixed Assets Turnover Fixed Assets Turnover = (Cost of Sales Net Fixed Assets)
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2010.31.12 = (154,639 81,042) = 1.91 2010.31.12 = (194,232 154,842) = 1.26

Financing Decisions
1) Debt Ratio Debt Ratio = (Total Liabilities Total Assets) x 100% 2010.31.12 = (60,427 266,580) x 100% = 22.67%
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2011.31.12 = (126,623 373,250) 100% = 33.92%

2) Times Interest Earned Times Interest Earned = (EBIT Interest Charged)


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2010.31.12 = 2011.31.12 =

3) Return on Equity Return on Equity = (Net Income Total Equity)


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2010.31.12 = (32,030 206,153) = 0.15 2011.31.12 = (44,927 246,987) = 0.18

Interpretation of Financial Ratios


Financial statements are documents reporting business financial performance and resources. It is a collection of report that shows organizations financial position. Financial Report includes balance sheet, income statement, and cash flow statement. It is useful to determine the ability of a business to generate profit, determine whether the business has the ability to pay its debts, to track financial result on a trend line to spot any looming
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profitability issues, to derive financial ratios from the statements that can indicate the condition of the business, and to investigate the details of certain business transactions. Ration Analysis use to measure the strength or weakness of a company in the financial sector. It is a technique that used to compare one figure with another figure in the financial statements.

http://announcements.bursamalaysia.com/EDMS/subweb.nsf/all/3ABA6929BF B92C49482577CB001EA542/$File/Bonia-AuditedYE30Jun10.pdf

http://bonia.listedcompany.com/misc/ar2011.pdf http://www.ehow.com/info_7750328_ebit-financial-statement.html http://businesscasestudies.co.uk/business-theory/finance/ratio-analysis.html

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