BBPW3103 PDF

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FACULTY OF BUSINESS AND MANAGEMENT
BBPW 3103
FINANCIAL MANAGEMENT 1
SEMESTER MAY 2012

TABLE OF CONTENT
NO. DESCRIPTION
1.0 INTRODUCTION OF THE TWO COMPANIES – PADINI

HOLDINGS BERHAD – COMPANY 1 AND MALAYAN FLOUR
MILLS BERHAD – COMPANY 2
2.0 COMPUTATION OF ASSET MANAGEMENT AND

PROFITABILITY RATIOS – COMPANY 1
PADINI HOLDINGS BERHAD
3.0 COMPUTATION OF ASSET MANAGEMENT AND

PROFITABILITY RATIOS – COMPANY 2
MALAYAN FLOUR MILLS BERHAD
4.0 ANALYSIS AND INTERPRETATION OF ASSET

MANAGEMENT AND PROFITABILITY RATIOS OF TWO
COMPANIES
5.0 CONCLUSION
Introduction of the two companies
COMPANY 1 : PADINI HOLDINGS BERHAD
Introduction of company 1
Companies name, business activities and business development
Vision
-to be the best fashion company ever
Mission
-to exceed customers’ expectation and our brands’ promise
Core value
-PADINI (wing from the heart)
Principal activities of company
Padini Holdings Berhad is investment holding companies. The have subsidiary companies.
All subsidiary companies were incorporated in Malaysia except for Padini International
Limited which was incorporated in Hong Kong Special Administrative Region of the
People’s Republic of China (“Hong Kong”).
Details of the subsidiary companies are as follows:-
Subsidiary companies of the Company Principal activities
Vincci Ladies’ Specialties Dealers of ladies’ shoes and accessories.

Centre Sdn. Bhd. (“Vincci”)
Padini Corporation Sdn. Bhd. Dealers of garments.

(“Padini Corporation”)
Seed Corporation Sdn. Bhd. (“Seed”) Dealers of garments and ancillary products.
Yee Fong Hung (Malaysia) Dealers of garments and ancillary products.

Sendirian Berhad (“Yee Fong Hung”)
Mikihouse Children’s Wear Dealers of children’s garments, maternity

Sdn. Bhd. (“Mikihouse”) wear and accessories.
Vincci Holdings Sdn. Bhd. Dormant.

(“Vincci Holdings”)
Padini Dot Com Sdn. Bhd. Provision of management services.
(“Padini Dot Com”)
The New World Garment Dormant.

Manufacturers Sdn. Bhd.
(“The New World Garment”)

Padini International Limited * Dealers of garments.
Director information
CHAIRMAN
Datuk Dr. Abdullah bin Abdul Rahman
MANAGING DIRECTOR
Yong Pang Chaun
DIRECTORS
Dato’ Zulkifli bin Abdul Rahman
Yong Lai Wah
Chong Chin Lin
Chan Kwai Heng
Sahid bin Mohamed Yasin
Cheong Chung Yet
COMPANY SECRETARIES Ho Mun Yee (MAICSA 0877877)

Liew Khoon Wan (MACS 00103)
AUDITORS Peter Chong & Co.

(formerly known as BKR Peter Chong)
Chartered Accountants
PRINCIPAL BANKERS
Standard Chartered Bank Malaysia Berhad
The Bank of Nova Scotia Berhad
REGISTERED OFFICE
3rd Floor
No. 17, Jalan Ipoh Kecil
50350 Kuala Lumpur
Tel : 03 - 40443235
Fax : 03 - 40413959
PRINCIPAL PLACE OF BUSINESS

No. 19, Lot 115, Jalan U1/20
Hicom Glenmarie Industrial Park
40150 Shah Alam
Selangor Darul Ehsan
Tel : 03 - 51233633
Fax : 03 - 78051066
SHARE REGISTRAR PFA Registration Services Sdn. Bhd.

Level 17, The Gardens
North Tower
Mid Valley City Lingkaran Syed Putra
59200 Kuala Lumpur
Tel : 03 - 22643883
Fax : 03 - 22821886
STOCK EXCHANGE LISTING Main Board of

Bursa Malaysia Securities Berhad
Corporate Structure for Padini Holdings Berhad

Corporate StructurBERHAD50202-A)
100%
MIKIHOUSE CHILDREN’S WEAR SDN. BHD. (164485-U)
100%
PADINI CORPORATION SDN. BHD. (22159-H)
100%
SEED CORPORATION SD
N. BHD. (194391-K)
100%
YEE FONG HUNG (MALAYSIA) SENDIRIAN BERHAD (15011-U)
100%
PADINI DOT COM SDN. BHD. (510558-H)
100%
VINCCI LADIES’ SPECIALTIES CENTRE SDN. BHD. (73404-H)
100%
VINCCI HOLDINGS SDN. BHD. (97644-K)
100%
THE NEW WORLD GARMENT MANUFACTURERS SDN. BHD. (80490-U)
100%
PADINI INTERNATIONAL LIMITED, HONG KONG (896012)
BUSINESS REVIEW – YEAR 2008 UNTIL YEAR 2010
The Group’s domestic operations had continued to be the main driver of its revenues and
profits, and garments, shoes, fashion accessories made up the bulk of the products offered for
sale. In the domestic market, our products are sold through the numerous retail stores and
consignment counters that the Group manages. There are also several Vincci franchise stores
in the smaller towns of Malaysia. In markets abroad, the products are sold mostly through
retail stores and counters managed by licensees and dealers.
The Group’s products are carried under the following brand names; Vincci, VNC, Vincci+,
Padini Authentics, PDI,Padini, Seed, Miki, and P&Co, all of which are owned by the Group.
The aforementioned brands are widely known by Malaysian consumers and are widely
available in the major urban shopping malls of Malaysia.
In addition to those, the Group also utilizes a great number of lesser known brands to market
the value-for-money merchandise that it produces
for sale in its Brands Outlet stores.
Group Financial Highlights
All in RM(,000)
2006 2007 2008 2009 2010
Revenue 286,107 316,866 383,306 475,477 520,880
Profit before taxation 39,519 44,007 57,659 67,610 86,280
Profit attributable to equity

holders of the Company 27,691 31,403 41,715 49,533 60,974
Basic earnings per share

(sen) based on
profit attributable to
equity shareholders* 22.02 24.24 31.71 37.64 46.34
Diluted earnings
per share (sen)* 21.84 24.21 NA NA NA
NA denotes not applicable as the ESOS expired on 2 October 2007.
Net assets 118,846 142,341 169,478 204,043 234,332
Net assets per share (sen) * 93.5 108.5 128.8 155.1 178.1
Dividend per share (sen) ^ 10sen 12.5sen 15sen 14sen 22.5sen
* Based on ordinary shares of RM0.50 each.

FINANCIAL RESULTS – YEAR 2008
For the financial year under review, the Group achieved a consolidated revenue of RM383.3
million, a growth of 21% over the previous year’s amount of RM316.9 million. Gross profits
rose in tandem by 24.7% over the same period, while profit before taxation grew by 31%,
from RM44 million achieved in the previous year to RM57.7 million in the current financial
year. Profit after taxation attributable to equity holders rose 32.8% to RM41.7 million when
compared to the amount of RM31.4 million achieved during the previous financial year.
For the financial year under review, the Group achieved consolidated revenues of RM475.5
million, a growth of 24% over the previous year’s amount of RM383.3 million. Gross profits
rose in tandem by 22.3% over the same period, while profit before taxation grew by 17.2%,
from RM57.7 million achieved in the previous year to RM67.6 million in the current
financial year. Profit after taxation attributable to equity holders rose 18.7% to RM49.5
million when compared to the amount of RM41.7 million achieved during the previous
financial year.
For the financial year under review, the Group achieved consolidated revenues of RM520.9
million, a growth of 9.5% over the previous year’s amount of RM475.5 million. Gross profits
rose in tandem by 11.9% over the same period, while profit before taxation grew by 27.7%,
from RM67.6 million achieved in the previous year to RM86.3 million in the current
financial year. Profit after taxation attributable to equity holders rose 23.2% to RM61 million
when compared to the amount of RM49.5 million achieved during the previous financial
year.
COMPANY 2 : MALAYA FLOUR MILLS BERHAD
Vision
-we aspire to be a leading food manufacturing interprise in the region
Mission
-we are the preferred provider and strategic partner in the industry. We drive operational
excellence by embracing a culture of continuous improvement. We add value to our
stakeholders by growing economy of scale.
Corporate Information
CHAIRMAN
Tan Sri Datuk Arshad bin Ayub
P.S.M., S.P.S.K., D.P.M.P., D.P.M.J., D.S.A.P.,
D.P.M.T., P.G.D.K., J.M.N.
MANAGING DIRECTOR
Teh Wee Chye
DIRECTORS
Lee Soon Lee,
Dato’ Hj Shaharuddin bin Hj Haron
Geh Cheng Hooi
Quah Ban Lee
Datuk Oh Chong Peng
AUDIT COMMITTEE
Dato’ Hj Shaharuddin bin Hj Haron
(Chairman and Independent Non-Executive Director)
Lee Soon Lee
(Non-Independent Non-Executive Director)
Geh Cheng Hooi
(Independent Non-Executive Director)
Tan Sri Datuk Arshad bin Ayub
Datuk Oh Chong Peng
SECRETARY
Mah Wai Mun (MAICSA 7009729)
REGISTERED OFFICE &

HEAD OFFICE
22nd Floor, Wisma MCA
Jalan Ampang, 50450 Kuala Lumpur
Tel. No: 03-2170 0999
Fax No: 03-2170 0888
Website: www.mfm.com.my
REGISTRARS
Symphony Share Registrars Sdn Bhd
Level 26, Menara Multi Purpose, Capital Square
No. 8 Jalan Munshi Abdullah, 50100 Kuala Lumpur
Tel. No: 03-2721 2222
Fax No: 03-2721 2530
FACTORIES
Jalan David Sung, Batu Undan
32200 Lumut
Perak Darul Ridzuan
Lot 133, Jalan Pukal
Pasir Gudang Industrial Estate
81700 Pasir Gudang
Johor Darul Takzim
BRANCHES
• FEDERAL TERRITORY
Lot 40, Jalan E 1/4
Taman Ehsan Industrial Park
Kepong, 52100 Kuala Lumpur
MALAYAN FLOUR MILLS BERHAD (4260-M)
BRANCHES
• PENANG
4557, Jalan Heng Choon Thian
12000 Butterworth, Pulau Pinang
• PERAK
No. 2, Laluan Perusahaan 10
Kawasan Perusahaan Menglembu
31450 Ipoh
Perak Darul Ridzuan
• MALACCA
No. 1, Jalan PM3
Taman Perindustrian Merdeka
75350 Batu Berendam, Melaka
• JOHOR
Lot 133, Jalan Pukal
Pasir Gudang Industrial Estate
81700 Pasir Gudang
Johor Darul Takzim
• KELANTAN
Lot 1763, Kampong Dusun Raja
Jalan Cherang Chempaka Panji
16100 Kota Bharu, Kelantan Darul Naim
• PAHANG
B-5 Lorong Padang Lalang
14, Jalan Tanjung Api
25050 Kuantan
Pahang Darul Makmur
SUBSIDIARIES
• Vimaflour Ltd
• MFM International Ltd
• Mekong Flour Mills Ltd
• Dindings Soya & Multifeeds Sdn Berhad
(34884-U)
• MFM Feedmill Sdn Bhd (172615-X)
• Dindings Poultry Processing Sdn Bhd
(144808-P)
• Dindings Broiler Breeder Farm Sdn Bhd
(172600-T)
• Dindings Poultry Development Centre
Sdn Bhd (180044-A)
• Semakin Dinamik Sdn Bhd (185533-V)
• Syarikat Pengangkutan Lumut Sdn Bhd
(51336-M)
• Muda Fibre Manufacturing Sdn Bhd (48785-V)
• Dindings Grand Parent Farm Sdn Bhd
(144962-W)
• MFM Property Sdn Bhd (176691-P)
• Dindings Trading Sdn Bhd (754079-T)
• MFM Ltd
PRINCIPAL BANKERS
• Malayan Banking Berhad (3813-K)

• HSBC Bank Malaysia Berhad (127776-V)
• Alliance Bank Malaysia Bhd (88103-W)
• Deutsche Bank (Malaysia) Bhd (312552-W)
• OCBC Bank (Malaysia) Bhd (29548-W)
• Bank Islam Malaysia Berhad (98127-X)
STOCK EXCHANGE LISTING

Bursa Malaysia Securities Berhad
- Main Board (Consumer Products Sector)
Stock Code: 3662
SOLICITORS
Isharidah, Ho, Chong & Menon
Skrine
AUDITORS
KPMG
Principal of company activities
The Company is principally engaged in the business of milling and selling wheat flour and
trading in grains and other allied products, whilst the principal activities of the subsidiaries
are as stated as follows: -
Name of subsidiary Principal activities interest

2010 2009
%%
MFM Property Sdn. Bhd. Dormant
Dindings Grand Parent Farm Dormant
Sdn. Bhd.
MFM Ltd. Dormant
Premier Grain Sdn. Bhd. Trading in corn, soyabean meal and other feed
ingredients. The Company commenced its operations
on 1 April 2010.
Subsidiary of MFM International

Ltd.
Mekong Flour Mills Ltd. Milling and selling wheat fl our

(incorporated in Vietnam) together with its allied products
Computation of asset management and profitability ratios COMPANY 1 AND

COMPANY 2
Below is the asset management and profitability ratios explanation.
Asset management ratio is for measure the efficiency of the management in using the assets
and specific accounts to generate sales or cash.
Can be divided into 6 ratio:-
1. Account receivable turnover
Account receivables turnover measures the ability of company to collect debts from
customers. It provides the total of account receivables collected through the year. The higher
of ratio, that mean, company better in the following matters:-
- The company can collect debts from customers quickly
- The company has low bad debts
- The company can use the funds/money for next investment
Calculation of account receivables is net credit sales revenue if unavailable, use the total sales
of company divided by account receivables or average account receivables. Account
receivables is mean the receivable will company received such trade receivable and other
receivables which related to the business and trade in nature. The deposits and prepayment
will deduct from the account receivables due to the money we need to put for run business
such as deposit. For prepayment is advance payment to our expenses such insurance, road tax
and etc. Because of that, we need to minus the deposits and prepayment.
Formula : Credit sales
Account receivables
2. Average collection period
Show the average days taken by company to collect the account receivables. The comparison
the efficiency of the company in collecting debts from its customers.
Formula : 360 days
Account receivables turnover
Or Account receivables
Yearly sales/360
3. Inventory turnover
Measures the efficiency of inventory management. It shows the number of times inventory
can be sold in a year. The higher the inventory turnover, that mean company shows is able to
sell its inventory very fast and quick.
Formula : Cost of goods sold/cost of sales
Inventory
4. Average inventory sales period
Average inventory sales period shows number of days taken to make one round of inventory
sales. The higher of average inventory sales period is not good for the company. The average
inventory is less days which is very goods and better.
Formula : 360 days
Inventory turnover
Or Inventory
Cost of goods sold/cost of sales/360
5. Fixed Asset Turnover
Shows the efficiency of the company in using its fixed assets to generate sales. The higher
ratio, is better because its shows efficient of asset management.
Formula : Sales
Net Fixed Assets
6. Total Asset Turnover
Shows the efficiency of company using all its assets to generate sales. The higher ratios is
much better because show company efficient in use of assets. It is also show overall
efficiency of company operation.
Formula : Sales
Totals Assets
Profitability Ratios is for measures the effectiveness of the company in generate returns from
investment and sales. Its is important to investors. It also for determine the business
efficiency and effectiveness in achieve its profit objective.
Profitability Ratios divided to 6 ratios which as follows :-
1. Gross profit margin
Measures the profit for each ringgit of sales that can be used to pay sales and administration
expenses. The higher the gross profit margin it much better because it show the lower
expenditure or costs in implementing sales activities.
Formula : Gross profit x 100%
Sales
2. Net profit margin
Measures the ability of company generate net profit from each ringgi of sale after deduct all
expenses including the cost of goods sold, sales expenses, general and administration
expenses. The higher of ratios, it shows company efficient in purchase with low purchasing
costs.
Formula : Profit after tax x 100%
Sales
3. Operating profit margin
Measures the efficiency of operations in reducing costs and increase returns before interest
and tax. Efficient if the ratios is higher because show company operate efficiently.
Formula : Operating Profit x 100%
Sales
4. Return on assets
Measures the effectiveness of the company in using assets to generate profit. The higher ratio
is good because show company efficiency in using its assets to generate profit.
Total assets
5. Return on equity
Measures efficiency of company in generate profit for its ordinary shareholders. The higher
ratios is shows company able to generate high profit for its owners.
Shareholders equity
6. Earning per share
Calculate the net profit that is generate from each ordinary share. This information is often
given priority by the management and investors which is very important indication of
company success. Bigger value of ratios is show better status for the shareholders.
Formula : Profit available to ordinary shareholders
Number of ordinary shares issued

Computation of asset management and profitability ratios for Company 1 – Padini Holdings
Berhad
Asset management – Padini Holdings Berhad in year 2008, 2009 and 2010
Year 2008 Year 2009 Year 2010

Ratio Formula
(RM) (RM) (RM)
380,850,000 471,697,000 516,664,000

Account Receivables Turnover 12,319,000 11,307,000 16,119,000
Credit sales or total sales = 30.91 times = 41.71 times = 32.05 times
Account receivable
360 days 360 days 360 days

Average Collection Period 30.91 times 41.71 times 32.05 times
360 days = 11.64 days = 8.63 days = 11.23 days

______________________
Account receivable turnover
192,353,000 241,958,000 259,547,000

Inventory Turnover 116,113,000 91,878,000 76,554,000
Cost of good sold/cost of sales = 1.65 times = 2.63 times = 3.39 times
Inventory

Average Inventory Sales 1.65 times 2.63 times 3.39 times
Period
______________________
Inventory turnover
380,850,000 471,697,000 516,664,000

Fixed Assets Turnover 73,274,000 78,481,000 82,623,000
Sales = 5.19 times = 6.01 times = 6.25 times

Net Fixed Assets
380,850,000 471,697,000 516,664,000

Total Asset Turnover 264,314,000 290,720,000 356,582,000
Sales
Total assets = 1.44 times = 1.62 times = 1.44 times
Profitability ratio – Padini Holdings Berhad in year 2008, 2009 and 2010

Ratio Formula
(RM) (RM) (RM)
190,953,000 x100% 233,519,000 x100% 261,333,000x100%

Gross profit margin 380,850,000 471,697,000 516,664,000
Gross profit x 100% = 50.13% = 49.50% = 50.58%

Sales
41,750,000 x100% 49,533,000 x100% 60,974,000 x100%

Net profit margin 380,850,000 471,697,000 516,664,000
Profit after tax x 100% = 10.96% = 10.50% = 11.80%

Sales
58,428,000 x100% 69,135,000 x100% 87,374,000 x100%

Operating profit margin 380,850,000 471,697,000 516,664,000
Operating profit x 100% = 15.34% = 14.65% = 16.91%

Sales
41,750,000 x100% 49,533,000 x100% 60,974,000 x100%

Return on assets 264,314,000 290,720,000 356,582,000
Profit after tax x 100%
Total assets = 15.79% = 17.03% = 17.09%
41,750,000 x100% 190,953,000 x100% 60,974,000 x100%

Return on equity 169,478,000 380,850,000 234,332,000

Shareholders equity
Earnings per share

RM31.71 RM37.64 RM46.34
Profit available to ordinary shareholders
Computation of asset management and profitability ratios for Company 1 – Malaya Flour
Mills Berhad
Asset management – Malayan Flour Mills Berhad in year 2008, 2009 and 2010

Ratio Formula
(RM) (RM) (RM)
1,198,778,000 1,201,053,000 1,555,091,000

Account Receivables Turnover 195,239,000 187,364,000 217,628,000
Credit sales or total sales = 6.14 times = 6.41 times = 7.14 times
Account receivable

Average Collection Period 6.14 times 6.41 times 7.14 times

______________________
1,017,888,000 1,010,891,000 1,317,134,000

Inventory Turnover 282,000,000 249,184,000 324,940,000
Cost of good sold/cost of sales = 3.60 times = 4.05 times = 4.05 times
Inventory

Average Inventory Sales 3.60 times 4.05 times 4.05 times
Period
360 days = 100 days = 88.88 days = 88.88 days
______________________
Inventory turnover
1,198,778,000 1,201,053,000 1,555,091,000

Fixed Assets Turnover 203,032,000 203,714,000 229,784,000
Sales = 5.90 times = 5.89 times = 6.76 times

Net Fixed Assets
1,198,778,000 1,201,053,000 1,555,091,000

Total Asset Turnover 797,585,000 796,338,000 1,015,712,000
Sales
Total assets = 1.50 times = 1.50 times = 1.53 times
Profitability ratio – Malayan Flour Mills Berhad in year 2008, 2009 and 2010

Ratio Formula
(RM) (RM) (RM)
180,890,000 x100% 190,162,000 x100% 237,957,000x100%

Gross profit margin 1,198,778,000 1,201,053,000 1,555,091,000
Gross profit x 100% = 15.08% = 15.83% = 15.30%

Sales
61,911,000 x100% 72,281,000 x100% 100,326,000 x100%

Net profit margin 1,198,778,000 1,201,053,000 1,555,091,000

Sales
81,227,000 x100% 92,210,000 x100% 128,036,000 x100%

Operating profit margin 1,198,778,000 1,201,053,000 1,555,091,000
Operating profit x 100% = 6.77% =8.23 % = 7.67%

Sales
61,911,000 x100% 72,281,000 x100% 100,326,000 x100%

Return on assets 797,585,000 796,338,000 1,015,712,000
Profit after tax x 100%
Total assets = 7.76% = 9.07% = 9.87%
61,911,000 x100% 72,281,000 x100% 100,326,000 x100%

Return on equity 388,686,000 425,435,000 469,073,000

Shareholders equity
Earnings per share

RM53.85 RM58.41 RM78.80
Profit available to ordinary shareholders
Analysis and interpretation of asset management and profitability ratios of the two
companies.
Company 1 : Padini Holdings Berhad
Account receivable turnover is for measure ability for the company to collect debts from their
customers. It is show how the company can collect debts from customer which company can
and able to reinvestment back the money in the their business to generate more profit.
For Padini, for the year 2008, the account receivable turnover is 30.91 times. For the year
2009 increase by 1.14 times which is 41.71, for the year 2010 is reduced by 9.66 which is
32.05 times. This show company can collect debts from customers very fast in year 2008
which is 30.91 times. In year 2009, increase very high which is 41.71 times. However, in year
2010, the account receivable is reduced. It is show company unable to collect debts from
customers like in year 2009. The company sales also is increased year by year from 2008,
2009 and 2010.
In year 2008 and 2009, the account receivable turnover can see company has low bad debts
and the can use money for the next investment. In year 2010, it could be company face with
inefficiency in their collection department to call and ask for the payment.
Average collection period
Company able to collect payment with customers approximately 360 days in one year. This
average collection period can show how company able to collect the payment for account
receivable of the company. In year 2008, company average collection period is 11.64 days,
year 2009 is very efficient which is 8.63 only days. However, in year 2010, the average for
the collection is 11.23 days. The overall of the average collection period is very good for each
year if compare to Malaya Flour Mills Berhad or compare to other company, the average of
Padini is very good.This is because industry trading like clothes is different compare to
industry manufacturing such as Malayan Flour Mills Berhad. Company activity for
manufacturing company and trading is very different due to the process of the business.
Industry average is 44.3 days., Padini has much better average collection period which is less
than 30 days. It is because trading company and their also have own brand and outlets. We
can say Padini has practical collection period which can collect payment from customers
within period specific by Padini. This is show satisfactory.
Inventory turnover
Is measure efficiency of company to monitor inventory or inventory management. It show

how many times the inventory can be sold in every year. The higher of inventory turnover, it
show company level each year able to sell the inventories very fast and efficiency in monitor
company inventory to avoid the obsolete stocks. In year 2008, company can sold their
inventory 1.65 times only, in year 2009 is 2.63 times and in year 2010 is 3.39 times. We can
see the improvement of management of inventory of Padini. However, if compare to industry

average which is 6.6 times, the padini has very low inventory turnover.
Average inventory sales period
It measure number days taken to make one round of inventory sales. If less the days which is
not high average consider very good because show company not takes longer times to sell the
inventory. Padini show very unsatisfactory. In year 2008, padini takes 218.18 days to make
one round inventory sales. In year 2009, is 136.88 days and year 2010 is 106.19 days. If
compare to every year, Padini has improvement on the number of days taken to make one
round of inventory sales but compare to industry average is unsatisfactory. Industry average
is 55.30 days. The average inventory also can shows company takes shorter time to sell its
inventory. However, Padini has unsatisfactory on the sell its inventory.
Fixed asset turnover
It shows efficiency company use fixed assets to generate sales. The higher ratio is very good
because efficient in asset management. Padini show fixed assets turnover in year 2008 is 5.19
times, year 2009 is 6.01 times and in year 2010 is 6.25 times. Padini show efficiency in use
fixed asset including properties to generate sales.
Total asset turnover
It shows efficiency company using all assets to generate sales. Higher is show very good and
high efficiency/more efficient. Padini, in year 2008 show 1.44 times, year 2009 is 1.62 times,
year 2010 is 1.44 times. From 2008 and 2009, Padini show satisfactory, it is mean Padini
efficient on usage of the all the assets.
Analysis and interpretation of profitability ratios for Padini Holdings Berhad.
Profitability ration measures the effectiveness of company in generating returns from

investment and sales. It show business efficient and efficiency to achieve company profit.
Gross profit margin
Year 2008, padini show 50.13%, year 2009 is 49.50%, year 2010 is 50.58%. From 2008 to
2009 is reduced and increased back in year 2010. It show satisfactory. It show profit each
ringgit of sales can be used to pay sales and administration expenses. Padini show lower
expenses or costs involved in implementing sales activity. Industry average is 30%. Padini
show satisfactory on gross profit margin compare industry average.
Net profit margin
Year 2008,Padini show 10.96%, year 2009 show 10.50%, year 2010 is 11.80%. Industry
average is 6.4%.Padini show ability of company generate net profit from each ringgit of sale
after deducting all expenses. The higher of net profit margin show efficient on purchase
management with low purchasing costs. Year 2008 to 2009 is reduced however year 2010 is
was increased. Padini also generate 10.96 sen in year 2008, 10.50 sen in year 2009 and 11.80
sen in year 2010 is higher compare to industry average 6.4 sen. Overall in net profit margin,
padini show satisfactory.
Operating profit margin
It show efficiency of operation in reducing costs and increase returns before tax and
interest.Padini show in year 2008 is 15.34%, year 2009 is 14.65%, year 2010 is 16.91%.
From 2008 to 2009 is reduced but from 2009 to 2010 is increase. Padini show able to operate
efficiency in order to achieve low cost but high returns. Industry average is 10%. Padini show
satisfactory.
Return on assets
Padini show in year 2008 is 15.79%, year 2009 is 17.03 % and year 2010 is 17.09%. It show
increased year by year. It show satisfactory compare to industry average of 4.8%. Padini
show effectiveness in using its assets to generate profit. Management of padini efficiency in
use all assets to generate company profit.
Return on equity
Padini show in year 2008 is 24.63%, year 2009 is 17.03% and year 2010 is 26.02%. The
ratios is reduce from 2008 to 2009 but increase back in year 2010. The higher of the ratio
show company efficiency in generate profit for shareholders which refer to shareholder hold
ordinary shares. Padini is more satisfactory in generating profit for company shareholders.
Industry average is 8%. This show the management of Padini more efficient compared to the
industry average.
Earnings Per Share
It show the net profit that is generated from each ordinary share. It is given priority to the
management and investors because show company success and performances. The higher
value, is good benefit to ordinary shareholders. Padini shows RM31.71 in year 2008, year
2009 is RM37.64 and year 2010 is RM46.34. We can see the earnings per shares increase
every year and show more and good satisfactory compare to industry average. Industry
average RM0.26. Padini obtained RM31.71 for each unit of shares issued in year 2008,
RM37.64 in year 2009 and RM46.34 in year 2010. Overall the earnings per share is very
satisfactory.
Analysis and interpretation of asset management and profitability ratios of Malayan

Flour Mills Berhad
For Malayan Flour Mills, for the year 2008, the account receivable turnover is 6.14 times. For
the year 2009 is 6.41 times and for the year 2010 is 7.14 times. It show increase every year.
Industry average is 8.24 times. The account receivables turnover unsatisfactory compared to
industry average. This is could be inefficiency collection department to collect debts from
customers.
Average collection period
In year 2008, company average collection period is 58.63 days, year 2009 is 56.16 days, in
year 2010, is 50.42 days. The overall of the average collection period is good because more
less days is show efficiency of the company but is not satisfactory industry average. Industry
average is 44.3 days. It show company us unsatisfactory compare to industry average. It is
show company less efficient in collecting debts from customers. It is could be less follow up
with customers on the outstanding payments. If this company credit period is 30 days that
mean the average of collection of period is unsatisfactory. However, if company credit period
is 60 days, the average collection period is less than 60 days it show practical collection
period.
Inventory turnover
In year 2008, company can sold their inventory 3.60 times only, in year 2009 is 4.05 times
and in year 2010 is same 4.05 times. We can see the improvement of management of
inventory of company. However, if compare to industry average which is 6.6 times, the
company has very low inventory turnover. It show company unable to sell its inventory
quickly. It could be company keep surplus inventory and does provide any return. That mean
company will incurred transportation and holding costs of the inventory and might be
company risks on damage or obsolete. Average, company show unsatisfactory compare to
industry average.
Average inventory sales period
It measure number days taken to make one round of inventory sales. If less the days which is
not high average consider very good because show company not takes longer times to sell the
inventory. Company show very unsatisfactory. In year 2008, takes 100 days to make one
round inventory sales. In year 2009, is 88.88 days and year 2010 is 88.88 days. No changes in
the year 2009 and 2010.
Industry average is 55.30 days. Company show unsatisfactory on average compare to

industry average of 55.30 days. It is show company unable to sell the inventory on specific
period and need to take longer time to sell it. The company average inventory sales period
show company takes mor times to sell its inventory compared to the other companies in the
industry.
Fixed asset turnover
It shows efficiency company use fixed assets to generate sales. The higher ratio is very good
because efficient in asset management. Company show fixed assets turnover in year 2008 is
5.90 times, year 2009 is 5.89 times and in year 2010 is 6.76 times. Company show efficiency
in use fixed asset including properties to generate sales. Industry average is 1.35 times. It
show good satisfactory compare to industry average. The turnover show company manage to
handle and maximum used of all the fixed assets on the generating sales for the company.
Total asset turnover
It shows efficiency company using all assets to generate sales. Higher is show very good and
high efficiency/more efficient. In year 2008 show 1.50 times, year 2009 is 1.50 times, year
2010 is 1.53 times. Industry average is 0.75 times. Company shows high total asset turnover
compare to industry average due to company maximum used of all the assets in generating
company sales.This ratios show company overall efficiency of the company operation. This is
show very and good satisfactory compare to industry average.
Analysis and interpretation of profitability ratios for Malayan Flour Mills Berhad
Gross profit margin
Year 2008, company show 15.08%, year 2009 is 15.83%, year 2010 is 15.30%. From 2008 to
2009 is increase and reduce in year 2010. It show unsatisfactory. Industry average is 30%.
This show purchase management is less efficient and unable to handle cost of company. The
gross profit margin less than industry average compare to other companies in the industry.
Company not satisfactory on the achieve lower expenses or cost of company.
Net profit margin
Year 2008,Company show 5.16%, year 2009 show 6.01%, year 2010 is 6.45%. Industry
average is 6.4%. Company show unsatisfactory in year 2008 and 2009 because below
industry average. In year 2010, show moderate satisfactory because above industry average
which is more 0.05 % compare with industry average. We can see company generate only
5.16 sen in year 2008, 6.01 sen in year 2009 and 6.45 sen in year 2010. Overall in net profit
margin, company show unsatisfactory. From the ratios, we can see company unable to
achieve better purchasing costs.
Operating profit margin
It show efficiency of operation in reducing costs and increase returns before tax and
interest.Company show in year 2008 is 6.77%, year 2009 is 8.23%, year 2010 is 7.67%. From
2008 to 2009 is increase but from 2009 to 2010 is decrease. Company show very
unsatisfactory operating profit margin ratios compare to industry average 10%. This means
company unable to achieve better margin and show is not operate efficiently. Company not
efficient in its operation and control its operating expenditures to generate higher earnings
before interest and tax.
Return on assets
Company show in year 2008 is 7.76%, year 2009 is 9.07 % and year 2010 is 9.87%. It show
increased year by year. It show very satisfactory compare to industry average of 4.8%.
Company show effectiveness in using its assets to generate profit. Management of Company
efficiency in use all assets to generate company profit.
Return on equity
Company show in year 2008 is 15.93%, year 2009 is 16.98% and year 2010 is 21.38%. The
ratios is increase from 2008 to 2010. The higher of the ratio show company efficiency in
generate profit for shareholders which refer to shareholder hold ordinary shares. Company is
more satisfactory in generating profit for company shareholders. Industry average is 8%. This
show the management of company more efficient compared to the industry average.
Earnings Per Share
It show the net profit that is generated from each ordinary share. It is given priority to the
management and investors because show company success and performances. The higher
value, is good benefit to ordinary shareholders. Company shows RM53.85 in year 2008, year
2009 is RM58.41 and year 2010 is RM78.80. We can see the earnings per shares increase
every year and show more and good satisfactory compare to industry average. Industry
average RM0.26. Company obtained RM53.85 for each unit of shares issued in year 2008,
RM58.41 in year 2009 and RM78.80 in year 2010. Overall the earnings per share is very
satisfactory.
Conclusion
For Padini Holdings Berhad, overall for the asset management t is very good because account
receivables turnover, average collection period is good turnover. However, only the inventory
turnover and average inventory sales period is not satisfactory to the company. The inventory
management company need to do something to achieve good turnover in management of
inventory. If we see the sales of company, from year 2008 to 2010 is was increased only and
not decreased. For fixed assets turnover and total assets turnover, all the turnover is show
very good to the company. From above calculation which is involved 6 calculation of ratios,
it measures company efficiency in using the assets and specific accounts to generate
sales/cash
For profitability ratios, Padini show overall is satisfactory because ratios is show very goods
if compare to Company 2. Padini show goods in lower expenditure involved in implementing
sales activities. They also has good purchase management and cost to get lower expenditure,
and also good in collection on debts from customers. Padini also show good operation which
can achieved the efficiency of company operation. The operating profit margin is satisfactory
to the industry average. From assets scope, Padini achieve maximum used of their assets to
generate the sales to the company. They manage to use all the assets in order to generate good
profit to the company. This is performance can see in ratios return on assets and return on
equity. It is show satisfactory overall. Padini also can generate good earnings per share from
year 2008 until 2010.
Conclusion and summary for padini, this company overall is satisfactory.Only Padini need to
do improvement in inventory scope. They need to increase the inventory turnover and
average inventory sales period to achieve good management in inventory company. If they
can improve this two ratio in asset management, that mean Padini can get good performance
company and will achieve good profit and achieve company objective.
For Company 2, Malayan Flour Mills Berhad, we can see every year the sales is increased
like Padini but for this company most of asset management is not satisfactory to the
company. For account receivables turnover, average collection period, inventory turnover,
average inventory sales period is show unsatisfactory if compare to industry average. It show
this company less productive on generated sales and profit to the company. It also do not
have good management on the inventory of company. Fixed assets turnover and total assets
turnover only show satisfactory if compare to the industry average. Overall for asset
management for Malayan Flour Mills Berhad show unsatisfactory. That mean this company
inefficiency in using the assets and specific accounts to generate sales or cash.
For profitability ratios, this company show unsatisfactory in gross profit margin, net profit
margin, operating profit margin. It show satisfactory in return on assets, return on equity and
earnings per share. It mean this company not effectiveness in generating returns from
investments and sales. It also can show how company efficiency and effectiveness in
achieving its profit objective. Only 3 ratios which are return on assets, return on equity and
earnings per shares show above industry average and show satisfactory to the company. It is
mean company manage to use all the asset to generate profit to the company. It consider
maximum use of all company assets.
Conclusion and summary for Malayan Flour Mills Berhad, overall this company show
unsatisfactory in asset management and profitability ratios. This company need improvement
in a lot of area in management which is how to collect debts from customers, how to manage
inventory efficiency, how to get lower expenditure and cost, how purchase management
achieve low purchasing costs for the company, how company to operate efficiently. From
usage of company assets, this company able to achieve above industry average. That mean
this company efficiency in use company assets to generate sales to the company. However,
overall this company need so much improvement to achieve company objective in future.
6.0 References
1. Assoc Prof Dr Yusnidah Ibrahim, Faudziah Zainal Abidin, Norlida Abd Manab, Rusmawati
Ismail, Zaemah Zainuddin, (2011). Financial Management 1 Open University Malaysia.
2. Padini Holdings Berhad. (2012). The Company Annual Report. [ONLINE]. Available:
http://announcements.bursamalaysia.com/PADINI-AnnualReport2010.pdf
3. Malayan Flour Mills Berhad. (2012). The Company Annual Report. [ONLINE]. Available:
http://announcements.bursamalaysia.com /MALAYAN-AnnualReport2010.pdf
ATTACHMENT INCOME STATEMENT AND BALANCE SHEET FOR PADINI

HOLDINGS BERHAD FOR THE YEAR 2008, 2009, 2010
2008 2009 2010

(RM)’000 (RM)’000 RM’000
Revenue 383,306 475,477 520,880
Cost of sales (192,353) (241,958) (259,547)
Gross profit 190,953 233,519 261,333
Other operating income 4,628 4,938 5,789
Selling and distribution (106,113) (128,126) (135,177)
costs
Administration expenses (31,040) (41,196) (44,571)
Profit from operations 58,428 69,135 87,374
Finance costs (769) (1,525) (1,094)
Profit before taxation 57,659 67,610 86,280
Taxation (15,909) (18,077) (25,306)
Profit for the financial year 41,750 49,533 60,974
Attributable to:
Equity holders of the 41,715 49,533 60,974
company
Minority interest 35
Earnings per share of 31.71 37.64 46.34

RM0.50 each (sen)
Note 21 for the revenue – Group
Revenue 2008 2009 2010

RM’000 RM’000 RM’000
Commission income 2,428 3,780 4,216

Dividend income 28 - -
Sale of goods 380,850 471,697 516,664
Total sales or sales is refer to sale of goods.

2008 2009 2010

(RM)’000 (RM)’000 RM’000
ASSETS
Non-current assets
Property, plant and equipment 70,748 75,887 79,953
Intangible asset - - 6,991
Investment properties 1,681 1,700 1,870
Prepaid land lease payments 845 894 800
Investment 697 684 684
Deferred tax assets 473 2,047 1,959
Total non-current assets 81,212 92,257
Current assets
Non-current assets held for sale 1,716
Inventories 116,113 91,878 76,554
Receivables 30,199 33,064 32,561
Tax asset 178 - 270
Shirt term investment 19,868 18,945 19,915
Deposit, cash and bank balances 21,796 65,621 135,025
Total current assets 189,870 209,508 264,325
TOTAL ASSETS 264,314 290,720 356,582
EQUITY AND LIABILITIES

Equity attributable to equity holders of
the company
Share capital 65,791 65,791 65,791
Reserves 103,687 138,252 168,541
Total equity 169,478 204,043 234,332
LIABILITIES
Non-current liabilities
Borrowings 3,195 3,210 10,125
Deferred tax liabilities 19 194 774
Total non-current liabilities 3,214 3,404 10,899
Current liabilities
Payables 60,757 44,260 74,676
Borrowings 25,002 28,636 26,128
Tax liabilities 4,796 8,740 6,865
Provision 1,067 1,637 3,682
Total current liabilities 91,622 83,273 111,351
Total liabilities 94,836 86,677 122,250

TOTAL EQUITY AND LIABILITIES 264,314 290,720 356,582
2008 2009 2010

RM’000 RM’000 RM’000
Trade receivables 12319 11307 16119
Other receivables 4834 7718 1051
and prepayment
Deposit 13046 14039 15391
Total 30199 33064 32561
Account receivables is trade receivables exclude prepayment, other receivable(non

trade), deposit.
ATTACHMENT INCOME STATEMENT AND BALANCE SHEET FOR MALAYAN

FLOUR MILLS BERHAD FOR THE YEAR 2008, 2009, 2010
2008 2009 2010

(RM)’000 (RM)’000 RM’000
Revenue 1,198,778 1,201,053 1,555,091
Cost of goods sold (1,017,888) (1,010,891) (1,317,134)
Gross profit 180,890 190,162 237,957
Other income 11,498 6,620 21,153
Distribution and selling (61,137) (67,519) (78,750)
expenses
Administration expenses (27,265) (25,083) (33,596)
Other expenses (16,290) (7,375) (20,635)
Results from operating 87,696 96,805 126,129
activities
Interest expenses (14,868) (9,870) (8,136)
Interest income 8,399 5,275 10,043
Operating profit 81,227 92,201 128,036

Share of loss of equity (512) (176) (143)
accounted associates, net of
tax
Profit before tax 80,715 92,034 127,893
Tax expenses (18,804) (19,753) (27,567)
Profit for the year 61,911 72,281 100,326
Profit attributable to:
Owners of the company 57,971 62,879 84,824
Minority interest 3,940 9,402 15,502
Profit for the year 61,911 72,281 100,326
Basic earnings per ordinary 53.85 58.41 78.80
share-sen
2008 2009 2010

(RM)’000 (RM)’000 RM’000
ASSETS
Non-current assets
Property, plant and equipment 197356 198095 224222
Intangible asset 3339 2580 1903
Investment properties 5676 5619 5562
Investment in subsidiaries - - -
Investment in an associate 319 143 -
Other investment 112 94 -
Deferred tax assets 2593 2596 4131
Total non-current assets 209395 209127 235,818
Current assets
Trade and other receivable 201386 193210 229,065
Prepayment and other assets 282000 2544 3825
Inventories 748 249184 324940
Current tax assets 104056 94 90
Cash and cash equivalents 104056 142179 221974
Total current assets 107645 796338 779894

281041
TOTAL ASSETS 388686 796338 1015712
EQUITY
Share capital 107645 107645 107645
Reserves 281041 317790 361428
Total equity attributable to owners of 388686 425435 469073

the company
Minority interests 33571 39340 53762
Total equity 422257 464775 522835
LIABILITIES
Deferred tax liabilities 6889 7200 7100
Total non-current liabilities 6889 7200 7100
Trade and other payables including 82206 84895 87407

derivaties
Loans and Borrowings 279908 229439 385172
Current tax liabilities 2288 5992 13198
Dividend payable 4037 4037 -
Total current liabilities 368439 324363 485777
Total liabilities 375328 331563 492877
TOTAL EQUITY AND LIABILITIES 797585 796338 1015712
2008 2009 2010

RM’000 RM’000 RM’000
Trade receivables 195239 187364 217628
Other receivables – 2725 4582 9782
non trade
Deposit 978 1264 1655
Prepayment 2444 2544 -
Total 201386 195754 229065
For account receivable , we take the trade receivables only. Exclude the other receivables –
non trade, deposit and prepayment.

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FACULTY OF BUSINESS AND MANAGEMENT

SEMESTER MAY 2012

1.0 INTRODUCTION OF THE TWO COMPANIES – PADINI

2.0 COMPUTATION OF ASSET MANAGEMENT AND

3.0 COMPUTATION OF ASSET MANAGEMENT AND

4.0 ANALYSIS AND INTERPRETATION OF ASSET

Introduction of the two companies

COMPANY 1 : PADINI HOLDINGS BERHAD

Companies name, business activities and business development

-to be the best fashion company ever

-to exceed customers’ expectation and our brands’ promise

-PADINI (wing from the heart)

Principal activities of company

Details of the subsidiary companies are as follows:-

Subsidiary companies of the Company Principal activities

Vincci Ladies’ Specialties Dealers of ladies’ shoes and accessories.

Padini Corporation Sdn. Bhd. Dealers of garments.

Yee Fong Hung (Malaysia) Dealers of garments and ancillary products.

Mikihouse Children’s Wear Dealers of children’s garments, maternity

Vincci Holdings Sdn. Bhd. Dormant.

The New World Garment Dormant.

(“The New World Garment”)

COMPANY SECRETARIES Ho Mun Yee (MAICSA 0877877)

AUDITORS Peter Chong & Co.

PRINCIPAL PLACE OF BUSINESS

SHARE REGISTRAR PFA Registration Services Sdn. Bhd.

STOCK EXCHANGE LISTING Main Board of

Corporate Structure for Padini Holdings Berhad

BUSINESS REVIEW – YEAR 2008 UNTIL YEAR 2010

Group Financial Highlights

Revenue 286,107 316,866 383,306 475,477 520,880

Profit before taxation 39,519 44,007 57,659 67,610 86,280

Profit attributable to equity

Basic earnings per share

NA denotes not applicable as the ESOS expired on 2 October 2007.

Net assets 118,846 142,341 169,478 204,043 234,332

Dividend per share (sen) ^ 10sen 12.5sen 15sen 14sen 22.5sen

* Based on ordinary shares of RM0.50 each.

FINANCIAL RESULTS – YEAR 2008

FINANCIAL RESULTS – YEAR 2009

FINANCIAL RESULTS – YEAR 2010

COMPANY 2 : MALAYA FLOUR MILLS BERHAD

REGISTERED OFFICE &

• Malayan Banking Berhad (3813-K)

STOCK EXCHANGE LISTING

Principal of company activities

Name of subsidiary Principal activities interest

Subsidiary of MFM International

Mekong Flour Mills Ltd. Milling and selling wheat fl our

Computation of asset management and profitability ratios COMPANY 1 AND

Below is the asset management and profitability ratios explanation.

Can be divided into 6 ratio:-

1. Account receivable turnover

- The company can collect debts from customers quickly

- The company has low bad debts

- The company can use the funds/money for next investment

Formula : Credit sales

2. Average collection period

Formula : 360 days

Account receivables turnover

Formula : Cost of goods sold/cost of sales

4. Average inventory sales period