CENTRE FOR FOUNDATION STUDIES

FHBM1224 FINANCIAL MANAGEMENT

TRIMESTER 202001

Company Name: Excel Force MSC Berhad and

Industronics Berhad

Prepared by

Tutorial
No ID No. Name Signature
Group
1 19AHF01431 CHEN CHU EN T9

2 19AHF02610 CHUNG SEOW LING T9

3 19AHF04088 LIM POH YEE T9

4 19AHF04792 SOO WAN ROU T9

5 19AHF02393 TAN SYE YING T9

6 19AHF01918 TEOH SHU YI T9

Date of submission: 09th March 2020

 TABLE OF CONTENT

Contents Page Number

Ratio Calculations and Explaination 2- 21

Comparison 22 - 24

Report 25 - 27

1
Liquidity
Excel Force MSC Berhad
2017 2018
QUICK RATIO QUICK RATIO
= current assets – inventories = current assets – inventories
current liabilities current liabilities
= RM40,621,399 – RM25,860 = RM36,500,893 – RM45,328
RM4,577,664 RM11,520,610
= 8.87x = 3.16x
Excel Force MSC Berhad has RM3.16 in Excel Force MSC Berhad has RM8.87 in
liquid current asset for every RM1 in liquid current asset for every RM1 in current
current liability. liability.
The quick ratio of the company has reduced in 2018 compared to 2017.The company has
less liquid current position to pay current liabilities in 2018.

QUICK RATIO: EXCEL FORCE MSC BERHAD

10

5
8.87
4

2
3.16
1

0
2017 2018

Series 1

2
The quick ratio is a measure of how well a company can meet its short-term financial
liabilities. Quick ratio also known as acid-test ratio. It measures the amount of the most
liquid current assets that used to cover the current liabilities. This ratio is more accurate
than the current ratio because it excludes inventories which are the least liquid asset and are
more difficult to turn into cash. Although the two are similar, the quick ratio provides a
stricter evaluation of a company's ability to pay its current liabilities. The higher ratio means
that a more liquid current position.

In year 2017, the quick ratio of Excel Force MSC Berhad is 8.87 which means that the
company has its current liabilities covered 8.87 times over. Meanwhile, it has 3.16 of quick
ratio in 2018 and it has decreased by 5.71 of quick ratio. The lower quick ratio means a less
liquid current position in 2018.

This is because the current assets become less otherwise the current liabilities becomes
more in 2018. The inventories in 2018 also increased. From the Statements of Financial
Position as at 31 December 2017 of the company, the amounts of other receivables and assets
held for sale in 2018 has reduced compared to year 2017, thus this affect the reduction of
current assets. The current liabilities have increased as its other payables and contract
liabilities has increased from 2017 to 2018. Besides, the inventories in 2018 has increased
from RM25, 860 to RM45, 328. All these factors will reduce the quick ratio in 2018.

3
Industronics Berhad
2017 2018
QUICK RATIO QUICK RATIO
= current assets – inventories = current assets – inventories
current liabilities current liabilities
= RM12,669,939 – RM2,174,502 = RM9,216,162 – RM1,449,473
RM10,897,871 RM7,897,798
= 0.96x = 0.98x
Industronics Berhad has RM0.98 in liquid Industronics Berhad has RM0.96 in liquid
current asset for every RM1 in current current asset for every RM1 in current
liability. liability.

The quick ratio of the company has increased in 2018 compared to 2017.The company has
more liquid current position to pay current liabilities in 2018.

QUICK RATIO: INDUSTRONICS BERHAD

0.985

0.98

0.975

0.97

0.965 0.98

0.96

0.955 0.96

0.95
2017 2018

Series 1

4
The quick ratio is a financial ratio used to gauge a company's liquidity. It also known as
the acid-test ratio and measure that the amount of the most liquid current assets to cover
current liabilities. The quick ratio is more conservative than the current ratio because it
excludes inventories (least liquid asset) which are more difficult to turn into cash. The higher
ratio means the more liquid current position.

As we can see the calculation above, the quick ratio of Industronics Berhad is 0.96 in year
2017 and it means the company has RM0.96 in liquid current asset for every RM1 in current
liability. However, quick ratio increased by 0.02 because it has 0.98 in year 2018. The higher
quick ratio means a more liquid current position in year 2018.

The reason is the current assets in year 2018 is higher than year 2017 while the current
liabilities in year 2018 is lower than year 2017. According the Statement of Financial
Positioning as at 31 December 2018 of the company, the trade and other receivable had
decreased RM1,885,423 from year 2017 to year 2018 the inventory also decreased
RM1,265,029 in year 2018. The current liabilities in have decrease compared to 2017 which
is RM101,08,073. The trade and other payable has decreased from year 2017 to year 2018.
Therefore, all of these factors will affect the quick ratio year 2018.

5
Asset Management Ratio

Excel Force MSC Berhad

2017 2018
ASSET MANAGEMENT RATIO ASSET MANAGEMENT RATIO
Total Asset Turnover Total Asset Turnover
= Sales = Sales
Total Asset Total Asset
= RM 22,918,204 = RM 22,939,010
RM 54,445,561 RM 58,722,659
= 0.42x = 0.39x
For every dollar in total assets, Excel Force For every dollar in total assets, Excel Force
MSC Berhad generated RM0.42 in sales. MSC Berhad generated RM0.39 in sales.
The total asset turnover of the company has decreased in 2018 compared to 2017. The
company has less efficiency at using its assets in generating revenue.

TOTAL ASSET TURNOVER: EXCEL FORCE MSC BERHAD

0.425

0.42

0.415

0.41

0.405

0.4
0.42
0.395

0.39

0.385
0.39
0.38

0.375
2017 2018

Series 1

6
The asset turnover ratio measures the value of a company's sales or revenues relative to
the value of its assets. The asset turnover ratio can be used as an indicator of the efficiency
with which a company is using its assets to generate revenue. The amount of sales generated
for every dollar’s worth of assets. The higher the asset turnover ratio, the more efficient a
company. Conversely, if a company has a low asset turnover ratio, it is not efficiently using
its assets to generate revenue.

For year 2017, Excel Force MSC Berhad generated RM0.42 in sales for every dollar in
total assets. In year 2018, the total asset turnover of Excel Force MSC Berhad is 0.39 which
means for every dollar in total assets, the company generated RM0.39 in sales. There is
decreased by 0.03 of total asset turnover. This means that the company in year 2018 has less
efficiency at using its assets in creating revenue.

The total asset turnover of the company has decreased because the total assets have risen in
2018. In year 2018, the company has added the capital work-in-progress which amounted by
RM 8,384,910 and product development cost so the total assets increased.

7
Industronics Berhad
2017 2018
ASSET MANAGEMENT RATIO ASSET MANAGEMENT RATIO
Total Asset Turnover Total Asset Turnover
= Sales = Sales
Total Asset Total Asset
= RM 75,326,249 = RM 28,288,219
RM 28,592,165 RM 22,715,027
=2.63x = 1.25x
Industronics Berhad generated RM2.63 in Industronics Berhad generated RM1.25 in
sales for every dollar in total asset. sales for every dollar in total asset.
The total asset turnover has decreased in 2018 compared to 2017. The company may has
less efficiency at using assets in generating revenue.

TOTAL ASSET TURNOVER: INDUSTRONICS BERHAD

3

2.5

1.5
2.63

1.25
0.5

0
2017 2018

Series 1

8
The asset turnover is the value of a company's revenues or sales relative to the value of
its assets. The amount of sales generated for every dollar’s worth of assets. The higher the
asset turnover ratio, the more efficient a company. If a company has a low asset turnover
ratio, it indicates it is not efficiently using its assets to generate sales. The formula of
calculating the total asset turnover is the company’s sales divided by total assets as shown
above.

From the calculation, in 2018, the total assets turnover of Industronics Berhad is 2.63 in
2017, it means for every dollar in total assets. Industronics Berhad generated RM2.63 in sales
for every dollar in total assets. In 2018, the total assets turnover of the company is 1.25. As
we can see, total assets turnover has decrease by 1.38 which means that the company has less
efficiency at using its assets in creating revenue in 2018.

The total asset had decreased because the total asset had decrease from 2017 to 2018 which
is RM28, 592, 165 to RM 22,715,027.

9
Financial Leverage Management Ratio
Excel Force MSC Berhad

2017 2018
FINANCIAL LEVERAGE FINANCIAL LEVERAGE
MANAGEMENT RATIO MANAGEMENT RATIO
Debt Ratio Debt Ratio
= Total Debt = Total Debt
Total Asset Total Asset
= RM 7,873,600 = RM11,520,610
RM 54,445,561 ×100 RM58,722,659 ×100
=14% =20%

Excel Force MSC Berhad finances 14% of Excel Force MSC Berhad finances 20% of
its assets with debts. its assets with debts.
The debt ratio of the company had increased in 2018 compared to 2017. The company has
more debt than assets in 2018.

DEBT RATIO: EXCEL FORCE MSC BERHAD

0.25

0.2

0.15

0.1 0.2

0.14
0.05

0
2017 2018

Series 1

10
The debt ratio is also known as the debt-to-assets ratio. The debt ratio is a financial ratio
that measures the extent of a company’s leverage. It is defined as the ratio of total debt to
total assets, expressed as a decimal or percentage. This ratio indicates what proportion of debt
a company has relative to its assets. It gives an idea to the leverage of the company along
with the potential risks the company faces in term of its debt-load. A ratio greater than 1
shows that a company has more debt than assets, meanwhile, a debt ratio of less than 1
indicates that a company has more assets than debt. A high ratio also indicates that a
company may be putting itself at a risk of default on its loans if interest rates were to rise
suddenly. A ratio below 1 translates to a greater portion of a company's assets is funded by
equity.

In year 2017, Excel Force MSC Berhad has the debt ratio of 14% which means it finances
14% of its assets with debts. For the year of 2018, Excel Force MSC Berhad finances 20% of
its assets with debts. The company has more debt than assets.

The ratio of the company in year 2018 is higher than year 2017 because its total debt is
higher. The total debt in 2018 is RM11, 520,610 and the total debt in year 2017 is RM7,
873,600 which is increased by RM3, 647,010. This is because the other payables has risen by
RM7, 979,312 in year 2018. This will increase the total debt in the year 2018.

11
Industronics Berhad

2017 2018
FINANCIAL LEVERAGE FINANCIAL LEVERAGE
MANAGEMENT RATIO MANAGEMENT RATIO
Debt Ratio Debt Ratio
= Total Debt = Total Debt
Total Asset Total Asset
= RM 11,386,644 = RM 8,414,239
RM 28,592,165 ×100 RM 22,715,027 ×100
= 39.82% = 37.04%
Industronics Berhad finance 39.82% of its Industronics Berhad finance 37.04% of its
assets with debts. assets with debts.
The debt ratio of the company had decreased in 2018 compared to 2017. The company has
low debt than assets in 2018.

DEBT RATIO: INDUSTRONICS BERHAD

40.5
40
39.5
39
38.5
38
39.82
37.5
37
36.5
37.04
36
35.5
2017 2018

Series 1

12
The debt ratio is a financial ratio that measures the extent of a company’s leverage. The
debt ratio is defined as the ratio of total debt to total assets, expressed as a decimal or
percentage. If the calculation of debt ratio is less than one which show that a greater portion
of a company’s funded by equity. Some investors will try to determine risk of a company
levels depends on ratio. They may not invest that particular company if the company
achieved a high debt ratio. In the opposite, if the calculation of debt ratio of total debt is
greater than 1, this shows that certain company has more debt compared with the asset which
means that a considerable portion of debt is funded by assets.

Industronics Berhad finances 39.82%of its assets with debts in year 2017. In year 2018,
Industronics Berhad has the debt ratio of 37.04% which means that it finances 37.04% of its
assets with debt.

The ratio of the company in year 2018 is lower than year 2017 because the total debt is
lower. The total debt in year 2017 and year 2018 are RM11,386,644 and RM8,414,239. The
reason is the trade and other payables has reduced from 2017 to 2018, which is RM10,
230.993 in year 2017 to RM7, 444, 079 in year 2018. That will decrease the total debt in the
year 2018.

13
Profitability Ratio
Excel Force MSC Berhad

2017 2018
PROFITABILITY RATIO: PROFITABILITY RATIO:
Gross Profit Margin Gross Profit Margin
Gross Profit Gross Profit
= =
Sales Sales
= RM 15,047,223 = RM 14,377,733
RM 22,918,204 ×100 RM 22,939,010 ×100
=66% = 63%
For every dollar in sales, Excel Force MSC For every dollar in sales, Excel Force MSC
Berhad generated RM0.66 of gross profit. Berhad generated RM0. 63 of gross profit.
The gross profit margin of the company has reduced in 2018 compared to 2017. The
company has less additional expenses and future savings in 2018.

GROSS PROFIT MARGIN: EXCEL FORCE MSC

BERHAD
68%

66%

64%

66%

62%
63%

60%
2017 2018

Series 1

14
Gross profit margin is the proportion of money left over from revenues after accounting
for the cost of goods sold. It used to assess a company's financial health and business model.
The gross profit margin is often expressed as a percentage of sales and may be called the
gross margin ratio. It serves as the source for paying additional expenses and future savings.

Excel Force MSC Berhad has gross profit margin of 66% which means for every dollar in
sales, the company generated RM0.66 of gross profit in year 2017. Meanwhile, in year 2018,
the company generated RM0. 63 of gross profit for every dollar in sales. This has decreased
by 3% of gross profit margin according to the company.

There are some reasons for the reduction of gross profit margin in year 2018. The gross profit
of Excel Force MSC Berhad in 2018 has dropped by RM669,490 compared to the year 2017.
This is because the cost of sales has increased, it affects the gross profit in year 2018
becomes lesser. Other than that, the sales in year 2018 also raised from RM22,918,204 to
RM22,939,010.

15
Industronics Berhad

2017 2018
Gross Profit Margin Gross Profit Margin
Gross Profit Gross Profit
= =
Sales Sales
= RM 7,136,201 = RM 9,685,310
RM 75,326,249 ×100 RM 38,288,219 ×100
=9.47% = 25.29%
For every dollar in sales, Industronics For every dollar in sales, Industronics
Berhad generated RM0.09 of gross profit. Berhad generated RM0.25 of gross profit.
The gross profit margin of the company has increase in 2018 compared to 2017. The
company has more additional expenses and future savings in 2018.

GROSS PROFIT MARGIN: INDUSTRONICS BERHAD

30.00%

25.00%

20.00%

15.00%
25.29%
10.00%

5.00% 9.47%

0.00%
2017 2018

Series 1

16
Gross profit margin is a profitability ratio that are used to measure the proportion of
money left over from sales after the cost of goods sold being conducted. The gross profit
margin serves as the source for paying the company's additional expenses and future savings.
The higher percentage of the gross profit margin means the more the company retains on
each dollar of the sales to cover its cost and other obligations

Industronics Berhad has gross profit margin of 9.47% which mean that for every dollar in
sales, the company generated RM 0.09 of gross profit in year 2017. Therefore, in 2018, the
company generated RM 0.25 of gross profit for every year in sales. This will increase by
15.82% of gross profit margin according to the company.

The reasons for the rising of gross profit margin in year 2018 is the gross profit of year 2018
had increased RM2, 549, 109 compared to the year 2017.The sales in of year 2017 had
decreased from RM75, 326, 249 to RM38, 288, 219 because the cost of sales has decreased,
it will affect the gross profit in 2018 become higher.

17
Market-Based
Excel Force MSC Berhad
2017 2018
MARKET-BASED MARKET: MARKET-BASED MARKET:
Price to Earnings Ratio Price to Earnings Ratio
Market Price per Share Market Price per Share
= =
Earnings per Share Earnings per Share
= RM 1.53__________ = RM 1.61_________
RM 6,323,258 / RM 20,743,365 RM 6,657,362 / RM 20,998,365
= 5.02x = 5.08x
Investors were willing to pay RM5.02 for Investors were willing to pay RM5.08 for
every dollar of earnings per share that Excel every dollar of earnings per share that Excel
Force MSC Berhad produced. Force MSC Berhad produced.
The price to earnings ratio has improved in 2018 compared to 2017. The investors are
expecting higher earnings growth in the future compared to previous year.

PRICE TO EARNING RATIO: EXCEL FORCE MSC

BERHAD
5.09
5.08
5.07
5.06
5.05
5.04
5.03 5.08
5.02
5.01
5 5.02
4.99
4.98
2017 2018

Series 1

18
The price-to-earnings ratio (P/E ratio) is the valuation of a company’s current share
price compared to its per-share earnings (EPS). The price-to-earnings ratio is also known
as the price multiple or the earnings multiple. This ratio shows how much investors are
willing to pay per dollar of earnings. It is used by investors and analysts to determine the
relative value of a company's shares in comparison. It can also be used to compare a company
against its own historical record or to compare aggregate markets against one another. A high
P/E ratios suggests that investors are expecting higher earnings growth in the future
compared to companies with a lower P/E ratio.

In 2017, Excel Force MSC Berhad has the price-to-earnings ratio of 5.02 meanwhile in year
2018, it has the ratio of 5.08 which means investors were willing to pay RM5.08 for every
dollar of earnings per share that Excel Force MSC Berhad produced. Investors are expecting
higher earnings growth in the future.

The price to earnings ratio in year 2018 is higher than the year 2017 because the market
price per share in year 2018 is bigger. The higher market price per share will increase the
ratio and directly increase the investor confidence to invest the company.

19
Industronical Berhad
2017 2018
MARKET-BASED MARKET: MARKET-BASED MARKET:
Price to Earning Ratio Price to Earning Ratio
Market Price per Share Market Price per Share
= =
Earnings per Share Earnings per Share
= RM6.04 _______ = RM 2.64__________
(RM6,545,028) / (RM8,291,667) (RM2,707,028) / (RM2,765,753)
= 7.65x = 2.70x
Investors were willing to pay RM7.65 for Investors were willing to pay RM2.70 for
every dollar of earnings per share that every dollar of earnings per share that
Industronics Berhad produced Industronics Berhad produced.
The price to earnings ratio has not improved in 2018 compared to 2017. The investors are
not expecting of lower earnings growth in the future.

PRICE TO EARNING RATIO: INDUSTRONICS BERHAD

9

4 7.65
3

2
2.7
1

0
2017 2018

Series 1

20
The price-to-earnings ratio (P/E ratio) is the valuation ratio of a company’s current share
price compared to its per-share earnings. The price-to-earnings ratio is also sometimes
known as the price multiple or the earnings multiple. This ratio used by investors and analysts
to determine the relative value of a company's shares in an apples-to-apples comparison. It
can also be used to compare a company against its own historical record or to compare
aggregate markets against one another or over time. A high P/E ratio suggests that investors
are expecting higher earnings growth in the future compared to companies with a lower P/E
ratio.

In 2017, Industronics Berhad has the price-to-earnings ratio of 7.65 meanwhile in 2018, it
has the ratio of 2.70 which means investors were only willing to pay RM2.70 for every dollar
of earnings per share that Industronics Berhad produced. Investors are reducing expecting
about earnings in the future.

The price to earnings ratio in 2018 is lower than the year 2017 because the market price per
share in 2018 is smaller. The lower market price per share will reduce the ratio and directly
decrease the investor confidence to invest the company.

21
Comparison

Quick Ratio

Quick ratio/ acid-test ratio is measured the amount of the most liquid current assets that used
to cover current liabilities.

In 2018, the quick ratio of Excel Force MSC Berhad is 3.16x which means Excel Force
MSC Berhad has RM3.16 in liquid current asset for every RM1 in current liability. It has a
higher quick ratio due to a higher current asset and a lower current liability. The high
current assets caused by the high account receivables meanwhile the low current liabilities
caused by the low account payable.

The quick ratio of Industronics Berhad is 0.98x in 2018 which means Industronics Berhad
has RM0.98 in liquid current asset for every RM1 in current liability. It has a lower quick
ratio compared to Excel Force MSC Berhad. This is because there are a higher current asset
and a higher current liability of Excel Force MSC Berhad.

In conclusion, Excel Force MSC Berhad has a higher quick ratio than Industronics
Berhad.

Total Asset Turnover

Total asset turnover is the amount of sales produced for every dollar’s worth of assets.

The total asset turnover of Excel Force MSC Berhad in 2018 is 0.39x which means for
every dollar in total assets, Excel Force MSC Berhad generated RM0.39 in sales. The
company has a low total asset turnover because it has a lower sale.

In 2018, Industronics Berhad has the total asset turnover of 1.25x which means
Industronics Berhad generated RM1.25 in sales for every dollar in total asset. It has a higher
total asset turnover compared to Excel Force MSC Berhad. This is caused by Industronics
Berhad has higher sales and lower total asset.

22
This has shown Industronics Berhad has a higher total asset turnover than Excel Force
MSC Berhad.

Debt Ratio
Debt ratio is measured the extent of a company’s leverage and it defined as the radio of total
debt to total assets, expressed as a decimal or percentage.

The debt ratio of Excel Force MSC Berhad in 2018 is 20% which means the company
finances 20% of its assets with debts. The company also has more debt than assets. Thus, the
other payable has risen so it will increase the total debt in 2018.

In 2018, Industronics Berhad has the total debt ratio of 37.04%. It has a higher total debt
ratio compared to Excel Force MSC Berhad. This is caused by the trade and other payables
has reduced in 2018 that will directly decrease the total debt.

In conclusion, Excel Force MSC Berhad has a lower debt ratio than Industronics Berhad.

Gross Profit Margin

Gross profit margin is measured the proportion of money less over from revenues after
accounting for the cost of goods sold.

In 2018, Excel Force MSC Berhad has 63% of gross profit margin which means for every
dollar in sales, the company generated RM0.63 of Gross profit. This is because the cost of
sales has increased, it will affect the gross profit in 2018 become lesser.

Gross profit margin of Industronics Berhad in the year of 2018 is 25.29% which means for
every dollar in sales, the company generated RM0.25 of Gross profit. The reason is the cost
of sales has decrease, it will affect the Gross profit in 2018 become higher.

This has shown Excel Force MSC Berhad has a higher gross profit margin than
Industronics Berhad.

Price-to-earnings Ratio

23
The price-to-earnings ratio (P/E ratio) is the valuation is the valuation of a company’s current
share price compared to its per-share-earnings (EPS). The ratio also shows how much
investors are willing to pay per dollar of earnings.

In 2018, Excel Force MSC Berhad had the price-to-earnings ratio of 5.08x which means
investors were willing to pay RM5.08 for every dollar of earnings per share that the company
produced. The reason is the market per share in 2018 is bigger. The higher market will
increase ratio and the investor confidence to invest the company.

The price-to-earnings ratio of Industronics Berhad in 2018 is 2.70x which means for
every dollar of earnings per share, the investors were willing to pay RM2.70that the company
produced. The low market price will reduce the ratio and directly lower the confidence of
investor to invest Industronics Berhad.

In conclusion, Excel Force MSC Berhad has a higher price-to-earnings ratio than
Industronics Berhad.

24
Report
To: Financial Director, Ms. Koo Xin Min
Subject: Report on Investment Decision
Date: 3 March 2020
Summary
Company Excel Force MSC Berhad Industronics Berhad Which
Name company’s
Year/ 2018 2017 Comparison 2018 2017 Comparison performance is
Ratio better?
Quick Ratio 3.16x 8.87x Decreased 0.98x 0.96x Increased Industronics
5.71x. 0.02x. Berhad
Asset 0.39x 0.42x Decreased 1.25x 1.63x Decreased Excel Force
Managemen 0.03x. 0.38x. MSC Berhad
t Ratio
Financial 20% 14% 38.04% 39.82% Decreased Industronics
Leverage Increased 6%. 1.78%. Berhad
Managemen
t Ratio
Profitable 63% 66% Decreased 3%. 25.29% 9.47% Increased Industronical
Ratio 15.75%. Berhad
Market- 5.08x 5.02x Increased 2.70x 7.65x Decreased Excel Force
Based 0.06%. 4.95x. MSC Berhad
Market

*Our final decision to invest is INDUSTRONICS BERHAD.

Company Background
Industronics Bhd, an electronics company, engages in the high profile products, services and
projects implemented for customers in Malaysia. Industronic Bhd was incorporated in 1975
and is based in Kuala Lumpur. The company has the monetary and human resources to carry
out two major which are local and international technology projects or activities in many
countries.

25
Industronics Bhd mainly manufactures electronics and microprocessor controlled products in
their business. Second activities in the company are computer systems design services. The
company also provides installation services in some systems such as telecommunication
system, audio video multimedia systems, intelligent transportation systems and information
communication technology related systems.

Besides that, Industronics Bhd is one of the pioneers in the world by applying the power of
the microprocessor and stored programme control in evolving rapidly its products and
applications. This is because Industronics Bhd had achieved an innovation that the company
history spans through the same period of aggressive growth of the semiconductor chip
technology when the microchip and microprocessor technology was at its infancy.

In the past few years, Industronics Bhd has become a profitable and well-known company in
the world. The company had shaped its business into a wide range of electronic products such
as Fire Protection Systems, Intelligent Transportation Systems, Audio Visual Systems,
Security Systems and Public Information Display Systems. Additionally, the company had
developed strategies by growth and completed many projects large or small locally and
internationally.

Investment Decision

The first reason that we want to invest Industronics Berhad is Industronics Berhad’s debt
ratio is lesser than Excel Force MSC Berhad. The debt ratio is to indicate what proportion
of debt a company has relative to its assets. This debt ratio will give an idea to the company
about the potential risks to the company that will face the debt-loan. It means debt ratio
higher, the company harder to repay the debt. In the annual report of Industronics Berhad,
this company has reduced the 0.03 debt ratio from the Year 2017 to the Year 2018. Excel
Force MSC Berhad has increased the 0.06 debt ratio from the Year 2017 to the Year 2018.
Compare Industronics Berhad with Excel Force MSC Berhad, Industronics Berhad has a
higher investment value.

Besides that, one of the reasons that we decided to invest in Industronics Berhad is because of
the overall financial performance of the year 2018 has improved compared to the
previous year. The gross profit margin of Industronics Berhad has increase in 2018
compared to 2017. The company has more additional expenses and future savings in 2018. A
higher gross profit margin indicates that Industronics Berhad can make a reasonable profit on
sales, as long as it keeps overhead costs in control. For example, the company operates in five

26
segments, which are telecommunication, security systems, mechanical and electrical
engineering, electronics products, fabrication and manufacturing operations. The value of
gross profit margin varies in a better way from the company. Additionally, the export market
includes Indonesia, Thailand, the Middle East, Australia and the USA have been formed.
This is a great business to affect the gross profit margin become higher. Therefore, we
decided to invest in Industronics Berhad because we can see the growing potential of
Industronics Berhad.

The reason why we want to invest Industronics Berhad is Industronics Berhad’s quick
ratio increase 0.02 from 0.96 in 2017 to 0.98 in 2018. However, the quick ratio of Excel
Force MSC Berhad is higher than Industronics Berhad but it is decreased from 8.87 in 2017
to 3.16 in 2018. The quick ratio measures the ability of a company to pay its current liabilities
with current assets that can be converted to cash in the short-term. Industronics Berhad’s
quick ratio increase means the company’s ability to pay its current liabilities is increase. The
company has more potential to invest because their financial has become more stable as they
can use their quick assets to pay their current liabilities in the short-term. Compare
Industronics Berhad with Excel Force MSC Berhad, Industronics Berhad has more
investment value.

Another reason is Industronics Berhad has high potential. In the Year 2019, Industronics
Berhad expects has increased cooperation with KLIA. For example, Industronics Berhad
helps KLIA upgrade and enhancement of the flight information display system for KLIA.
This company also has cooperation with Public Security which is participated in biddings for
highways, Wireless & Fiber Optic Communications, and CCTV systems. This company's
success many projects on Security, Fire & Safety sector include Security Alarm System for
AEON for whole Malaysia & to supply the Industronics manufactured fire alarm panels for
many projects in Malaysia. Industries Berhad is the twice winner of the National Product
Excellence Award by the Ministry of International Trade and Industry of Malaysia. It also
won the Product-Of-The-Year Award by PIKOM, the computer industry association of
Malaysia four times. The Company has also won the Corporate Excellence Award (2nd
Board - Technology Sector) from Bursa Malaysia.

The other reason that we suggest investing Industronics Berhad is the company had sell
Redeemable Convertible Preference Shares (RCPS) up to RM250million to raise the
funds for their business expansion and increase the capital of the existing business. The

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Redeemable Convertible Preference Shares (RCPS) that worth RM250million will firstly sell
to the Bluemount Investment Fund SPC. The company totally raise RM20million from this
activity, RM12.6million will use for the business expansion and RM7million as the capital of
the company operation. Therefore, the company’s market share price also increase because of
this project, so we highly suggest to invest in this company because they have potential.

Lim Poh Yee

Financial Manager

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