SCHOOL OF ECONOMICS, FINANCE AND BANKING (SEFB)

UNIVERSITI UTARA MALAYSIA (UUM)

Second Semester; 2021-22 Academic Session

BWFF2033 Financial Management (H)

Project Paper Report – Part I

Financial Position and Performance for the Year 2020 of [MGB] Listed on the

[CONSTRUCTION & MATERIALS ] Sector in Malaysia

submitted to: Angappan Regupathi

by [287657] [FITRI NUR HUZAILIN SYAWANA BINTI HAMDAN] from Project

Group [H09]

13 May 2022
 The MGB Group is a solid construction player that has amassed a strong track record

to shape the country for over 10 years and was incorporated in 2002. From design and

construction to general construction for residential, commercial, and industrial structures, as

well as infrastructural projects, they have grown the country. MGB has completed over

15,000 property units to date, primarily in the inexpensive housing category.

In 2020, the company's current ratio is 1.237, indicating that net working capital is

positive and that the ratio has changed by 0.038 from the previous year. From 2019 (1.199) to

2020 (1.237), the ratio trend is growing, showing inefficient use of cash and other short-term

assets. The quick ratio of the company is 1.213, with a change of 0.058 from 2019. From

2019 (1.155) to 2020 (1.213), the ratio has increased, indicating that the corporation has

adequate fast assets to pay its liabilities. The company's cash ratio is 0.156, and the changes

in its ratio are 0.082. From the year 2019 (0.074) through 2020, the ratio rises (0.156). This

demonstrates that the corporation can pay off its debts with cash.

The equity multiplier ratio in 2020 is 2.348 and the changes in its ratio is 0.227. The

ratio increases from 2019 (2.121) to 2020 (2.348). Increase in equity multiplier could indicate

that the company may be overly dependent on debt for its financing which would make it a

potentially risky investment. The cash coverage ratio of the company is 5.277 and the

changes in the ratio is 1.822. The yearly ratio from 2019 to 2020 increases and this means

that the company have enough of cash to pay off its interest.

Asset management ratios describe how effectively or intensively a company uses its

assets to generate revenue. In 2020, the firm's total asset turnover ratio is 0.585. Meanwhile,
the changes in the ratio are -0.196, indicating a fall in the ratio from 2019 (0.781) to 2020

(0.585). This demonstrates that the company invested more in its assets and had fewer sales

through its assets. The fixed asset turnover ratio is 5.007. The changes in the ratio is -1.536

which shows a dicrease from 2019 (6.543) to 2020 (5.007). This indicates that the company

has generated revenue inefficiently by utilising its fixed assets. The receivables turnover ratio

is 1.228, with a change of -0.39 indicating a decrease from 2019 (1.618) to 2020. (1.228).

This shows that the company is making good use of its assets to collect receivables. The

inventory turnover ratio of the company was 52.344, with a change in ratio of 13.975. The

trend ratio rises from 2019 (38.369) to 2020 (52.344), indicating that the company is

inefficient in managing its inventory over time.

The profit margin of MGB is 2.48% which means that the company generates a little

less than 3 cents in profit for every RM in sales. The changes in the ratio is 0.7% where the

yearly ratio for profit margin inreases from 2019 (1.78%) to 2020 (2.48%). All other things

being equal, a low profit margin corresponds to higher cost relative to sales. The return on

assets for the company is 1.45%. The changes of the ratio is 0.06% where the yearly ratio

increases from 2019 (1.39%) to 2020 (1.45%). This shows that the company uses less cost in

order to generate profit through its assets. The return on equity of the company is 3.40% .

Since the return on equity ratio of the company is higher than the return on assets, the

company uses more equity rather than the assets to generate profit.

The company's market-to-book ratio is 0.966. This indicates that the company has not

been successful in creating value for its stockholders in general. The ratio has changed by

0.252, increasing from 2019(0.714) to 2020(0.966), indicating that the company has a healthy

financial situation. The price-earnings ratio is 28.409, with a change of 4.239 from 2019

(24.170) to 2020 (28.409). This demonstrates to investors that the company has tremendous

future growth potential.

 The process of analysing a company's financial statements for decision-making

purposes is known as financial statement analysis. External stakeholders use it to assess an

organization's general health as well as its financial performance and business worth. Internal

stakeholders utilise it as a financial management monitoring tool. The COVID-19 pandemic

wreaked havoc on economies around the world, and the building industry in Malaysia was no

exception. MGB and its subsidiaries ("the Group") recorded a revenue decrease of 25.51 % in

2020, bringing in RM563.27 million in FY2020 compared to RM756.15 million in FY2019,

as a result of temporary closures of sites and offices during the national Movement Control

Orders ("MCO") to curb the spread of infections.

Appendix

Company name: L:VTIB

Type Description 2019 2020
WC0535 31/12/201 31/12/202
0 Fiscal year end date 9 0
WC0100
1 Net sales or revenues 756,146 563,274
WC0105
1 Cost of goods sold (excl depreciation) 661,326 472,119
WC0115
1 Depreciation, depletion & amortization 14,427 14,891
WC0110
0 Gross Income 80,392 76,264
WC0110
1 Selling, general and adminitrative expenses 49,148 45,896
  Other operating expenses 3,331 5,340
WC0125
0 Operating income 27,913 25,028
  Other incomes (+) or associated losses (-) 2,482 4,334
WC0126
6 Non-operating interest income 156 481
WC1819
1 Earnings before interest & taxes 30,551 29,843
WC0125
1 Interest expense on debt 13,019 8,477
WC0140
1 Pretax income 20,850 22,507
WC0145
1 Income taxes 8,425 9,110
  Extraordinary gain (+), loss or minority interest (-) 1,066 553
WC0175
1 Net income 13,491 13,950
       
WC0210
1 Inventories - total 19,707 10,761
WC0205
1 Receivables (net) 467,213 458,797
WC0200
1 Cash & short-term investments 33,100 70,067
  Other current assets 19,120 16,038
WC0220
1 Current assets - total 539,140 555,663
WC0250
1 Property, plant & equipment - net 115,558 112,499
WC0264
9 Total intangible other assets - net 256,523 255,042
  Other non-current assets 57,359 40,210
  Total non-current assets 429,440 407,751
WC0299
9 Total assets 968,580 963,414
WC0304
0 Accounts Payable 255,891 172,826
WC0305 Short-term debt & current portion of long-term
1 debt 100,176 134,653
  Other current liabilities 93,631 141,655
WC0310
1 Current liabilities - total 449,698 449,134
WC0325
1 Long-term debt 59,199 40,743
  Other non-current liabilities 2,970 63,174
  Total non-current liabilities 62,169 103,917
WC0348
0 Common stock 388,186 327,886
  Retained earnings, other reserves, treasury shares 68,527 82,477
WC0350
1 Common equity 456,713 410,363
       
P Share price (market value) as at financial year end 0.650 0.790
WC0530
1 Number of shares outstanding 501,653 501,653
  Financial Ratios    
  Market Value Ratios    
  Market -to-book ratio 0.714 0.966
  Price-earnings ratio 24.170 28.409
  Profitability Ratios    
  Return on equity 2.95% 3.40%
  Return on assets 1.39% 1.45%
  Profit margin 1.78% 2.48%
  Asset Management Ratios    
  Total asset turnover 0.781 0.585
  Fixed asset turnover 6.543 5.007
  Receivables turnover 1.618 1.228
  Inventory turnover 38.369 52.344
  Long-term Solvency Ratios    
  Equity multiplier 2.121 2.348
  Cash coverage ratio 3.455 5.277
  Short-term Solvency Ratios    
  Current ratio 1.199 1.237
  Quick ratio 1.155 1.213
  Cash ratio 0.074 0.156
REFERENCES

1. Ross Westerfield Jordan (12th edition).(2019) Fundamentals Of Corporate Finance

Working with Financial Statements.