FINAL ASSESSMENT COVERSHEET

Attach this coversheet as the cover of your submission. All sections must be completed.

Section A: Submission Details

Student Name : Nurul Aqilah binti Zawawi

Student ID : 62212120577

Programme : M10

Course Code & Name : SMALL BUSINESS MANAGEMENT (ECB20603)

Course Lecturer(s) : Associate Professor Dr. Nazatul Shima Abdul Rani (PhD)

Submission Title : Final assessment

Deadline :
Day 11 Month 01 Year 2023 Time 11:59

Penalties  5% will be deducted per day to a maximum of four (4) working days, after which
the submission will not be accepted.
 Plagiarised work is an Academic Offence as stated in University Rules &
Regulations and will be penalised accordingly.

Section B: Declaration of Academic Integrity

Tick (✓) each box below if you agree:

/ I have read and understood the UniKL’s policy on Plagiarism in University Rules & Regulations.
/ This submission is my own, unless indicated with proper referencing.
/ This submission has not been previously submitted or published.
/ This submission follows the requirements stated in the course.

Section C: Details of the Submitter

Check that all the details above are filled in, then sign below with the date of submission:

Signature:

Date: 11 January 2023

UniKL CDDH v3 Appendix N(F) - Assessment Coversheet v1 (2020-04-23)

1.Discuss the THREE (3) types of entrepreneurs. Provide examples of real-life entrepreneurs
who fit the descriptions?

There so many types of entrepreneurships in this world. Although there are several forms of
entrepreneurship, they can all be summed up as the process of creating, establishing, and managing
a firm. Everyone has a unique set of goals and dreams for the kind of company they eventually launch
and that how their character and types of entrepreneurs may create. Every entrepreneur has their own
unique set of talents, interests, and quirks that inform how they run their business. Some individuals
believe that by working hard they would be successful, while others could rely on financial resources
to move ahead. In the eyes of some business owners, doing good for society is more essential than
making money.

Firstly, the necessity entrepreneurs, it means entrepreneurs who launch their businesses in
underdeveloped nations sometimes do so out of financial need. The urge to live is what binds together
this diverse group, which includes both street vendors and college grads with little opportunities for
steady work. In my understanding they do this because they have a reason of life needed to push or
motivated them to do this business. Other easy definition also writes as the term "necessity
entrepreneur" is used to describe those who have registered as jobless before beginning their own
firms, since those who have registered as unemployed are actively seeking work. Example,
entrepreneur who are necessity type are John Paul DeJoria. Just picture yourself selling shampoo and
conditioner from the trunk of your vehicle, hoping to make it big one day. Surely this is just wishful
thinking. But John Paul DeJoria did exactly that, teaming up with a business partner and $700 to create
the hair-care firm John Paul Mitchell Systems.

Secondly, opportunity entrepreneur, is a person who, seeing an untapped market for their products or
services, is inspired to launch a new venture. Business owner that prioritises expansion and economic
growth above maintaining operations. In other words, create a fresh customer base for an already
established product. If the business owner can find a cheaper source of the necessary materials, the
price of production may be reduced. Put today's tools to use in making yesterday's output. Put to good
use an already existing technique. Example, Mark Zuckerberg, the self-taught creator, chair, and CEO
of Meta (META), previously known as Facebook, is a computer programmer. Facebook was
established by Mark Zuckerberg, Andrew McCollum, Dustin Moskovitz, Chris Hughes, and Eduardo
Saverin in Zuckerberg's Harvard University dorm room in 2004 under the moniker Facemash. On June
10, 2022, Bloomberg estimated Zuckerberg's wealth at $68.2 billion. Opportunity that he have are to
make a business in his business that are difference than other people are as of the first quarter of
2022, Facebook has 2.93 billion monthly active members, making it the largest social network in the
world by a wide margin. With the intention of providing "...tailored learning, treating illness, connecting
people, and establishing strong communities," Zuckerberg and his wife Priscilla Chan established the
Chan Zuckerberg foundation in 2015. Zuckerberg testified before Congress in April 2018 on

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Facebook's handling of user data, particularly the data breach involving 87 million accounts and
Cambridge Analytica.

Thirdly, the innovation entrepreneur. Consequently, a creative business owner is one who can think
of novel solutions to existing problems in the market. It encourages businesses to set themselves
apart from competitors using cutting-edge methods of promotion, manufacturing, and sales.
Organizations may use this to their advantage as they strive to weather economic storms and maintain
their competitive edge. It is useful for expanding businesses in challenging environments like the
current COVID-19 epidemic. Next, entrepreneurs that are also creative employ a wide range of
innovative abilities while coming up with new goods, services, and procedures. Problem-solving,
creative thinking, and strategic planning are all examples of innovative abilities. Example, Ole Kirk
Kristiansen created LEGO in Denmark in 1932 out of a modest collection of wooden toys. Even before
the advent of plastics in 1946, the business was at the forefront of innovation, having patented a self-
locking ‘stud and tube' system the year before.

Conclusions, all entrepreneurs type have unique reasons that drive them to be good entrepreneur.
From what I learnt that not all problem give negatives impact, sometimes in negative we received
ideas and solutions that brings opportunity , that we can take advantage, sometimes we can make an
innovation ideas. The situation we have been through can be the reasons motivate us to find any
solution to bring profit like the all the entrepreneur.

2. You are thinking of opening a bubble tea business and are interested in one of the well-
known franchises. Visit the Malaysian Association of Franchise (MFA) website and identify
TWO (2) franchises related to bubble tea or boba tea. Discuss the requirements for opening an
outlet for the TWO (2) franchise related to bubble tea or boba tea in Malaysia and evaluate the
pros and cons of franchising for the two-bubble tea franchise that you had chosen. [20 marks]

The popularity of bubble tea establishments surged as users of social media began sharing photos of
their beverages online. The visual value of the beverages was always a priority since we wanted our
consumers to feel inspired to share the beauty of their drinks on social media. The internet at large
pays a lot of attention to such images since they are often shared. Having a cup of bubble tea, with its
distinctive appearance and flavour, has become a social phenomenon. Toppings like grass jelly, aloe
vera, and red bean are frequent additions to bubble tea, although bubble tea is most often served with
chewy tapioca balls ("boba" or "pearls"). It comes in numerous tastes and forms, but the two most
well-known are pearl black milk tea and pearl green milk tea ("pearl" signifies the tapioca balls at the
bottom). I am thinking opening a bubble tea business and I interested in one of the well-known
franchises.
I have checked and visit Malaysian Association of Franchise (MFA) website of food and beverage I
found two franchises related to bubble tea or boba tea which are Tealive and Chatime. I will write
about their information background first. From its modest beginnings in Malaysia, Tealive has made

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its way to the forefront of the global tea market. Tealive now have over 800 locations worldwide,
making them the biggest lifestyle tea brand in Southeast Asia and the CEO Bryan Loo that from the
past , he is one of the Chat time teams and now he do he is own brand Tealive. Other than that,
Taiwanese teahouse brand Chatime was founded in the city of Zhubei. The Chatime chain of tearooms
is the most widespread of its kind. Franchising is key to the company's strategy for development and
expansion. It has over 2500 stores in over 38 different countries including Malaysia.

Next will explain how to register for franchisor to be their franchisee. Tealive step requirements to be
their franchisee are the franchise cost for this firm is RM75,000, and in exchange, the franchisor will
provide the franchisee with all the tools they need to launch their venture successfully, including
assistance with marketing and product development. There will be a 5+5 year commitment. A starting
investment of RM460k is required. All the question and purpose can email to
feedback@tealive.com.my or can contact 03-6151-8581.

Then, for Chatime, from my research we can write business partner enquiry in Chatime website
https://chatime.com.my/business-partner/ under business partner. All step are details written rather
than tealive. Firstly, we need to submit the completed Business Partner Inquiry Form. A member of
Chatime team will get in touch with you to talk about forming a partnership with Chatime and send an
application form. Then, submit the application, next can Email to Chatime of your completed
application. Then, A member of Chatime business partner team will contact you to set up a meeting,
during which you may ask any questions you have and learn more about Chatime and the application
procedure. Next, following Chatime consultation, Chatime will provide you with a Financial Planning
Guide and a Business Plan outline to fill out. Chatime may use this to analyse data and plan more
effectively. Chatime advisory team will be provided with draughts of our business partner
documentation, including a Business. Partner Agreement and a Disclosure Document. When we
Interested in learning more about the Chatime franchise opportunity. Chatime also set up a meeting
with a member of their Operations staff, who are a wealth of information and give constant assistance
to all of our partners. Then, visit chatime offices for the final approval interview with Chatime upper
management. After being accepted as a business partner in the network, official paperwork will be
delivered to you. Business partner agreements need a minimum of three weeks for preparation and
completion. After, you have signed the dotted line and are now a recognised member of the Chatime
family as a Business Partner.

The pros about tealive are new and innovative image large distribution network by Bryan Looo. and
local market knowledge connections because it made from Malaysia. As example, with one swift move,
a new rival emerged in Malaysia and quickly took 90% of Chatime's market share. By acquiring and
merging 162 Chatime franchisees, Bryan Loo and his new Tealive brand essentially shattered
Chatime's monopoly on the Malaysian bubble tea industry. The vast rebranding project was
extensively publicised in Malaysian media due to its amazing magnitude, speed, and execution. But it
also has cons in Tealive which is A brand's reputation might be damaged by rumours and speculation

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regarding the components. Example their ingredient because they are new. For Chatime it far more
longs existent than Tealive, even Tealive are part of it, so Chatime pros are strong brand recognition,
have familiar products and also reliable. The cons are It is possible that Brian Loo's outmanoeuvring
of the team damaged their standing with the public. Also, its insufficient distribution system.

3. You are tasked with developing marketing growth strategies for So.Lek Cosmetics
(https://solekcosmetics.com/), a local business started by a pair of siblings offering beauty
products. Conduct research into this company and prepare a business plan that includes the
following sections:

1. COMPANY PROFILE (5 marks)

1.1 Company Name: SO.LEK Cosmetics
The phrases "SO? Relax!" and the term "alat-solek," which means "makeup" in English, were the
inspirations for the name "SO.LEK." The two terms appear often in the siblings' conversations.

1.2 Company Logo

1.3 Nature of Business

The cosmetic and beauty industry. SO.LEK Cosmetics is a locally owned and operated business with
a mission to redefine beauty and confidence for our consumers. Our company, SO.LEK Cosmetics, is
dedicated to providing the highest quality service and products while also keeping our prices low so
that we can compete with industry leaders.

1.4 Industry Background

Cosmetics company SO.LEK is based in the heart of Kuala Lumpur, Malaysia. Dahlia Nadirah and
Luqman Hakim, two siblings, established SO.LEK. When Dahlia visited local pharmacies in New York
City in December 2015, she was impressed by the low prices of the cosmetics offered without
sacrificing quality. SO.LEK Cosmetics is a locally owned and operated business with a mission to
redefine beauty and confidence for our consumers. Company, SO.LEK Cosmetics, is dedicated to
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providing the highest quality service and products while also keeping our prices low so that we can
compete with industry leaders. They sell lips product, eye makeup products, nail cosmetic product,
also some face product like contour.

2. DESCRIPTION OF VENTURE (5 marks)

2.1 Product (s)
Lips product all called semula gang – codes:
1. Ikhlas
2. Setia
3. Cekal
4. Ikhtiar
5. Sabar
6. Usaha
7. Tabah

Eye makeup product-

They focus only for eyebrow pencil. Called as alis.

Nail cosmetic product –

They have nail product that been called Kilat. Also have a code such as,
1. Rambutan
2. Keranji
3. Plum
4. Delima 2.0
5. Manggis
6. Tembikai
7. Acai
8. Belimbing

Face product-
They sell stick that add depth to your skin with this multi-use stick. Use a sweeping motion to apply
and blend them around your face, focusing on the eyes, cheeks, and other features of prominence.
In code:
First code:
 Chenderoh: Eyeshadow and Blusher (Terracotta)
 Perdana: Eyeshadow and Highlighter (Shimmer Gold)
 Multipurpose - All-in-1 Eyeshadow, Contour, Blusher, and Highlighter
 Ultra creamy & easily glides on
 Adds depth to eyes and creates a multi-dimensional effect
 Retractable and strong holding power
 2 x 2ml
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 Second code:
 Titiwangsa: Eyeshadow and Contour (Dark Brown)
 Temenggor: Eyeshadow and Blusher (Nude Mauve)
 Multipurpose - All-in-1 Eyeshadow, Contour, Blusher, and Highlighter
 Ultra-creamy & easily glides on
 Adds depth to eyes and creates a multi-dimensional effect
 Retractable and strong holding power
 2 x 2ml

2.2 Size of business

SO.LEK Cosmetics, in local level in Malaysia only.

2.3 Background of entrepreneur(s)

While visiting New York City with their family in 2016, siblings Dahlia Nadirah Juhari and Luqman
Hakim Juhari the entrepreneurs, found reasonably priced drugstore cosmetics. Almost daily, we
made a trip to the drug store. We appreciated that not only were their items of high quality, but they
were also very cheap considering they were entirely produced in the United States. Dahlia laments, "I
was wondering, why can't we have anything like this at home – things created in Malaysia at low
prices. Dahlia was working at RHB Bank at the time in 2016. After, more than nine years, she
decided it was time for a career transition away from the financial sector. Luqman was in his final year
of engineering studies in university before he enters cosmetic world with his sister.

3. MARKETING PLAN (5 marks)

3.1 Future outlook and trends
 In 2023, the beauty and personal care industry is expected to generate $2.88 billion in revenue.
Annual market growth is forecasted to reach 3.10 percent (CAGR 2023-2027). It’s good for
SO.LEK Cosmetics to growth.

 With an expected revenue of $1.32 billion by 2023, the Personal Care subsegment will be the
industry's most lucrative. SO.LEK Cosmetics will expect more potential customer.

 In 2023, revenues per person amount to $US85.72, based on population estimates. So, the
chances of getting customer buy product will be good.

 By 2023, internet sales will account for 14.1% of the total income in the beauty and personal
care industry. Good for SO.LEK Cosmetics to selling their products online.

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3.2 Market Segmentation – current and proposed

Demographic Psychographic Geographic Behavioral

Segmentation Segmentation Segmentation
Age:15 years old and Values: Redefine beauty Zip code/postcode: 60000 Purchasing
above. and confidence for habits:
Gender: woman SO.LEK cosmetic Address: 13A, Jalan Tun Customer will
Income: 100 an consumers. Mohd Fuad 3, Taman Tun repeat after 3
above. Dr Ismail, 60000 Kuala months
Goals: Company, Lumpur, Wilayah product
Occupation: All SO.LEK Cosmetics, is Persekutuan Kuala Lumpur targeting
types of occupations. dedicated to providing the finish. They
highest quality service Hours: will repeat
Family size: anyone and products while also Closed ⋅ Opens 9AM order to
can. keeping our prices low so SO.LEK
that we can compete with Phone: 011-2727 6535 cosmetic.
Race: All races can industry leaders.
try. Brand
Needs: people who need interactions:
Religion: All religion make up product. on Instagram
can try. they have 30.6
Pain points: classic K good
Marital Status: not names in Malay language, interaction
matters, everyone other races could not between
can wear makeup. understand who are not SO.LEK
fluently in Malay. cosmetic and
Education: All audience.
person in different Hobbies: Doing make up. Many
background followers
education can wear Personality traits: make means many
makeup. up artist, any make up supporters
tutorial. and buyers.
Ethnicity: any
ethnicity can wear Interests: Anything
makeup. about make up .

Political party affiliation:

Health Government
spread news about good
local product that made of

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 without mercury. Like
SO.LEK cosmetic ,
mercury free.

3.3 TOWS Matrix

Strengths Weaknesses
 Research and  Using Malay language
Development not people understand.
formulated by own and  Reactions to our brand
trusted. DNA were divided;
 Affordable price. some, including some
 Choose only natural of our closest friends,
color mostly in their deemed SO.LEK to be
product cosmetic too conventional.
shades.  Not creative in content.
Opportunities  Using Malay language
 Target customer are  Women will trust on is fine, but better put
women. beauty product that are translation so all
 Malaysian people trusted because people can understand
dominated. beauty is important to and learn Malay
 Have 30.6k followers them and safety of language.
on Instagram. product.  Try to make it more
 Affordable price will modern in classic such
make Malaysian as have a classic
people happy to be packaging that looks
afford such high-quality expensive.
makeup.  Do more content about
 Natural colors are makeup.
favorite and to be wear
with so many people. It
suits too all people and
follower of SO.LEK
cosmetic.
Threats  With own formula  Educate customer in
 Local cosmetic ingredients, we need to both language of
businesses had a bad have customer trust on mercury product and
rep for containing the good ingredient justify that our
mercury and other listed. cosmetic is mercury
potentially harmful free.
substances, and this
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 perception persists
today.
 Justifying our pricing to
clients who mistakenly
believe that only
foreign brands can
afford to be pricey and
that local ones should
be inexpensive.
 Convincing people that
Malaysian products are
just as good as
international brands.
 Try make a content
educated about quality
so customer
understand that the
price is equal to quality
of product.
 Show to the customer
that we have all
expensive natural color
as good as
international brands as
well as have good
natural ingredients.
 Need to clarify and
show that our product
its same as foreign
brand even the name is
classic, the price is as
good as ingredient.
 Make a content about
convincing people that
Malaysian products are
just as good as
international brands in
creative ways such as
storyline.

4. MARKETING MIX (5 marks)

Merchandise, pricing, placement, and word-of-mouth advertising are the four pillars of a successful
marketing mix. The odds of a product being recognised and purchased by consumers may be
improved by focusing on the following four aspects of the marketing mix:

4.1 Product Strategy.

PRODUCT STRATEGY
Lips product all called semula gang – codes:  It took a lot of work to find the
1. Ikhlas correct recipe and manufacturing to
2. Setia get the Halal certification. Due to
3. Cekal entrepreneur that have very dry lips,
4. Ikhtiar both entrepreneurs spent months
5. Sabar perfecting the lipstick mix that is
6. Usaha now universally adored. So, the
7. Tabah product specialize with good formula
Eye makeup product- RND .
They focus only for eyebrow pencil. Called as  No mercury.
alis.  Name with local language, malay
Nail cosmetic product – language.
They have nail product that been called Kilat.  Friendly products names to
Also have a code such as, Malaysian
1. Rambutan  Focus on product that always can
2. Keranji make 2 in one or use in many ways.
3. Plum Example, for product bayang like
4. Delima 2.0 face product , it advices to add depth
5. Manggis
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 6. Tembikai to your skin with this multi-use stick.
7. Acai Use them as a blending tool by
8. Belimbing swiping them over your eyes,
Face product- cheeks, and other features of your
First code: face.
 Chenderoh: Eyeshadow and Blusher
(Terracotta)
 Perdana: Eyeshadow and Highlighter
(Shimmer Gold)
 Multipurpose - All-in-1 Eyeshadow,
Contour, Blusher, and Highlighter
 Ultra creamy & easily glides on
 Adds depth to eyes and creates a multi-
dimensional effect
 Retractable and strong holding power
 2 x 2ml
Second code:
 Titiwangsa: Eyeshadow and Contour
(Dark Brown)
 Temenggor: Eyeshadow and
Blusher (Nude Mauve)
 Multipurpose - All-in-1 Eyeshadow,
Contour, Blusher, and Highlighter
 Ultra creamy & easily glides on
 Adds depth to eyes and creates a
multi-dimensional effect
 Retractable and strong holding
power
 2 x 2ml

4.2 Pricing Strategy

The cosmetic item is be sold at the right price for consumer expectations with local product like SO.LEK
Cosmetics, the price in range RM 35 to RM59 neither too low nor too high. The price are affordable
for Malaysian. Some consumers, wrongly believing that only foreign brands can afford high pricing,
expect local ones to be far lower.The cheap production costs of foreign brands mean that they may
undercut domestic rivals in drugstores, but SO.LEK Cosmetics must account for the high costs of its
ingredients, packaging, and distribution when setting pricing.

4.2 Distribution Strategy

SO.LEK Cosmetics, are available at
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  Lazada: https://www.lazada.com.my/products/solek
 Shopee: https://shopee.com.my/solekcosmetics.os
 Website: https://solekcosmetics.com/
 Watsons stores

4.3 Promotion Strategy

 Using Malay language. So, easy for Malaysian to understand the product name and remember
because its easy to spell and mentioned.
 Getting the Halal certification, so it will be trusted most Malaysian are Muslim.
 SO.LEK Cosmetics use Facebook and Instagram as platform for promote.

4(a). Compare the quality management of product and service businesses. (10 marks)

Management of quality refers to the steps taken to guarantee that goods and services supplied to
consumers meet or exceed their needs. Although quality management procedures are beneficial for
both product and service firms, there are important distinctions to keep in mind when doing so. To
assure quality, you must assess the product's operations, infrastructure, and labour. When we manage
quality, we are constantly looking for ways to improve and stay ahead of the competition, ensuring our
company's work is always high-quality.

Product vs, intangible offering

Businesses that deal in products tend to concentrate on making and selling products, whereas those
that deal in services tend to focus on providing clients with experiences that they are going through
from what we sell to them. As it is often simpler to measure and quantify the quality of a physical
product than it is to analyse the quality of a service, this may have an effect on how quality is evaluated
and maintained. For example, a homestay includes a physical product in the form of bed for sleep and
intangible value such as décor of homestay, service and environment surrounding of homestay.

Quality control vs. quality assurance

What we need to know is when comparing quality control with quality assurance, it is common for
product-based organisations to put more weight on quality control, which entails examining and testing
items at various stages of manufacturing to ensure they satisfy standards, it means until we as seller
achieve the needs of customer, it is good to be always improve and be better. One possible area of
emphasis for service-based firms is quality assurance, or the development of procedures and
infrastructure that ensures consumers always have a satisfactory experience, with that potential
customer will hear the good news, our loyalty customer will repeat order or want again our services.
Example, for non-manufacturing organisations, quality testing might take the form of customer service
evaluations, questionnaires, surveys, inspections, and audits.

Quality improvement

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Businesses that sell products or provide services may both benefit from a commitment to continual
quality improvement, while their methods for doing so may vary, means if we improve the profit will be
better because customer happy, what we give we get back. In the case of product companies, this
may mean adjusting production methods or releasing new models, while service companies may look
at ways to boost the quality of service provided or the satisfaction of our customer. Example what we
can do in quality improvement, by shortening the time it takes for a cycle to complete of our product
or services. Also, elevating the standard of the final product. Then we can lower our business
expenses. Next, increasing participation from staff members. Need transforming the way in which
businesses interact with their customers.

In conclusions, long-term connections with consumers may be fostered via product service
management's focus on providing individualised care. In addition, it works to create goods that, across
a range of pricing points, can live up to customers' quality expectations.

4(b). Short case: Root Remedies

Health and beauty brand Root Remedies will bid its customers goodbye in August 2022
after a seven-year run. The main reason: burnout.
In a heartfelt post to Instagram, the founder, Chiew Yee Sian, explained that keeping up
with social media and its "unceasing trends" has become all too much for her.
"With the constant need to pursue profits and thus views and clicks, I find myself becoming
increasingly disillusioned and burned out," she wrote.
In October, Sian and her partner Leland updated the Root Remedies community, sharing
that the supportive messages they received had opened their hearts to the possibility of
restarting the brand sometime in the future.

4.The above case illustrates the common problem entrepreneurs face when transitioning from
the role of a founder to that of a professional manager. If Root Remedies were to restart its
business, what would you advise Ms. Chiew about the managerial responsibilities of
entrepreneurs? (10 marks)
[20 marks]

Ms. Chiew, as the company's creator and professional manager, must be aware of her many
management obligations before Root Remedies can get back up and running.

Firstly, planning activities. Strategy, or long-term strategy, is the overarching goal of Root Remedies
company. A company's short-term strategy is the blueprint for how it will run for the next 12 months or
less.A budget is a document that details monetary goals for the future. Next, Creating an organizational
structure for the Root Remedies organisation. The improvised framework Root Remedies - develop
with little premeditation, an organization's formal, hierarchical method of passing up-and-down
messages known as the "chain of command." A line organisation is a straightforward management
system in which employees report directly to one manager. The number of direct reports that one

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manager is responsible for is called their "span of control." Then, Delegating Authority, the practise of
empowering subordinates to take action or make choices on their own. In charge of Maintaining Order
in the Working World Intentional placement of benchmarks in order to measure progress toward an
objective. Next, communicating facilitating free dialogue between supervisors and staff members in
order to discuss issues and brainstorm solutions. Last but not least, negotiating. A method of
discussing and working out differences in wants, needs, and expectations with the other person.

5. Discuss how a company evaluates their financial performance, such as their ability to pay
debt, profitability, debt, and the rate of return on their investment. Provide the formula, and
interpretation of the analysis on the company financial performance. [20 marks]

Examining and analysing the individual line items in a company's financial records is what is known
as a ratio analysis. It may be used to examine the company's efficiency, profitability, liquidity, and
solvency. To get insight into a company's profitability, liquidity, operational efficiency, and solvency,
ratio analysis examines line-item data from its financial statements. A company's performance
throughout time may be measured and compared to others in the same industry or sector with the use
of ratio analysis. External parties that establish standards, which are often connected to risk, may also
need ratio analysis. Although ratios are helpful, they should be used in conjunction with other
measures to provide a whole view of a company's financial health. A few examples of ratio analysis
include the current ratio, the gross profit margin ratio, and the inventory turnover ratio.

Gross profit margin is a ratio used to determine how much money is made after subtracting selling
expenses.This ratio is instructive because it quantifies, as a percentage of sales, the amount that can
be put toward covering operational expenditures for a certain business.
(Revenue-cost of sales) / revenue = 100

A company's ROI is the rate at which its capital investment yields a profit. The higher the ROl, the
better the return on investment, whereas the lower the ROI, the more reason there may be to worry
about the company's performance. Return on investment is determined by dividing net profit by the
total amount of capital used. Return on investment may be calculated as follows:
ROI = (Net profit / Invested capital) x 100%

Working capital is a measure of a company's liquid net assets that may be utilised immediately for
operations. Understanding a company's liquidity is crucial since it shows whether it has resources that
can be swiftly transformed into cash.
Currents assets- currents liabilities

The current ratio is a liquidity ratio used to assess a company's ability to meet its short-term obligations.
Currents assets/currents liabilities (divide)

UniKL CDDH v3 Appendix N(F) - Assessment Coversheet v1 (2020-04-23)

Margin of profit is a way to evaluate a business's financial health by comparing its net profit to its total
revenue. It's determined by comparing the company's net profit to its total sales. A simple profit margin
formula is Profit margin = (Net profit. / Total revenue) x 100%

The ratio of debt to equity utilised to acquire assets is called the company's leverage. If all assets are
funded by stock, the leverage multiplier is 1, but if debt is utilised to buy assets, the multiplier starts to
rise.
Total assets/ total equity

Conclusions are if a company's profit margin is large, it means it is making money off of sales, but if
it's low, it might mean it's struggling to do so. It is vital to analyse these measures in the context of the
company's industry and unique Business model, and to compare its performance to that of other firms
operating in the same or related industries. Ratio analysis is used by investors and analysts to assess
a company's financial health by comparing the company's historical financial performance with its
present performance. The ability to see how a firm is doing over time and to project its future success
is a key benefit of using comparative data. This information may be used to evaluate a firm's
performance relative to competitors in the same field, as well as to assess how the company compares
to the average performance of its industry. Ratio analysis is a simple tool for investors to employ, and
all the data investors need to compute the ratios can be found in a company's financial statements.

UniKL CDDH v3 Appendix N(F) - Assessment Coversheet v1 (2020-04-23)