Group Assignment 2 CIA1002 – Foundation in Financial Accounting and

Reporting
Semester 1, 2018/2019
Faculty of Business and Accountancy
University of Malaya

Name Matric Number

Ng Yun Qian CIA180090

Teh Yi Ting CIA180146

Wee Min Er CIA180152

Yong Chee Hoong CIA180157

Yu Ming Zhu CIA180159

Instructor : Dr. Azlina Binti Abdul Jalil

 Table of Contents

No. Title Page

1. Cover Page

2. Table of Contents

3. Executive Summary

4. Background of the Companies

5. Ratio Analysis

1. Fraser and Neave (F&N) Berhad

2. Heineken Malaysia Berhad

3. Poly Glass Fibre(M) Berhad

4.Maxis Berhad

5.Axiata Group Berhad

6. Ratio Discussion on Companies Status and Risk of
Financial Difficulties
7. Limitations of Ratio Analysis

8. Practical Difficulties Faced in The Calculation of the

Ratios.

9. References

10. Appendix
 Executive summary
This report was commissioned to examine and provide an analysis and evaluation of the
current and prospective of profitability, liquidity, and financial status on the 5 different companies
selected, namely F&N Berhad, Heineken Malaysia Berhad, Poly Glass Fibre (M) Berhad, Maxis
Berhad and Axiata Group Berhad. Methods of analyzing the companies using ratios include
profitability ratio, efficiency ratio, leverage ratio, liquidity ratio. Other calculations include earnings
per share, quick ratio, asset turnover ratio just to name a few. All calculations can be found in the
appendices. Results of data analyzed shows most companies have above average performance for the
past year. The report also investigates the fact that the analysis conducted has limitations. Some of the
limitations include: forecasting figures are not provided nature and type of company is not known nor
the current economic conditions data limitations as not enough information is provided or enough
detail i.e. monthly details not known results are based on past performances not present

The report finds the prospects of the company in its current position are still considered
positive. Some major areas of weakness that could be improved require further investigation and
remedial action by management. It is recommended that: companies should improve the average
collection period for accounts receivable, improving/increasing inventory turnover, as well as
reducing prepayments and perhaps increasing inventory levels

B) Background of the company :

Fraser and Neave Berhad

Founded by John Fraser and David Chalmers Neave in 1883, from which the instantly
recognisable initials ‘F&N’ are derived, the F&N brand is today synonymous with high quality and
halal-compliant product that is trusted by generations. Fraser & Neave Holdings Bhd (F&NHB) is
amongst the region’s oldest and most established food and beverage companies with its brands
enjoying the distinction of being a market leader and household name in many categories

A household name to many, F&N has established itself as an innovative and trusted leader in
the Food & Beverage arena. Since its humble beginnings as a producer of carbonated soft drinks in
Singapore in 1883, the Group has successfully ventured into various F&B categories such as Dairies
and Ice Cream. F&N is one of the largest beverage manufacturers and distributors in the region with
leading brands such as 100PLUS, F&N Fun Flavours, F&N SEASONS, F&N NutriSoy, F&N ICE
MOUNTAIN, OISHI, Rangers and EST Cola. Deeply entwined into the nation’s fabric. F&N is also
the undisputed leader in the Sweetened Condensed Milk and Evaporated Milk market. Millions of
consumers from all walks of life enjoy their daily treasured moments with a cup of milk tea (teh tarik)
or coffee, cakes or confectionery made with F&N’s broad range of dairy products under the F&N,
TEAPOT, CARNATION®, Cap Junjung® and IDEAL® brands, as well as liquid milk and juice
products under F&N Magnolia, FARMHOUSE and F&N Fruit Tree Fresh brands.

One of the major competitor would be Coca-cola, as the World’s largest market share owner
in beverage industry which owned approximately 40% of share market in the world. Coca Cola is still
concentrating on selling beverage only, this definitely will put the company into the disadvantage
side. The consumption of soft drinks from all around the world is declining and Coca Cola Company
will find it hard to penetrate Malaysia’s market and thus leaves F&N as the leader.

Axiata Group Berhad

Formerly known as TM International Bhd (TMI), the company was incorporated on 12 June
1992, and was the mobile and international operations arm of Telekom Malaysia Bhd (TM).Axiata is
one of the leading telecommunications groups in Asia with approximately 350 million subscribers in
eleven countries.

In pursuit of the vision to be a New Generation Digital Champion by 2020, Axiata pieces
together the best in the region in terms of innovation, connectivity and talent. With a diverse portfolio
in mobile network, communications infrastructure and digital services, Axiata offers a range of
innovative telecommunications products and services.

Axiata has controlling interests in six mobile operators under the brand names of ‘Celcom’ in
Malaysia, ‘XL’ in Indonesia, ‘Dialog’ in Sri Lanka, ‘Robi’ in Bangladesh, ‘Smart’ in Cambodia and
‘Ncell’ in Nepal, with strategic interests in ‘Idea’ in India and ‘M1’ in Singapore. The competitors of
Axiata Group Berhad included Maxis and Digi.
c) Ratio Analysis :
Profitability Ratio

Profitability Ratio
Ratio Profit Margin On Return On Assets Earnings Per Share
Sales (%) (Cents)
Year Current Past Current Past Current Past
Company
Fraser and Neave Bhd 0.7 0.08 0.27 0.04 6.90 7.50

Heineken Malaysia Bhd

Poly Glass Fibre (M) Bhd 0.03 0.07 0.01 0.17 1.13 21.48

Maxis Bhd

Axiata Group Bhd 4.76 3.05 1.65 0.93 10.10 5.70

Liquidity Ratio

Liquidity Ratio
Ratio Current Ratio Quick Ratio Current Cash Debt
Coverage Ratio
Year Current Past Current Past Current Past
Company
Fraser and Neave Bhd 1.46 3.61 1.25 3.06 0.8 0.31

Heineken Malaysia Bhd

Poly Glass Fibre (M) Bhd 1.63 1.34 0.73 0.60 0.32 -0.02

Maxis Bhd

Axiata Group Bhd 0.65 0.53 0.64 0.52 0.30 0.60

Leverage Ratio

Leverage Ratio
Ratio Debt To Asset Times Interest Current Cash Debt
Ratio Earned Coverage Ratio
Year Current Past Current Past Current Past
Company
Fraser and Neave Bhd 0.36 0.16 99.41 33.87 0.80 0.31

Heineken Malaysia Bhd

Poly Glass Fibre (M) Bhd 0.30 0.31 2.43 27.36 0.08 -0.005

Maxis Bhd

Axiata Group Bhd 0.56 0.60 48.46 38.87 0.14 0.19

Efficiency Ratio

Efficiency Ratio
Ratio Account Inventory Turnover Asset Turnover
Receivables Ratio Ratio
Turnover Ratio
Year Current Past Current Past Current Past
Company
Fraser and Neave Bhd 5.75 7.24 5.00 4.99 0.44 0.82

Heineken Malaysia Bhd

Poly Glass Fibre (M) Bhd 5.54 5.20 2.17 2.39 0.23 0.23

Maxis Bhd

Axiata Group Bhd 11.60 13.23 23.53 26.17 0.35 0.34

REFERENCES :
1. Woshi Ken (2017) A little introduction to Fraser & Neave Holding Berhad, retrieved
from:https://www.academia.edu/5236702/A_little_introduction_to_Fraser_and_Nea
ve_Holding_Berhad

2. Fraser and Neave Berhad (2017) Annual report 2017, retrieved from :
http://www.fraserandneave.com/docs/default-source/investor-relations/annual-
reports/2017/FN_AR2017.pdf?sfvrsn=6
 Appendices :
A) Calculation Of Ratios
Fraser & Neave Berhad
Year Current Past

 Current ratio Current Asset Current Asset

= =
Current liabiliies Current Liability
1,738,398 , 000 1,626,534,000
= =
1,193,498 , 000 451,149,000
= 3.61
= 1.46
 Quick or Current Asset−Inventories Current Asset−Inventories
= =
acid-test ratio Current Liability Current Liability
1,738,398 , 000−247,085 ,000 1,626,534,000−247,332,000
=
=
1,193,498 , 000 451,149,000
= 1.25 = 3.06

 Current cash Net cash provided by =

debt coverage = operating activities Net cash provided by operating activities
Average current liabilities Average current liability
71,550,000 184,667,000
= =
946,959,000 603,560,000
= 0.31
= 0.8
Liquidity Ratio

Efficiency Ratio

Year Current Past

 Accounts = Net Sales
=
receivable Average Account Receivables
Net Sales 1,978,622 , 000
turnover Average net accounts receivable =
273,416,000
1,897,959,000 = 7.24
=
329,945,500
= 5.75
 Inventory Cost of goods sold Cost Of Good Sold
= =
turnover Average inventory Average Inventory
1,250,256 , 000
1,236,660,000 =
= 250,625,000
247,222,000
= 4.99
=5.00
 Asset Net sales Net Sales
= =
turnover Average total assets Average Total Assets
1,897,959,000
= 1,978,622,000
4,334,283,000 =
2,406,839,500
= 0.44 = 0.82

Profitability Ratio

Year Current Past

 Profit Net income Net income
= =
margin on Net Sales Total Sales
165,658,000
sales 1,329,225,000 =
= 1,978,622,000
1,897,959,000
= 0.70 = 0.08

 Return on Net income Net income

= =
assets Average total Assets Total Assets
1,329,225,000 =
=
1,738,398,000+3,156,340,000 165,658,000
2,147,267,000 c +1,626,561,000
= 0.27 = 0.04

 Return on =
ordinary
Net income−Preference dividens
share Average shareholders equity−ordinary
capital-
equity =
 Earnings per Attributable Net Profit Attributable Net Profit
= =
share Total Number Of Shares Total Number Of Shares
99,906 108,096,000
= =
1,446,751,141 1,445,519,595
= 6.9 cents = 7.5 cents

 Payout ratio Cash∣ ¿

= Net income
¿

=
 Leverage Ratio

Year Current Past

 Debt to Total liabilities Total Liability
= =
assets ratio Total assets Total Asset
1,193,498,000+565,547,000 451,861,000+ 169,423,000
= =
1,738,398,000+3,156,340,000 2,147,267,000+1,626,561,000
= 0.36 = 0.16

 Times Net income+ Interest expense =

= + Income tax expense Net income+ Interest expense+ Income tax expen
interest
Interset expense Interset expense
earned =
= 165,658,000+ 4,969,000+22,506,000
1,329,225,000+13,656,000+14,707,000 4,969,000
13,656,000 = 38.87
= 99.41

 Cash debt = =
Net cash provided by operating activities
coverage
Net Cash provided by operating activitis Average current liability
Average total liabilities
184,667,000
71,550,000 =
= 603,560,000
946,959,000
= 0.31
= 0.8

 Book value Shareholders equity−ordinary

=
per share Outstanding Shares

=
Poly Glass Fibre (M) Berhad
Current Past

 Current ratio Current assets Current assets

= =
Current liabiliies Current liabiliies
28,184,925 26,908,386
= =
17,268,934 20,142,050
= 1.632 = 1.336

 Quick or acid- Quick Assets Quick Assets

= =
test ratio Current Liabilities Current Liabilities
= 1,870,745+10,304,448
=
20,142,050
698,840+ 386,545+ 11,581,452
= 0.6044
17,268,934
= 0.7335
 Current cash Net cash provided Net cash provided
debt coverage = by operating activities = by operating activities
Average current liabilities Average current liabilities
= =

5,911,316 (299,640)
(17,268,934+20,142,050)÷2 (20,142,050+18.051,128)÷ 2
= 0.3160 = -0.01569
Liquidity Ratio
Efficiency Ratio
Current Past

 Accounts = =
receivable
Net Sales Net Sales
turnover Average net accounts receivable Average net accounts receivable
54,019,277 47,829,146
= =
(10,319,793+9,179,724) ÷ 2 (9,179,724+ 9,231,160)÷ 2
= 5.541 = 5.196
 Inventory Cost of goods sold Cost of goods sold
= =
turnover Average inventory Average inventory
= 47,829,146−20,352,716
=
(14,733,193+8,239,188)÷ 2
54,019,277−20,865,121
= 2.392
(15,895,055+14,733,193)÷ 2
= 2.165
 Asset turnover Net sales Net sales
= =
Average total assets Average total assets
= =

54,019,277 47,829,146
(230,605,529+231,491,706)÷ 2 (231,491,706+ 182,088,811 ) ÷ 2
=0.2338 = 0.2313

Profitability Ratio

Year Current Past

 Profit margin Net income Net income
= =
on sales Net Sales Net Sales
1,812,062 34,364,172
= =
54,019,277 47,829,146
= 0.03354 = 0.7185

 Return on Net income Net income

= =
assets Average total Assets Average total Assets
= =

1,812,062 34,364,172
(230,605,529+231,491,706)÷ 2 (231,491,706+182,088,811)÷ 2
= 0.007843 = 0.1662
 Return on =
ordinary share
Net income−Preference dividens
capital-equity Average shareholders equity−ordinary
1,812,062− ¿
= ❑
¿
 Earnings per = =
share
Profit Attributable Profit Attributable
Weighted−average shares outstandingWeighted−average shares outstanding
1,812,062 34,364,172
= =
159,974,948 159,974,948
= 1.13 cent = 21.48 cent
 Payout ratio Cash∣ ¿
= Net income
¿
❑
=
1,812,062
=

Leverage Ratio
Year Current Past

 Debt to assets Total liabilities Total liabilities

= =
ratio Total assets Total assets
69,451,389 72,149,628
= =
230,605,529 231,491,706
= 0.30 = 0.31
 Times interest Income before Interest =
= ¿ Taxes expenses
earned
Interest expense
 4,597,336+60,715 Income before Interest
=
1,916,960 ¿ Taxes expenses
= 2.43
Interest expense
=

44,812,854+99,674
1,641,357
= 27.36
 Cash debt Net Cash provided =
= by operating activitis
coverage
Average total liabilities Net Cash provided
5,911,316 by operating activitis
=
(69,451,389+72,149,628)÷ 2 Average total liabilities
= 0.08 =

( 299,640 )
(72,149,628+57,110,905 ) ÷ 2
= -0.0046
 Book value per Shareholders equity−ordinary
=
share Outstanding Shares

Axiata Group Berhad

Liquidity Ratio
Year Current Past

 Current ratio Current Asset Current Asset

= =
Current liabiliies Current Liability
11,801,734,000 10,484,329, 000
= =
18,295,332,000 20,262,564 ,000
= 0.52
= 0.65
 Quick or acid- Current Asset−Inventories Current Asset−Inventories
= =
test ratio Current Liability Current Liability
= =
RM 10,488,600,000−RM 174,747,000
RM 11,801,734,000−RM 174,279,000
RM 18,295,332,000 RM 19,944,869,000
= 0.64 = 0.52

 Current cash debt Net cash provided by =

coverage = operating activities Net cash provided by operating activities
Average current liabilities Average current liabilities
= =
RM 6,775,101,000
RM 5,732,951,000
RM 19,944,869,000+ RM 12,489,727,000
RM 18,295,332,000+ RM 20,262,564,000
2
2
= 0.297 = 0.60

Efficiency Ratio

Year Current Past

 Accounts = =
Net Sales
receivable
Net Sales Average Account Receivables
turnover Average net accounts receivable =
RM 21,565,392,000
=
RM 4,775,304,000+ RM 3,954,716 ,000
RM 24,402,401,000
2
RM 4,496,637000+ RM 4,775,304 , 000
2 = 4.94
= 4.99

 Inventory Cost of goods sold Cost Of Good Sold

= =
turnover Average inventory Average Inventory
=
=
RM 24,402,401,000
RM 699,910,996,000+ RM 11,801,734,000
2
 Asset turnover Net sales Net Sales
= =
Average total assets Average Total Assets
 =
=
RM 24,402,401,000 RM 21,565,392,000
RM 70,753,005,000+ RM 56,118,271,000
RM 69,910,996,000+ RM 70,753,005,000
2 2
= 0.34
= 0.35

Profitability Ratio

Year Current Past

 Profit margin Net income Net income
= =
on sales Net Sales Net Sales
RM 1,162,482, 000 RM 657,158,000
= =
RM 24,402,401,000 RM 21,565,392,000

= 0.0476% = 0.0305%

 Return on Net income Net income

= =
assets Average total Assets Average Total Assets
= =

RM 1,162,482 , 000 RM 657,158,000

RM 70,753,005,000+ RM 56,118,271,000
RM 69,910,996,000+ RM 70,753,005,000
2 2
= 0.02 times = 0.01 times

 Return on =
ordinary share
Net income−Preference dividens
capital-equity Average shareholders equity−ordinary
=

RM 1,162,482 , 000−Preference dividens

Average shareholders equity−ordinary

 Earnings per Attributable Net Profit Attributable Net Profit

= =
Total Number Of Shares Total NumberOf Shares
 share RM 909,480,00 0 504.254,000
= =
8,992,086,000 8,877,928,000
=10.1 cents = 5.7 cents

 Payout ratio Cash∣ ¿

= Net income
¿
=

Leverage Ratio

Year Current Past

 Debt to Total liabilities Total Liabilities
= =
assets Total assets Total Assets
21,111,081,000+18,295,332 , 000 =
ratio = 21,872,340 , 000+20,262,564 ,000
58,109,262,000+11,801,734,000
60,268,676 ,000+ 10,484,329, 000

= 0.56 = 0.60

 Times Net income+ Interest expense =

+ Income tax expense Net income+ Interest expense+ Income tax expense
=
interest Interset expense
Interset expense
earned =
= 657,158,000+ 22,900,000+ 744,903, 000
1,162,482 , 000+45,300,000+730,614 , 000 22,900,000
45,300,000 = 62.23
= 42.79
 Cash = =
Net cash provided by operating activities
debt
Net Cash provided by operating activitis Average total liabilities
coverage Average total liabilities
=
=
 RM 5,732,951,000 RM 6,775,101,000
RM 39,406,413,000+ RM 42,134,904,000 RM 42,134,904,000+ RM 30,393,927,000
2 2
= 0.14 = 0.19

 Book Shareholders equity−ordinary

=
value per Outstanding Shares

share
=

RM 24,731,136,000 – RM 8,992,086,000
❑
=0.68