CIA1002 Group Assignment 2 Finalized 1

FOUNDATION IN FINANCIAL ACCOUNTING AND
REPORTING (CIA 1002)
Faculty of Business and Accountancy
University of Malaya
Semester 1, 2019/2020
Group Assignment 2
Monday 11:00 am – 1:00 pm
NO NAME MATRIC NUMBER

1 ARRECA WONG KA-HWA CIA190010
2 HAFIZ IZZUDYN BIN ZAINAL ABIDIN CIA190034
3 JOHNSON NG ZE WEY CIA190042
4 LIM SIOW TENG CIA190056
5 WU SIYI CIA180707
Instructor: Dr. AzlinaBinti Abdul Jalil
Dr. NurlianaBintiMdRahin
Table of Contents
N Title Page
o
1 Executive Summary 1
2 Background of The Companies
2.1 Industrial Product & Service Industry 1-2
2.2 Plantation Industry 2
2.3 Transport / Logistic Industry 2
3 Type of Investors 2-3
4 Ratio Analysis
4.1 Profitability Ratio 3-4
4.2 Liquidity Ratio 4-5
4.3 Leverage Ratio 5-6
4.4 Efficiency Ratio 6-8
5 Limitations of ratio analysis 8-9
6 Any practical difficulties faced in the calculation of the ratios 9
7 Conclusion 9-10
8 References a-b
9 Appendix c-bbb
1.0 Executive Summary
This report will mainly outline ratio analysis used on the financial statements to assess the the profitability, liquidity,
leverage and efficiency and investment potential on 5 different companies, namely, Tiong Nam Logistics Holdings
Berhad, Comfort Rubber Gloves Industries Sdn.Bhd, UMS Holdings Berhad, United Plantation Berhad and
HupSeng Industries Berhad, from 3 different sectors which are, industrial product and services, plantation and
transportation/logistic sectors which are all listed in Bursa Malaysia’s Main Market listing. Ratio analysis is a useful
quantitative method of gaining an overview into a company's liquidity, operational efficiency, and profitability by
comparing information contained in its financial statements. Ratio analysis is a cornerstone of fundamental analysis.
Outside analysts use several types of ratios to assess companies, while corporate insiders rely on them less because
of their access to more detailed operational data about a company. This report will give further explanation on the
ratios that we have obtained, specifically from the aspects of its profitability, liquidity, leverage and efficiency.
Besides that, the report will cover briefly on each company's background and introduce the different type of
investors that are looming in the financial market. Furthermore, the report will explain the limitation of the ratio
analysis used and the practical difficulties faced in the calculation of the ratios used. Finally, the report will aim to
advice the different types of investors on which of these 5 companies should invest in, based on their needs and the
suitability of the ratio analysis that we have obtained.
2.0 Background of the Companies
2.1 Industrial Product & Service Industry
Comfort Rubber Gloves Industries Sdn. Bhd. (CRG) is a producer of natural and synthetic specialty examination
gloves in Malaysia. It was established in 1993 as the glove manufacturing subsidiary of Comfort Gloves Berhad
(Formerly known as Integrated Rubber Corporation Berhad (IRCB)). Located in Taiping, Perak, CRG’s factory is
equipped with advanced machineries and operations that are capable of producing wide range of quality gloves. Its
products include non-sterile latex examination gloves (powdered, powder-free, polymer coated PF, chlorinated PF)
and non-sterile nitrile examination gloves (powdered, powder-free). Currently CRG’s gloves are exported to the
Oceanic Countries, Middle East Countries, Europe, Northern American, South America, Africa and Asia-Pacific
region. Its major competitors are Hartalega Holdings Bhd and Top Glove Corp Bhd.
Before rebranding to UMS Holdings Berhad (UMSH), this company founded in 1941, was under the name of
Syarikat Union Motor Supply, UMSH has grown into a key player in the distribution of industrial spare parts and
implementation of systems that help keep its customers at maximum operation efficiency. UMSH is listed on the
KLSE Main Board. With subsidiaries engaging in the distribution of mechanical power transmission, material
handling systems and industrial spare parts, UMSH services a wide spectrum of industries which include (but not
limited to) palm oil, sugar, quarry, cement, rubber, timber and the manufacturing sectors. Besides that, the company
also provides engineering consultancy, which includes feasibility studies, capital costs estimates, planning and
scheduling and installation. A few main competitors of UMSH are Design Systems Inc, Innovative Wireless
Technologies Inc and Waltonen Engineering Inc.
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HupSeng Industries Berhad (HSIB) is a manufacturer of biscuit products in Malaysia since 1958 and have been a
major player in the industry for the past 60 years with their brand. HSIB is one of the most popular and top biscuit
companies in Malaysia and its manufacturing and sales quality makes it the superior biscuit product across
Malaysia. Its current products include biscuits, beverages and other agents' products. For example, Special Cream
Crackers, Instant Coffee Mix, Rice Crackers and others. HupSeng Industries Berhad is located at 14, JalanKilang,
KawasanPerindustrianTongkangPecah, 83010 BatuPahat, Johor, Malaysia. Its major competitors are Munchy Food
Industries SdnBhd and Jacob Fruitfield Food Group.
2.2. Plantation Industry
United Plantation Berhad (UP) is a Malaysia-based oil plantation company. Starting in 1906, the company has
grown over the years to become one of the largest plantation company in Malaysia. The company's main business is
growing and processing palm oil, coconut and other cultivated crops in a sustainable manner. In Malaysia UP´s total
Landbanks consist of approximately 40,855 hectares. The main focus is cultivation of oil palms (90%) and coconuts
(10%). United Plantations Berhad operates 6 Palm Oil Mills and the Unitata refinery in Malaysia. The company is
located in 36400 HutanMelintang, Perak. Its major competitors are Sime Darby Berhad and Genting Plantations
Berhad.
2.3 Transport/Logistic Industry
Tiong Nam Logistics Holdings (Tiong Nam) is a Malaysia-based company that is involved in the provision of
fully integrated logistics and warehousing services. Ever since 1992, they have consistently ridden high on Bursa
Malaysia. Tiong Nam Logistics operates through three divisions, which are Logistic and Warehousing services,
Property and Investment development. They provide all sorts of services such as trucking delivery, cross-border
transfers, warehouse space and management services, heavy transportation, as well as container haulage. Their
competitors consists of CEVA Logistics, Deutsche Post DHL Group and CJ Century Logistics Holdings Bhd. At
TIong Nam, they are often driven by the company’s motto of “You call, we deliver”. They always made sure that
distance or complexity is never an obstacle to efficiency delivery. They also render services across countries like
Malaysia, Thailand, Singapore and Myanmar.
3.0 Type of Investors
The most meaningful way to succeed is to help others succeed (Adam Grant, 2018). Investors are unique players in
the growth process of a business. The level and quality of their involvement are detrimental to determine a
company’s make or break. It is imperative for any entrepreneur, company or organization, especially during its start-
up phase, to take the time to learn about the types of investors available and identify their needs before approaching
them for funds. Investors are needed during almost any stage in the life of a business.
Investors can range from banks, angel investors, peer-to-peer lenders, venture capitalists and personal investors.
Despite the different types of investors that are available in the financial market, an entrepreneur has to identify the
specific needs and wants of an investor in order to obtain the funds needed for the operation of the business. For this
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report, our investors consist of four types, each with their own specific needs. Firstly, ABC Bank, is an investment
group that heavily focuses on investing in companies that are having high profit margins. Next is Mr. Sam, a
personal investor who is a low risk taker, and would like to invest in a company that is able to finance its operations
through their own resources, rather than taking on debt. Moving on, is Mrs. Samantha, a high profile
businesswoman in the investment industry who invests in companies with high liquidity, as she is concern how
capable a company is in raising cash to purchase additional assets or to repay creditors quickly, either in an
emergency situation or in the course of normal business. Lastly, we have Mr. Adam, a personal investor who invests
in companies with good inventory management and are able to generate enough sales to turn or utilize the inventory.
Based on the analysis that we make below, we will advise and recommend the companies that are suitable and meet
the needs and requirements of the investors stated above.
4.0 Ratio Analysis
4.1.0 Profitability Ratio

Sector Company Profit Margin Ratio Return on Assets Ratio
Year Year
2018 2017 2018 2017
Industrial Comfort Rubber Gloves Industries Sdn. Bhd. 0.09 0.10 0.13 0.12
Product & UMS Holdings Berhad 0.08 0.07 0.04 0.03
Service
HupSeng Industries Berhad 0.14 0.15 0.17 0.18
Plantation United Plantation Berhad 0.29 0.27 0.13 0.14
Transport/ Tiong Nam Logistics Holding Berhad 0.05 0.14 0.02 0.05
Logistic
4.1.1 Profit Margin Ratio

In the industrial product and service industry, although the net sales and net income of Comfort Rubber Gloves
Industries Sdn. Bhd. increases in 2018, their profit margins suffer a decline from 0.10 in 2017 to 0.09 in 2018. The
same situation happens to HupSeng Industries Berhad, whereby their profit margins decrease from 0.15 (2017) to
0.14 (2018), despite and increase in both their net income and net sales. The decrease in profit margins in these two
companies might be due to lower selling prices and intense competition from new players in the industry. However,
for UMS Holdings Berhad, they have seen an increase from 0.07 in 2017 to 0.08 with increases in both its net
income and net sales. This could be due to their lean manufacturing, whereby they lower production costs by careful
monitoring material purchases and only producing products as needed.
In the plantation industry, United Plantation Berhad sees an increase in their profit margins from 0.27 (2017) to
0.29 (2018), despite a decline in both net sales and net income.
In the transportation and logistic industry, for Tiong Nam Logistics Holding Berhad, they suffer a huge shrink in
their profit margins, from 0.14 in 2017 to 0.05 in 2018, a deduction of almost 64%, coupled with huge reductions in
net income and net sales in 2018.
In result, we would advice ABC Bank, to invest in United Plantation Berhad, related to the plantation industry, as
the company was able to record the highest profit margin among the 5 companies and also it showed an increase in
profit margin from 2017 to 2018. This is in line with ABC Bank’s requirement of investing in companies with high
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profit margins.
4.1.2 Return on Assets Ratio
In the industrial product and service industry, an increase in both net income and total average assets, results in
an increase of ratio from 0.12 (2017) to 0.13 (2018), for Comfort Rubber Gloves Industries Sdn. Bhd. UMS
Holdings Berhad also was able to achieve the same situation with an increase in ratio from 0.03 in 2017 to 0.04 in
2018. The increase in return on assets could be due to the company being able to increase asset turnover and sales
during the financial period. For HupSeng Industries Berhad however, they incurred a decrease in the ratio, from 0.18
in 2017 to 0.17 in 2018, with declines in both net income and average total assets. This decrease in return on assets
could be due to the diminishing productivity in its assets and decrease in sales.
In the plantation industry, United Plantation Berhad sees a decrease in their return on assets from 0.14 (2017) to
0.13 (2018), despite only a decrease in net income for the period.
In the transportation and logistic industry, for Tiong Nam Logistics Holding Berhad, they too suffer a decline in
their return on assets, from 0.05 in 2017 to 0.02 in 2018, due to a huge decrease in net income but and increase in
average total assets in 2018.
4.2.0 Liquidity Ratio
Sector Company Current ratio Quick ratio
Year Year
2018 2017 2018 2017
Product & Comfort Rubber Gloves Industries Sdn. Bhd. 2.92 3.07 2.15 1.95
Service UMS Holdings Berhad 9.30 10.70 5.29 6.12
Transport/ Tiong Nam Logistics HoldingsBerhad 1.23 1.50 0.86 1.40
Logistic
4.3.1 Current Ratio
In the Product and Service industry, Comfort Rubber Gloves Industries Sdn.Bhd. showed a decrease in current
ratio from 3.07 to 2.92 from 2017 to 2018 although there was an increase in current assests. The increase in current
liabilities that is proportionately larger than the increase in current assets lead to a fall in current ratio. While in
HupSeng Industrial Berhad, the current ratio decreases from 2.26 in 2017 to 2.18 in 2018. This is because the
current assets decreased from 2017 to 2018. The ability of the company to manage liabilities deteriorates. While for
UMS Holdings Berhad, the company’s current ratio had a reduction from 10.70 (2017) to 9.30 (2018) due to the
reduction in current assets from the year 2017 to 2018. The company is lowly risky as it’s current ratio exceeds
HupSeng Industries Berhad by 7.12 (9.30-2.18) in 2018 and 8.44 (10.70-2.26) in 2017.
In the Plantation industry, United Plantation Berhad showed an increase in current ratio from 7.96 (2017) to 7.98
(2018). It’s ability to manage liabilities improved since the current assets that are available to pay off liabilities
increases in 2018.
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In the Transport and Logistic industry, although the current assets of Tiong Nam Logistics Holdings Berhad in
2018 was higher than in 2017, the company’s current ratio was lower in the year 2018 (1.23) as compared to 2017
(1.50). This happened because the increase in current liabilities was proportionately larger than the increase in
current assets. Therefore, the company experienced a fall in current ratio eventhough there was an increase in assets.
In summary, we will advise investors to choose UMS Holdings Berhad compared to the other four companies
because UMS Holdings recorded the highest current ratio which means the company has the highest ability to
manage liabilities and pay them off.
4.3.2 Quick Ratio
In the Product and Service industry, the quick ratio in Comfort Rubber Gloves Industries Sdn.Bhd. experienced a
rise which is from 1.95 (2017) to 2.15 (2018). This means that the ability of quick assets to settle off liabilities
increases. This indicates that the company is experiencing solid top-line growth, quickly converting receivables into
cash and is able to easily cover financial obligations. While UMS Holdings Berhad and HupSeng Industries Berhad
had a drop in quick ratio from the year 2017 to 2018. By comparing UMS Holdings Berhad and HupSeng
Industries, UMS is highly leveraged and highly risky as it’s quick ratio in 2018 is 3.47 (5.29-1.82) less than
HupSeng Industries in 2017 which is 4.21 (6.12-1.91).
In the Plantation industry, United Plantation Berhad experienced an increase in quick ratio from 6.99 (2017) to
7.06 (2018). Therefore, the company has a higher ability to manage liabilities using quick assets and they are able to
quickly convert receivables to cash and cover financial obligations.
In the Transport and Logistic industry, Tiong Nam Logistics Holdings Berhad recorded a fall in it’s quick ratio
from 1.40 in 2017 to 0.86 in 2018. This fall results in a lower ability to pay off liabilities using the quick assets.
Hence, the company is said to be over-leveraged.
In summary, we advise investors to choose United Plantation as their quick ratio was the highest among all the
other companies. This means that the company has a higher ability to pay off liabilities using the quick asset and are
able to convert receivables to cash and cover financial obligations
4.3.0 Leverage Ratio

Sector Company Debt-to-asset ratio Debt-to-equity ratio
Year Year
2018 2017 2018 2017
Product & UMS Holdings Berhad 0.06 0.05 0.061 0.058
Service
Transport/ Tiong Nam Logistics Holding Berhad 0.60 0.59 1.51 1.45
Logistic
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4.3.1 Debt-to-Assets Ratio
In the industrial product and service industry, the ratio of Comfort Rubber Gloves Industries Sdn. Bhd. rose
from 0.17 in 2017 to 0.20 in 2018 which means the debt to assets in 2018 became higher and more leverage
compared to previous year. In UMS Holdings Berhad, although there was an increase in total asset in 2018 but the
debt-to-asset ratio still increases from 0.05 to 0.06 since the proportion of total liabilities increase is greater than
proportion of the total asset increase. While in HupSeng Industries Berhad, there was a decline in total liabilities but
the debt-to-asset ratio still slightly increased from 0.327 to 0.331 because the proportion of total liabilities decrease
is smaller than the proportion of total asset decrease.
In the plantation industry, United Plantation Berhad shows an increment of debt-to-asset ratio from 0.112 to 0.113.
Therefore, in 2018 United Plantation Berhad has 11.3% of the corporation's assets are being financed by the
creditors, and the owners are providing 88.7% of the assets' cost.
In the transport industry, the debt to assets of Tiong Nam Logistics Holding Berhad increases to 0.60. Due to the
ratio is more than 0.5 therefore Tiong Nam is considered as a highly risk and leverage company. It is because 60% of
the total asset of the company are financed by liabilities.
In summary, we will advise investors to choose UMS Holdings Berhadcompared to another 4 companies because
investors prefer to see low debt ratio and the lower the ratio, the lower the leverage and the financial risk.
4.3.2 Debt-to-Equity Ratio
In the industrial product and service industry, even though the total equity of Comfort Rubber Gloves Industries
Sdn. Bhd. increased approximately RM 51 million in 2018 but the debt-to-equity ratio still increased from 0.21 to
0.25. This is due to the proportion of total liabilities increased is greater than proportion of the total equity increased.
While in UMS Holdings Berhad, there is a slight rise 0.3% from 2017 to 2018 which means that the company is
efficient at managing their total equity. Other than that, although the total liability decrease RM 1,369,672, but the
overall ratio grows a bit, from 0.486 to 0.494, this is due to the proportion of liability decreasing more than the
proportional decrease in the equity.
In the plantation industry, there is an increment of debt-to-equity ratio from 0.126 to 0.127. Therefore, 12.7% of
total equities of United Plantation Berhad are being financed by debts in 2018 compared to 12.6% in 2017.
In the transport industry, Tiong Nam Logistics Holding Berhad’s debt to equity increases from 1.45 to 1.51.
Therefore, Tiong Nam has the more risk of money and few chance to borrow money further when the company
faces an immediate situation because it has the highest debt-to-equity which is 1.51.
In result, investors will more likely to invest in UMS Holdings Berhad since the debt to equity ratio of UMS
Holdings Berhad lowerthan other companies therefore it is considered less risky to creditors and investors and at the
same time UMS Holdings Berhad has better creditability in both years compared with other companies.
4.4.0 Efficiency Ratio
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Sector Company Accounts Receivable Inventory Turnover
Turnover (times) (times)
Year Year
2018 2017 2018 2017
Product UMS Holdings Berhad 3.57 3.58 1.61 1.54
& Service
Transport Tiong Nam Logistics Holding Berhad 3.37 3.31 0.06 0.15
/ Logistic
4.4.1 Accounts Receivable Turnover Ratio
In the industrial products and services industry, Comfort Rubber Gloves Industries Sdn. Bhd. collects its
receivables more frequently in 2018 (6.38 times) compared to 2017 (6.33 times). UMS Holdings Berhad’s net sales
increases in 2018 but it collects its receivables fewer times in 2018 (3.57 times) compared to 2017 (3.58 times).
Meanwhile, HupSeng Industries Berhad takes shorter time to collect accounts receivables in 2018 (44.26 days).
In the plantation industry, the account receivable turnover of United Plantation Berhad is lower in 2018(6.77
times) as compared to 2017 (6.82 times) although there is a slight decrease in average accounts receivable. This
means that United Plantation Berhad collects its receivable about 7 times per year.
In the transport industry,Tiong Nam Logistics Holding Berhad does a better job in collecting receivables in
2018 as it collects the debts as frequent as 3.37 times compared to 3.31 times in 2017.
In summary, we will advise investors to choose HupSeng Industries Berhad compared to another 4 companies
because it is the more effective and more liquid as it is more efficient at converting its accounts receivable into cash
with the capability to efficiently issue credit to its customers and collect funds from them in a timely manner.
4.4.2 Inventory Turnover Ratio
In the industrial product and service industry, Comfort Rubber Gloves Industries Sdn. Bhd. sells roughly 8.67
times in 2018 which is higher than 6.62 times in 2017 due to the increase in cost of goods sold and decrease in
average inventory. Meanwhile, UMS Holdings Berhad sells roughly 1.61 times in 2018 which is higher than 1.54
times in 2017 due to the increase in cost of goods sold and average inventory. The increase in cost of goods sold and
average inventory of HupSeng Industries Berhad in 2018 have led to it to sell more 0.03 times (7.83 -7.86) of its
inventory in 2017.
In the plantation industry, United Plantation Berhad turn over its inventory 3.15 times in 2018 slightly lower than
2017 which is 3.73 times. This implies that it becomes slower at controlling the merchandise into cash.
In the transport industry, the cost of goods sold and average inventory ofTiong Nam Logistics Holding Berhad
increases, so its inventory turnover in 2018 is lower (0.06 times) compared to 2017(0.15 times).
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In summary, we will advise investors to choose Comfort Rubber Gloves Industries Sdn. Bhd. compared to another
4 companies because it more effective and more liquid as it is more efficient at controlling the merchandise into cash
in a shorter period which implies that it has a better inventory control.
5.0Limitations of ratio analysis
Ratio analysis is used to evaluate numerous matters related with an entity, such as its liquidity, efficiency of
operations, profitability, leverage and so on. This type of analysis is particularly useful to analysts outside of a
business, since their primary source of information about an organization is its financial statements. Despite its
ability to help validate or disprove the financing, investment and operating decisions of the firm and simplifies
complex accounting statements and financial data into simple ratios, there are a few limitations to these ratios.
Firstly, ratio analysis completely ignores the qualitative aspects of the firm, as they only take into consideration the
monetary aspects (quantitative). Some qualitative aspects such as the well-being of its employees, leisure time,
operating hours, customer satisfaction, morale and product quality. These qualitative aspects cannot be evaluated
based on ratio analysis and requires further analysis to determine its qualitative wellbeing. A company with high
income, doesn’t necessarily mean its products are of good quality and company morale is high. Vice versa, a
company with comparatively low income, might have better product quality and high company morale. Some
investors emphasize heavily on the balance of both qualitative and quantitative aspects of a company before they
make an investment. This is due to certain cases where by, companies with high income right now, will close down
or even face internal management issues due to its policies of overworking staff, low company morale and long
working hours. Investing is definitely and intricate art and requires years of experience and much relevant
information to find the right fit and make right investments all the time.
Next. ratio analysis ignores the price level changes due to inflation. This is due to the calculation of most ratios
using historical costs. This causes investors to overlook the changes in price level between the periods, due to
inflation or current economy state which in return does not reflect the correct financial situation. For example,
inflation causes cash and cash equivalents to be off less value in the present period as compared to the past. An
interesting way of putting this situation in play is by using RM100 as an example. RM100 two decades ago could
buy household goods, have family meals and at the same time you might still have a balance that could be saves.
Fast forward to today, RM100 will not necessarily be enough to buy household goods for a typical family of four.
This situation has sometimes misled certain investors to invest into companies that may seem good on paper due to
their historical costs, but their investments are hampered when the company’s current financial situation is not
reflected on the ratios.
Lastly, is the different type of alternatives available to compute ratios and valuations. One good example is the
current ratio, where some firms take into consideration all current liabilities while there are others that ignore
overdrafts from current liabilities while calculating current ratio. For valuations, this is apparent in situations where
by, companies use different types of inventory valuation methods and asset depreciation methods. Comparing ratios
obtained from companies that use different types of valuation methods may not necessarily result in a fair
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comparison and cause an incorrect investment to be made. This is due to the fact that companies are free to choose
what valuation methods suit them, thus resulting in somewhat biased decisions being made. Companies will
definitely choose valuation methods that depicts the best picture of their company, in terms of operational efficiency
and management wise. This will cause outsider analysts who do not have more detailed information regarding the
company to take ratios obtained at face value and incorrect decisions are made.
6.0Any practical difficulties faced in the calculation of the ratios
In the process of calculating the ratios, we faced some difficulties. Firstly, the information in some financial
statements were vague and not easily defined. For example, when trying to acquire the figure for the net sales, to
calculate the accounts receivable turnover, of Tiong Nam Logistics Holding Berhad, we were not able to take the
value immediately, as there was not any net sales stated in the statements. Therefore, we totaled the services
rendered, property development and the goods sold, while ignoring dividens and interest revenues as they are not an
integral part of sales, rather a type of other revenue. In result we also took the cost of services, cost of goods sold
and cost of property developed when calculating the inventory turnover ratio.
Another instance of this was also when calculating the cost of goods sold for United Plantation Berhad. Their
statements too did not include a direct figure for cost of goods sold, therefore in order to calculate the related ratios,
we in turn took the figure for the changes in finished goods. Other analyst might have different opinions and use
different computations to attain the value of net sales and cost of goods sold. What this will cause is that a fair
comparison cannot be made and ratios obtain may not be accurate as there is no set standard to compute ratios.
Other than that, this might influence investors to choose ratios that are favourable to them, which will cause
problems in decision making.
7.0 Conclusion
After taking in consideration of our ratio analysia, we have drafted out the best possible outcomes for our clients.
Firstly, we would recommend ABC bank to invest in United Plantation Berhad, related to the plantation industry, as
the company was able to record the highest profit margin among the 5 companies and also it showed an increase in
profit margin from 2017 to 2018. This is in line with ABC Bank’s requirement of investing in companies with high
profit margins. Next, for Mr.Sam, we will advise him to choose UMS Holdings Berhad compared to the other 4
companies because he prefer to see low debt ratio and the lower the ratio, the lower the leverage and the financial
risk. Moving on to Mrs.Samantha, we recommend her to choose UMS Holdings Berhad compared to the other four
companies because UMS Holdings recorded the highest current ratio which means the company has the highest
ability to manage liabilities and pay them off. Lastly, for Mr. Adam, we advice him to choose Comfort Rubber
Gloves Industries Sdn. Bhd. compared to the other 4 companies because it is more effective and more efficient at
controlling the merchandise into cash in a shorter period which implies that it has a better inventory control.
All in all, financial ratio analysis is a vital tool in the financial market in order to make right decisions and right
investments that meets our needs and current financial capabilities. Ratio analysis is an amazing way to help
companies to scout out competition by conducting comparisons with other firms in the industry. Not only that, ratio
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analysis is a good building block for ordinary people who are interested in wetting their beak in the investment
profession as it helps simplify complex and lengthy financial statements, assist in making decisions with regards to
what type of requirement we need in investing and helps in making comparisons of companies in the market. There
is no set standard or formula in calculating these ratios, therefore we should be more wary and take deeper
considerations before dumping our money into the operations of a company. It is without said that every situation in
every company especially in different types of industries are different. Ratio analysis is a good indicator of company
performance, but other factors such as product quality and company reputation that should also be taken into
consideration before investing. Management can also use ratio analysis as a way to strategically plan operations and
the track of the company to ensure that it is always to the right track, financially and management wise, in order to
keep the business running for a long period of time.
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https://www.myaccountingcourse.com/financial-ratios/current-ratio.
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https://www.accountingtools.com/articles/2017/5/5/debt-to-assets-ratio
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ANNUAL REPORT 2018: COMFORT RUBBER GLOVES. (2018). Retrieved from http://www.comfort-
rubber.com.my/investor-relations/financial-info/annual-report/
ANNUAL REPORT 2017: COMFORT RUBBER GLOVES. (2017). Retrieved from http://www.comfort-
rubber.com.my/investor-relations/financial-info/annual-report/
a
Accounts Receivable Turnover Ratio. (May 19, 2019). My Accounting Course. Retrieved from
https://www.myaccountingcourse.com/financial-ratios/accounts-receivable-turnover-ratio
Hargrave, M. (June 26, 2019). Inventory Turnover. Investopedia. Retrieved from

https://www.investopedia.com/terms/i/inventoryturnover.asp
b
9.0 Appendix
9.1 Comfort Rubber Gloves Industries Sdn. Bhd
Ratio Analysis 2018 (RM) 2017 (RM)

Profitability Ratio
Net Income 35,896,556 25,866,908
Profit Margin Ratio= Profit Margin Ratio= Profit Margin Ratio=
Net Sales 421,175,627 262,987,738
¿ 0.09 ¿ 0.10
Return on Assets Ratio Returnon Assets Ratio Return on Assets Ratio
Net Income 35,896,556 25,866,908
¿ ¿ ¿
Average Total Assets 277,335,661 223,701,744
¿ 0.13 ¿ 0.12
Earnings Per Share Ratio 35,896,556 25,866,908
Earnings Per Share Ratio= Earnings Per Share Ratio=
Net Income−Preference Dividens 558,807,751 558,790,443
¿
Weighted average shares outstanding ¿ 6.42 cents per share ¿ 4.63 cents per share
Notes :
1. Average Total Assets (2018)
Beginning Balance + Ending Balance

¿
2
247,718,761+306,952,561
¿
2
¿ RM 277,335,661
Average Total Assets (2017)

¿
2
199,684,727+ 247,718,761
¿
2
¿ RM 223,701,744

Liquidity Ratio
Current Ratio = Current Assets Current Ratio Current Ratio
Current Liabilities = 161,425,934 = 124,062,924
55,329,519 40,450,433
c
= 2.92 = 3.07
Quick Ratio = Current Asset - Inventory Quick Ratio Quick Ratio
- Prepaid Expenses
= 161,425,934 - 39,757,220 - 2,801,044 = 124,062,924 - 43,950,298 - 1,049,859
Current liabilities 55,329,519 40,450,433
= 2.15 = 1.95

Leverage Ratio
Total Liabilities Debt ¿ Assets Ratio Debt ¿ Assets Ratio
Debt ¿ Assets Ratio=
Total Assets 61,542,242 41,616,394
¿ ¿
306,952,561 247,718,761
¿ 0.20 ¿ 0.17
Total Liabilities Debt ¿ Equity Ratio Debt ¿ Equity Ratio
Debt ¿ Equity Ratio=
Total Equity 61,542,242 41,616,394
¿ ¿
245,410,319 193,988,324
¿ 0.25 ¿ 0.21
Total Equity Equity Ratio Equity Ratio
Equity Ratio=
Total Assets 245,410,319 193,988,324
¿ ¿
306,952,561 247,718,761
¿ 0.80 ¿ 0.78

Efficiency Ratio
Accounts Receivable Turover Accounts Receivable Turover Accounts Receivable Turover
Net Sales 421,175,627 262,987,738
¿ ¿ ¿
Average Net Accounts Receivable 66,012,159.50
1
41,516,514.50
2
¿ 6.38 ¿ 6.33
Inventory Turnover
Cost Of Goods Sold Inventory Turnover
Inventory Turnover=
Average Inventory 362,658,552 224,265,988
¿ 3
¿ 4
41,853,759 33,899,113.50
¿ 8.67 times ¿ 6.62 times
Net Sales Asset Turnover Asset Turnover
Asset Turnover=
¿ 5
¿ 6
277,335,661 223,701,744
Notes:
1. Average Net Accounts Receivable (2018)
d
¿
2
50,858,239 +81,166,080
= 2
= RM66,012,159.50

¿
2
32,174,790 +50,858,239
= 2
= RM41,516,514.50
3. Average Inventory (2018)

¿
2
43,950,298+39,757,220
¿
2
¿ RM 41,853,759

¿
2
23,847,929+ 43,950,298
¿
2
¿ RM 33,899,113.50

¿
2
247,718,761+306,952,561
¿
2
e
¿ RM 277,335,661

¿
2
199,684,727+ 247,718,761
¿
2
¿ RM 223,701,744
f
g
h
i
j
k
l
9.2UMS Holdings Berhad

Profitability Ratio
Net Income 7,053,633 5,595,675
Net Sales 86,180,793 82,618,040
¿ 0.08 ¿ 0.07
Net Income 7,053,633 5,595,675
¿ ¿ ¿
Average Total Assets 172,408,694.50 169,451,041.50
¿ 0.04 ¿ 0.03
Earnings Per Share Ratio=
¿
Notes :

¿
2
170,612,689+174,204,700
¿
2
¿ RM 172,408,694.50

¿
2
168,289,394+ 170,612,689
¿
2
¿ RM 169,451,041.50

Liquidity Ratio
8,498,848 7,692,470
= 9.30 = 10.70
- Prepaid Expenses = 79,010,008 - 34,012,248 - 24,248 = 82,277,589 - 35,154,593 - 20,376
m
= 5.29 = 6.12

Leverage Ratio
Total Assets 9,998,848 9,341,470
¿ ¿
174,204,700 170,612,689
¿ 0.06 ¿ 0.05
Total Equity 9 , 998,848 9,341,470
¿ ¿
164,205,852 161,271,219
¿ 0.061 ¿ 0.058
Equity Ratio=
Total Assets 164,205,852 161,271,219
¿ ¿
174,204,700 170,612,689
¿ 0.94 ¿ 0.95
n
Efficiency Ratio
Accounts
Net Sales
Receivable Turover Accounts Receivable Turover
Accounts Receivable Turover=
Average Net Accounts Receivable
86,180,793 82,618,040
¿ 1
¿
24,084,525 23,055,177.502
¿ 3.57 ¿ 3.58
Cost Of Goods Sold
Inventory Turnover Inventory Turnover
Inventory Turnover=
¿ ¿
34,583,420.503 34,034,964.50 4
Asset Turnover=
¿ ¿
172,408,694.505 169,451,041.506
Notes:

¿
2
24,995,425 +23,173,625
= 2
= RM24,084,525

¿
2
21,114,930 +24,995,425
= 2
= RM23,055,177.50

¿
2
35,154,593+34,012,248
¿
2
o
¿ RM 34,583,420.50

¿
2
32,915,336+ 35,154,593
¿
2
¿ RM 34,034,964.50

¿
2
170,612,689+174,204,700
¿
2
¿ RM 172,408,694.50

¿
2
168,289,394+ 170,612,689
¿
2
¿ RM 169,451,041.50
p
q
r
s
t
u
v
9.3 HupSeng Industries Berhad

Profitability Ratio
Net Income 42,959,367 44,446,946
Net Sales 307,372,915 299,665,032
¿ 0.14 ¿ 0.15
Net Income 42,959,378 44,446,946
¿ ¿ ¿
Average Total Assets 239,772,828 244,213,702.50
¿ 0.17 ¿ 0.18
¿
Notes :

¿
2
243,081,251+236,464,405
¿
2
¿ RM 239,772,828

¿
2
245,346,154 +243,081,251
¿
2
¿ RM 244,213,702.50

Liquidity Ratio
72,281,699 73,219,187
= 2.18 = 2.26
w
- Prepaid Expenses = 157,477,699 - 25,414,315 - 576,123 = 165,141,426 - 24,857,496 - 722,527
72,281,699 73,219,187
Current liabilities
= 1.82 = 1.91

Leverage Ratio
Total Assets 78,193,912 79,563,584
¿ ¿
236,464,405 243,081,251
¿ 0.331 ¿ 0.327
Total Equity 78,193,912 79,563,584
¿ ¿
158,270,493 163,517,667
¿ 0494 ¿ 0.486
Equity Ratio=
Total Assets 158,270,493 163,517,667
¿ ¿
236,464,405 243,081,251
¿ 0.669 ¿ 0.672

Efficiency Ratio
Net Sales 307,372,915 299,665,032
¿ ¿ ¿
Average Net Accounts Receivable 37,169,086
1
38,993,326.50
2
¿ 8.27 ¿ 7.68
Inventory Turnover
Cost Of Goods Sold Inventory Turnover
Inventory Turnover=
¿ 3
¿ 4
25,135,905.50 23,818,805.50
Asset Turnover=
¿ 5
¿ 6
239,772,828 244,213,702.50
Notes:

=
2
x
39,777,328 +34,560,844
= 2
= RM37,169,086

=
2
38,209,325 +39 ,777 , 328

= 2
= RM38,993,326.50

¿
2
24,857,496+ 25,414,315
¿
2
¿ RM 25,135,905.50

¿
2
22,780,115 +24,857,496
¿
2
¿ RM 23,818,805.50

¿
2
243,081,251+236,464,405
¿
2
¿ RM 239,772,828
y

¿
2
245,346,154 +243,081,251
¿
2
¿ RM 244,213,702.50
z
aa
bb
cc
dd
ee
9.4United Plantation Berhad

Profitability Ratio
Net Income 374,100,000 394,682,000
Net Sales 1,305,591,000 1,474,323,000
¿ 0.29 ¿ 0.27
Net Income 374,100,000 394,682,000
¿ ¿ ¿
Average Total Assets 2,884,075,000 2,760,829,500
¿ 0.13 ¿ 0.14
¿
Weighted average shares outstanding ¿ 179 cents per share ¿ 189 cents per share
Notes :

¿
2
2,849,761,000+2,918,389,000
¿
2
¿ RM 2,884,075,000

¿
2
2,671,898,000+2,849,761,000
¿
2
¿ RM 2,760,829,500

Liquidity Ratio
Current Liabilities = 1,356,012,000 = 1,304,697,000
169,866,000 163,822,000
= 7.98 = 7.96
- Prepaid Expenses
= 1,356,012,000- 152,866,000 - 3,218,000 = 1,304,697,000 - 156,833,000 - 3,211,000
f
= 7.06 = 6.99

Leverage Ratio
Total Assets 329,472,000 318,943,000
¿ ¿
2,918,389,000 2,849,761,000
¿ 0.113 ¿ 0.112
Total Equity 329,472,000 318,943,000
¿ ¿
2,588,917,000 2,530,818,000
¿ 0.127 ¿ 0.126
Equity Ratio=
Total Assets 2,588,917,000 2,530,818,000
¿ ¿
2,918,389,000 2,849,761,000
¿ 0.887 ¿ 0.888
gg
Efficiency Ratio
Net Sales 1,305,591,000 1,474,323,000
¿ ¿ ¿
Average Net Accounts Receivable 192,808,0001 216,160,0002
¿ 6.77 ¿ 6.82
Cost Of Goods Sold
Inventory Turnover=
¿ ¿
154,849,5003 173,395,500 4
Asset Turnover=
¿ ¿
2,884,075,0005 2,760,829,5006
Notes:

=
2
211,967,000 +173,649,000
= 2
= RM192,808,000

=
2
220,353,000 +211,967,000
= 2
= RM216,160,000

¿
2
156,833,000+152,866,000
¿
2
hh
¿ RM 154,849,500

¿
2
189,958,000+156,833,000
¿
2
¿ RM 173,395,500

¿
2
2,849,761,000+2,918,389,000
¿
2
¿ RM 2,884,075,000

¿
2
2,671,898,000+2,849,761,000
¿
2
¿ RM 2,760,829,500
ii
jj
kk
ll
mm
nn
oo
pp
qq
9.5Tiong Nam Logistics Holding Berhad

Profitability Ratio
Net Income 34,428,000 82,927,000
Net Sales 656,374,000 573,428,000
¿ 0.05 ¿ 0.14
Net Income 34,428,000 82,927,000
¿ ¿ ¿
¿ 0.02 ¿ 0.05
Earnings Per Share Ratio 31,257 , 000 81,476 , 000
Earnings Per Share Ratio= Earnings Per Share Ratio=
Net Income−Preference Dividens 446,988 , 000 416,946 , 000
¿
Notes :

¿
2
1,652,572,000+1,808,413,000
¿
2
¿ RM 1,730,492,500

¿
2
1,466,010,000+1,652,572,000
¿
2
¿ RM 1,559,291,000

Liquidity Ratio
Current Liabilities = 622,519 = 602,644
506,473 400,889
= 1.23 = 1.50
rr
- Prepaid Expenses = 622,519 - 183,624 - 2,095 = 602,644 - 40,380 - 2,784
506,473 400,889
Current liabilities
= 0.86 = 1.40

Leverage Ratio
Total Assets 1,087,140,000 978,309,000
¿ ¿
1,808,413,000 1,652,572,000
¿ 0.60 ¿ 0.59
Total Equity 1,087,140,000 978,309,000
¿ ¿
721,273,000 674,263,000
¿ 1.51 ¿ 1.45
Equity Ratio=
Total Assets 721,273,000 674,263,000
¿ ¿
1,808,413,000 1,652,572,000
¿ 0.40 ¿ 0.41
Tiong Nam Logistics Holding Berhad

Efficiency Ratio
Net Sales 656,016,0001 573,219,0002
¿ ¿ ¿
Average Net Accounts Receivable 194,519,500
3
173,256,000
4
¿ 3.37 ¿ 3.31
Cost Of Goods Sold
Inventory Turnover=
Average Inventory
499,824,0005 422,974,0006
¿ 7
¿ 8
112,002,500 41,879,500
¿ 4.46 times ¿ 10.11 times
Asset Turnover=
¿ 9
¿ 10
1,730,492,500 1,559,291,000
Notes:
1. Net Sales (2018)
ss
= Services Rendered + Property Development + Goods Sold
=501,945,000 + 146,855,000 + 7,216,000
= RM656,016,000
2. Net Sales (2017)
= Services Rendered + Property Development + Goods Sold
= 448,283,000 + 118,553,000 + 6,383,000
= RM573,219,000

¿
2
184,262,000+204,777,000
=
2
= RM194,519,500

¿
2
162,250,000+184,262,000
=
2
= RM173,256,000
5. Cost of Goods Sold (2018)
= Cost of Services + Cost of Properties Sold + Cost of Goods Sold
= 432,892,000 + 59,819,000 + 7,113,000
= RM499,824,000
6. Cost of Goods Sold (2017)
= Cost of Services + Cost of Properties Sold + Cost of Goods Sold
=367,047,000 +49,573,000 + 6,354,000
= RM422,974,000
t

¿
2
40,380,000+183,624,000
¿
2
¿ RM 112,002,500

¿
2
43,379,000+40,380,000
¿
2
¿ RM 41,879,500

¿
2
1,652,572,000+1,808,413,000
¿
2
¿ RM 1,730,492,500

¿
2
1,466,010,000+1,652,572,000
¿
2
¿ RM 1,559,291,000
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vv
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FOUNDATION IN FINANCIAL ACCOUNTING AND

REPORTING (CIA 1002)

Faculty of Business and Accountancy

Monday 11:00 am – 1:00 pm

NO NAME MATRIC NUMBER

Instructor: Dr. AzlinaBinti Abdul Jalil

2.0 Background of the Companies

2.1 Industrial Product & Service Industry

2.2. Plantation Industry

2.3 Transport/Logistic Industry

3.0 Type of Investors

4.0 Ratio Analysis

4.1.0 Profitability Ratio

4.1.1 Profit Margin Ratio

4.3.1 Current Ratio

4.3.2 Quick Ratio

4.3.0 Leverage Ratio

4.3.2 Debt-to-Equity Ratio

4.4.0 Efficiency Ratio

4.4.1 Accounts Receivable Turnover Ratio

4.4.2 Inventory Turnover Ratio

5.0Limitations of ratio analysis

6.0Any practical difficulties faced in the calculation of the ratios

Current Ratio: Formula: Example: Calculator: Analysis. (n.d.). Retrieved from

Bragg, S. (Dec 4, 2018). Debt to Equity Ratio. AccountingTools. Retrieved from

Hargrave, M. (June 26, 2019). Inventory Turnover. Investopedia. Retrieved from

9.1 Comfort Rubber Gloves Industries Sdn. Bhd

Ratio Analysis 2018 (RM) 2017 (RM)

1. Average Total Assets (2018)

Beginning Balance + Ending Balance

Average Total Assets (2017)

Beginning Balance + Ending Balance

Ratio Analysis 2018 (RM) 2017 (RM)

Ratio Analysis 2018 (RM) 2017 (RM)

Ratio Analysis 2018 (RM) 2017 (RM)

1. Average Net Accounts Receivable (2018)

2. Average Net Accounts Receivable (2017)

Beginning Balance + Ending Balance

3. Average Inventory (2018)

Beginning Balance + Ending Balance

4. Average Inventory (2017)

Beginning Balance + Ending Balance

5. Average Total Assets (2018)

Beginning Balance + Ending Balance

Average Total Assets (2017)

Beginning Balance + Ending Balance

Ratio Analysis 2018 (RM) 2017 (RM)

1. Average Total Assets (2018)

Beginning Balance + Ending Balance

Average Total Assets (2017)

Beginning Balance + Ending Balance

Ratio Analysis 2018 (RM) 2017 (RM)

Ratio Analysis 2018 (RM) 2017 (RM)

1. Average Net Accounts Receivable (2018)

Beginning Balance + Ending Balance

2. Average Net Accounts Receivable (2017)

Beginning Balance + Ending Balance

3. Average Inventory (2018)

Beginning Balance + Ending Balance

4. Average Inventory (2017)

Beginning Balance + Ending Balance

5. Average Total Assets (2018)

Beginning Balance + Ending Balance