FACULTY OF BUSINESS, ECONOMICS AND ACCOUNTANCY

UNIVERSITI MALAYSIA SABAH

FINANCIAL MANAGEMENT
(BT12103) SECTION 1
SEMESTER 2, 2020/2021

GROUP ASSIGNMENT: COMPANY ANALYSIS

MAIN COMPANY: DATASONIC GROUP BERHAD

PREPARED FOR: SIR ROSLE @ AWANG BIN MOHIDIN

Hereby, we declare that the work contained in this assignment is our

own, except where acknowledgement of sources is made.

PREPARED BY:
No. Name Matric No. Signature
1 Apriliani Rafita Ningsih BB20281131 Apriliani
2 Arvine Noel Ronny BB19110847 Arvine
3 Hazana bin Salman BB19110388 Hazana
4 Jamie Korom BB19110490 Jamie
5 Jonathan Tan BB19110655 Jonathan
6 Mohd Faerhan Shehdad bin Omarali BB19110161 Faerhan
7 Muhammad Raziq Aiman bin Asamawi BB19110153 Raziq
8 Norfaezah Binti Dollah @ Mohd.Amdu BB19110866 Norfaezah
9 Wang Xiang Yi BB18271169 Wang

SUBMISSION DATE: 27 May 2021

 Contents

1.0 Background and Nature of Datasonic Group Berhad ..................................... 1

2.0 Financial Ratio Analysis .................................................................................... 1

2.1 Liquidity Ratios ............................................................................................... 1

2.2 Capital Structure Ratios ................................................................................. 3

2.3 Asset Management Efficiency Ratios............................................................ 4

2.4 Probability Ratios ........................................................................................... 5

2.5 Market Value Ratios ........................................................................................ 7

3.0 Industry Comparison Analysis.......................................................................... 8

3.1 Liquidity Ratios ............................................................................................... 8

3.2 Capital Structure Ratios ................................................................................. 9

3.3 Asset Management Efficiency Ratios............................................................ 9

3.4 Profitability Ratios ........................................................................................ 10

3.5 Market Value Ratios ...................................................................................... 11

4.0 Recommendation and Summary..................................................................... 11

References .............................................................................................................. 12

Appendices ............................................................................................................. 13
1.0 Background and Nature of Datasonic Group Berhad

Datasonic Berhad was incorporated under the Act 12 March 2008 as a public limited
company. On 22 of june 2011 the company was subsequently converted to a private
limited company. Datasonic Group specialises in ICT solutions such as smart card
personalization, such as secure ID or chip-based credit, debit, and bank cards,
software and hardware modification, project management, consulting, R&D, and
technical advice, as well as project management, consulting, R&D, and technical
advice.
Datasonic Corporation Sdn Bhd that is incorporated on 22 October 1980 was originally
named Bumi Packaging & Storage (M) Sdh Bhd. Previously, the company sold ICT
products to Malaysian financial institutions in the form of computer forms and credit
card imprinters. In 1983, the company expanded into personalization services and
established a commercial agreement with Datacard Corporation. Datacard
Corporation joined Datasonic Corporation (formerly known as Datacard Toppan
Moore (M) Sdn Bhd) as a 49 percent joint-venture partner in 1991. Datasonic were
given the distribution rights for Datacard ® Central Issuance Systems and Solutions in
Malaysia as a consequence of the joint venture.
Datasonic Corporation is the country's sole ICT vendor engaged in three (3) key smart
card migration initiatives, including the GMPC, PMPC (ATM chip-based card), and
EMV chip-based credit card migration. Datasonic Technologies is a provider of
information technology (IT) solutions and services, including project management for
the adoption of ICT system solutions. Customized software and hardware solutions
for government ministries and agencies, as well as significant businesses such as
healthcare, telecommunications, and others, are available.
Data sonic has evolved over time from secure ID and smart card personalization to a
broader range of goods and services, including government ICT projects and services,
project management, and other ICT solutions services, such as customized integrated
ICT software and hardware systems and solutions.

2.0 Financial Ratio Analysis

2.1 Liquidity Ratios
Table 1.0: Datasonic Group Berhad Liquidity Ratios 2016-2020
2016 2017 2018 2019 2020
Current ratio 2.7131 2.1578 2.5846 2.2522 2.6720
Acid-test (quick) ratio 2.2018 1.7259 2.1431 1.7332 2.0206
Average collection 187.4234 152.6155 194.7090 198.3096 121.5732
period
Accounts receivable 1.9474 2.3916 1.8745 1.8405 3.0023
turnover ratio
Inventory turnover 2.6472 3.1553 2.9363 1.9123 2.3942
ratio
Day's sales in 137.8773 115.6749 124.3057 190.8656 152.4492
inventory

1
Figure 1.0: Datasonic Group Berhad Liquidity Ratios 2016-2020

Liquidity Ratios
350.00%
300.00%
250.00%
200.00%
150.00%
100.00%
50.00%
0.00%
2016 2017 2018 2019 2020

current ratio quick ratio accounts receivable turnover ratio inventory turnover ratio

Based on the table above, the analysis of the Datasonic group is as follows: In the
2016 period, the current ratio of the Datasonic group was 2.7131 times. In the 2017
period, the Datasonic Group's current ratio had a decrease of 0.5553 times, from
2.7131 to 2.1578. In 2018 the current ratio has increased from 2017, which is from
2.1578 to 2.5846. In 2019 the current ratio of the Datasonic Group had a decline again
2.5846 to 2.2522. then in the last year 2020 there was an increase of 0.4198% from
2.2522 to 2.6720.
In 2016, the quick ratio of the Datasonic Group was 2.2018. In the 2017 period, the
quick ratio of the Datasonic Group had a decrease of 0.4759, from 2.2018 to 1.7259.
In 2018 the quick ratio increased from 2017, from 1.7259 to 2.1431. In 2019 the quick
ratio of the Datasonic Group had a decline again by 0.4099 from 2.1431 to 1.7332.
Then in the last year 2020 there was an increase of 0.2874 from 1.7332 to 2.0206.
In the period of 2016 the average collection period of the Datasonic Group was 187.42
days. In the 2017 period the average collection period the Datasonic Group had a
period of 152, 61 days. In 2018 the average collection period was 194, 70 days. In
2019 the average collection period of the Datasonic Group was 198.30 days. Then in
the last year 2020 the average collection period of the Datasonic Group lasted 121,
57 days.
In the period of 2016 the accounts receivable turnover ratio from Datasonic Group has
a value of 1.9474 times. In 2017 the accounts receivable turnover ratio Datasonic
Group has a value of 2.3916 times. In 2018 the accounts receivable turnover ratio was
1.8745 times. In 2019 Datasonic Group's accounts receivable turnover ratio was
1.8405 times. Then in the last year 2020 the accounts receivable turnover ratio
Datasonic Group had a period of 3.0023 times.

2
Figure 1.1: Datasonic Group Berhad Liquidity Ratios 2016-2020

Liquidity Ratios (Days)

250

200

150

100

50

0
2016 2017 2018 2019 2020

average collection period day's sales in inventory

In the 2016 period, the inventory turnover ratio of the Datasonic Group was 2.6472
times. In the 2017 period, the Datasonic Group's inventory turnover ratio was 3.1553
times. In 2018 the inventory turnover ratio was 2.9363 times. In 2019 the Datasonic
Group's inventory turnover ratio was 1.9123 times. Then in the last year 2020 the
Datasonic Group inventory turnover ratio had a total of 2.3942 times. In the 2016
period, the sales in inventory days from the Datasonic group lasted 137.87 days. In
the period of 2017 the days sales in inventory Datasonic Group had a period of 115.67.
In 2018 days sales in inventory were 124.30 days. In 2019 the days sales in inventory
Datasonic Group lasted 190.86 days. Then in the last year 2020 the days sales in
inventory Datasonic Group lasted 152.44 days.

2.2 Capital Structure Ratios

Table 1.1 Datasonic Group Berhad Capital Structure Ratios 2016-2020

2016 2017 2018 2019 2020

Debt Ratio 39.41% 44.97% 40.01% 41.15% 33.95%
Times Interest Earned Ratio 13.4952 11.5846 9.8701 5.9913 11.0794

Table 1.1 shown Capital Structure Ratios of Datasonic Group Berhad from 2016 until
2020. Capital structure refers to the way a firm finances its assets using a combination
of debt and equity. The company financed 39.41% in 2016, 44.97% in 2017, 40.01%
in 2018,41.15% in 2019 and 33.95% in 2020 of its assets. During those 5 years, the
highest debt ratio was in 2017 that was 44.97% and the lowest debt ratio was in 2020
(33.95%). The company’s ratio is still under control as all the ratios in those 5 years
were below 1.0 (100%). Meanwhile, a debt ratio less than 100% indicates that a
company has more assets than debt. If the ratio was greater than 100%, its implying
greater financial risk. In other words, the company has more liabilities than assets. A
high ratio also indicates that a company may be putting itself at risk of default on its
loans if interest rates were to rise suddenly.

3
Figure 1.2: Datasonic Group Berhad Capital Structure Ratios 2016-2020

Capital Structure Ratios

50
40
30
20
10
0
Debt ratio Times interest earned ratio

Table 1.1 shown Capital Structure Ratios of Datasonic Group Berhad from 2016 until
2020. Capital structure refers to the way a firm finances its assets using a combination
of debt and equity. The company financed 39.41% in 2016, 44.97% in 2017, 40.01%
in 2018,41.15% in 2019 and 33.95% in 2020 of its assets. During those 5 years, the
highest debt ratio was in 2017 that was 44.97% and the lowest debt ratio was in 2020
(33.95%). The company’s ratio is still under control as all the ratios in those 5 years
were below 1.0 (100%). Meanwhile, a debt ratio less than 100% indicates that a
company has more assets than debt. If the ratio was greater than 100%, its implying
greater financial risk. In other words, the company has more liabilities than assets. A
high ratio also indicates that a company may be putting itself at risk of default on its
loans if interest rates were to rise suddenly.
For times interest earned ratio, it is represented by the red line in Figure 1.4.
Overall, the trend has steadily declined until the year of 2019 that was only 5.9913
times. However, there has been arise in 2020 that was equally to 11.0794 times. Here,
we can see that even though Datasonic Group Berhad’s ratio was decreasing until the
year of 2019 and only started increasing in 2020 but Datasonic Group Berhad was
managing its creditworthiness quiet well, as it is continually able to increase its
profitability without taking on additional debt because the ratio was greater than one.
A ratio of less than one indicates that a company may not be in a position to pay its
interest obligations, and so is more likely to default on its debt; a low ratio is also a
strong indicator of impending bankruptcy.

2.3 Asset Management Efficiency Ratios

Table 1.2: Datasonic Group Berhad Asset Management Efficiency Ratios 2016-2020
2016 2017 2018 2019 2020
Total Asset Turnover Ratio 0.5957 0.6717 0.5805 0.4908 0.6378
Fixed Asset Turnover Ratio 1.9844 2.3541 1.4965 1.2364 1.4724

4
Figure 1.3: Datasonic Group Berhad Asset Management Efficiency Ratios 2016-2020

Asset Management Efficiency Ratios

2.5
2
1.5
1
0.5
0
2016 2017 2018 2019 2020

Total aset turnover ratio Fixed asset turnover ratio

Table 2.3 and Figure 2.3 indicate about Datasonic Group Berhad Asset Management
Efficiency Ratios from 2016 to 2020. Asset management efficiency ratios measure a
company’s effectiveness in utilizing its assets to generate sales. These ratios are
commonly referred to as turnover ratios as they reflect the number of times a particular
asset account balance turns over during the year. For Total asset turnover ratio,
Datasonic Group Berhad generates 0.5957 in 2016, 0.6717 in 2017, 0.5805 in 2018,
0.4908 in 2019 and 0.6378 in 2020. The trend remained comparatively fluctuate in
those 5 years. The lowest ratio was in 2019 that was total as 0.4908 and the highest
was in 2017 that was 0.6717. So from the calculation, it is seen that the asset turnover
ratio of the company is lesser than one for those 5 years. But that doesn’t mean it’s a
lower ratio. We need to see other companies from the same industry to make a
comparison.
For Fixed Asset Turnover Ratio, the pattern is the same as the trend in total
asset turnover ratio. The highest ratio was in 2017 that was 2.3541 and the lowest
ratio was in 2019 that was 1.2364. It means that meaning that for every RM1 invested
in fixed assets, a return of almost 2.3541 in 2017 and 1.2364 in 2019 were earned.
Fixed assets are tangible long-term or non-current assets used in the course of
business to aid in generating revenue. These include real properties, such as land and
buildings, machinery and equipment, furniture and fixtures, and vehicles. Overall,
Fixed Asset Turnover Ratio of Datasonic Group Berhad in those 5 years had greater
efficiency in regards to managing in such assets.

2.4 Probability Ratios

Table 1.0: Datasonic Group Berhad Profitability Ratios 2016-2020

2016 2017 2018 2019 2020
Gross profit margin 53.41% 43.30% 55.97% 54.19% 56.01%
Operating profit margin 29.14% 24.71% 30.27% 22.13% 28.15%
Net profit margin 26.13% 19.68% 26.00% 16.64% 24.37%
Operating return on assets 17.36% 16.60% 17.57% 10.86% 17.96%
Return on equity 46.70% 46.41% 49.81% 27.06% 44.68%

5
Figure 1.0: Datasonic Group Berhad Profitability Ratios 2016-2020

Profitability Ratios
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
2016 2017 2018 2019 2020

Gross profit margin Operating profit margin

Net profit margin Operating return on assets
Return on equity

Based on table 1.0 and figure 1.0, gross profit margin for Datasonic group berhad
averaged at about 53% from 2016 to 2020. During those five years, its gross profit
margin falls to its lowest in 2017 at 43.30%. Its highest was in 2020 at 56.01%. This
means that in 2020, Datasonic group berhad spent RM0.44 for cost of goods sold and
thus RM0.56 out of each ringgit of sales went towards gross profits.
Datasonic group berhad’s operating profit margin that is represented by the
green line in figure 1.0 seems to fluctuate from 2016 to 2020. On average, its operating
profit margin is 26.88% with the highest recorded at 30.27% in 2018 and the lowest
marked at 22.13% in the following year. In 2020, the operating profit margin increases
to 28.15% which means that about RM0.28 is generated from each ringgit of sales
after accounting for both cost of goods sold and operating expenses.
For net profit margin, it is represented by the yellow line in the graph. Net profit
margin for Datasonic group berhad seems to follow a similar pattern with its operating
profit margin. For the five years, net profit margin averaged at 22.56%. Its highest was
at 26.13% in 2016 and the lowest was at 16.64% in 2019. In 2020, net profit margin
reaches 24.37% which translates to RM0.24 generated for each ringgit of sales after
paying all of the firm’s expenses.
Next, operating return on assets ratio is presented by the turquoise line in table
1.3. On first glance, a significant drop can be seen in 2019. Specifically, operating
return on assets ratio of Datasonic group berhad dropped from 17.57% in 2018 to
10.86% in 2019 before going up to 17.96% in 2020. On average, its operating return
on assets is approximately at 16% for the five years. Hence, Datasonic group berhad
generated around RM0.16 of operating profits for every RM1 of its invested assets.
Lastly, the magenta line in figure 1.0 represents the return on equity ratio which
measures the accounting return on the common stockholdersʼ investment. The return
on equity ratio of Datasonic group berhad starts at 46.70% in 2016 and droped sligthly
in 2017. In 2018, it increases to 49.81% before fall sharply to 27.06% in 2019. In 2020,
the return on equity ratio climbs back up to 44.68% or in other words the shareholders
earned 44.68% on their investments during 2020.
Overall, based on the profitability ratios of Datasonic group berhad, it is shown
that in 2016 to 2020, the firm was able to control its costs well enough relative to each

6
ringgit of its sales except in 2019. Additionally, the profitability ratios also shows that
on average, Datasonic group berhad was able to effectively use its assets to generate
sales with the excepion in the year 2019.

2.5 Market Value Ratios

Table 1.4: Datasonic Group Berhad Market Value Ratios 2016-2020

2016 2017 2018 2019 2020
Price-earnings ratio 28 27 18 19 17
Market-to-book ratio 6.40 5.97 2.13 7.29 5.51

Figure 1.5: Datasonic Group Berhad Market Value Ratios 2016-2020

Market value ratios

30
25
20
15
10
5
0
2016 2017 2018 2019 2020

Price-earning ratio Market-to-book ratio

Table 1.1 and figure 1.1 show the market value ratios for Datasonic group berhad from
2016 until 2020. Market values ratios explain on how the firm’s shared are valued in
the stock market using price-earnings ratio and market-to-book ratio. The price-
earnings ratios that the market is willing to pay for this company’s earnings are 28
times in 2016, 27 times in 2017, 18 times in 2018, 19 times in 2019 and 17 times in
2020. During those five years, the market highest times to pay for the company’s
earning was in 2016 at 28 times and the lowest was in 2020 at 17 times. Higher price
to earnings ratio in 2016 indicates that the market has high expected future growth in
earnings for the company. On the other hand, the lower price to earnings in 2020
indicates that the market does not have much confidence in the future for the share.
Next, market-to-book ratio, it is represented by the green line in the figure 1.1.
Market-to-book ratio or P/B ratio is one of the most commonly used rations to
determine if the company’s stock is cheap or expensive. The graph shows that market-
to-book ratio for Datasonic group berhad seems to follow a similar pattern with the
price-earnings ratio. Specifically, market-to-book ratio for these companies dropped
drastically from 6.40 times in 2016 to 2.13 times in 2018 before going up to 7.29 times
in 2019. The rise occurred in 2019 indicates that the company has healthy future profit
projections, and the investor are willing to pay a premium for that possibility. In 2020,
the market-to-book ratio decrease by 1.78 times. This indicates that the investors
could theoretically buy all of the outstanding shares of the company.

7
3.0 Industry Comparison Analysis

As discussed earlier, Datasonic Group is involved in the provision of ICT

solutions including the smart card personalisation (such as secure ID or chip-based
credit / debit / bank cards), customisation of software and hardware solutions, project
management, consultancy, R&D and technical consultancy services. The company
works in the information technology industry and provides high quality and
performance products as well as services related to IT to its users.
In order to compare the performance of Datasonic Group, AppAsia is a well-
known company in the information technology industry. It is headquartered in the
same area as Datasonic, both in Kuala Lumpur. Furthermore, the main source of
revenue of AppAsia is its specialisation in advanced mobile applications, digital
contents, e-marketplaces, big data and artificial intelligent technologies. In context to
evaluate and analyse the financial performance of Datasonic in the last five years, the
technique of ratio analysis is really helpful. This ratio is also helpful to make the
comparison of the financial performance between Datasonic Group and its market
competitor AppAsia.
It is required to conduct trend analysis to determine trends in the accounting
statement entries. The following table presents trend analysis by considering income
statement, balance sheet, and cash flow statements of AppAsia Berhad

3.1 Liquidity Ratios

Liquidity ratio provides the information related to the potential of the firm to meet
the short-term obligations (Keating, 2014). The below table shows the calculated
liquidity ratio of AppAsia Berhad (for Datasonic Group’s liquidity ratios please refer the
financial ratio and analysis in 2.0):
Table 2.0 AppAsia Berhad Liquidity Ratios (2016-2020)
2016 2017 2018 2019 2020
Current ratio 4.1548 1.2275 7.2853 5.2408 4.9315
Acid-test (quick) 3.9677 1.2257 7.2438 5.2082 4.9192
ratio
Average collection 11.7489 252.0554 33.3026 54.9896 54.4505
period
Accounts receivable 31.0667 1.4481 10.9601 6.6376 6.7033
turnover ratio
Inventory turnover 3.8621 759.4444 1156.7330 545.3750 982.4286
ratio
Day's sales in 94.5089 0.4806 0.3155 0.6693 0.3715
inventory

From the above table, it can be stated that there is an increase in the current
ratio of AppAsia (from 4.15 to 4.93) meanwhile Datasonic Group facing a decrease
(from 2.71 to 2.67) from the year 2016-2020 with some fluctuations. But at the same
time, the current ratio of both firms is above 1 showing the ability of both firms to meet
their current obligations effectively, but it is not equal to ideal ratio of 2:1. Meanwhile,

8
AppAsia current ratio is higher than Datasonic showing better ability of AppAsia as
compared to Datasonic to meet its short-term obligations. The lower current ratio of
Datasonic as compared to AppAsia might be due to sharp increase in the short-term
debts without significant increase in the short-term assets.
In addition, the quick ratio of both firms is more than 1 but with declining trend
during this period for Datasonic, from 2.71 to 2.67; an increase for AppAsia, from 4.15
to 4.93. However, it is higher for AppAsia in comparison of Datasonic showing better
ability of the firm to meet its short-term obligations in contingency (Edmonds et al.,
2015). It is because there might be possibility of increasing short-term debts for
Datasonic. It also indicates that both companies can settle their short-term debts for
more than 1 time without considering the inventories. However, there is better
consistency in the liquidity of Datasonic due to fewer fluctuations as compared to
AppAsia.

3.2 Capital Structure Ratios

Capital structure ratio is related to the ratio reflecting the fund arrangement of
the firm. It shows the ability of the firm to manage the capital structure effectively
(Keating, 2014). The below table shows the capital structure ratio of AppAsia Berhad
(for Datasonic Group’s capital structure ratios please refer the financial ratio and
analysis in 2.0):
Table 2.1 AppAsia Berhad Capital Structure Ratios (2016-2020)
2016 2017 2018 2019 2020
Debt ratio 14.40% 78.90% 11.86% 15.61% 16.44%
Times interest earned ratio -684 -15 60 - -

From the above table, it can be stated that there is an increase in debt ratio of
AppAsia (14% to 16%) and a decrease for Datasonic (from 39% to 34%) from the year
2016 to the year 2020 showing the increasing contribution of debt in capital structure
for AppAsia Berhad and a decreasing contribution for Datasonic Group.
Meanwhile for the time interest earned ratio, we cannot really compare the two
because AppAsia does not provide enough data for us to calculate the time interest
earned, where the interest expenses are zero (0). But for Datasonic Group we can see
a declining from 2016 to 2019 and rose back in 2020. Overall, the consistency from
Datasonic Group shows the company's ability to meet its debt obligations based on its
current income.

3.3 Asset Management Efficiency Ratios

These ratios provide the information related to the efficiency of the

management to use the available resources including inventory and assets to increase
sales (McKinney, 2015). In concern of these ratios, the following table presents the
efficiency of the management of AppAsia Berhad (for Datasonic Group’s asset
management efficiency ratios please refer the financial ratio and analysis in 2.0):

9
Table 2.2 AppAsia Berhad Asset Management Efficiency Ratios (2016-2020)
2016 2017 2018 2019 2020
Total asset turnover 0.3969 1.1324 5.8024 2.9062 2.1479
ratio
Fixed asset turnover 4.0522 264.5185 405.7727 147.4194 107.7391
ratio

In relation to asset ratio, it can be depicted that the total asset turnover ratio for
AppAsia (from 0.3969 times to 2.1479 times) as well as Datasonic (from 0.5957 times
to 0.6378 times) increased from the year 2016 to the year 2020.
However, the value of asset turnover is higher for AppAsia in comparison to
Datasonic showing the higher efficiency of AppAsia’s management to convert assets
into sales. It means AppAsia Berhad uses assets efficiently to convert them into sales
in less time period as compared to Datasonic Group.

3.4 Profitability Ratios

These ratios provide the information related to the profitable situation of the
company to generate sufficient returns for the investors (Petty et al., 2015). The below
table shows the calculated profitability ratio of AppAsia Berhad (for Datasonic Group’s
profitability ratios please refer the financial ratio and analysis in 2.0):
Table 2.3 AppAsia Berhad Profitability Ratios (2016-2020)
2016 2017 2018 2019 2020
Gross profit margin 75.97% 4.30% 2.82% 4.53% 7.49%
Operating profit margin -146.78% -0.11% 0.34% 0.05% 0.65%
Net profit margin -147.00% -0.29% 0.26% -0.28% 0.91%
Operating return on assets -58.26% -0.12% 1.95% 0.16% 1.39%
Return on equity -24.15% -0.83% 0.91% -0.98% 2.35%

Regarding these ratios, it can be interpreted that there is an increase in net

profit margin (from -147.00% to 0.91%) from 2016 to 2020 for AppAsia, also there is
an increase in return on equity (from -24.15% to 2.35%) during this period. The
increase in return on equity may be associated with finance access by AppAsia Berhad
in procurement of assets as costs incurred on borrowing.
However, there is a significant decrease in return on equity (from 46.70% to
44.68%), and also a decline in net profit margin (from 26.13% to 24.37%) is also
noticed from 2016 to 2020 for Datasonic Group.
The decline in net profit for Datasonic was because of rising cost of operations
including R&D and depreciation of assets that largely affected the net profits of the
firms. So, it is crucial for the management of both firms to take measures for reducing
operating expenses.
But at the same time, the values of all profitability ratios are higher for Datasonic
as compared to AppAsia during this period. It suggests that Datasonic Group is

10
capable of generating higher profits as compared to AppAsia Berhad for its investors
(Warren et al., 2013).

3.5 Market Value Ratios

Market value ratios are significant to provide the information related to returns
on investment by the company to the investors that help them to make investment
decisions. In relation to AppAsia Berhad, the below table presents the calculated
market value ratios (for Datasonic Group’s market value ratios please refer the
financial ratio and analysis in 2.0):
Table 2.4 AppAsia Berhad Market Value Ratios (2016-2020)
2016 2017 2018 2019 2020
Price-earning-ratio -15.1 -26.5 73.1 -17.5 47.7
Market-to-book ratio 10.3 4.73 1.21 1.8 8.85

The price-earnings ratio is the current price of the stock divided by the earnings
per share. Earnings generally are calculated by looking at the last four quarters of
financial results. According to the table above, the price-earnings ratio for AppAsia
Berhad is increasing (from -15.1 to 4.77) from the year 2016 to 2020. Meanwhile, the
price-earnings ratio for Datasonic is decreasing (from 28 to 17) from 2016 to 2020.

4.0 Recommendation and Summary

Why should investor invest in Datasonic Group rather than AppAsiaa Berhad?
Based on the above analysis and discussion, in liquidity ratio, there is better
consistency in the liquidity of Datasonic due to fewer fluctuations than AppAsia. In
capital structure ratio, the consistency from Datasonic Group shows the company's
ability to meet its debt obligations based on its current income. In profitability ratio,
Datasonic Group can generate higher profits than AppAsia Berhad for its investors.
But in terms of Asset management ratio, AppAsia Berhad uses assets efficiently to
convert them into sales in less time period as compared to Datasonic Group.
It can be summarized that Datasonic Group is performing better than AppAsia
Berhad. But at the same time, the financial performance of Datasonic is declining due
to increasing competition and changing customers’ preferences. But it will not change
the fact that Datasonic Group is better than AppAsia Berhad based on analysis (3.0
Industry Comparison Analysis)
In addition, it is also concluded that historical trends showed that both
companies have fluctuations in trends of accounting statement entries. At the same
time, ratio analysis reflects that AppAsia Berhad has higher liquidity and efficiency,
Datasonic Group has higher profitability and investment ratios and uses more debt in
its capital structure as compared to AppAsia Berhad.

11
 References

Edmonds, T., Nair, F., Olds, P. and Edmonds, C. (2015) Fundamental Financial
Accounting Concepts. USA: McGraw-Hill Higher Education.
Keating, S.B., (2014) Financial Support and Budget planning for Curriculum
Development or Revision. EVALUATION IN NURSING, p.169.
McKinney, J.B., (2015) Effective financial management in public and nonprofit
agencies. USA: ABC-CLIO.
Petty, J. W., Titman, S., Keown, A. J., Martin, P., Martin, J. D., & Burrow, M.
(2015) Financial management: Principles and applications. Australia: Pearson
Higher Education AU.
Warren, C., Reeve, J. and Duchac, J. (2013) Financial & Managerial Accounting.
12th edn.US: Cengage Learning.

12
 Appendices

Financial Data of Datasonic Group Berhad from 2016 to 2020

2016 2017 2018 2019 2020
(RM mil) (RM mil) (RM mil) (RM mil) (RM mil)
Sales 241.31 318.35 258.6 219.56 247.54
COGS 112.43 180.52 113.87 100.57 108.89
Gross profit 128.88 137.83 144.74 118.99 138.65
Interest expense (-) 5.21 6.79 7.93 8.11 6.29
Net operating income 70.31 78.66 78.27 48.59 69.69
Net Income 63.05 62.66 67.24 36.53 60.32
Total assets 405.06 473.93 445.44 447.33 388.09
Total liabilities 159.67 213.14 178.24 184.09 131.78
Current assets 225.33 285.81 227.06 228.22 186.56
Current liabilities 83.05 132.45 87.85 101.33 69.82
Inventories 42.47 57.21 38.78 52.59 45.48
Accounts receivable 123.91 133.11 137.95 119.29 82.45
Common equity 135.00 135.00 135.00 135.00 135.00
Net plant and equipment 121.6 135.23 172.8 177.58 168.11
Earnings per share (Cents) 4.67 4.64 4.98 2.71 4.47

Retrieved from Datasonic Group Berhad Annual Reports

Financial Data of AppAsia Berhad from 2016 to 2020

2016 2017 2018 2019 2020
(RM mil) (RM mil) (RM mil) (RM mil) (RM mil)
Sales 4.66 142.84 178.54 91.4 74.34
COGS 1.12 136.7 173.51 87.26 68.77
Gross profit 3.54 6.14 5.03 4.14 5.57
Interest expense (-) 0.01 0.01 0.01 0 0
Net operating income -6.84 -0.15 0.6 0.05 0.48
Net Income -6.85 -0.42 0.46 -0.26 0.68
Total assets 11.74 126.14 30.77 31.45 34.61
Total liabilities 1.69 99.52 3.65 4.91 5.69
Current assets 6.44 122.1 26.3 25.68 28.06
Current liabilities 1.55 99.47 3.61 4.9 5.69
Inventories 0.29 0.18 0.15 0.16 0.07
Accounts receivable 0.15 98.64 16.29 13.77 11.09
Common equity 28.37 50.45 50.46 26.46 28.93
Net plant and equipment 1.15 0.54 0.44 0.62 0.69
Earnings per share (Cents) 2.43 0.14 0.13 0.08 0.2

Retrieved from AppAsia Berhad Annual Reports

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