EVALUATION FORM

ACCOUNTING AND FINANCIAL MANAGEMENT (UECB2201 / UECM2201)

REPORT (20%)

Name Matrix No

1. MUHAMMAD IMAN QAYYUM BIN ABDUL HALIM UDC210284

2. MUHAMMAD IRFAN SHAHDAM KAMAL ARIFF BIN MOHAMAD YAZID UDC210313

3. MUHAMMAD IQLIL BIN WAHEEDUL RAHMAN UDC 210344

4. SUFYAN DANIEL BIN SULAIMAN UDC210379

5. YOGAMANI PARASURAMAN UDC180187

 INTRODUCTION

Hup Seng Industries Berhad

- Hup Seng Industries Berhad (HSIB) is a Malaysia-based holding company. The Company's segments include
biscuit manufacturing, beverage manufacturing, and trading business. The Cookie Manufacturing Division
of the Company is engaged in the manufacture and sale of cookies. The Beverage Manufacturing segment is
engaged in the manufacture and wholesale of all types of coffee blends and food products.

Hwa Tai Industries Berhad

- Hwa Tai Industries Berhad is one of the oldest and leading biscuit manufacturers in Malaysia. It was
established in 1962 and listed on the Malaysian Stock Exchange in 1992. Since then, this rapidly expanding
company has become one of the largest players in the country's biscuit industry, producing a fine range of high-
quality biscuits.
 DISCUSSIONS
Hup Seng Industries B. Efficiency Ratio

Berhad Cost of Goods Sold = RM214,159,313

Average/Closing Stocks = RM78,757,505

A. Liquidity
Ratio
1. Inventory Turnover Ratio

1. Current Ratio = Cost of Goods

= Current
Sold Average/Closing
Assets Current Stocks

= Liabilities == RM214,159,313
2.72X (times)
RM78,757,505
RM126,997,76
5 2. Account Receivable Turnover (days)
=2.09X
(times) = Account Receivable
RM60,890,186
Annual Credit Sales/360 days

= RM31,614,935
2. Acid Test
RM23,752,497/360 days
Ratio
= Current Assets – Inventory – = 1.33 x 360
Prepayment ≈ 480 days
Current Liabilities
= RM126,997,765 – 28,211,902 –
3. Total Asset Turnover
RM477,672 RM60,890,186
=

= Sales Total
Assets
= RM87,741
RM98,308,1
RM207,154
91
=1.61X = 0.42X (times)
(times)
RM60,890,1
86
 D. Profitability
C. Leverage
Ratio
Ratio
1. Net Profit Margin
= Net Income Available to Common X
100%
1. Debt Shareholders Sales
Ratio
= Total Debt X = RM12,985.668 X
100% 100% RM87,741
Total
Assets
= RM2,222 X =14.8
%
100%
RM207,154

= 0.011X 2. Return on
100% Asset
= Net Income Available to Common X
= 11
100%
% Shareholders Total Assets

= RM12,985.668 X
2. Time Interest
100% RM207,154
Earned
= Earning Before Interest and =6.3
Tax Interest Expense %

= 3. Return on
RM37,2 Equity
= Net Income Available to Common X
92
= 35.18tim 100%
Shareholders Common
es
RM1060
= 6.216 Equity
x100
10
= 62.16%
Hwa Thai Industries B. Efficiency Ratio
Cost of Goods Sold = RM52,540
Berhad Average/Closing Stocks = RM74,950
A. Liquidity
Ratio 1. Inventory Turnover Ratio

= Cost of Goods
1. Current Ratio
= Current Sold Average/Closing
Stocks
Assets Current = RM52,539,849

(RM9,258,286+8,226,594) ÷2
= Liabilities
=52,539,849÷8,742,440
RM42,142,4 = 6.0(Times)

15
=1.1X
(times)
RM38,555,6 2. Account Receivable Turnover (days)
= Account Receivable
86 Test
2. Acid Annual Credit Sales/360 days

Ratio = RM25,052,522
= Current Assets – Inventory – Prepayment RM74,950,417 /360 days

Current Liabilities = 120.33

≈ 120 days
= RM42,142,415 – 9,258,286 –
293,731
3. Total Asset Turnover
RM38,555,686 =
= Sales Total

RM32,590,3 Assets
= RM74,950,417
RM63,500,743
98
=0.85X = 1.18 X(Times)
(times)
RM38,555,6
86
 D.Profitability Ratio
C. Leverage
1. Net Profit Margin
Ratio
1. Debt Ratio = Net Income Available to Common Shareholders X 100%
Sales
= Total Debt X
= RM1,109,522 X 100%
100% Total Assets RM74,950,417

= 0.015 X 100%
= RM39,906,572 X
100% = 1.5%
RM
2. Return on Asset
63,500,437
= 0.63 X = Net Income Available to Common Shareholders X 100%
100% Total Assets
=63
= RM1,109,522 X
%
100% RM63,500,743

= 0.017 X 100%
2. Time Interest
= 1.74%
Earned
= Earning Before Interestand Tax 3. Return on Equity

Interest Expense = Net Income Available to Common Shareholders X 100%

Common Equity
= = 1.17 X 100% 62

RM1,10 = 0.03X 100%

9 RM
=0.54X
= 2.85%

(tim
2,039es)
Current Ratio
Hup Seng Berhad has a current ratio of 2.09 times compared to Hwa Thai Berhad's
1.1 times. It means that Hup Seng Berhad just has RM2.09 in current assets for every RM1 in
current liabilities while Hwa Thai Berhad just has RM1.10 in current assets for every RM1 in
current liabilities.
Acid Test Ratio
The acid test ratio for Hup Seng Berhad is 1.61 times, while the acid test ratio for Hwa
Thai Berhadis 0.85 times. It means Hup Seng Berhad companies have not enough
assets to cover the liabilitiesbecause Hup Seng Berhad just has RM1.61 in current
assets for every RM1 in current liabilitieswithout selling inventor
Inventory Turnover Ratio
Additionally, the inventory turnover ratio for Hup Seng Berhad, which is 2.72 times, is lower
than the 6.0 times industry average for Hwa Thai Berhad. The higher the inventory turnover
ratio, the faster the stock is sold.
Account Receivable Turnover
Hup Seng Berhad has a collection term of 480 days to collect its account receivable,
whereas Hwa Thai Berhad has a collection period of 120 days to collect its account
receivable,.
Total Asset Turnover
Total asset turnover for 0.42 Hup Seng Berhad is 0.42 times while Hwa Thai Berhad is having
1.18 times which is higher than Hup Seng Berhad. Property, plant, and equipment (non-current
assets) were utilized by Hup Seng Berhad and Hwa Thai Berhad to generate sales.
Debt Ratio
For debt ratio, Hup Seng Berhad is 11% while Hwa Thai Berhad is 63%. This shows that Hwa
Thai Berhad has many debts compared with the assets that Hup Seng Berhad has. Besides,
Hwa Thai Berhad may face difficulties when it wants to raise its additional borrowings
compared with Hup Seng Berhad.
Time Interest Earned
Time interest earned is the purpose to measure the firm’s ability to cover its interest changes out
of its operating profit. The time interest earned for Hup Seng Berhad is 35.18 times while Hwa
Thai Berhad is 0.54 times.
Net profit Margin
The net profit margin for Hup Seng Berhad is 14.8% while Hwa Thai Berhad is 1.5%. It shows
that Hup Seng Berhad makes RM14.8 net profit for every RM1 of sales made after deducting
all costs and expenses including interest and tax while
Return on Assets
For return on asset, Hup Seng Berhad is 6.3% while Hwa Thai Berhad is 1.74%. It means that Hup Seng Berhad
will generate a return after tax of RM0.0630 for every RM1 of assets from the company’s investment while
Maxis Berhad is RM0.0174. So, Hup Seng Berhad is better than Hwa Thai Berhad in return on assets because
the ability to manage assets to make a profit is higher than Hwa Thai Berhad.

Return on Equity
Hup Seng Berhad is 62.16% while Hwa Thai Berhad is 2.85%. It shows that Hup Seng Berhad is better than
Hwa Thai Berhad in the return on equity because the higher of return on equity, the better the return for the
shareholders. So, shareholders of Hup Seng Berhad will be earned more profit or good returns from their
investment in the company compared with Hwa Thai Berhad.
 Recommendation

• Hup Seng Industries Berhad • Hwa Tai Industries Berhad

- Hup Seng Industries could increase the overall
quality of its services by increasing the amount of
money it spends on research and development.
For instance, Hup Seng Industries can teach its staff
or send them to courses such as personality and
management training.
- In view of recent observations regarding the
probability of an economic downturn, Hwa Tai
Industries should depreciate its assets by analyzing
which assets are most susceptible to change or drop
as a result of the status of the economy.
 Conclusion
• The conclusion base on this assignment is by comparing both companies’ overall performances,
Hup Seng is doing much better than Hwa Tai. Hup Seng has a higher current ratio than Hwa Tai.
Hwa Tai can increase their current ratio by increasing its current asset. If we compare both
companies’ shortest time taken to collect the debt, Hwa Tai is taking longer time than Hup Seng.
Comparing both companies’ Return On Asset (ROA), Hwa Tai’s ROA is lower than Hup Seng’s
ROA