BBPW3103

Sample of good assignment

FACULTY OF BUSINESS AND MANAGEMENT

BBPW 3103 FINANCIAL MANAGEMENT 1

SEMESTER MAY 2012


TABLE OF CONTENT

NO.

DESCRIPTION

1.0

INTRODUCTION OF THE TWO COMPANIES COMPANIES – PADINI HOLDINGS BERHAD – BERHAD – COMPANY COMPANY 1 AND MALAYAN FLOUR MILLS BERHAD – BERHAD – COMPANY COMPANY 2

2.0

COMPUTATION OF ASSET MANAGEMENT PROFITABILITY PROFITABILITY RATIOS – RATIOS – COMPANY COMPANY 1 PADINI HOLDINGS BERHAD

AN D AND

3.0

COMPUTATION OF ASSET MANAGEMENT PROFITABILITY PROFITABILITY RATIOS – RATIOS – COMPANY COMPANY 2 MALAYAN FLOUR MILLS BERHAD

AN D AND

4.0

ANALYSIS AND INTERPRETATION OF ASSET MANAGEMENT AND PROFITABILITY RATIOS OF TWO COMPANIES

5.0

CONCLUSION


TABLE OF CONTENT

NO.

DESCRIPTION

1.0

INTRODUCTION OF THE TWO COMPANIES COMPANIES – PADINI HOLDINGS BERHAD – BERHAD – COMPANY COMPANY 1 AND MALAYAN FLOUR MILLS BERHAD – BERHAD – COMPANY COMPANY 2

2.0

COMPUTATION OF ASSET MANAGEMENT PROFITABILITY PROFITABILITY RATIOS – RATIOS – COMPANY COMPANY 1 PADINI HOLDINGS BERHAD

AN D AND

3.0

COMPUTATION OF ASSET MANAGEMENT PROFITABILITY PROFITABILITY RATIOS – RATIOS – COMPANY COMPANY 2 MALAYAN FLOUR MILLS BERHAD

AN D AND

4.0

ANALYSIS AND INTERPRETATION OF ASSET MANAGEMENT AND PROFITABILITY RATIOS OF TWO COMPANIES

5.0

CONCLUSION


Introduction of the two companies COMPANY 1 : PADINI HOLDINGS BERHAD Introduction of company 1 Companies name, business activities and business development Vision

-to be the best fashion company ever Mission

-to exceed customers’ expectation and our brands’ promise Core value

-PADINI (wing from the heart)

Principal activities of company

Padini Holdings Berhad is investment holding companies. The have subsidiary companies. All subsidiary companies were incorporated in Malaysia ex cept for Padini International Limited which was incorporated in Hong Kong Special Administrative Region of the People’s Republic of China (“Hong Kong”). Details of the subsidiary companies are as follows:Subsidiary companies of the Company

Principal activities

Vincci Ladies’ Specialties Centre Sdn. Bhd. (“Vincci”)

Dealers of ladies’ shoes and accessories.

Padini Corporation Sdn. Bhd. (“Padini Corporation”)

Dealers of garments.

Seed Corporation Sdn. Bhd. (“Seed”)

Dealers of garments and ancillary products.

Yee Fong Hung (Malaysia) Sendirian Berhad (“Yee Fong Hung”)

Dealers of garments and ancillary products.

Mikihouse Children’s Wear Dealers of children’s garments, maternity Sdn. Bhd. (“Mikihouse”) wear and accessories. Vincci Holdings Sdn. Bhd. (“Vincci Holdings”) Padini Dot Com Sdn. Bhd. (“Padini Dot Com”)

Dormant. Provision of management services.


The New World Garment Manufacturers Sdn. Bhd. (“The New World Garment”) Padini International Limited *

Dormant.

Dealers of garments.

Director information CHAIRMAN Datuk Dr. Abdullah bin Abdul Rahman MANAGING DIRECTOR Yong Pang Chaun DIRECTORS Dato’ Zulkifli bin Abdul Rahman Yong Lai Wah Chong Chin Lin Chan Kwai Heng Sahid bin Mohamed Yasin Cheong Chung Yet COMPANY SECRETARIES Ho Mun Yee (MAICSA 0877877) Liew Khoon Wan (MACS 00103) AUDITORS Peter Chong & Co. (formerly known as BKR Peter Chong) Chartered Accountants PRINCIPAL BANKERS Standard Chartered Bank Malaysia Berhad The Bank of Nova Scotia Berhad REGISTERED OFFICE 3rd Floor No. 17, Jalan Ipoh Kecil 50350 Kuala Lumpur Tel : 03 - 40443235 Fax : 03 - 40413959 PRINCIPAL PLACE OF BUSINESS No. 19, Lot 115, Jalan U1/20 Hicom Glenmarie Industrial Park 40150 Shah Alam Selangor Darul Ehsan Tel : 03 - 51233633 Fax : 03 - 78051066


SHARE REGISTRAR PFA Registration Services Sdn. Bhd. Level 17, The Gardens North Tower Mid Valley City Lingkaran Syed Putra 59200 Kuala Lumpur Tel : 03 - 22643883 Fax : 03 - 22821886 STOCK EXCHANGE LISTING Main Board of Bursa Malaysia Securities Berhad

Corporate Structure for Padini Holdings Berhad Corporate Structur BERHAD50202-A) 100% MIKIHOUSE CHILDREN’S WEAR SDN. BHD. (164485 -U) 100% PADINI CORPORATION SDN. BHD. (22159-H) 100% SEED CORPORATION SD N. BHD. (194391-K) 100% YEE FONG HUNG (MALAYSIA) SENDIRIAN BERHAD ( 15011-U) 100% PADINI DOT COM SDN. BHD. (510558-H) 100% VINCCI LADIES’ SPECIALTIES CENTRE SDN. BHD. (73404-H) 100% VINCCI HOLDINGS SDN. BHD. (97644-K) 100% THE NEW WORLD GARMENT MANUFACTURERS SDN. BHD. (80490-U) 100% PADINI INTERNATIONAL LIMITED, HONG KONG (896012)

BUSINESS REVIEW – YEAR 2008 UNTIL YEAR 2010

The Group’s domestic operations had continued to be the main driver of its revenues and profits, and garments, shoes, fashion accessories made up the bulk of the products offered for sale. In the domestic market, our products are sold through the numerous retail stores and consignment counters that the Group manages. There are also several Vinc ci franchise stores in the smaller towns of Malaysia. In markets abroad, the products are sold mostly through retail stores and counters managed by licensees and dealers. The Group’s products are carried under the following brand names; Vincci, VNC, Vincci+, Padini Authentics, PDI,Padini, Seed, Miki, and P&Co, all of which are owned by the Group.


The aforementioned brands are widely known by Malaysian consumers and are widely available in the major urban shopping malls of Malaysia. In addition to those, the Group also utilizes a great number of lesser known brands to market the value-for-money merchandise that it produces for sale in its Brands Outlet stores.

Group Financial Highlights All in RM(,000) 2006

2007

2008

2009

2010

Revenue

286,107

316,866

383,306

475,477

520,880

Profit before taxation

39,519

44,007

57,659

67,610

86,280

49,533

60,974

Profit attributable to equity holders of the Company 27,691

31,403

41,715

Basic earnings per share (sen) based on profit attributable to equity shareholders*

22.02

24.24

31.71

37.64

46.34

Diluted earnings per share (sen)*

21.84

NA

NA

NA

204,043

234,332

155.1

178.1

24.21

NA denotes not applicable as the ESOS expired on 2 October 2007. Net assets

118,846

Net assets per share (sen) * 93.5 Dividend per share (sen) ^ 10sen

142,341

169,478

108.5

128.8

12.5sen

* Based on ordinary shares of RM0.50 each.

15sen

14sen

22.5sen


FINANCIAL RESULTS – YEAR 2008

For the financial year under review, the Group achieved a consolidated revenue of RM383.3 million, a growth of 21% over the previous year’s amount of RM316.9 million. Gross profits rose in tandem by 24.7% over the same period, while profit before taxation grew by 31%, from RM44 million achieved in the previous year to RM57.7 million in the current financial year. Profit after taxation attributable to equity holders rose 32.8% to RM41.7 million when compared to the amount of RM31.4 million achieved during the previous financial year.

FINANCIAL RESULTS – YEAR 2009

For the financial year under review, the Group achieved consolidated revenues of RM475.5 million, a growth of 24% over the previous year’s amount of RM383.3 million. Gross profits rose in tandem by 22.3% over the same period, while profit before taxation grew by 17.2%, from RM57.7 million achieved in the previous year to RM67.6 million in the current financial year. Profit after taxation attributable to equity holders rose 18.7% to RM49.5 million when compared to the amount of RM41.7 million achieved during the previous financial year. FINANCIAL RESULTS – YEAR 2010

For the financial year under review, the Group achieved consolidated revenues of RM520.9 million, a growth of 9.5% over the previous year’s amount of RM475.5 million. Gross profits rose in tandem by 11.9% over the same period, while profit before taxation grew by 27.7%, from RM67.6 million achieved in the previous year to RM86.3 million in the current financial year. Profit after taxation attributable to equity holders rose 23.2% to RM61 million when compared to the amount of RM49.5 million achieved during the previous financial year.


COMPANY 2 : MALAYA FLOUR MILLS BERHAD

Vision -we aspire to be a leading food manufacturing interprise in the region Mission -we are the preferred provider and strategic partner in the industry. We drive operational excellence by embracing a culture of continuous improvement. We add value to our stakeholders by growing economy of scale.

Corporate Information CHAIRMAN Tan Sri Datuk Arshad bin Ayub P.S.M., S.P.S.K., D.P.M.P., D.P.M.J., D.S.A.P., D.P.M.T., P.G.D.K., J.M.N. MANAGING DIRECTOR Teh Wee Chye DIRECTORS Lee Soon Lee , Dato’ Hj Shaharuddin bin Hj Haron Geh Cheng Hooi Quah Ban Lee Datuk Oh Chong Peng AUDIT COMMITTEE Dato’ Hj Shaharuddin bin Hj Haron (Chairman and Independent Non-Executive Director) Lee Soon Lee (Non-Independent Non-Executive Director) Geh Cheng Hooi (Independent Non-Executive Director) Tan Sri Datuk Arshad bin Ayub (Independent Non-Executive Director) Datuk Oh Chong Peng (Independent Non-Executive Director) SECRETARY Mah Wai Mun (MAICSA 7009729)


REGISTERED OFFICE & HEAD OFFICE 22nd Floor, Wisma MCA Jalan Ampang, 50450 Kuala Lumpur Tel. No: 03-2170 0999 Fax No: 03-2170 0888 Website: www.mfm.com.my REGISTRARS Symphony Share Registrars Sdn Bhd Level 26, Menara Multi Purpose, Capital Square No. 8 Jalan Munshi Abdullah, 50100 Kuala Lumpur Tel. No: 03-2721 2222 Fax No: 03-2721 2530 FACTORIES Jalan David Sung, Batu Undan 32200 Lumut Perak Darul Ridzuan Lot 133, Jalan Pukal Pasir Gudang Industrial Estate 81700 Pasir Gudang Johor Darul Takzim BRANCHES • FEDERAL TERRITORY Lot 40, Jalan E 1/4 Taman Ehsan Industrial Park Kepong, 52100 Kuala Lumpur MALAYAN FLOUR MILLS BERHAD (4260-M) BRANCHES • PENANG 4557, Jalan Heng Choon Thian 12000 Butterworth, Pulau Pinang • PERAK No. 2, Laluan Perusahaan 10 Kawasan Perusahaan Menglembu 31450 Ipoh Perak Darul Ridzuan • MALACCA No. 1, Jalan PM3 Taman Perindustrian Merdeka 75350 Batu Berendam, Melaka


• JOHOR Lot 133, Jalan Pukal Pasir Gudang Industrial Estate 81700 Pasir Gudang Johor Darul Takzim • KELANTAN Lot 1763, Kampong Dusun Raja Jalan Cherang Chempaka Panji 16100 Kota Bharu, Kelantan Darul Naim • PAHANG B-5 Lorong Padang Lalang 14, Jalan Tanjung Api 25050 Kuantan Pahang Darul Makmur SUBSIDIARIES • Vimaflour Ltd • MFM International Ltd • Mekong Flour Mills Ltd • Dindings Soya & Multifeeds Sdn Berhad (34884-U) • MFM Feedmill Sdn Bhd (172615 -X) • Dindings Poultry Processing Sdn Bhd (144808-P) • Dindings Broiler Breeder Farm Sdn Bhd (172600-T) • Dindings Poultry Development Centre Sdn Bhd (180044-A) • Semakin Dinamik Sdn Bhd (185533 -V) • Syarikat Pengangkutan Lumut Sdn Bhd (51336-M) • Muda Fibre Manufacturing Sdn Bhd (48785-V) • Dindings Grand Parent Farm Sdn Bhd (144962-W) • MFM Property Sdn Bhd (176691 -P) • Dindings Trading Sdn Bhd (754079-T) • MFM Ltd PRINCIPAL BANKERS

• Malayan Banking Berhad (3813-K) • HSBC Bank Malaysia Berhad (127776-V) • Alliance Bank Malaysia Bhd (88103-W) • Deutsche Bank (Malaysia) Bhd (312552-W) • OCBC Bank (Malaysia) Bhd (29548-W) • Bank Islam Malaysia Berhad (98127-X)


STOCK EXCHANGE LISTING Bursa Malaysia Securities Berhad - Main Board (Consumer Products Sector) Stock Code: 3662 SOLICITORS Isharidah, Ho, Chong & Menon Skrine AUDITORS KPMG

Principal of company activities

The Company is principally engaged in the business of milling and selling wheat flour and trading in grains and other allied products, whilst the principal activities of the subsidiaries are as stated as follows: Name of subsidiary Principal activities interest 2010 2009 %% MFM Property Sdn. Bhd. Dormant Dindings Grand Parent Farm Dormant Sdn. Bhd. MFM Ltd. Dormant Premier Grain Sdn. Bhd. Trading in corn, soyabean meal and other feed ingredients. The Company commenced its operations on 1 April 2010. Subsidiary of MFM International Ltd.

Mekong Flour Mills Ltd. (incorporated in Vietnam)

Milling and selling wheat fl our together with its allied products


Computation of asset management and profitability ratios COMPANY 1 AND COMPANY 2

Below is the asset management and profitability ratios explanation. Asset management ratio is for measure the efficiency of the management in using the assets and specific accounts to generate sales or cash. Can be divided into 6 ratio:1. Account receivable turnover

Account receivables turnover measures the ability of company to collect debts from customers. It provides the total of account receivables collected through the year. The higher of ratio, that mean, company better in the following matters:- The company can collect debts from customers quickly - The company has low bad debts - The company can use the funds/money for next investment Calculation of account receivables is net credit sales revenue if unavailable, use the total sales of company divided by account receivables or average account receivables. Account receivables is mean the receivable will company received such trade receivable and other receivables which related to the business and trade in nature. The deposits and prepayment will deduct from the account receivables due to the money we need to put for run business such as deposit. For prepayment is advance payment to our expenses such insurance, road tax and etc. Because of that, we need to minus the deposits and prepayment. Formula : Credit sales Account receivables

2. Average collection period

Show the average days taken by company to collect the account receivables. The comparison the efficiency of the company in collecting debts fr om its customers. Formula : 360 days Account receivables turnover Or

Account receivables Yearly sales/360


3. Inventory turnover

Measures the efficiency of inventory management. It shows the number of times inventory can be sold in a year. The higher the inventory turnover, that mean company shows is able to sell its inventory very fast and quick. Formula : Cost of goods sold/cost of sales Inventory

4. Average inventory sales period

Average inventory sales period shows number of days taken to make one round of inventory sales. The higher of average inventory sales period is not good for the company. The average inventory is less days which is very goods and better. Formula : 360 days Inventory turnover Or

Inventory Cost of goods sold/cost of sales/360

5. Fixed Asset Turnover

Shows the efficiency of the company in using its fixed assets to generate sales. The higher ratio, is better because its shows efficient of asset management. Formula : Sales Net Fixed Assets

6. Total Asset Turnover

Shows the efficiency of company using all its assets to generate sales. The higher ratios is much better because show company efficient in use of assets. It is also show overall efficiency of company operation. Formula : Sales Totals Assets


Profitability Ratios is for measures the effectiveness of the company in generate returns from investment and sales. Its is important to investors. It also for determine the business efficiency and effectiveness in achieve its profit objective. Profitability Ratios divided to 6 ratios which as follows :1. Gross profit margin

Measures the profit for each ringgit of sales that can be used to pay sales and administration expenses. The higher the gross profit margin it much better because it show the lower expenditure or costs in implementing sales activities. Formula : Gross profit x 100% Sales

2. Net profit margin

Measures the ability of company generate net profit from each ringgi of sale after deduct all expenses including the cost of goods sold, sales expenses, general and administration expenses. The higher of ratios, it shows company efficient in purchase with low purchasing costs.

Formula : Profit after tax x 100% Sales

3. Operating profit margin

Measures the efficiency of operations in reducing costs and increase returns before interest and tax. Efficient if the ratios is higher because show company operate efficiently. Formula : Operating Profit x 100% Sales


4. Return on assets

Measures the effectiveness of the company in using assets to generate profit. The higher ratio is good because show company efficiency in using its assets t o generate profit. Formula : Profit after tax x 100% Total assets

5. Return on equity

Measures efficiency of company in generate profit for its ordinary shareholders. The higher ratios is shows company able to generate high profit for its owners. Formula : Profit after tax x 100% Shareholders equity

6. Earning per share

Calculate the net profit that is generate from each ordinary share. This information is often given priority by the management and investors which is very important indication of company success. Bigger value of ratios is show better status for the shareholders. Formula : Profit available to ordinary shareholders Number of ordinary shares issued


Computation of asset management and profitability ratios for Company 1 – Padini Holdings Berhad Asset management – Padini Holdings Berhad in year 2008, 2009 and 2010

Ratio Formula

Account Receivables Turnover

Credit sales or total sales Account receivable

Average Collection Period

360 days ______________________ Account receivable turnover

Inventory Turnover

Cost of good sold/cost of sales Inventory

Average Inventory Sales Period 360 days ______________________ Inventory turnover

Fixed Assets Turnover

Sales Net Fixed Assets

Total Asset Turnover Sales Total assets

Year 2008 (RM)

Year 2009 (RM)

Year 2010 (RM)

380,850,000 12,319,000

471,697,000 11,307,000

516,664,000 16,119,000

= 30.91 times

= 41.71 times

= 32.05 times

360 days 30.91 times



= 11.64 days

= 8.63 days

= 11.23 days

192,353,000 116,113,000

241,958,000 91,878,000

259,547,000 76,554,000

= 1.65 times

= 2.63 times

= 3.39 times

360 days 1.65 times

360 days 2.63 times

360 days 3.39 times

= 218.18 days

= 136.88 days

= 106.19 days

380,850,000 73,274,000

471,697,000 78,481,000

516,664,000 82,623,000

= 5.19 times

= 6.01 times

= 6.25 times

380,850,000 264,314,000

471,697,000 290,720,000

516,664,000 356,582,000

= 1.44 times

= 1.62 times

= 1.44 times


Profitability ratio – Padini Holdings Berhad in year 2008, 2009 and 2010

Ratio Formula

Gross profit margin

Gross profit x 100% Sales

Net profit margin

Profit after tax x 100% Sales

Operating profit margin

Operating profit x 100% Sales

Return on assets Profit after tax x 100% Total assets

Return on equity

Profit after tax x 100% Shareholders equity

Year 2008 (RM)

Year 2009 (RM)

Year 2010 (RM)

190,953,000 x100% 380,850,000

233,519,000 x100% 471,697,000

261,333,000x100% 516,664,000

= 50.13%

= 49.50%

= 50.58%

41,750,000 x100% 380,850,000

49,533,000 x100% 471,697,000

60,974,000 x100% 516,664,000

= 10.96%

= 10.50%

= 11.80%

58,428,000 x100% 380,850,000

69,135,000 x100% 471,697,000

87,374,000 x100% 516,664,000

= 15.34%

= 14.65%

= 16.91%

41,750,000 x100% 264,314,000

49,533,000 x100% 290,720,000

60,974,000 x100% 356,582,000

= 15.79%

= 17.03%

= 17.09%

41,750,000 x100% 169,478,000

190,953,000 x100% 380,850,000

60,974,000 x100% 234,332,000

= 24.63%

= 17.03%

= 26.02%

RM31.71

RM37.64

RM46.34

Earnings per share

Profit available to ordinary shareholders Number of ordinary shares issued


Computation of asset management and profitability ratios for Company 1 – Malaya Flour Mills Berhad Asset management – Malayan Flour Mills Berhad in year 2008, 2009 and 2010

Ratio Formula

Account Receivables Turnover

Credit sales or total sales Account receivable

Average Collection Period

360 days ______________________ Account receivable turnover

Inventory Turnover

Cost of good sold/cost of sales Inventory

Average Inventory Sales Period 360 days ______________________ Inventory turnover

Fixed Assets Turnover

Sales Net Fixed Assets

Total Asset Turnover Sales Total assets

Year 2008 (RM)

Year 2009 (RM)

Year 2010 (RM)

1,198,778,000 195,239,000

1,201,053,000 187,364,000

1,555,091,000 217,628,000

= 6.14 times

= 6.41 times

= 7.14 times

360 days 6.14 times

360 days 6.41 times

360 days 7.14 times

= 58.63 days

= 56.16 days

= 50.42 days

1,017,888,000 282,000,000

1,010,891,000 249,184,000

1,317,134,000 324,940,000

= 3.60 times

= 4.05 times

= 4.05 times

360 days 3.60 times

360 days 4.05 times

360 days 4.05 times

= 100 days

= 88.88 days

= 88.88 days

1,198,778,000 203,032,000

1,201,053,000 203,714,000

1,555,091,000 229,784,000

= 5.90 times

= 5.89 times

= 6.76 times

1,198,778,000 797,585,000

1,201,053,000 796,338,000

1,555,091,000 1,015,712,000

= 1.50 times

= 1.50 times

= 1.53 times


Profitability ratio – Malayan Flour Mills Berhad in year 2008, 2009 and 2010

Ratio Formula

Gross profit margin

Gross profit x 100% Sales

Net profit margin

Profit after tax x 100% Sales

Operating profit margin

Operating profit x 100% Sales

Return on assets Profit after tax x 100% Total assets

Return on equity

Profit after tax x 100% Shareholders equity

Year 2008 (RM)

Year 2009 (RM)

Year 2010 (RM)

180,890,000 x100% 1,198,778,000

190,162,000 x100% 1,201,053,000

237,957,000x100% 1,555,091,000

= 15.08%

= 15.83%

= 15.30%

61,911,000 x100% 1,198,778,000

72,281,000 x100% 1,201,053,000

100,326,000 x100% 1,555,091,000

= 5.16%

= 6.01%

= 6.45%

81,227,000 x100% 1,198,778,000

92,210,000 x100% 1,201,053,000

128,036,000 x100% 1,555,091,000

= 6.77%

=8.23 %

= 7.67%

61,911,000 x100% 797,585,000

72,281,000 x100% 796,338,000

100,326,000 x100% 1,015,712,000

= 7.76%

= 9.07%

= 9.87%

61,911,000 x100% 388,686,000

72,281,000 x100% 425,435,000

100,326,000 x100% 469,073,000

= 15.93%

= 16.98%

= 21.38%

RM53.85

RM58.41

RM78.80

Earnings per share

Profit available to ordinary shareholders Number of ordinary shares issued


Analysis and interpretation of asset management and profitability ratios of the two companies. Company 1 : Padini Holdings Berhad

Account receivable turnover is for measure ability for the company to collect debts from their customers. It is show how the company can collect debts from customer which company can and able to reinvestment back the money in the their business to generate more profit. For Padini, for the year 2008, the account receivable turnover is 30.91 times. For the year 2009 increase by 1.14 times which is 41.71, for the year 2010 is reduced by 9.66 which is 32.05 times. This show company can collect debts from customers very fast in year 2008 which is 30.91 times. In year 2009, increase very high which is 41.71 times. However, in year 2010, the account receivable is reduced. It is show company unable to collect debts from customers like in year 2009. The company sales also is increased year by year from 2008, 2009 and 2010. In year 2008 and 2009, the account receivable turnover can see company has low bad debts and the can use money for the next investment. In year 2010, it could be company face with inefficiency in their collection department to call and ask for the payment. Average collection period Company able to collect payment with customers approximately 360 days in one year. This average collection period can show how company able to collect the payment for account receivable of the company. In year 2008, company average collection period is 11.64 days, year 2009 is very efficient which is 8.63 only days. However, in year 2010, the average for the collection is 11.23 days. The overall of the average coll ection period is very good for each year if compare to Malaya Flour Mills Berhad or compare to other company, the average of Padini is very good.This is because industry trading like clothes is different compare to industry manufacturing such as Malayan Flour Mills Berhad. Company activity for manufacturing company and trading is very different due to the process of the business. Industry average is 44.3 days., Padini has much better average collection period which is less than 30 days. It is because trading company and their also have own brand and outlets. We can say Padini has practical collection period which can collect payment from customers within period specific by Padini. This is show satisfactor y.

Inventory turnover Is measure efficiency of company to monitor inventory or inventory management. It show how many times the inventory can be sold in every year. The higher of inventory turnover, it show company level each year able to sell the inventories very fast and efficiency in monitor company inventory to avoid the obsolete stocks. In year 2008, company can sold their inventory 1.65 times only, in year 2009 is 2.63 times and in year 2010 is 3.39 times. We can


see the improvement of management of inventory of Padini. However, if compare to industry average which is 6.6 times, the padini has very low inventory turnover.

Average inventory sales period It measure number days taken to make one round of inventory sales. If less the days which is not high average consider very good because show company not takes longer times to sell the inventory. Padini show very unsatisfactory. In year 2008, padini takes 218.18 days to make one round inventory sales. In year 2009, is 136.88 days and year 2010 is 106.19 days. If compare to every year, Padini has improvement on the number of days taken to make one round of inventory sales but compare to industry average is unsatisfactory. Industry average is 55.30 days. The average inventory also can shows company takes shorter time to sell its inventory. However, Padini has unsatisfactory on the sell its inventory. Fixed asset turnover It shows efficiency company use fixed assets to generate sales. The higher ratio is very good because efficient in asset management. Padini show fixed assets turnover in year 2008 is 5.19 times, year 2009 is 6.01 times and in year 2010 is 6.25 times. Padini show efficiency in use fixed asset including properties to generate sales. Total asset turnover It shows efficiency company using all assets to generate sales. Higher is show very good and high efficiency/more efficient. Padini, in year 2008 show 1.44 times, year 2009 is 1.62 times, year 2010 is 1.44 times. From 2008 and 2009, Padini show satisfactory, it is mean Padini efficient on usage of the all the assets.

Analysis and interpretation of profitability ratios for Padini Holdings Berhad. Profitability ration measures the effectiveness of company in generating returns from investment and sales. It show business efficient and efficiency to achieve company profit. Gross profit margin Year 2008, padini show 50.13%, year 2009 is 49.50%, year 2010 is 50.58%. From 2008 to 2009 is reduced and increased back in year 2010. It show satisfactory. It show profit each ringgit of sales can be used to pay sales and administration expenses. Padini show lower expenses or costs involved in implementing sales activity. Industry average is 30%. Padini show satisfactory on gross profit margin compare industry average. Net profit margin Year 2008,Padini show 10.96%, year 2009 show 10.50%, year 2010 is 11.80%. Industry average is 6.4%.Padini show ability of company generate net profit from each ringgit of sale


after deducting all expenses. The higher of net profit margin show efficient on purchase management with low purchasing costs. Year 2008 to 2009 is reduced however year 2010 is was increased. Padini also generate 10.96 sen in year 2008, 10.50 sen in year 2009 and 11.80 sen in year 2010 is higher compare to industry average 6.4 sen. Overall in net profit margin, padini show satisfactory. Operating profit margin It show efficiency of operation in reducing costs and increase returns before tax and interest.Padini show in year 2008 is 15.34%, year 2009 is 14.65%, year 2010 is 16.91%. From 2008 to 2009 is reduced but from 2009 to 2010 is increase. Padini show able to operate efficiency in order to achieve low cost but high returns. Industry average is 10%. Padini show satisfactory. Return on assets Padini show in year 2008 is 15.79%, year 2009 is 17.03 % and year 2010 is 17.09%. It show increased year by year. It show satisfactory compare to industry average of 4.8%. Padini show effectiveness in using its assets to generate profit. Management of padini efficiency in use all assets to generate company profit. Return on equity Padini show in year 2008 is 24.63%, year 2009 is 17.03% and year 2010 is 26.02%. The ratios is reduce from 2008 to 2009 but increase back in year 2010. The higher of the ratio show company efficiency in generate profit for shareholders which refer to shareholder hold ordinary shares. Padini is more satisfactory in generating profit for company shareholders. Industry average is 8%. This show the management of Padini more efficient compared to the industry average. Earnings Per Share It show the net profit that is generated from each ordinary share. It is given priority to the management and investors because show company success and performances. The higher value, is good benefit to ordinary shareholders. Padini shows RM31.71 in year 2008, year 2009 is RM37.64 and year 2010 is RM46.34. We can see the earnings per shares increase every year and show more and good satisfactory compare to industry average. Industry average RM0.26. Padini obtained RM31.71 for each unit of shares issued in year 2008, RM37.64 in year 2009 and RM46.34 in year 2010. Overall the earnings per share is very satisfactory.


Analysis and interpretation of asset management and profitability ratios of Malayan Flour Mills Berhad

Account receivable turnover For Malayan Flour Mills, for the year 2008, the account rec eivable turnover is 6.14 times. For the year 2009 is 6.41 times and for the year 2010 is 7.14 times. It show increase every year. Industry average is 8.24 times. The account receivables turnover unsatisfactory compared to industry average. This is could be inefficiency collection department to collect debts from customers. Average collection period In year 2008, company average collection period is 58.63 days, year 2009 is 56.16 days, in year 2010, is 50.42 days. The overall of the average collection period is good because more less days is show efficiency of the company but is not satisfactory industry average. Industry average is 44.3 days. It show company us unsatisfactory compare to industry average. It is show company less efficient in collecting debts from customers. It is could be less follow up with customers on the outstanding payments. If this company credit period is 30 days that mean the average of collection of period is unsatisfactory. However, if company credit period is 60 days, the average collection period is less than 60 days it show practical collection period.

Inventory turnover In year 2008, company can sold their inventory 3.60 times only, in year 2009 is 4.05 times and in year 2010 is same 4.05 times. We can see the improvement of management of inventory of company. However, if compare to industry average which is 6.6 times, the company has very low inventory turnover. It show company unable to sell its inventory quickly. It could be company keep surplus inventory and does provide any return. That mean company will incurred transportation and holding costs of the inventory and might be company risks on damage or obsolete. Average, company show unsatisfactory compare to industry average.

Average inventory sales period It measure number days taken to make one round of inventory sales. If less the days which is not high average consider very good because show company not takes longer times to sell the inventory. Company show very unsatisfactory. In year 2008, takes 100 days to make one round inventory sales. In year 2009, is 88.88 days and year 2010 is 88.88 days. No changes i n the year 2009 and 2010.


Industry average is 55.30 days. Company show unsatisfactory on average compare to industry average of 55.30 days. It is show company unable to sell the inventory on specific period and need to take longer time to sell it. The company average inventory sales period show company takes mor times to sell its inventory compared to the other companies in the industry.

Fixed asset turnover It shows efficiency company use fixed assets to generate sales. The higher ratio is very good because efficient in asset management. Company show fixed assets turnover in year 2008 is 5.90 times, year 2009 is 5.89 times and in year 2010 is 6.76 times. Company show efficiency in use fixed asset including properties to generate sales. Industry average is 1.35 times. It show good satisfactory compare to industry average. The turnover show company manage to handle and maximum used of all the fixed assets on the generating sales for the company.

Total asset turnover It shows efficiency company using all assets to generate sales. Higher is show very good and high efficiency/more efficient. In year 2008 show 1.50 times, year 2009 is 1.50 times, year 2010 is 1.53 times. Industry average is 0.75 times. Company shows high total asset turnover compare to industry average due to company maximum used of all the assets in generating company sales.This ratios show company overall efficienc y of the company operation. This is show very and good satisfactory compare to industry average.


Analysis and interpretation of profitability ratios for Malayan Flour Mills Berhad Gross profit margin Year 2008, company show 15.08%, year 2009 is 15.83%, year 2010 is 15.30%. From 2008 to 2009 is increase and reduce in year 2010. It show unsatisfactory. Industry average is 30%. This show purchase management is less efficient and unable to handle cost of company. The gross profit margin less than industry average compare to other companies in the industry. Company not satisfactory on the achieve lower expenses or cost of company.

Net profit margin Year 2008,Company show 5.16%, year 2009 show 6.01%, year 2010 is 6.45%. Industry average is 6.4%. Company show unsatisfactory in year 2008 and 2009 because below industry average. In year 2010, show moderate satisfactory because above industry average which is more 0.05 % compare with industry average. We can see company generate only 5.16 sen in year 2008, 6.01 sen in year 2009 and 6.45 sen in year 2010. Overall in net profit margin, company show unsatisfactory. From the ratios, we can see company unable to achieve better purchasing costs.

Operating profit margin It show efficiency of operation in reducing costs and increase returns before tax and interest.Company show in year 2008 is 6.77%, year 2009 is 8.23%, year 2010 is 7.67%. From 2008 to 2009 is increase but from 2009 to 2010 is decrease. Company show very unsatisfactory operating profit margin ratios compare to industry average 10%. This means company unable to achieve better margin and show is not operate efficiently. Company not efficient in its operation and control its operating expenditures to generate higher earnings before interest and tax.

Return on assets Company show in year 2008 is 7.76%, year 2009 is 9.07 % and year 2010 is 9.87%. It show increased year by year. It show very satisfactory compare to industry average of 4.8%. Company show effectiveness in using its assets to generate profit. Management of Company efficiency in use all assets to generate company profit.


Return on equity Company show in year 2008 is 15.93%, year 2009 is 16.98% and year 2010 is 21.38%. The ratios is increase from 2008 to 2010. The higher of the ratio show company efficiency in generate profit for shareholders which refer to shareholder hold ordinary shares. Company is more satisfactory in generating profit for company shareholders. Industry average is 8%. This show the management of company more efficient compared to the industry average.

Earnings Per Share It show the net profit that is generated from each ordinary share. It is given priority to the management and investors because show company success and performances. The higher value, is good benefit to ordinary shareholders. Company shows RM53.85 in year 2008, year 2009 is RM58.41 and year 2010 is RM78.80. We can see the earnings per shares increase every year and show more and good satisfactory compare to industry average. Industry average RM0.26. Company obtained RM53.85 for each unit of shares issued in year 2008, RM58.41 in year 2009 and RM78.80 in year 2010. Overall the earnings per share is very satisfactory.


Conclusion

For Padini Holdings Berhad, overall for the asset management t is very good because account receivables turnover, average collection period is good turnover. However, only the inventory turnover and average inventory sales period is not satisfactory to the company. The inventory management company need to do something to achieve good turnover in management of inventory. If we see the sales of company, from year 2008 to 2010 is was increased only and not decreased. For fixed assets turnover and total assets turnover, all the turnover is show very good to the company. From above calculation which is involved 6 calculation of ratios, it measures company efficiency in using the assets and specific accounts to generate sales/cash For profitability ratios, Padini show overall is satisfactory because ratios is show very goods if compare to Company 2. Padini show goods in lower expenditure involved in implementing sales activities. They also has good purchase management and cost to get lower expenditure, and also good in collection on debts from customers. Padini also show good operation which can achieved the efficiency of company operation. The operating profit margin is satisfactory to the industry average. From assets scope, Padini achieve maximum used of their assets to generate the sales to the company. They manage to use all the assets in order to generate good profit to the company. This is performance can see in ratios return on assets and return on equity. It is show satisfactory overall. Padini also can generate good earnings per share from year 2008 until 2010. Conclusion and summary for padini, this company overall is satisfactory.Only Padini need to do improvement in inventory scope. They need to increase the inventory turnover and average inventory sales period to achieve good management in inventory company. If they can improve this two ratio in asset management, that mean Padini can get good performance company and will achieve good profit and achieve company objective.

For Company 2, Malayan Flour Mills Berhad, we can see every year the sales is increased like Padini but for this company most of asset management is not satisfactory to the company. For account receivables turnover, average collection period, inventory turnover, average inventory sales period is show unsatisfactory if compare to industry average. It show this company less productive on generated sales and profit to the company. It also do not have good management on the inventory of company. Fixed assets turnover and total assets turnover only show satisfactory if compare to the industry average. Overall for asset management for Malayan Flour Mills Berhad show unsatisfactory. That mean this company inefficiency in using the assets and specific accounts to generate sales or cash. For profitability ratios, this company show unsatisfactory in gross profit margin, net profit margin, operating profit margin. It show satisfactory in return on assets, return on equity and earnings per share. It mean this company not effectiveness in generating returns from investments and sales. It also can show how company efficiency and effectiveness in achieving its profit objective. Only 3 ratios which are return on assets, return on equity and


earnings per shares show above industry average and show satisfactory to the company. It is mean company manage to use all the asset to generate profit to the company. It consider maximum use of all company assets. Conclusion and summary for Malayan Flour Mills Berhad, overall this company show unsatisfactory in asset management and profitability ratios. This company need improvement in a lot of area in management which is how to collect debts from customers, how to manage inventory efficiency, how to get lower expenditure and cost, how purchase management achieve low purchasing costs for the company, how company to operate efficiently. From usage of company assets, this company able to achieve above industry average. That mean this company efficiency in use company assets to generate sales to the company. However, overall this company need so much improvement to achieve company objective in future.


6.0 References

1. Assoc Prof Dr Yusnidah Ibrahim, Faudziah Zainal Abidin, Norlida Abd Manab, Rusmawati Ismail, Zaemah Zainuddin, (2011). Financial Management 1 Open University Malaysia.

2. Padini Holdings Berhad. (2012). The Company Annual Report . [ONLINE]. Available: 

http://announcements.bursamalaysia.com/PADINI-AnnualReport2010.pdf







3. Malayan Flour Mills Berhad. (2012). The Company Annual Report . [ONLINE]. Available: 

http://announcements.bursamalaysia.com /MALAYAN-AnnualReport2010.pdf








ATTACHMENT INCOME STATEMENT AND BALANCE SHEET FOR PADINI HOLDINGS BERHAD FOR THE YEAR 2008, 2009, 2010

Revenue Cost of sales Gross profit Other operating income Selling and distribution costs Administration expenses Profit from operations Finance costs Profit before taxation Taxation Profit for the financial year

2008 (RM)’000 383,306 (192,353) 190,953 4,628 (106,113)

2009 (RM)’000 475,477 (241,958) 233,519 4,938 (128,126)

2010 RM’000 520,880 (259,547) 261,333 5,789 (135,177)

(31,040) 58,428 (769) 57,659 (15,909) 41,750

(41,196) 69,135 (1,525) 67,610 (18,077) 49,533

(44,571) 87,374 (1,094) 86,280 (25,306) 60,974

41,715

49,533

60,974

37.64

46.34

Attributable to: Equity holders of the company Minority interest Earnings per share RM0.50 each (sen)

35 of

31.71

Note 21 for the revenue – Group

Revenue

2008 RM’000

2009 RM’000

2010 RM’000

Commission income Dividend income Sale of goods

2,428 28 380,850

3,780 471,697

4,216 516,664

Total sales or sales is refer to sale of goods.


ASSETS Non-current assets Property, plant and equipment Intangible asset Investment properties Prepaid land lease payments Investment Deferred tax assets

2008 (RM)’000

2009 (RM)’000

2010 RM’000

70,748 1,681 845 697 473

75,887 1,700 894 684 2,047

79,953 6,991 1,870 800 684 1,959

81,212

92,257

Total non-current assets Current assets Non-current assets held for sale Inventories Receivables Tax asset Shirt term investment Deposit, cash and bank balances

1,716 116,113 30,199 178 19,868 21,796

91,878 33,064 18,945 65,621

76,554 32,561 270 19,915 135,025

Total current assets

189,870

209,508

264,325

TOTAL ASSETS

264,314

290,720

356,582

EQUITY AND LIABILITIES Equity attributable to equity holders of the company Share capital Reserves

65,791 103,687

65,791 138,252

65,791 168,541

Total equity

169,478

204,043

234,332

LIABILITIES Non-current liabilities Borrowings Deferred tax liabilities

3,195 19

3,210 194

10,125 774

Total non-current liabilities

3,214

3,404

10,899

Current liabilities Payables Borrowings Tax liabilities Provision Total current liabilities

60,757 25,002 4,796 1,067 91,622

44,260 28,636 8,740 1,637 83,273

74,676 26,128 6,865 3,682 111,351

Total liabilities

94,836

86,677

122,250


TOTAL EQUITY AND LIABILITIES

Trade receivables Other receivables and prepayment Deposit

Total

264,314

290,720

2008 RM’000 12319 4834

2009 RM’000 11307 7718

2010 RM’000 16119 1051

13046

14039

15391

30199

33064

32561

Account receivables is trade receivables exclude prepayment, other receivable(non trade), deposit.

356,582


ATTACHMENT INCOME STATEMENT AND BALANCE SHEET FOR MALAYAN FLOUR MILLS BERHAD FOR THE YEAR 2008, 2009, 2010

Revenue Cost of goods sold Gross profit Other income Distribution and selling expenses Administration expenses Other expenses Results from operating activities Interest expenses Interest income Operating profit Share of loss of equity accounted associates, net of tax Profit before tax Tax expenses Profit for the year Profit attributable to: Owners of the company Minority interest Profit for the year Basic earnings per ordinary share-sen

2008 (RM)’000 1,198,778 (1,017,888) 180,890 11,498 (61,137)

2009 (RM)’000 1,201,053 (1,010,891) 190,162 6,620 (67,519)

2010 RM’000 1,555,091 (1,317,134) 237,957 21,153 (78,750)

(27,265) (16,290) 87,696

(25,083) (7,375) 96,805

(33,596) (20,635) 126,129

(14,868) 8,399

(9,870) 5,275

(8,136) 10,043

81,227 (512)

92,201 (176)

128,036 (143)

80,715 (18,804) 61,911

92,034 (19,753) 72,281

127,893 (27,567) 100,326

57,971 3,940 61,911 53.85

62,879 9,402 72,281 58.41

84,824 15,502 100,326 78.80


2008 (RM)’000

2009 (RM)’000

2010 RM’000

ASSETS Non-current assets Property, plant and equipment Intangible asset Investment properties Investment in subsidiaries Investment in an associate Other investment Deferred tax assets

197356 3339 5676 319 112 2593

198095 2580 5619 143 94 2596

224222 1903 5562 4131

Total non-current assets

209395

209127

235,818

Current assets Trade and other receivable Prepayment and other assets Inventories Current tax assets Cash and cash equivalents

201386 282000 748 104056 104056

193210 2544 249184 94 142179

229,065 3825 324940 90 221974

796338

779894

TOTAL ASSETS

107645 281041 388686

796338

1015712

EQUITY Share capital Reserves

107645 281041

107645 317790

107645 361428

388686

425435

469073

33571 422257

39340 464775

53762 522835

LIABILITIES Deferred tax liabilities

6889

7200

7100

Total non-current liabilities

6889

7200

7100

82206

84895

87407

279908 2288 4037 368439

229439 5992 4037 324363

385172 13198 485777

Total current assets

Total equity attributable to owners of the company Minority interests Total equity

Trade and other payables including derivaties Loans and Borrowings Current tax liabilities Dividend payable Total current liabilities

BBPW3103

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