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Section A: Submission Details

Programme : JLB22123
Course Code & Name : BusinessAccounting
Course Lecturer(s) : Mr Khairul Firdaus Hj.
Adrutdin Submission Title : Financial Statement
Analysis
Deadline : Day 25 Month 5 Year 2021 Time 5 PM
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Table of Content

Abstract 1

1.0 Introduction
2
1.1 Company overview

2.0 Problem statement 3

2.1 Vertical Analysis 4-12

2.2 Horizontal Analysis 13-22

2.3 Ratio Analysis 23-31

3.0 Ratio Analysis Definition 32-33

3.1 Purpose of Ratio Analysis 34

4.0 Ratio Analysis Comparison 35

5.0 Business Strategy

5.1 Decision On Operation

36
5.2 Management Decision

5.3 Economic Decision

6.0 Capital Budgeting and Finance Decision

6.1 Capital Budegting

37
6.2 Finance Decision

7.0 Conclusion 38

8.0 Reference 39
List of Table

Table 2.1.1: Bonia financial position Vertical analysis 2019 & 2018
Table 2.1.2: Bonia financial position Vertical analysis 2018 & 2017
Table 2.1.3: Bonia financial position Vertical analysis 2017 & 2016
Table 2.1.4: Bonia Income Statement analysis 2019 & 2018
Table 2.1.5: Bonia Income Statement analysis 2017 & 2016
Table 2.2.1: Bonia Financial position Horizontal analysis 2019 & 2018

Table 2.2.2: Bonia Financial position Horizontal analysis 2018 & 2017

Table 2.2.3: Bonia Financial position Horizontal analysis 2017 & 2016
Table 2.2.4: Bonia Income Statement Horizontal analysis 2019 & 2018
Table 2.2.5: Bonia Income Statement Horizontal analysis 2018 & 2017
Table 2.2.5: Bonia Income Statement Horizontal analysis 2017 & 2016

Table 2.3.1: Ratio analysis Bonia 2019

Table 2.3.2: Ratio analysis Bonia 2018

Table 2.3.3: Ratio analysis Bonia 2017

Table 2.3.4: Ratio analysis Bonia 2016

Table 4.0: Bonia Ratio Analysis Comparison
List of Figure

Figure 1: Formula ratio analysis

 Abstract
To examine Bonia Corp Bhd's financial statements. Financial analysis entails determining a
company's operating results and financial condition by selecting, analysing, and interpreting
relevant financial data and other details. The operating output of a business is a measure of how
effectively it has used its resources, both tangible and intangible, to generate a profit. The financial
status of a corporation is an indicator of its ability to fulfil its obligations. Take, for instance, the
timely payment of interest on its debt. When it comes to analysing financial data, the analyst has a
variety of tools at his disposal. An summary of the income statement, balance sheet, and financial
ratio are among these instruments. Quantitative analysis is also important. Along with economics
and accounting skills, the analyst must consider how to use these tools most effectively.

1
1.0 Introduction

Financial statements are reports prepared by a company's management to present the

company's financial performance and status at a given point in time. A balance sheet, income
statement, equity statement, and cash flow statement are usually included in a general set of
financial statements. These statements are intended to provide additional information about the
company's financial status to customers outside the company, such as investors and creditors. These
claims, as well as others, are required to be sent to regulatory authorities by publicly traded firms as
soon as possible. Financial statements are the main source of financial information for most
decision-makers. As a result, the accuracy, reliability, and validity of the data on these financial
statements are prioritised in accounting and reporting.

1.1 Company Overview

Bonia Corp Bhd is primarily involved in the design, manufacture, promotion, marketing,
distribution, wholesale, and retail of luxury leatherwear, footwear, clothing, accessories, and
eyewear for men and women under its own labels and other foreign licenced brands. In addition, the
group is involved in commercial property investment, growth, management, and leasing. In
addition, the company is involved in commercial property investment, growth, management, and
leasing, as well as the management of food and beverage services. The company's headquarters are
in Malaysia and Singapore, and it also has branches in Indonesia and Vietnam.

2
2.0 Problem Statement

Your company was working a few years ago. However, you do have some other concerns that have to be
discussed in particular regarding the cash situation. You then went to the bank to assist you with the capital injection
via a loan. As usual, the bank will say that you need a healthy financial position and will review your financial
statement to assess your business efficiency.

3
2.1 Vertical Analysis

Vertical analysis is a way of examining financial statements in which each line item is listed
as a percentage of the statement's base figure. The base figure is always shown at 100% on the first
line of the statement, with each subsequent line item indicating a percentage of the total. For
example, an income statement's each line indicates a percentage of gross sales, whereas a cash flow
statement's each line represents each cash inflow or outflow as a percentage of total cash flows.

Understanding the proportions of each line item to the overall, understanding major trends
that occur over time, comparing different organisations of varied sizes, or comparing a company's
financial statements to industry norms may all be done via vertical analysis on an income statement,
balance sheet, or cash flow statement.

When performing financial analytics and comparisons, using percentages makes the
information more useful and understandable. Because the vertical analysis approach uses
percentages to represent each line item, you may compare a company's relative account balances to
those of another company or the industry average proportionately, regardless of whether the other
business's or industry average's total sales are more or lower than the firm you're looking at.

To execute a vertical analysis on a financial statement that does not already show each line
item as a percentage, divide the line item value by the base number and multiply the result by 100
to get the percentage of each line item.

Formula In a vertical analysis the percentage is :

Percentage of base = (Amount of individual item/Amount of base item) x 100

4
 Comparative Statement of Financial Position Bonia 2019 & 2018

2019 2018
Amount (RM) Percentage Amount (RM) Percentage
ASSETS

Non-current assets
Property, plant and equipment 119,775,000 45.2% 134,671,000 53%
Investment properties 51,647,000 19.5% 21,442,000 8.4%
Intangible assets 83,223,000 31.5% 86,254,000 33.9%

Investments in subsidiaries - -
Interests in associates 531,000 0.2% 749,000 0.3%
Other investments 1,203,000 0.5% 1,222,000 0.5%
Deferred tax assets 1,770,000 0.7% 1,354,000 0.5%

Other receivables 6,310,000 2.4% 8,569,000 3.4%

Total non-current assets 100%

264,459,000 100% 254,261,000

Current assets

Inventories 93,118,000 34.7% 105,363,000 34.7%

Trade receivables and other

64,553,000 24.1% 83,236,000 27.4%
receivables
Current tax assets 3,271,000 1.2% 3,521,000 1.2%

Cash and bank balances 89,169,000 33.2% 84,029,000 27.7%

Short terms funds 18,301,000 6.8% 27,293,000 9%
Total current assets
268,412,000 100% 303,442,000 100%

Assets of disposal group classified as

- 121,020,000
held of sale
Total Assets
532,871,000 678,723,000

5
EQUITY AND LIABILITIES

Equity attributable to owners

of the parent
Share capital 201,572,000 50.9% 201,572,000 43.2
Reserves 174,664,000 44.1% 239,365,000 51.4
Non-controlling interests
19,910,000 5% 25,018,000 5.4
Total Equity
396,146,000 100% 465,955,000 100%
Liabilities

Non-current liabilities

Borrowing
35,024,000 71.6% 58,162,000 80.6%
Other payable
5,067,000 10.4% 4,820,000 6.7%

Provision for restoration costs 1,316,000 2.7% 1,700,000 2.4%

Deferred tax liabilities 7,505,000 15.3% 7,400,00 10.3%
Total non-current liabilities
48,912,000 100% 72,082,000 100%
Current Liabilities

Trade and other payables 38,302,000 43.6 62,110,000 59.7%

Borrowings 21,008,000 24 38,143,000 36.6%

Provision for restoration costs 1,341,000 1.5 897,000 0.9%

Contracts liabilities 23,551,000 26.8 -
Current tax liabilities
3,611,000 4.1 2,918,000 2.8%
Total current liabilities
87,813,000 100% 104,068,000 100%
Liabilities of disposal groups classified
as held of sale - 36,618,000
Total Liabilities
136,725,000 212,768,000
Total equity and liabilities
532,871,000 678,723,000

Table 2.1.1: Bonia financial position Vertical analysis 2019 & 2018

6
 Comparative Statement of Financial Position Bonia 2018 & 2017

2018 2017
Amount (RM) Percentage Amount (RM) Percentage
ASSETS

Non-current assets
Property, plant and equipment 134,671,000 53% 183,125,000 56.6%
Investment properties 21,442,000 8.4% 34,544,000 10.7%
Intangible assets 86,254,000 33.9% 90,145,000 27.9%

Investments in subsidiaries - -
Interests in associates 749,000 0.3% 679,000 0.2%

Other investments 1,222,000 0.5% 1,299,000 0.4%

Deferred tax assets 1,354,000 0.5% 2,501,000 0.7%

Other receivables 8,569,000 3.4% 11,197,000 3.5%

Total non-current assets 100%
254,261,000 323,490,000 100%

Current assets

Inventories 105,363,000 34.7% 132,938,000 34.3%

Trade receivables and other
83,236,000 27.4% 121,783,000 31.4%
receivables
Current tax assets 3,521,000 1.2% 8,209,000 2.1%

Cash and bank balances 84,029,000 27.7% 119,648,000 30.9%

Short terms funds 27,293,000 9% 4,942,000 1.3%
Total current assets
303,442,000 100% 387,520,000 100%

Assets of disposal group classified as

121,020,000 -
held of sale
Total Assets
678,723,000 711,010,000

7
EQUITY AND LIABILITIES

Equity attributable to owners

of the parent
Share capital 201,572,000 43.2 201,572,000 44.3%
Reserves 239,365,000 51.4 231,358,000 50.8%
Non-controlling interests
25,018,000 5.4 22,337,000 4.9%
Total Equity
465,955,000 100% 455,267,000 100%
Liabilities

Non-current liabilities

Borrowing
58,162,000 80.6% 98,225,000 85.3%
Other payable
4,820,000 6.7% 4,978,000 4.3%

Provision for restoration costs 1,700,000 2.4% 3,443,000 3%

Deferred tax liabilities 7,400,00 10.3% 8,525,000 7.4%
Total non-current liabilities
72,082,000 100% 115,171,000 100%
Current Liabilities

Trade and other payables 62,110,000 59.7% 90,929,000 64.7%

Borrowings 38,143,000 36.6% 44,601,000 31.7%

Provision for restoration costs 897,000 0.9% 110,000 0.1%

Contracts liabilities - -
Current tax liabilities
2,918,000 2.8% 4,932,000 3.5%
Total current liabilities
104,068,000 100% 140,572,000 100%
Liabilities of disposal groups classified
as held of sale 36,618,000 -
Total Liabilities
212,768,000 255,743,000
Total equity and liabilities
678,723,000 711,010,000

Table 2.1.2: Bonia financial position Vertical analysis 2018 & 2017

8
 Comparative Statement of Financial Position Bonia 2017 &2016

2017 2016
Amount (RM) Percentage Amount (RM) Percentage
ASSETS

Non-current assets
Property, plant and equipment 183,125,000 56.6% 193,618,000 58.8%
Investment properties 34,544,000 10.7% 32,801,000 10%
Intangible assets 90,145,000 27.9% 88,319,000 26.8%

Investments in subsidiaries - -
Interests in associates 679,000 0.2% 392,000 0.1%
Other investments 1,299,000 0.4% 1,298,000 0.4%
Deferred tax assets 2,501,000 0.7% 2,113,000 0.6%

Other receivables 11,197,000 3.5% 10,805,000 3.3%

Total non-current assets 100%

323,490,000 100% 329,346,000

Current assets

Inventories 132,938,000 34.3% 149,426,000 40.2%

Trade receivables and other

121,783,000 31.4% 111,719,000 30.1%
receivables
Current tax assets 8,209,000 2.1% 7,092,000 1.9%

Cash and bank balances 119,648,000 30.9% 103,159,000 27.8%

Short terms funds 4,942,000 1.3% -
Total current assets
387,520,000 100% 371,396,000 100%

Assets of disposal group classified as

- 4,139,000
held of sale
Total Assets
711,010,000 704,876,000

9
EQUITY AND LIABILITIES

Equity attributable to owners

of the parent
Share capital 201,572,000 44.3% 201,572,000 47.3%
Reserves 231,358,000 50.8% 204,174,000 47.9%
Non-controlling interests
22,337,000 4.9% 20,494,000 4.8%
Total Equity
455,267,000 100% 426,240,000 100%
Liabilities

Non-current liabilities

Borrowing
98,225,000 85.3% 106,322,000 81.5%
Other payable
4,978,000 4.3% 13,235,000 10.1%

Provision for restoration costs 3,443,000 3% 2,809,000 2.2%

Deferred tax liabilities 8,525,000 7.4% 8,033,000 6.2%
Total non-current liabilities
115,171,000 100% 130,399,000 100%
Current Liabilities

Trade and other payables 90,929,000 64.7% 97,036,000 65.5%

Borrowings 44,601,000 31.7% 48,339,000 32.6%

Provision for restoration costs 110,000 0.1% 87,000 0.1%

Current tax liabilities
4,932,000 3.5% 2,777,000 1.8%
Total current liabilities
140,572,000 100% 148,239,000 100%
Total Liabilities
255,743,000 278,638,000
Total equity and liabilities
711,010,000 704,878,000

Table 2.1.3: Bonia financial position Vertical analysis 2017 & 2016

10
 Comparative Income Statement of Bonia 2019 & 2018

2019 2018

Continuing operations
Revenue
462,259,000 440,493,000

Cost of sales
(212,081,000) (172,690,000)

Gross profit
250,178,000 267,803,000

Other operating income

11,773,000 12,386,000

Selling and distribution expenses

(132,954,000) (143,004,000)

General and administrative expenses

(85,614,000) (99,151,000)

Finance costs
(4,773,000) (6,334,000)

Share of profit of an associate, net of tax

202,000 430,000

Profit before tax

38,812,000 32,130,000

Tax expense
(15,404,000) (11,002,000)

Profit for the financial year from continuing

operations
23,408,000 21,128,000

Discontinued operations

(Loss)/Profit for the financial year from discontinued

operations, net of tax (147,000) 3,772,000
Profit for the financial year
23,261,000 24,900,000

Table 2.1.4: Bonia Income Statement analysis 2019 & 2018

11
 Comparative Income Statement of Bonia 2017 & 2016

2017 2016

Revenue
613,159,000 665,438,000

Cost of sales
(254,132,000) (299,252,000)

Gross profit
359,027,000 366,186,000

Other operating income

14,575,000 11,425,000

Selling and distribution expenses

(184,802,000) (197,218,000)

General and administrative expenses

(121,711,000) (124,457,000)

Finance costs
(11,208,000) (11,138,000)

Share of profit of associates, net of tax

287,000 295,000

Profit before tax

56,168,000 45,093,000

Tax expense
(16,770,000) (15,785,000)

Profit for the financial year

39,398,000 29,308,000

Table 2.1.5: Bonia Income Statement analysis 2017 & 2016

12
2.2 Horizontal Analysis

Horizontal analysis is a form of financial accounting that shows how the amounts of the
corresponding financial statements have improved over time. It's a useful tool for figuring out
pattern situations. For two or more intervals, the reports are used in horizontal analyses. The earliest
era is usually used as the base period, and all subsequent periods' statements are compared to items
from the base period's records. The changes are usually expressed in dollars and percentages.

Formula In a Horizontal analysis the percentage is :

Malaysia Ringgit change;(amount of item in comparison year / amount of the item in base
year)x100

Percentage change; Change x100

Amount item in base year

13
 Comparative Statements of Financial Position Bonia 2019 & 2018

Increase or (-Decrease)
2019 (RM) 2018 (RM) Amount (RM) Change %
ASSETS

Non-current assets
Property, plant and equipment 119,775,000 134,671,000 -14,896,000 -11%
Investment properties 51,647,000 21,442,000 30,205,000 141%
Intangible assets 83,223,000 86,254,000 -3,031,000 -4%

Investments in subsidiaries - -
Interests in associates 531,000 749,000 -218,000 -29%
Other investments 1,203,000 1,222,000 -19,000 -2%
Deferred tax assets 1,770,000 1,354,000 416,000 31%

Other receivables 6,310,000 8,569,000 -2,259,000 -26%

Total non-current assets 10,198,000 4%

264,459,000 254,261,000

Current assets

Inventories 93,118,000 105,363,000 -12,245,000 -12%

Trade receivables and other -18,683,000

64,553,000 83,236,000 -22%
receivables
Current tax assets 3,271,000 3,521,000 -250,000 -7%

Cash and bank balances 89,169,000 84,029,000 5,140,000 6%

Short terms funds 18,301,000 27,293,000 -8,992,000 -33%
Total current assets
268,412,000 303,442,000 -35,030,000 -12%

Assets of disposal group classified as

- 121,020,000
held of sale
Total Assets
532,871,000 678,723,000

14
EQUITY AND LIABILITIES

Equity attributable to owners

of the parent
Share capital 201,572,000 201,572,000 0 0%
Reserves 174,664,000 239,365,000 -64,701,000 -27%
Non-controlling interests
19,910,000 25,018,000 -5,108,000 -20%
Total Equity
396,146,000 465,955,000 -69,809,000 -15%
Liabilities

Non-current liabilities

Borrowing
35,024,000 58,162,000 -23,138,000 -40%
Other payable
5,067,000 4,820,000 247,000 5%

Provision for restoration costs 1,316,000 1,700,000 -384,000 -23%

Deferred tax liabilities 7,505,000 7,400,000 105,000 1%
Total non-current liabilities
48,912,000 72,082,000 -23,170,000 -32%
Current Liabilities

Trade and other payables 38,302,000 62,110,000 -23,808,000 -38%

Borrowings 21,008,000 38,143,000 -17,135,000 -45%

Provision for restoration 444,000

1,341,000 897,000 49%
costs
Contracts liabilities 23,551,000 -
Current tax liabilities
3,611,000 2,918,000 693,000 24%
Total current liabilities
87,813,000 104,068,000 -16,255,000 -16%
Liabilities of disposal groups
classified as held of sale - 36,618,000
Total Liabilities
136,725,000 212,768,000
Total equity and liabilities
532,871,000 678,723,000

Table 2.2.1: Bonia Financial position Horizontal analysis 2019 & 2018

15
 Comparative Statements of Financial Position Bonia 2018 & 2017

Increase or (-Decrease)
2018 (RM) 2017 (RM) Amount (RM) Change %
ASSETS

Non-current assets
Property, plant and equipment 134,671,000 183,125,000 -48,454,000 -26%
Investment properties 21,442,000 34,544,000 -13,102,000 -38%
Intangible assets 86,254,000 90,145,000 -3,891,000 -4%

Investments in subsidiaries - -
Interests in associates 749,000 679,000 70,000 10%
Other investments 1,222,000 1,299,000 -77,000 -6%
Deferred tax assets 1,354,000 2,501,000 -1,147,000 -46%

Other receivables 8,569,000 11,197,000 -2,628,000 -23%

Total non-current assets -69,229,000 -21%

254,261,000 323,490,000

Current assets

Inventories 105,363,000 132,938,000 -27,575,000 -21%

Trade receivables and other -38,547,000

83,236,000 121,783,000 -32%
receivables
Current tax assets 3,521,000 8,209,000 -4,688,000 -57%

Cash and bank balances 84,029,000 119,648,000 -35,619,000 -30%

Short terms funds 27,293,000 4,942,000 22,351,000 452%
Total current assets
303,442,000 387,520,000 -84,078,000 -22%

Assets of disposal group classified as

121,020,000 -
held of sale
Total Assets
678,723,000 711,010,000

16
EQUITY AND LIABILITIES

Equity attributable to owners

of the parent
Share capital 201,572,000 201,572,000 0 0%
Reserves 239,365,000 231,358,000 8,007,000 3%
Non-controlling interests
25,018,000 22,337,000 2,681,000 12%
Total Equity
465,955,000 455,267,000 10,688,000 2%
Liabilities

Non-current liabilities

Borrowing
58,162,000 98,225,000 -40,063,000 -41%
Other payable
4,820,000 4,978,000 -158,000 -3%

Provision for restoration costs 1,700,000 3,443,000 -1,743,000 -51%

Deferred tax liabilities 7,400,000 8,525,000 -1,125,000 -13%
Total non-current liabilities
72,082,000 115,171,000 -43,089,000 -37%
Current Liabilities

Trade and other payables 62,110,000 97,036,000 -34,926,000 -36%

Borrowings 38,143,000 48,339,000 -10,196,000 -21%

Provision for restoration 810,000

897,000 87,000 931%
costs
Current tax liabilities
2,918,000 2,777,000 141,000 5%
Total current liabilities
104,068,000 148,239,000 -44,171,000 -30%
Liabilities of disposal groups
classified as held of sale 36,618,000 -
Total Liabilities
212,768,000 255,743,000
Total equity and liabilities
678,723,000 711,010,000

Table 2.2.2: Bonia Financial position Horizontal analysis 2018 & 2017

17
 Comparative Statements of Financial Position Bonia 2017 & 2016

Increase or (-Decrease)
2017 (RM) 2016 (RM) Amount (RM) Change %
ASSETS

Non-current assets
Property, plant and equipment 183,125,000 193,618,000 -10,493,000 -5%
Investment properties 34,544,000 32,801,000 1,743,000 5%
Intangible assets 90,145,000 88,319,000 1,826,000 2%

Investments in subsidiaries - -
Interests in associates 679,000 392,000 287,000 73%
Other investments 1,299,000 1,298,000 1,000 0%
Deferred tax assets 2,501,000 2,113,000 388,000 18%

Other receivables 11,197,000 10,805,000 392,000 4%

Total non-current assets -5,856,000 -2%

323,490,000 329,346,000

Current assets

Inventories 132,938,000 149,426,000 -16,488,000 -11%

Trade receivables and other 10,064,000

121,783,000 111,719,000 9%
receivables
Current tax assets 8,209,000 7,092,000 1,117,000 16%

Cash and bank balances 119,648,000 103,159,000 16,489,000 16%

Short terms funds 4,942,000 -
Total current assets
387,520,000 371,396,000 16,124,000 4%

Assets of disposal group classified as

- 4,139,000
held of sale
Total Assets
711,010,000 704,876,000

18
EQUITY AND LIABILITIES

Equity attributable to owners

of the parent
Share capital 201,572,000 201,572,000 0 0%
Reserves 231,358,000 204,174,000 27,184,000 13%
Non-controlling interests
22,337,000 20,494,000 1,843,000 9%
Total Equity
455,267,000 426,240,000 29,027,000 7%
Liabilities

Non-current liabilities

Borrowing
98,225,000 106,322,000 -8,097,000 -8%
Other payable
4,978,000 13,235,000 -8,257,000 -62%

Provision for restoration costs 3,443,000 2,809,000 634,000 23%

Deferred tax liabilities 8,525,000 8,033,000 492,000 6%
Total non-current liabilities
115,171,000 130,399,000 -15,228,000 -12%
Current Liabilities

Trade and other payables 90,929,000 97,036,000 -6,107,000 -6%

Borrowings 44,601,000 48,339,000 -3,738,000 -8%

Provision for restoration costs 110,000 87,000 23,000 26%

Current tax liabilities
4,932,000 2,777,000 2,155,000 78%
Total current liabilities
140,572,000 148,239,000 -7,667,000 -5%
Total Liabilities
255,743,000 278,638,000
Total equity and liabilities
711,010,000 704,878,000

Table 2.2.3: Bonia Financial position Horizontal analysis 2017 & 2016

19
 Comparative Income Statement of Bonia 2019 & 2018

Increase or (-Decrease)
Amount
2019 2018 Change %
(RM)
Revenue 21,766,000
462,259,000 440,493,000 5%

Cost of sales -39,391,000

(212,081,000) (172,690,000) 23%

Gross profit -17,625,000

250,178,000 267,803,000 -7%

Other operating income -613,000

11,773,000 12,386,000 -5%

Selling and distribution expenses 10,050,000

(132,954,000) (143,004,000) -7%

General and administrative 13,537,000

(85,614,000) (99,151,000) -14%
expenses
Finance costs 1,561,000
(4,773,000) (6,334,000) -25%

Share of profit of an associate, net -228,000

202,000 430,000 -53%
of tax
Profit before tax 6,682,000
38,812,000 32,130,000 21%

Tax expense -4,402,000

(15,404,000) (11,002,000) 40%

Profit for the financial year from

continuing
operations
23,408,000 21,128,000 2,280,000 11%

Discontinued operations

(Loss)/Profit for the financial

year from discontinued -3,919,000 -104%
(147,000) 3,772,000
operations, net of tax
Profit for the financial year -1,639,000
23,261,000 24,900,000 -7%

Table 2.2.4: Bonia Income Statement Horizontal analysis 2019 & 2018

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 Comparative Income Statement of Bonia 2018 & 2017

Increase or (-Decrease)

2017 Amount
2018 Change %
(RM)
Revenue -172,666,000
440,493,000 613,159,000 -28%

Cost of sales 81,442,000

(172,690,000) (254,132,000) -32%

Gross profit -91,224,000

267,803,000 359,027,000 -25%

Other operating income -2,189,000

12,386,000 14,575,000 -15%

Selling and distribution expenses 41,798,000

(143,004,000) (184,802,000) -23%

General and administrative 22,560,000

(99,151,000) (121,711,000) -19%
expenses
Finance costs 4,874,000
(6,334,000) (11,208,000) -43%

Share of profit of an associate, net 143,000

430,000 287,000 50%
of tax
Profit before tax -24,038,000
32,130,000 56,168,000 -43%

Tax expense 5,768,000

(11,002,000) (16,770,000) -34%
operations
21,128,000

Discontinued operations

(Loss)/Profit for the financial

year from discontinued 3,772,000
operations, net of tax
Profit for the financial year -35,626,000
24,900,000 39,398,000 -90%

Table 2.2.5: Bonia Income Statement Horizontal analysis 2018 & 2017

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 Comparative Income Statement of Bonia 2017 & 2016

Increase or (-Decrease)
2017 2016 Amount (RM) Change %
Revenue -52,279,000
613,159,000 665,438,000 -8%

Cost of sales 45,120,000

(254,132,000) (299,252,000) -15%

Gross profit -7,159,000

359,027,000 366,186,000 -2%

Other operating income 3,150,000

14,575,000 11,425,000 28%

Selling and distribution expenses 12,416,000

(184,802,000) (197,218,000) -6%

General and administrative expenses 2,746,000

(121,711,000) (124,457,000) -2%

Finance costs -70,000

(11,208,000) (11,138,000) 1%

Share of profit of associates, net of tax -8,000

287,000 295,000 -3%

Profit before tax 11,075,000

56,168,000 45,093,000 25%

Tax expense -985,000

(16,770,000) (15,785,000) 6%

Profit for the financial year 10,090,000

39,398,000 29,308,000 34%

Table 2.2.5: Bonia Income Statement Horizontal analysis 2017 & 2016

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2.3 Ratio Analysis

Financial ratios are useful tools for companies and investors to analyse and compare
relationships between different financial data points in a company's history, market, or entire field.
Analysts can calculate different types of financial ratios for various types of market intelligence and
details using data from a company's income statement, balance sheet, and cash flow report. Table
below are show the ratio analysis of Bonia Corporation Bhd in 2019, 2018, 2017 and 2016.

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 Ratio Analysis 2019
Liquidity

Working capital Current Ratio

= 268,412,000 - 87,813,000 =268,412,000

= 180,599,000 87,813,000
=3.1
Quick ratio
6,310,000+64,553,000
87,813,000
= 0.80
Efficiency

Account receivable (AR) turnover Average collection period

462,259,000 365
(64,553,000+83,236,000) 6.3
2 = 57.93
= 6.3
Inventory Turnover Asset Turnover
-212,081,000 462,259,000
99,240,500 608,797,000

=-2.14 = 0.76
Profitability

Gross profit margin Net profit margin

250,178,000 23,261,000
462,259,000 462,259,000

=0.54 =0.05
Return on asset Return on owner equity
23,261,000 23,261,000
605,797,000 431,050,500

=0.04 =0.05
Return on owner equity’s ordinary share Earning per share

N/A N/A

Price earning ratio Dividend yield

N/A N/A

Dividen payout ratio

N/A

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Debt Management

Interest coverage ratio Debt ratio

136,725,000
N/A 532,871,000
=0.26
Equity ratio Debt equity ratio
396,146,000 136,725,000
532,871,000 396,146,000
=0.74 =0.35

Table 2.3.1: Ratio analysis Bonia 2019

25
 Ratio Analysis 2018

Liquidity

Working capital Current Ratio

254,261,000 - 72,082,000 254,261,000
= 182,179,000 72,082,000
=3.53

Quick Ratio
8,569,000+83,236,000
104,068,000
=0.88

Efficiency

Account receivable (AR) turnover Average collection period

440,421,000 365
102,509,500 4.3

=4.3 =84.9

Inventory Turnover Asset Turnover

-172,690,000 440,421,000
119,150,500 694,866,500
=-1.45 =0.63

Profitability

Gross profit margin Net profit margin

267,731,000 24,900,000
440,421,000 440,421,000
=0.61 =0.06
Return on asset Return on owner equity
24,900,000 24,900,000
694,866,500 460,611,000
=0.04 =0.06
Return on owner equity’s ordinary share Earning per share

N/A N/A

Price earning ratio Dividend yield

N/A N/A

26
Dividen payout ratio

N/A

Debt Management

Interest coverage ratio Debt ratio

212,768,000
N/A 678,723,000
=0.31
Equity ratio Debt equity ratio
465,955,000 212,768,000
678,723,000 465,955,000
=0.7 =0.46

Table 2.3.2: Ratio analysis Bonia 2018

27
 Ratio Analysis 2017

Liquidity

Working capital Current Ratio

323,490,000 - 255,743,000 323,490,000
=67,747,000 255,743,000
=1.27

Quick Ratio
122,524,000
140,572,000
=0.87

Efficiency

Account receivable (AR) turnover Average collection period

613,159,000 365
116,751,000 5.3

=5.3 =68.7

Inventory Turnover Asset Turnover

-254,132,000 613,159,000
141,182,000 707,944,000
=-1.8 =0.87

Profitability

Gross profit margin Net profit margin

359,027,000 39,398,000
613,159,000 613,159,000
=0.58 =0.06

Return on asset Return on owner equity

39,398,000 39,398,000
707,944,000 440,753,500
=0.06 =0.1
Return on owner equity’s ordinary share Earning per share

N/A N/A

Price earning ratio Dividend yield

N/A N/A

28
Dividen payout ratio

N/A

Debt Management

Interest coverage ratio Debt ratio

255,743,000
N/A 711,010,000
=0.36
Equity ratio Debt equity ratio
455,267,000 255,743,000
711,010,000 455,267,000
=0.64 =0.56

Table 2.3.3: Ratio analysis Bonia 2017

29
 Ratio Analysis 2016

Liquidity

Working capital Current Ratio

371,396,000 - 149,401,000 371,396,000
=221,995,000 149,401,000
= 2.5

Quick Ratio
122,524,000
149,401,000
=0.82

Efficiency

Account receivable (AR) turnover Average collection period

665,438,000 365
122,793,000 5.42

=5.42 =67.34

Inventory Turnover Asset Turnover

-299,252,000 665,438,000
151,474,500 687,298,000
=0.98
=-1.98
Profitability

Gross profit margin Net profit margin

366,186,000 29,998,000
665,438,000 665,438,000
=0.55 =0.05

Return on asset Return on owner equity

29,998,000 29,998,000
314,620,500 415,620,000
=0.1 0.07
Return on owner equity’s ordinary share Earning per share

N/A N/A

Price earning ratio Dividend yield

N/A N/A

30
Dividen payout ratio

N/A

Debt Management

Interest coverage ratio Debt ratio

282,795,000
N/A 709,730,000
=0.40
Equity ratio Debt equity ratio
426,933,000 282,795,000
709,730,000 426,933,000
=0.6 =0.66

Table 2.3.4: Ratio analysis Bonia 2016

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3.0 Ratio Analysis Definition

Ratio analyses are a quantitative method of evaluating financial statements like the balance
sheet and income statement to gain insight into a company's liquidity, operational efficiency, and
profitability. A basic pillar of equity analysis is ratio analysis. Figure 1 shows ratio analysis formula

32
Figure 1: Formula ratio analysis

33
3.1 Purpose of Ratio Analysis

The ratio analysis is used to determine the state of a company's financial situation. There are
variety of purposes may be used for ratio analysis. Comparisons are made. One of the applications
of the ratio analysis to understand a company's position in the market and to compare its financial
results to those of similar companies in the industry. The achievement of financial ratios, such as
prices/earnings, and their relationship to the business's ratios would enable management to identify
market differences and assess the company's competitive advantages, strengths, and weaknesses.
The data would then be used by management to make decisions aimed at strengthening the
company's market position.

Liquidity ratios measure a company's ability to meet its debt commitments with current
assets. If a company is having financial difficulties and is unable to pay its debts, it will convert its
assets into cash and use the funds to pay off any unpaid debts.Some of typical liquidity ratios
is include the fast ratio, cash ratio, and current ratio. Liquidity ratios are used by banks, creditors,
and vendors to decide whether a client will fulfil his financial obligations on time.

Profitability ratios are used to equate a company's profitability to its expenses. Profitability
that is greater than the previous financial reporting period means that the company is doing well
financially. A profits ratio can be compared to a comparable company's ratio to determine how
profitable a company is in comparison to its competitors. Significant returns on equity, return on
assets, operating margin, gross margin, and return on capital employed are only a few examples.

Efficiency ratios show how well a company uses its assets and liabilities to generate sales
and profit. Inventory use, equipment use, liability turnover, and equity use are all tracked. These
ratios are critical because as the productivity ratios improve, the business can generate more
revenue and profits. Asset turnover, inventory turnover, payable turnover, working capital turnover,
fixed asset turnover, and receivables turnover ratio are only a few of the major efficiencies.

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4.0 Ratio analysis comparison

Ratio analysis comparison of company Bonia Corporation bhd in 2019,2018,2017and 2016

Particular Year
2019 2018 2017 2016
Liquidity
 Working capital 180,599,000 182,179,000 67,747,000 318769222

 Current Ratio 3.1 3.53 1.27 2.5

 Quick ratio 0.80 0.88 0.87 0.82

Efficiency
 Account receivable (AR) 6.3 4.3 5.3 5.42

turnover
 Average collection period 57.93 84.9 68.7 67.34
 Inventory turnover -2.14 -1.45 -1.8 -1.98

 Asset turnover
0.76 0.63 0.87 0.98

Profitability
 Gross profit margin 0.54 0.61 0.58 0.55

 Net profit margin 0.05 0.06 0.06 0.05

 Return on asset 0.04 0.04 0.06 0.1

 Return on owner’s equity 0.05 0.06 0.1 0.07

 Return on owners
equity’s ordinary share
 Earning per share
 Price earning ratio
 Dividend yield
 Dividend payout ratio
Debt management
 Interest coverage ratio
 Debt ratio 0.26 0.31 0.36 0.40
 Equity ratio 0.74 0.7 0.64 0.6
 Debt equity ratio 0.35 0.46 0.56 0.66

Table 4.0: Bonia Ratio Analysis Comparison

35
5.0 Business Strategy

Based on ratio analysis, we determine that company Bonia needs to implement additional
policies in order to ensure that their financial statement and business health are in good working
order in order to present their statement to the bank for a new loan. There are a few options.
Direction guidelines recommendations for operational, administrative, and strategic decisions that
can be provided after the review of

5.1 Decisions on operation

 To maximize company Bonia sales profits, it is necessary to determine the sales price and, if
possible, increase costs.
 The brand management is led by Chairman with a dedicated team managing the respective
brands, including their direction and performance
 To achieve retail excellency by minimize the cost of products or services, the business should
aim to buy higher volumes and reduce the purchasing price

5.2 Management decision

 Bonia business had no big cash flow problem and seemed like fluctuation. The vital issue of
this business, however, is the unproductive or unprofitable use of company sources. Efficient
service must be made of the funds transferred to the company. High sales profit was the key
reason for the success achieved in the highest year.
 Capital does not need to be raised when the company loses sales. Second, to achieve The
Organization's continuity in maximising profits from the central business division, adequate
steps (reduced sales costs or increased sales revenues) must be taken. Otherwise, the capital
increase will not be a preventative measure to ensure the company's sustainability.
 The use of source becomes important in the case of an increase in capital. If this cash flow is
retained in the bank, for example, no contribution will be made.

5.3 Economic Decision

 A long-term loan can help a company's long-term survival by allowing it to be transformed into
investments (such as the purchasing of properties for continuity). It will, for example, assist in
the elimination of lease costs and the reduction of costs.
 This transferable source would not only result in a long-term commitment through partnerships
with suppliers that provide management input, but it will also lower the company's sales costs.

36
6.0 Capital Budgeting and Finance Decision

Capital budgeting for financial management defines a strategic business planning approach.
The financing structure decides how a strategic strategy is paid for-sometimes with debt, but more
often with retained income or new investors. These two concepts work hand in hand with the
company's working capital, which must stay high in order for the company to cover its operating
costs over the next 12-month period.

6.1 Capital Budgeting

The term capital budgeting refers to a company's decision to invest its current funds most
effectively in long-term investments in expectation of a predictable flow of benefits over time.
Capital budgeting entails prudently investing the firm's existing capital in long-term investments
(assets) with the expectation of positive returns on those assets in the future. This return is
calculated based on the investment strategies used. Capital budgeting is primarily concerned with
more than just determining which fixed assets to buy. The issue of capital budgeting is probably
one of the most pressing issues in the field of corporate finance. The question of how the firm
chooses to finance its operations and how it manages its operational activities in the short term is
certainly intriguing, but the firm's business is determined by its fixed assets.

Firms' investment decisions usually include asset acquisition and replacement (long-term).
Fixed assets make up a sizable portion of a company's asset portfolio, and the size of the fixed
assets portfolio has a significant impact on its valuation. These assets depreciate over time,
necessitating the replacement, modernization, or acquisition of new ones. The replacement of assets
has long been a critical component of capital budgeting.

6.2 Financing Decision

The financial manager's Financing Decision is yet another important decision on the
organization's financing mix. It has to do with borrowing and allocating funds for investment
purposes. The decision to finance necessitates two sources of funds: an enterprise's own money,
such as share capital, income, debenture, loan, bond, and so on; and an enterprise's own money,
such as share capital, revenue, debenture, loan, bond, and so on.The aim of the financial decision is
to create the best capital structure possible. an optimal debt-to-equity ratio to ensure risk-to-reward
trade-offs for shareholders

37
7.0 Conclusion

Examining a company's financial statements is one of the most important aspects of making
the correct investment decision. Financial statement analysis is a tool for selecting, evaluating, and
interpreting financial data in order to assess a company's past, present, and future financial
performance. Among the significant issues to be explored more closely in financial reports are
whether the corporation has debt repayment capacity, whether it is financially stable or stressed,
whether it has an appropriate financial mix, whether it is right to provide shareholders with returns,
the quality of revenue output, and work capital management.

Financial statement review based on Bonia tests an organization's health and profitability
and provides insight into how it conducts business. However, it is important to remember that the
financial statement analysis has a number of disadvantages. Various accounting methods are used
by various organisations to change apparent health and profit levels for better or worse. The same
data will yield different results for different analysts. As a result, we must conclude that the
financial statement analysis (while important) is just one tool in the investment decision-making
process.

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8.0 Reference

Bursa Malaysia Bonia Financial statement report. Retrieve from

https://www.bursamalaysia.com/trade/trading_resources/listing_directory/company-
profile?stock_code=9288

M,.N.Lakada,(2017) Financial statement using horizontal- Vertical analysis. Retrieved from

https://cdn-cms.f-static.net/uploads/4379844/normal_5f8bffdfe077d.pdf

Pandey, (2013) Capital budgeting and corporate financing decision. Retrieved from
https://www.academia.edu/43066422/Capital_Budgeting_and_Corporate_Financing_Decisions_of_
Selected_Quoted_Firms_in_Nigeria

T. J Nantell, (1974) Journal of Finance. Retrieve from

https://sci-hub.do/https://doi.org/10.2307/3665399

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