QUESTION $3(50$ MARKS$)$

You have been hired as a financial analyst by CIMB Berhad. Your task is to analyse

the present financial condition of Sejati Berhad. You are provided with the following

$2021$ Statement of Financial Position and Statement of Profit or Loss information for

Sejati Berhad. In addition, you are told that Sejati Berhad has $12,500,000$ shares of

ordinary shares outstanding, currently trading at RM$11\mathrm{.}25$ per share, and has made

annual purchases of RM$262,500,000.$

SEJATI BERHAD

STATEMENT OF PROFIT OR LOSS AND OTHER

COMPREHENSIVE INCOME

for the year ended $31$ December $2023$

RM

Net Sales $($all credit$)375,000,000\mathrm{.}00$

Less: Cost of Goods Sold $312,500,000\mathrm{.}00$

Earnings Before Interest and Taxed $62,500,000\mathrm{.}00$

Less: Interest Expense $50,000,000\mathrm{.}00$

Earnings before taxes $12,500,000\mathrm{.}00$

Less: Taxes $40\%5,000,000\mathrm{.}00$

Net Income $7,500,000\mathrm{.}00$

SEJATI BERHAD

STATEMENT OF FINANCIAL POSITION

as at $31$ December $2023($RM$)$

RM RM

Cash $6,250,000\mathrm{.}00$ Account payable $18,750,000\mathrm{.}00$

Account Receivable $25,000,000\mathrm{.}00$ Notes Payable $25,000,000\mathrm{.}00$

Inventory $50,000,000\mathrm{.}00$ Total Current Liabilities $43,750,000\mathrm{.}00$

Total Current Asset $81,250,000\mathrm{.}00$ Long Term Debt $125,000,000\mathrm{.}00$

Net Fixed Asset $168,750,000\mathrm{.}00$ Shareholder$$s Equity $81,250,000\mathrm{.}00$

Total Assets $250,000,000\mathrm{.}00$ Total Liabilities and Equity $250,000,000\mathrm{.}00$

Industry averages for key ratios

Net Profit Margin $6\mathrm{.}40\%$

Average Collection period $(365$ days$)30$ days

Debt Ratio $50\%$

P$/$E Ratio $23$

Inventory Turnover ratio $12$

Return on Equity $18\%$

Average Payment Period $(365$ days$)20$ days

Times interest earned ratio $8\mathrm{.}50$

Current Ratio $1\mathrm{.}50$

Quick Ratio $1\mathrm{.}25$

Fixed Asset Turnover Ratio $1\mathrm{.}50$

You are required to calculate $5$ blocks of financial ratios and to compare these

calculated ratios with the industry average ratios that are provided. Your analysis is

based on five categories of ratios: $($a$)$ liquidity ratios; $($b$)$ activity ratios; $($c$)$ debt ratios;

$($d$)$ profitability ratios; and $($e$)$ market ratios. Besides, you have to determine the

financial position for Sejati as a stand$-$alone company, you are also required to

compare these ratios to the industry average ratios provided in the problem.

Requirements:

a$)$ Based on the provided industry$-$average information, discuss Sejati Berhad$$s

liquidity position by comparing with the overall industry performance.

$(10$ marks$)$

b$)$ Referring to data provided for industry$-$average information, analyse Sejati$$s

activity ratios and the overall industry.

$(10$ marks$)$

c$)$ Discuss debt and market position for Sejati Berhad$$s and industry$-$average.

$(10$ marks$)$

d$)$ As part of this investigation, you are required to include profitability ratios in

examining the profitability of Petrox Berhad and overall industry.

$(10$ marks$)$

e$)$ One of the main conditions for loan approval is company should be in a betterthan$-$average financial position. Recommend your decision whether to approve

or deny the loan application from Sejati Berhad by looking at overall financial

performance. Explain Sejati$$s strong and weak points.

$(10$ marks