INDIVIDUAL ASSIGNMEN

NAMES: MOHAMED SAAD ELTAYEB- TP022941

MODULE: accounting and finance 2
CODE: BM021-3-1-QA-L

DATE: January/2011
LECTURE: GOH YANG HUAN
General overview for the BURSA MALASIA:

Bursa Malaysia it is the first formal securities business organization in Malaysia was
first established in Singapore in 1937.

With the secession of Singapore from Malaysia in 1965, the Stock Exchange of Malaysia
became known as the Stock Exchange of Malaysia and Singapore. In 1973, the stock
exchange of Malaysia was known as the stock exchange of Malaysia and for Singapore
was known as the stock exchange of Singapore .that was due to the currency
interchangeability between Malaysia and Singapore ceased. (1)

On April 14, 2004, they changed their name to Bursa Malaysia Berhad their purpose of
which was to enhance our competitive position and to respond to global trends in the
exchange sector by making us more customer-driven and market-oriented.

On 18 March 2005, Bursa Malaysia was listed on the Main Board of Bursa Malaysia
Securities bursa Malaysia today is one of the largest bourses in Asia with just under
1,000 listed companies offering a wide range of investment choices to the world.

BATU KAWAN BERHAD COMPANY:

Now we are going to head the bulk of our attention on the one of a 1000 listed company
as mentioned above, the company which is BATU KAWAN is an investment holding
company with subsidiaries and associates involved in chemical manufacturing,
transportation, property.

The Company was incorporated in Malaysia under the Companies Act, 1965 on 9
December 1965 and was listed on the Bursa Malaysia Main Market (formerly known as
the KLSE Main Board) on 12 October 1971. It’s issued and fully paid-up capital is
435,951,000 shares of RM1.00 each.
BATU KAWAN was incorporated in 1965 and commenced operations as a plantation
company when it took over the assets and liabilities of its predecessor company, Batu
Kawan Rubber and Coconuts Plantations Ltd in 1971 under a scheme of reconstruction.

At present, Batu Kawan Berhad is involved in plantations through KLK, in the

manufacture of chlor-alkali and sulphuric acid products and transportation through its
subsidiaries, Malay-Sino Chemical Industries Sdn Bhd Group and See Sen Chemical
Berhad, and in investment holding. Recently, through its wholly-owned subsidiary, Batu
Kawan Holdings Sdn Bhd, the Company is also involved in letting out office space of its
commercial building, Menara KLK (previously known as Menara Batu Kawan), located
in Mutiara Damansara, Petaling Jaya.(2).

Now after what have mentioned above let’s look in full-detail the list for Board of
Directory and Independent Auditors and those who are directing the financial tasks for
BATU KAWAN COMPANY as following(3) :

1-board of director:

Tan Sri Lee Oi Hian ---------------------------------------- Non-Independent Non-

Executive Chairman

Dato' Lee Hau Hian ---------------------------------------- Senior Independent Non-

Executive Director Tan Sri Dato' Thong Yaw Hong ----------------------------------------
Senior Independent Non-Executive Director

R.M. Alias ---------------------------------------- Independent Non-Executive

Director

Dato' Mustafa bin Mohd Ali ----------------------------------------Independent Non-

Executive Director

Dato' Yeoh Eng Khoon -------------------------------------------Independent Non-

Executive Director

Quah Chek Tin -------------------------------------------

Independent Non-Executive Director

2- AUDITORS

Ernst & Young Chartered Accountants

3- BANKERS
Malayan Banking Berhad OCBC Bank (M) Berhad Public Bank Berhad Standard
Chartered Bank Malaysia Berhad.

Financial statements for Batu Kawan Berhad

presentation:
Below is the presentation of the financial statements for batu kawan berhad which
encompasses each of (balance sheet and income statement) we are going to use all the
scientific concepts that relates to the ratio’s methods as we are going to mentioned that
within full-details however the points which are going to be exhibits as following:

 Liquidity
 Assets management
 Financial leverage
 Profitability

We ‘ill provide a comprehensive coverage accompanied with definition of the financial

ratio itself as starting point for ratios.
Definition of financial ratio:
It is relationships determined from firm’s financial information and used for comparison
purposes.(4)

Work on financial statement of BATU KAWAN BERHAD Company by

using scientific approaches to calculate the ratios within the terms from
2008->2009:

 Liquidity ratios:
The word” liquidity” here refers to the speed and ease with which an asset can be
converted to cash.

This kind of ratio focus on current assets and current liabilities which will become liquid
within 12 months, lets initiate by one type of this ratios for Batu kawan which is:

A- Current ration = Current asset

Current liability
BATU KAWAN balance sheet at 30 September 2009 :
Current assets =RM292, 511.
Current liability =RM29, 334.

Then current ratio =292511/29334

= 9.9718
BATU KAWAN balance sheet at 30 September 2008:
Current asset =RM218890
Current liability = RM37303
Then current ratio = 218890/37303
= 5.867
Commenting on the figures gained in 2008 and 2009: as known that The
current ratio can give a sense of the efficiency of a company's operating cycle or
its ability to turn its product into cash however criteria will be used to evaluate
current ratio for BATU KAWAN, we say that the higher current ratio the more
capable for company to pat its obligation. (7)
So BATU KAWAN in 2008 has 5.867 in current asset for every RM 5 in current
liability while in 2009 BATU KAWAN has RM9.9718 in current asset for every
RM9 in current liability 2009 was better its earned more ratio than 2008 ratio.
B- Acid ratio= Current Assets- Inventory
Current liability

This show that provided creditors and debtors are paid at approximately the same
time.(5)

.BATU KAWAN balance sheet at 30 September 2009:

Current assets =RM292, 511.

Current liability =RM29, 334.
Inventory = RM32693
Acid ratio = 292511- (32693)/29344
= 8.854.
BATU KAWAN balance sheet at 30 September 2008:
Current asset =RM218890
Current liability = RM37303
Then current ratio = 218890-(42837)/37303
= 4.719

Commenting on the figures gained in 2008 and 2009 as to acid ratio:

Generally Companies with ratios of less than 1 cannot pay their current liabilities
In theory, the higher the ratio is, the better the position of the company is
That means in 2009 acid ratio which is worth to 8.854 is higher than acid ratio in
2008which is 4.719. Then BATU KAWAN still has ability to pay its obligation.
 Asset management:
Here we turn our attention to the efficiency with which BATU KAUAN use s its
asset .the is sometimes called as turnover intended to describe how efficiently or
intensively the firm uses it asset to generate sales as to our company which is
BATU KAWAN BERHAD we are going to look at tow important current asset:
a- Inventory
b- Receivable.
a- Inventory turnover can be calculated as
Inventory turnover = cost of goods sold
Inventory
BATU KAWAN within period 2008 turnover of inventory:
- Cost of goods sold =RM219663
- Inventory=RM42837
The inventory turnover = 219663/42837
=5.1279 times.
BATU KAWAN within period 2009 turnover of inventory:
- Cost of goods sold =RM185710
 - Inventory=RM32693
The inventory turnover = 185710/32693
=5.6804 times.
Commentary:
We have mentioned previously in the introduction of this company that it has
many types of products to deal with these products the nation is in-need to such
products means that needs to be continually provided if that then BATU
KAWAN should have to higher its level of inventory. , generally if the inventory
turnover is low then it indicates that management doesn’t do its jobs properly, on
this base we could say BATU KAWAN in 2008 had been 5.1279 while in 2009
was 5.6804, significantly that BATU KAWAN in 2009 gained a higher level of
inventory than the previous year and the difference only was 0.5528 however this
is not good enough, BATU KAWAN’s management should have to further its
performance to increase its inventory.
b- Receivable turnover and it can be calculated as :
Receivables turnover = sales _____________
Account receivables
BATU KAWAN within period 2008 receivables turnover:
-Sales =RM3855
-Account receivables = RM82411

Then receivables turnover = 3855/82411

=0.0468.

 Financial leverage :
It is long term solvency ratios are intended to address the firm’s ability to meet its
obligation or its financial leverage.
Includes all of:
A- Total debt ratio
B- Times interest earned
A-total debt ratio it can be calculated in several ways but this is the easiest
way.
Total debt ratio= Total assets – Total equity
Total asset
BATU KAWAN within period 2008 total debt ratio:
- Total assets= RM2955559.
- Total equity = RM2903771.
So Total debt equity = 2955559-(2903771)/2955559
 =0.0175 times.
BATU KAWAN within period 2009 total debt ratio:
- Total assets =RM3089172.
- Total equity= RM3014705.
So Total debt equity =3089172 -(3014705)/-3089172
= 0.0241 times.
Commentary:
The purpose of debt ratio is to compares the total debts of the company to
the total assets in order to determine the degree of the risk company will
faces.
As to BATU KAWAN in 2008 the debt ratio was 0.0175 while in 2009
was 0.0241, , here our criteria will be used to determines that the ratio
is high or less , actually the higher ratio is indicates to the more risk that
company is poses. However as to BATU KAWAN in 2009 the ration was
greater than what was in 2008 by 0.0067 that reveals our company is
actually depend on the leverage therefore BATAU KAWAN Company
they should have to boosts their return in order to avoid the risks.
C- Now we turn our focus on Times interest earned ratio = EBIT
EBIT it’s refers to Earnings before Interest and Taxes. (6)
So it can be calculated as following:
Times interest earned ratio =EBIT
Interest
BATU KAWAN within period 2008 times interest earned:
- EBIT= 230346
- Interest=8492
Then = 230346/8492
=27.12 times5.
BATU KAWAN within period 2009 times interest earned:
-EBIT=213499
-interest=4339
Then = 213499/4339
=49.204times.
Commentary:
Our criteria to identify that whether BATAU KAWAN had a lower or greater time’s
earnings, we say that if a lower times interest earned ratio means less earnings to meet
interest payments.
However BATU KAWAN in 2008 interest earned was 27.12 times while in 2009
was 40.20 times obviously times interest earnings have grater earnings whereby
increased in 2009 by 22.12 this is better actually for our company because it can
pay its interest expense on debt.
  Profitability ratio:

Profitability ratio intended to measure how efficiently the firm uses its assets and
further how efficiently I manage its operation therefore we are going to use the
following approaches tp calculate the ratio of the profitability:
1- Profit margin
2- Return on assets
Let’s commence by profit margin the way to calculate it as follow:
Profit margin = net income
Sales
BATU KAWAN within period 2008 profit margin:
- Net income = 514031
- Sales = 3855

Profit margin = 514031/3855

=13.334

BATU KAWAN within period 2009 profit margin:

- Net income = 341687
- Sales = 28,89

Profit margin = 341687/28899

= 11.823 .

BATY KAWAN profit margin in 2008 was 13.334 where in 2009 was
11. 823 our criteria to evaluate on this is that high profit margin is
desirable but our company doesn’t seem performed will because 2009
decreased by 1.511 form 2008 therefore in 2010 must perform higher
than previous.

Second approach of calculating profitability is Return on assets will be

computed as following:

Return on asset = net income

Total asset

BATU KAWAN within period 2008 return on assets:

- Net income = 514031
- Total assets = 2955559
Then return on assets = 51403/2955559
 =0.017 =1.7%.
BATU KAWAN within period 2009 return on assets:
- Net income = 341687
- Total asset = 3089172
Then the return on assets = 341687/3089172
0.110 =11%.
Commentary:

Our criteria here is the higher the ROA number, the better, because the company is
earning more money on less investment.

BATU KAWAN in 2008 was 1.7% whereas in 2009 was 11% this is actually higher than
what in 2008 by 9.7% therefore BATU KAWAN should have to continue  at making
large profits with little investment.

Discussing other five measurements which can evaluate our BATU

KAWAN Company’s performance:
All ratios and measures mentioned above are useful indicators of a firm’s performance
and financial situation.

Now let’s see other measurements other than the previously which we have mentioned:

 We have already mentioned in liquidity ratio some measures except cash ratio we
haven’t detailed about it cash ratio indicates to the ability of the firm to pay off its
current liabilities for some reason immediate payment were demanded. See the
formula for it and then we calculate cash ratio:

The cash ratio is a more conservative measure of liquidity than the current ratio,
because it only looks at Assets that are already liquid, ignoring assets such as
receivables or inventory. However the amount of cash a company has on hand for
every dollar of current liabilities.

 Second measurement is Debit-To-Equity ratio:

This it can be defined as a measure of a company's financial leverage calculated by

dividing its total liabilities by stockholders' equity. It indicates what proportion of equity
and debt the company is using to finance its assets and it can be calculated as follow:
  By the figures resulted from this formula our evaluate is to be that a high debt-
equity ratio for company is the more earnings that would have.

 Third dividend yield:

A financial ratio that shows how much a company pays out in dividends each
year relative to its share price. In the absence of any capital gains, the dividend
yield is the return on investment for a stock. Dividend yield is calculated as
follow

Moreover about this measurement is that calculating the yield using the stock
price, it will change with the stock price.  If the stock price increases, then yield
gets smaller and vice versa.

 Fourth is payout ratio:

This measurement kind of dividend policy ratio and it is can be defined as the
amount of earnings paid out in dividends to shareholders.
To calculate such measurement as below:

In addition that  payout can be used to determine what company can doing with
their earnings.
However the result yield form this formula for every company we could express
in our commentary as the lower the ratio we had, the more secure the
dividend will be.

 Finally the return on equity:

Definition of return on equity is the amount of net income returned as a
percentage of shareholders equity. The basic formula to calculate is:
Return on Equity = Net Income/Shareholder's Equity
As to BATU KAWAN Company if we have to calculate return on equity batu
kawan should have to point out years ago that achieving higher earnings each year
is an easy task.

Ultimately we would like to conclude or report about BATU KAWAN Bhd Company is
that fanatical ratio provided enough information in which can enables BATU KAWAN
BHD Company to get enough idea to decide about the investments of their funds
financial statements analysis can help the government agencies to analyze the taxation
due to the company. Moreover, company can analyze its own performance over the
period of time through financial statements analysis.
However from the above calculation and the results as well it is enables BATU KAWAN
Company financial analysts to evaluate and communicate the strengths and
weaknesses of the company.

Referencing:
Bursa Malaysia it history”[online] Available at.
http://www.bursamalaysia.com/website/bm/about_us/the_organisation/history.html

[Accessed at18 january]

History and products of BATU KAWAN bhd” [online] Available at. (2)-
http://www.bkawan.com.my/a_history.html [Accessed at 18 January]

List for board of directors of batu kawan bhd” [online] Available at.

(3)-http://www.bkawan.com.my/a_corpInfo.html [Accessed at 21January]

Current ratio calculation” [online] Available at.

http://www.investopedia.com/terms/c/currentratio.asp [Accessed at 23January]

(4)- formula for acid ratio and definition” [book] available {essentials of corporate
finance six edition for ROSS. WESTERFIELD}. [Accessed at 26 January].

(5)- acid ratio” [book] available {of business of accounting FRANK WOOD; S eleven
edition} [Accessed at 26 January].

(6)- EBIT it’s refers to Earnings before Interest and Taxes’’ [online] Available at.

(6) http://www.investorwords.com/1631/EBIT.html [Accessed at 20 January]

* To understand the debt –to-equity-ratio” [online] Available at.

<http://www.investopedia.com/terms/d/debtequityratio.asp> [Accessed at 31 January]

Table of contents for the topic:
 Introduction to:
1-General overview for the BURSA MALASIA……………………………..
3- BATU KAWN BHD Company…………………………………………….
 Board of directors…………………………………………………………………
 Auditors………………………………………………………………………….
 Bankers…………………………………………………………………………...
 Financial statement for BATU KAWAN BHDcompany…………………………
1-balance sheet…………………………………………………………………….
2-income statement………………………………………………………………...
 Definition of the financial ratios……………………………………………………
 Liquidity……………………………………………………………………………
A- Current ration.......................................................................................................
B- Acid-ratio……………………………………………………………………….
 Asset management………………………………………………………………….
A-Inventory………………………………………………………………………
B-Receivable……………………………………………………………………..
 Financial leverage………………………………………………………………….
A- Total debt ratio……………………………………………………………….
B- Times interest earned………………………………………………………...
 Profitability ratio…………………………………………………………………...
A- Profit margin………………………………………………………………….
B- Return on assets……………………………………………………………....
 Discussing other five measurements which can evaluate our BATU KAWAN
Company’s performance……………………………………………………………
First cash ratio……………………………………………………………………...
Second Debit-To-Equity ratio………………………………………………………
Third dividend yield………………………………………………………………...
Fourth return on equity……………………………………………………………..
Finally return on equity……………………………………………………………..
 Conclusion …………………………………………………………………………
 Referencing…………………………………………………………………………
 Table of content…………………………………………………………………….