FACULTY TECHNOLOGY

MANAGEMENT &
TECHNOPRENEURSHIP (FPTT)
UNIVERSITI TEKNIKAL MALAYSIA
MELAKA
BUSINESS ACCOUNTING
BTMT 1243 SEMESTER 2 SESSION 2018/2019

GROUP ASSIGNMENT (10%)

DATE OF SUBMISSION 25/04/19

1. DARSHENI ESWARAN ( B061810097 )

2. NURSYUHADAH BINTI ABDUL
RAHMAN ( B061810176 )
NAME OF GROUP MEMBERS &
3. NUR SYAHIRAH BINTI MOHD
MATRIX NUMBER
SHAH ( B061810265 )
4. SYAZA NABIHAH BINTI KAMARUL
BAHRIN ( B061810162 )

FACULTY & PROGRAMME FPTT – 1BTEC S2

NAME OF LECTURER DR. NOR AZAH BINTI ABDUL AZIZ

GROUP LEADER CONTACT NO 012-6539380 (DARSHENI ESWARAN)

COMPANY NAME: WARISAN TC HOLDING BERHAD

TOTAL MARKS:

1
 1Assessment Rubric

1 0.75 0.5 0 Total

Criterion
A-level qualities B-level qualities C-level qualities D- or F-level qualities Score
Company Provides a very well- Provides a well- Provides a somewhat Provides a disorganized and
Background organized and easy to organized and easy organized and somewhat hard to understand
understand background to understand understandable background history of the /1
history of the firm. background history background history of the firm.
of the firm. firm.

3 2 1 0 Total
Criterion A-level qualities B-level qualities C-level qualities D- or F-level qualities Score
Financial All the calculations There are 1-2 There are 3-4 calculation There are 5 or more
Performance performed are correct calculation mistakes mistakes in terms of calculation mistakes in terms
Calculation with reference to the in terms of misapplication of formula of misapplication of formula
formulas and misapplication of or using the wrong data. or using the wrong data. /3
accounting report data. formula or using the
wrong data.

4 3 2 0-1 Total
Criterion A-level qualities B-level qualities C-level qualities D- or F-level qualities Score
Ratio Interpretation & The student The student The student demonstrated The student demonstrated
Investment demonstrated excellent demonstrated good adequate understanding poor understanding of the
Recommendation understanding of the understanding of the of the ratio. ratio and interpreted majority /4
ratio ratio. of calculation results
incorrectly.

1 0.75 0.5 0 Total

Criterion
A-level qualities B-level qualities C-level qualities D- or F-level qualities Score
Writing demonstrates a Writing is Writing lacks some Writing is unfocused,
sophisticated clarity, accomplished in clarity or conciseness and rambling, or contains serious
conciseness, and terms of clarity and contains some errors. errors.
correctness including conciseness
Format, Planning and table of content, including table of /1
Organizing formatting and content, formatting
references are well and references
organize and stated. contains only a few
errors.

1 0.75 0.5 0 Total

Criterion
A-level qualities B-level qualities C-level qualities D- or F-level qualities Score
Identifies key issues of Identifies key issues Identifies key issues of Does not present an
the company s of the company the company performance evaluation of the company
performance in a performance in an in an adequate manner. performance or does so in an
/1
sConclusions complete and clear above-average incomplete or incorrect way.
manner manner

/10
Grand Total:

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2TABLE OF CONTENTS

BI CONTENTS PAGES
L
1 Company Background 1-4
2 Financial Performance 5-17
3 Ratio calculation 20-23
a) Liquidity ratio :
 Current assets
 Quick ratio
 Account receivable turnover
 Inventory turnover
b) Profitability ratio : 24-30
 Profit margin
 Asset turnover
 Return on assets
 Return on common stockholders’ equity
 Earning per share
 Price earnings
 Payout ratio
c) Solvency ratio 31-32
 Debts to total assets
 Times interest earned
4 Ratio interpretation and investment recommendation 33-41
5 Conclusion 42-43
6 References 44
Appendix 45-46
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21.0 COMPANY BACKGROUND

9 Warisan TC Holdings Bhd. is a company that runs an investment business in

10Malaysia. Incorporated on 26 March 1997, the first director of this company is Dato’ Tan
11Heng Chew. Dato’ Tan graduated from the University of New South Wales, Australia with a
12Bachelor of Engineering (Honors) degree and a Master’s degree in Engineering from the
13University of Newcastle, Australia. He was appointed the Chairman of the Board on 1
14November 1999 and was re-designated as Executive Chairman on 1 January 2011. His
15corporate title has been changed to President effective 1 January 2015.

16 This company has a mission to develop Malaysia's long-term wealth. Developing in

17this context is to enhance the value of sustainable investments in addition to maintaining
18injected capital. Long term refers to a period that goes beyond generations and its vision

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 1ensures the ability of future generations to meet their needs. Wealth refers to the value of its
2financial assets and the result of economic development for the country.

3 The company's business segments comprise travel and car rental, machinery,
4automotive, and others. Its travel and car rental division provides an inbound tour, outbound
5tour, corporate travel, airline ticketing, and car and coach rental services. Its machinery
6division provides material handling equipment, forklift, factory scrubber and sweeper while
7its automotive division provides light commercial trucks, heavy commercial trucks, and
8pickup trucks. The company's others division includes cosmetics, hair care, and property
9investment.

10 For travel and car rental, Mayflower maintains its position as the leading inbound tour
11operator in the country, focusing on providing good customer service and maintaining world
12class travel infrastructure. Mayflower continued to adopt innovative marketing and
13promotional programs, and with Mayflower’s extensive sales network globally serving more
14than 57 countries and supported by more than 500 foreign partners, the number of tourists’
15arrival via Mayflower continued to increase. In line with the effort of the Ministry of
16Tourism, Malaysia is aggressively promoted by Mayflower as the world’s preferred
17destinations for holidays and experiences. Mayflower has also leveraged on the Government
18Economic Transformation Plan (ETP) to increase tourists’ influx from China, Middle East,
19India, Russia & Commonwealth of Independent States (CIS) countries.

20 In industrial machinery and equipment, TCIM deals primarily in material handling

21equipment, construction machinery, agricultural tractors & power generating sets.
22Incorporated in 1983, TCIM has built a wealth of over 25 years of expertise and experience
23in marketing a huge range of machineries and equipments. They have 16 branches located all
24over Malaysia, and the headquarter is based in Shah Alam. Currently is sold theorized
25distributor in Malaysia market for Unicarriers Forklift, John Deere agricultural tractor, SDLG
26Wheel Loader, Terex Backhoe Loader and Sumitomo excavator. TCIM's mission & vision is
27to consistently improve their performances in their scope of business and continuously seek
28opportunities that would contribute towards the growth of their shareholders' & customers'
29value.

30 For automotive, Angka-Tan Motor Sdn Bhd, a wholly-owned subsidiary of the

31Company, entered into a Distribution Agreement and Technical Assistance Agreement with

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 1Beiqi Foton Motor Co Ltd (“BFM”) for the appointment as sole and exclusive assembler and
2distributor of Auman heavy duty trucks, after sales service provider as well as parts and
3accessories distributor in Malaysia. Besides Auman heavy duty trucks, ATM also entered into
4a Distribution Agreement with BFM for the appointment as sole and exclusive assembler and
5distributor of Auman bus chassis / complete bus of such contractual models to be mutually
6agreed between the parties, after sales service provider as well as parts and accessories
7distribution in Malaysia.

8 In consumer products, it was 30th anniversary for Shiseido Revital while Za was
9rebranded in conjunction with its new skincare range. The second Cle de Peau Beaute store
10was opened in Parkson Pavilion which elegantly exhibits the features of this luxury beauty
11product. On the hair care segment, Shiseido Professional announced its collaboration with yet
12another concept salon, Peek-A-Boo, The Curve. This marked another expansion of Shiseido
13Professional range which is a major player in the industry. Wacoal Malaysia Sdn Bhd
14(“WM”), a joint venture company, making further inroads into the Malaysian lingerie market
15as WM outperformed the market’s leading lingerie brands in terms of sales growth. To meet
16the growing needs of customers for more sophisticated merchandise, during the financing
17year, WM introduced a range of shape pants and girdles covering both functional shapes wear
18and fashionable shape wear to ensure that the Wacoal brand remains in the forefront of the
19lingerie market in Malaysia. It also further enhanced the Wacoal brand’s commitment to
20Women’s Beauty.

21 For others, GroomEXP stands for Grooming Expert. They aim to be a leading
22professional hairdressing & beauty salon chain group and to provide aspiration to
23continuously excel in the hair fashion & beauty industry. Being awarded Shiseido
24Professional’s Artistic Ambassadors Salon, GroomEXP will adopt Japan’s most advanced
25and cutting-edge styling technology to present contemporary Asian beauty to the Malaysian
26market. Besides using high-grade Shiseido professional products, GroomEXP also aims to
27maintain Shiseido’s core culture, “omotenashi” which translates to hospitality. It is not just
28about welcoming the clients to the salon but also providing all services with utmost respect
29and courtesy to let the clients know they are valued. GroomEXP’s total beauty philosophy is
30to pay extra attention to details from grooming to their services. So in line with our
31philosophy, we offers an elegantly designed, professional as well as comfortable environment
32that lets clients relax while stylists consult and understand their hair care needs. The

3
 1exclusivity of the glamorous styling area and VIP pampering room with soft lighting and
2warm furnishings allow complete privacy and serenity.

3 They also ensure to contribute back to society as it could change the people who are
4needed. The CSR activities that have been carried out during the year 2017 are visit/support
5to Old Folk Home (6 January), Zoo Negara Volunteer Program (15 April) and blood donation
6(19January & 25 April). These CSR activities would have a large impact in the community.

7 Warisan TC holdings Berhad were not spared from this adverse market condition.
8Nonetheless, they will continue to widen their sales and marketing coverage by focusing on
9potential corporate customers, particularly those with corporate fleet requirements to
10ultimately grow their market share in this segment.
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52.0 FINANCIAL PERFORMANCE OF WARISAN TC HOLDING BERHAD

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3RATIO ANALYSIS FORMULA

4LIQUIDITY RATIO

5 1) Current ratio :

6 Current asset
Current liabilities
7

8 2) Quick ratio :
9

10
Cash + short-term investment + accounts receivable (net)
11 Current liabilities

12

13 3) Accounts receivable turnover ratio :

14
15
Net credit sales
16 (Average net accounts receivable)/2
17

18 4) Inventory turnover :
19

20 Cost of goods sold

Average inventory
21

22

23PROFITABILITY RATIO

24 5) Profit margin :
25

Net income
26
Net sales

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1 6) Asset turnover :
2

3 Net sales
Average total assets
4 7) Return on assets :
5

6 Net income
Average total assets
7 8) Return on common stockholders’ equity :
8

9 Net income – preferred dividends

Average common stockholders’ equity
10 9) Earnings per share (EPS) :
11

12 Net income – preferred dividends

Weighted-average common shares outstandnig
13 10) Price-earnings ratio :
14

15
Market price per share of stock
Earnings per share
16 11) Payout ratio :
17
Cash dividends declared on common stock
18
Net income
19

20SOLVENCY RETIO

21 12) Debts to assets ratio :

22

23 Total liabilities
Total assets
24 13) Times interest earned :
25

Net income – interest expense + income tax expense

26
Interest expense
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 1

6CALCULATION

7 A. LIQUIDITY RATIO:
8 1) Current ratio = Current assets
9 Current liabilities
10
2017 2016
Current assets = RM387 377 000 Current assets = RM388 419 000
Current ratio
Current liabilities = RM 390 672 000 Current liabilities = RM 384 715 000

= 387 377 000 = 388 419 000

390 672 000 384 715 000

= 0.99 : 1 = 1.01 : 1
11
12 In 2017, for every RM 1 of current liability, Warisan TC Holding Berhad has available
13current asset of RM 0.99. It is less than in 2016, which is this company has RM 1.01 current
14asset for every RM 1 of current liability. This company shows a good organization because it
15has a current ratio in the range of 0.8 to 1.0 and will continue to perform well if it is with
16negative working capital.
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9 2) Quick ratio = Investment + Account Receivable
10 Current Liability
11
2017 2016
Investment = RM45 400 000 Investment = RM45 800 000
Quick ratio
Account receivable = RM157 775 000 Account receivable = RM158 218 000
Current liabilities = RM390 672 000 Current liabilities = RM384 715 000

= 45 400 000 + 157 775 000 = 45 800 000 + 158 218 000
390 672 000 384 715 000

= 0.52 : 1 = 0.53 : 1
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13 There is slightly different between quick ratio from 2 years above. The quick ratio for
14Warisan TC Holding Berhad in 2017 is 0.52 : 1 while in 2016, it shows 0.53 : 1. This
15company should ensure that they do not make higher debts compare to previous year so that it
16will have better ability to pay short-term debts. For instance, they can cut operation cost to
17support its ability to pay them.
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5 3) Trade receivable turnover ratio = Credit Sales (revenue–change in receivable)
6 Average net trade receivable (debtors)
7
2017 2016
Revenue = RM490 805 000 Revenue = RM446 116 000
Trade receivable
Change in receivable = RM2 898 000 Change in receivable = RM6 811 000
turnover ratio
Trade receivable 2017 =RM157 775 000 Trade receivable 2016 =RM158 218 000
Trade receivable 2016 = RM 158 218 000 Trade receivable 2015 = RM 155 333
000
= ____490 805 000 – 2 898 000___
((157 775 000 + 158 218 000) / 2) = ____446 116 000– 6 811 000___
(( 158 218 000+ 155 333 000) / 2)
= 3.09 times
= 2.80 times
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9 In 2017, the trade receivables turnover for Warisan TC Holding Berhad is 181.1 days
10which is being divided by 365 days (365 / 3.09). This shows that the average collection of
11trade receivables is for every 182 days. Meanwhile in 2016, the average debts collected was
12130.4 (365/2.80) or for 131 days. This can be concluded that the trade receivables turnover
13for 2017 is better compared to 2016.
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4 4) Inventory Turnover ratio = Cost of goods sold
5 Average inventory
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2017 2016
Cost of goods sold = RM462 672 000 Cost of goods sold = RM314 202 000
Debts to total assets
Inventory 2017 = RM125 002 000 Inventory 2016 = RM132 140 000
ratio
Inventory 2016 = RM132 140 000 Inventory 2015 = RM144 089 000

= ____462 672 000________ = ____314 202 000________

125 002 000 + 132 140 000 132 140 000 + 144 089 000
2 2
= 3.60 times = 2.27 times
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8 In 2016, the inventory can be sold for every 161 days ( 365/ 2.27 ). Meanwhile, in
92017 the inventory of Warisan TC Holdings Berhad can be sold for every 101 days ( 365/
103.60 ). This shows that the performance in 2017 is more efficient and effective when
11compared with that of 2016.
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3 B. PROFITABILITY RATIO :
4
5 5) Profit margin = Net income
6 Net Sales
7
2017 2016
Profit margin Net income = RM4 520 000 Net income = RM5 641 000
Net sales = RM490 805 000 Net sales = RM446 116 000

= ____4 520 000_____ = 5 641 000

490 805 000 446 116 000

= 0.92% = 1.26%

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10 Warisan TC Holdings Berhad makes profit of 0.92 sen for 2017 and net profit of
11RM 1.26 in 2016 for every RM1 sales. This shows that it capability to rise the profit cannot
12be performed.
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3 6) Assets Turnover ratio = Net sale
4 Average assets
5
2017 2016
Assets Net sales = RM490 805 000 Net sales = RM446 116 000
turnover ratio Assets 2016 = RM795 261 000 Assets 2016 = RM795 261 000
Assets 2017 = RM791 411 000 Assets 2015 = RM770 770 000

= 490805000 = 446 116 000

795 261 000 + 791 411 000 795 261 000 + 770 792 000
2 2

= 0.62 times = 0.57 times

6
7 Based on the above analysis, every Ringgit invested in the business, the company Warisan
8TC Holding Berhad successfully made sales of RM 0.62 in 2017 and RM 0.57 in 2016.

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2 7) Return on assets = Net income
3 Average asset
4

2017 2016
Net income = RM4 520 000 Net income = RM5 641 000
Return on assets
Assets 2016 = RM795 261 000 Assets 2016 = RM795 261 000
Assets 2017 = RM791 411 000 Assets 2015 = RM770 770 000

= 4 520 000 = 5 641 000

795 261 000 + 791 411 000 795 261 000 + 770 792 000
2 2
= 0.57% = 0.72%

5
6 Since the return on assets for 2017 is lower when compared with 2016, then
7 the overall profit performance of the company Warisan TC Holding Berhad for
8 2016 is better than 2017. This means that the business operation of the Company
9 Warisan TC Holding Berhad does not perform enough.
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1 8) Return on shareholders’ equity = Net income

2 Average equity of ordinary shareholders

3
2017 2016
Net income = RM4 520 000 Net income = ( RM5 641 000 )
Return on
Total equity 2017 = RM328 910 000 Total equity 2016 = RM318 914 000
equity
Total equity 2016 = RM318 914 000 Total equity 2015 = RM329 132 000

= 4 520 000 = (5 641 000 )

328910 000 + 318914 000 318 914 000 + 329 132 000
2 2

= 1.4% = -1.8 %
4
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6 Based on the above analysis, for every Ringgit invested by the total equity the
7 profits/ loss received by them are 1.4 sen in 2017 and 1.8 sen in 2016. This means
8 that the ordinary shareholders of the company Warisan TC Holdings Berhad enjoy
9 higher rates of return compared with those in other companies within the same
10 industry.
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24 9) Earnings per Share = Net income

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1 Weighted-average common share outstanding

2
2017 2016
Net income 2017 =RM4 520 000 Net income 2016 = RM ( 5641000)
Ordinary per share = RM 67200000 Ordinary per share = RM 67200000

Earnings per share

= 4520 000 = 5641000
67200 000 67200000
2.21 2.21
= RM0.15
= RM0.17
3

4 Based on the calculation above, this company's earnings came to RM0.15 per share
5 in the year 2017 while RM0.17 per share in the year 2016. This means 2016 earning
6 per share more higher than 2017. This mean that the net income per share issued by
7 this company in 2017 decrease by 0.02 as compared with 2015.

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19 10) Price earning ratio = Market price per share

20 Earning per share

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 2017 2016
Market price per share 2017 Market price per share 2016 =
=RM2.21 RM 2.21
Earning per share = RM 0.15 Earning per share = RM 0.17
Price earning ratio

= ____2.21_______ = ____2.21________
0.15 0.17

= 14.73 times = 13 times

1

2 Based on calculations above, PE ratio for the year 2017 is 14.73 times while 13
3 times in the year 2016. A high P/E could mean that a stock's price is high relative to
4 earnings and possibly overvalued. Conversely, a low P/E might indicate that the
5 current stock price is low relative to earnings. So, that can be concluded that this
6 company has a better price earning ratio 2017.

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17 11) Payout ratio = cash dividend declared on common stock

18 Net income
19
2017 2016
Cash dividend declared= RM 1953000 Cash dividend declared =RM4232000

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 Net income = RM 65698000 Net income =RM51318000
= 1953000 = 4232000
65698000 51318000
= 0.0297% =0.0842%
Payout ratio

1 Based on the calculation above, the payout ratio for the year 2017 is 2.97% while
28.42% in the year 2016. This indicates a low payout ratio can signal that a company is
3reinvesting the bulk of its earnings into growing the business.

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22 C. Solvency ratio :
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24 12) Debts to total assets ratio = Total Liabilities
25 Total Assets
26
2017 2016
= 462 501 000 = 476 347 000

30
 791 411 000 795 261 000

Debts to total
= 58.44% = 59.90%
assets ratio
1
2 Debts to total assets ratio for 2017 is 58.44%, which is in 2017, 58.44% of the total
3assets earned from the source of the trade payables. This ratio frames the overall look of the
4Warisan TC Holding berhad. Normally, companies with strong and stable earnings are
5companies which provide public facilities and their debts to total assets ratio higher when
6compared with that of high technology companies. So this company has strong and stable
7earning 2017 compared to 2016.
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24 13) Times interest earned ratio = Earning before interest & taxes
25 Interest expense
2017 2016
Net income 2017 =RM4 520 000 Net income 2016 = RM
Income tax expenses = RM 4045 000 ( 5641000)
Interest expenses = RM 14305 000 Income tax expenses = RM4778
Times interest earned
000
ratio
= 4520 000 + 4045000+14305000 Interest expenses = RM 13907

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 4520000 000

= 5.06 times = 5641000+4778000+1390700_

5641000

= 2.09 times
1
2 Based on the calculation above, TIE ratio 5.06 times in the year 2017 while in the
3 year 2016 was 2.09 times. This mean that TIE ratio the company’s income is 5.06 times
4 greater in the year 2017 than the company annual interest expenses. The company is less
5 risky and the bank should not have problem accepting the company’s loan.

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183.0 RATIO INTERPRETATION AND INVESTMENT RECOMMENDATION
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21 A. LIQUIDITY RATIO
22
23 Liquidity ratio, known as liquid cash ratio, measures the short-term ability of the
24 business or company to pay all matured debts, as well as measures the ability of the
25 company to have reasonable cash to meet unexpected needs for cash. In other words, this
26 can also mean a contingency plan. Liquidity ratio can be divided into four types which is
27 current ratio, quick ratio, trade receivables turnover ratio and inventory turnover ratio.
28

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1 Current ratio is the relationship between current assets and current liabilities. It is used
2 widely to evaluate the degree of liquidity of the company and the ability of the company
3 to settle its debts in the short term. Based on result, the Warisan TC Holding Berhad In
4 2017, for every RM 1 of current liability, the company has available current asset of RM
5 0.99. It is less than in 2016, which is this company has RM 1.01 current asset for every
6 RM 1 of current liability. A good organization has a current ratio in the range of 0.8 to 1.0
7 and continue to perform well with negative working capital.
8
9 Professional managed organization of Warisan TC Holding Berhad will operate with
10 low inventory, the best collection of receivables and management in cash. It will lead to
11 low current assets and in turn a lower current ratio. So that, it will known in the market as
12 negative working capital because current asset is less than current liabilities. Then the
13 company may have problem meeting its short-term obligation. It is not indicative of a
14 serious problem. If an organization of Warisan TC Holding Berhad has good long-term
15 revenue streams, it may be able to borrow against those prospects to meet current
16 obligations. Some types of business usually operate with a current ratio less than one. For
17 instance, when inventory turn over more rapidly than account payable becomes due, the
18 current ratio will be less than one. This can allow a firm to operate with a low current
19 ratio.
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25 Apart from that, quick ratio also known as acid- test ratio, shows the relationship
26 between cash, marketable securities ( shares) and net trade receivables (debtors) with
27 current liabilities. It measures the ability of the company to settle its short-term debts fast
28 ( immediately). Based on the result, there is a slightly different between quick ratio from
29 2 years above. The quick ratio for Warisan TC Holding Berhad in 2017 is 0.52 : 1 while
30 in 2016, it shows 0.53 : 1. This company should ensure that they do not make higher
31 debts compare to previous year so that it will have better ability to pay short-term debts.
32 For instance, they can cut operation cost to support its ability to pay them.
33

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1 The quick ratio, like other financial ratios, is a test of viability for business entities but
2 does not give a complete picture of a Warisan TC Holding Berhad health. For example, if
3 a business has large amounts in accounts receivable which are due for payment after a
4 long period such as 120 days and essential business expenses and accounts payable are
5 due for immediate payment, the quick ratio may look healthy when the business is
6 actually about to run out of cash. In contrast, if the business has negotiated fast payment
7 terms with customers and long payment terms from suppliers, it may have a very low
8 quick ratio yet good liquidity.
9
10 Other than that, trade receivables turnover ratio, this ratio measures the number of
11 times, on average, trade receivables can be collected in a certain period. It is usually used
12 to evaluate the effectiveness of the credit policy and debt collection policy of the
13 company. Inventory turnover ratio, this ratio measures the efficiency or number of times
14 the inventory can be sold by the company. Based on result, In 2017, the trade receivables
15 turnover for Warisan TC Holding Berhad is 181.1 days which is being divided by 365
16 days (365 / 3.09). This shows that the average collection of trade receivables is for every
17 182 days. Meanwhile in 2016, the average debts collected was 130.4 days (365/2.80) or
18 for 131 days. This can be conclude that the trade receivables turnover for 2017 is better
19 compared to 2016.
20
21
22
23 For account receivable turnover ratio, it is used evaluate the ability of Warisan TC
24 Holding Berhad to efficiently issue credit to it customer and collect fun from them. If this
25 company shows lower turnover ratio, it will give the opportunity for them to collect all
26 account receivable that are unnecessarily tying up working capital. Refer to the result, it
27 been illustrate that Warisan TC Holdings Berhad has high account receivable turnover
28 ratio due to the smoothness of the organization and operation.
29
30 Next, inventory turnover ratio, this ratio is measures the efficiency or number of times
31 the inventory can be sold by the company. This ratio is important because total turnover
32 depends on two main components of performance. The first component is stock
33 purchasing. If larger amounts of inventory are purchased during the year, the Warisan TC
34 Holding Berhad will have to sell greater amounts of inventory to improve its turnover. If

34
1 the company cannot sell these greater amounts of inventory, it will incur storage costs and
2 other holding costs. The second component is sales. Sales have to match inventory
3 purchases otherwise the inventory will not turn effectively. That’s why the purchasing
4 and sales departments must be in tune with each other. Based on result, In 2016, the
5 inventory can be sold for every 161 days ( 365/ 2.27 ). Meanwhile, in 2017 the inventory
6 of Warisan TC Holdings Berhad can be sold for every 101 days ( 365/ 3.60 ). This shows
7 that the performance in 2017 is more efficient and effective when compared with that of
8 2016.
9
10 Inventory turnover is a measure of how efficiently a Warisan TC Holding Berhad can
11 control its merchandise, so it is important to have a high turn. This shows the company
12 does not overspend by buying too much inventory and wastes resources by storing non-
13 salable inventory. It also shows that the company can effectively sell the inventory it
14 buys. This measurement also shows investors how liquid a company’s inventory is.
15
16
17
18
19
20
21
22
23 B. Profitability ratio
24
25 On the other hand, profitability ratio this ratio is calculated to measure the income or
26 the ability of the business to run the operations for a certain period. This ratio is made up
27 of profit margin, assets turnover, return on assets, return on shareholders’ equity, return
28 on shares, price-earning ratio and ratio on payout.
29
30 Besides, profit margin, this ratio is used to measure the percentage for every Ringgit of
31 net income from net sales for a certain period. It can be used to compare the success of
32 large companies versus small ones. If a large company is doing well, it is because it has
33 billions in revenue and billions in profit. But if its profit margin is low, it might not be
34 doing as well as a much smaller company that has a better ratio. Based on the result,

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1 Warisan TC Holdings Berhad makes profit of 0.92 sen for 2017 and net profit of RM
2 1.26 in 2016 for every RM1 sales. This shows that its capability to rise the profit cannot
3 be performed. So, it can be conclude that this company has decline in its profit.
4
5 Moreover, assets turnover, this ratio measures the efficiency of the company or
6 business in using their assets to generate sales. Based on the above analysis, every Ringgit
7 invested in the business, the company successfully made sales of RM 0.62 in 2017 and
8 RM 0.57 in 2016. This ratio measures how efficiently a company Warisan TC Holdings
9 Berhad uses its assets to generate sales, so a higher ratio is always more favorable. Higher
10 turnover ratios mean the company Warisan TC Holdings Berhad is using its assets more
11 efficiently. Lower ratios mean that the company Warisan TC Holdings Berhad isn’t using
12 its assets efficiently and most likely have management or production problems.

13

14 For example, a ratio of 1 means that the net sales of a company Warisan TC Holdings
15 Berhad equals the average total assets for the year. In other words, the company Warisan
16 TC Holdings Berhad is generating 1 dollar of sales for every dollar invested in assets.
17 Company Warisan TC Holdings Berhad use assets more efficiently than others. To get a
18 true sense of how well a company’s Warisan TC Holdings Berhad assets are being used,
19 it must be compared to other companies in its industry.

20 The total asset turnover ratio is a general efficiency ratio that measures how
21 efficiently a company Warisan TC Holdings Berhad uses all of its assets. This gives
22 investors and creditors an idea of how a company Warisan TC Holdings Berhad is
23 managed and uses its assets to produce products and sales. Sometimes investors also want
24 to see how companies Warisan TC Holdings Berhad use more specific assets like fixed
25 assets and current assets. The fixed asset turnover ratio and the working capital ratio are
26 turnover ratios similar to the asset turnover ratio that is often used to calculate the
27 efficiency of these asset classes.

28

29 Return on assets is measures the profitability of the company as a whole. Return on

30 shareholders’ equity to measure profitability of ordinary shareholders. Since the return on
31 assets for 2017 is lower when compared with 2016, then the overall profit performance of
32 the company Warisan TC Holding Berhad for 2016 is better than 2017. This means that

36
1 the business operation of the Company Warisan TC Holding Berhad does not perform
2 enough.

4 Return on assets, often called return on total assets, is a financial ratio that measures
5 how efficiently and profitably a company can manage their income producing assets. The
6 return on assets formula is calculated by dividing net income by the average total assets
7 during the period. This company Warisan TC Holdings Berhad shows the income that
8 each dollar invested in assets produces during the period. Managers can use this
9 information to see what assets are producing the most in return a steer to focus in the
10 company Warisan TC Holdings Berhad to those types of operations.

11

12 Returns on equity of ordinary shareholders indicate the amount of returns received on

13 every Ringgit invested by the owner or the ordinary shareholder. Based on the above
14 analysis, for every Ringgit invested by the share capital the profits/ loss received by them
15 are 6.70 sen in 2017 and 8.39 sen in 2016. Return on Equity varies substantially across
16 different industries. Therefore, it is recommended to compare return on equity against
17 company's Warisan TC Holdings Berhad previous values or return of a similar company.

18 The company Warisan TC Holdings Berhad has high return on equity in 2016 because
19 they require less capital invested. The company Warisan TC Holdings Berhad requires
20 large infrastructure build before generating any revenue. It is not a fair conclusion that the
21 company Warisan TC Holdings Berhad with a higher Return on Equity ratio is better
22 investment than the lower ones. In 2017 the company Warisan TC Holding Berhad which
23 are capital-intensive and with a low return on equity have a limited competition but in
24 2016 the company Warisan TC Holdings Berhad with high return on equity and small
25 assets bases have a much higher competition because it is a lot easier to start a business
26 within those industries
27 Earnings per share (EPS), or return on shares, is used to measures the amount of net
28 income received by the company for every ordinary share issued. Based on the
29 calculation above, this company's earnings came to RM0.15 per share in the year 2017
30 while RM0.17 per share in the year 2016. This means 2016 earning per share more higher
31 than 2017. This that the net income per share issued by this company in 2017 decrease by
32 0.02 as compared with 2015.

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1 Earnings per share is the portion of a company's profit that is allocated to each
2 outstanding share of its common stock. It is calculated by taking the difference between a
3 company's net income and dividends paid for preferred stock and then dividing that figure
4 by the average number of shares outstanding.
5
6 On the other hand, Price earning ratio is known as return on price ratio, measures the
7 market price per ordinary shares when compared with the earning per share of the
8 company. Price earning ratio are demonstrates the investors’ evaluation of the future
9 earnings in the company. Based on calculations above, PE ratio for the year 2017 is 14.73
10 times while 13 times in the year 2016. A high PE could mean that a stock's price is high
11 relative to earnings and possibly overvalued. Conversely, a low P/E might indicate that
12 the current stock price is low relative to earnings. So, that can be conclude that this
13 company have a better price earning ratio 2017.

14 The price-to-earnings ratio (PE ratio) is the ratio for valuing a company that measures
15 its current share price relative to its per-share earnings (EPS). The price-to-earnings ratio
16 is also sometimes known as the price multiple or the earnings multiple. PE ratios are used
17 by investors and analysts to determine the relative value of a company's Warisan TC
18 Holdings Berhad shares in an apples-to-apples comparison. It can also be used to compare
19 a company against its own historical record or to compare aggregate markets against one
20 another or over time.

21 Next, payout ratio known as divided rate. This ratio measures the ability of the
22 company to distribute cash dividends. Based on the calculation above, the payout ratio
23 for the year 2017 is 2.97% while 8.42% in the year 2016. This indicates a low payout
24 ratio can signal that a company is reinvesting the bulk of its earnings into growing the
25 business.

26 The payout ratio shows the proportion of earnings paid out as dividends to
27 shareholders, typically expressed as a percentage of the company's earnings. The payout
28 ratio can also be expressed as dividends paid out as a proportion of cash flow. The payout
29 ratio is also known as the dividend payout ratio.

30

31

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10

11

12 C. Solvency ratio

13 Solvency ratio is the ability of business to survive over a long period of time. This ratio
14includes two categories which are debts to total assets ratio and time interest earned ratio.
15Debt to total assets ratio is the ratio that measures the total assets percentage received from
16trade payables. Based on result, Debts to total assets ratio for 2017 is 58.44%, which is in
172017, 58.44% of the total assets earned from the source of the trade payables. This ratio
18frames the overall look of the Warisan TC Holding berhad. Normally companies with strong
19and stable earnings are companies which provide public facilities and their debts to total
20assets ratio higher when compared with that of high technology companies. So this company
21has strong and stable earning 2017 compared to 2016
22
23 If company of Warisan TC Holding Berhad has high debt-to-asset ratios it may be at risk,
24especially in an increasing interest rate market. Creditors might get concerned if the company
25carries a large percentage of debt. They may demand that the company pay some of it back

39
 1before taking on any more debt. The debt-to-equity ratio is often used instead of the debt to
2asset ratio. The liabilities to asset ratio, calculated as total liabilities divided by total assets,
3provide similar insight. So that the Warisan TC Holding Berhad will easy to perform well in
4business if they carry fewer debts to total asset ratio and can compete with other company
5with smoothness organization.
6
7 Lastly, times interest earned (TIE) ratio also called interest coverage ratio, reveals the
8number of times the company is able to repay interest when the loan has matured. Based on
9the calculation above, TIE ratio 5.06 times in the year 2017 while in the year 2016 was 2.09
10times. This mean that TIE ratio the company’s income is 5.06 times greater in the year 2017
11than the company annual interest expenses. In this respect, the company is less risky and the
12bank should not have problem accepting the company’s loan.
13
14
15 The higher the time interest earned ratio, the stronger the financial position of the
16company to pay interest when needed. The company is less risky and the bank should not
17have problem accepting the company’s Warisan TC Holdings Berhad loan. Times interest
18earned (TIE) is a metric used to measure a company's Warisan TC Holdings Berhad ability to
19meet its debt obligations. The formula is calculated by taking a company's Warisan TC
20Holdings Berhad earnings before interest and taxes (EBIT) and dividing it by the total interest
21payable on bonds and other contractual debt. TIE indicates how many times a company
22Warisan TC Holdings Berhad can cover its interest charges on a pretax earnings basis.
23

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13

14

15CONCLUSION

16 In conclusion there are three ratios which are liquidity ratio, profitability ratio and
17solvency ratio that researchers must investigate about Warisan TC Holding Berhad. Firstly, in
18liquidity ratio the terms that researchers must look for consist of current ratio, quick ratio,
19trade receivable turnover ratio and inventory turnover ratio. Secondly, for profitability ratio
20contains of profit margin, assets turnover ratio, return on assets, return on shareholder’s
21equity, earning per share, price earning ratio and payout ratio. Finally, the solvency ratio
22consists of debts to total assets ratio and time interest earned ratio.

23

24 First and foremost, for liquidity ratio, trade receivable turnover ratio and inventory
25turnover ratio experience increasing from 2016 to 2017. It is because this company can pay
26debts in a short period of time. Refer to the result, it has been illustrate that Warisan TC
27Holdings Berhad has high account receivable turnover ratio due to the smoothness of the

41
 1organization and operation and if the company cannot sell these greater amounts of inventory,
2it will incur storage costs and other holding costs. However, current ratio and quick ratio are
3falling down from 2016 to 2017. If an organization of Warisan TC Holding Berhad has good
4long-term revenue streams, it may be able to borrow against those prospects to meet current
5obligations. If the business has negotiated fast payment terms with customers and long
6payment terms from suppliers, it may have a very low quick ratio yet good liquidity.
7
8 Apart from that, profitability ratio in assets turnover ratio, return in shareholder’s
9equity and price earning ratio from 2016 are better than in 2017. This is due to the higher
10sales made by this company on assets turnover ratio. This company has better return on
11shareholder’s equity because it has higher rate of it. This company also has better price
12earning ratio in 2017 than 2016. Compared to better profitability ratio, profit margin and
13return on asset does perform enough in that year. Earnings per share decrease in that year and
14payout ratio in 2017 is lower than 2016.
15
16 Last but not least, the two terms in solvency ratio that is debts to total assets ratio and
17times interest earned ratio show a good result. It is because the debts to total asset ratio in this
18company has strong and stable earnings. For the times interest earned ratio, this company has
19less risky because it has high technology use.
20

21 Finally, it can be conclude that year 2017 financially in the better position than year
222016, with positive income statements, cash flow statements, financial positions statements
23and ratios. Some analysis also study the cash flow from operating activities to see if the
24company is earning “quality” income in the year 2017 compare to 2016 which is the current
25asset.

26 Researchers are hoping that Warisan TC Holdings Berhad can continue to compete in
27Bursa Saham Malaysia and also in the market. They must increase their income so that they
28can achieve their objective. They also must improve their productivity services in order to
29sustain in a long term market to make sure that they are being well known.
30
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20REFERENCE
21
221.http://www.bursamalaysia.com/market/listed-companies/list-of-companies/plc-
23profile.html?stock_code=5016
24
252. https://ilmumanajemenindustri.com/pengertian-rasio-profitabilitas-jenis-profitability-ratio/
26
273. https://www.myaccountingcourse.com/financial-ratios/asset-turnover-ratio
28
294. http://www.warisantc.com.my/
30
315. http://www.warisantc.com.my/index.php/using-joomla/extensions/components/content-
32component/article-categories/78-demo/slides/81-home-slide-travel
33
346. http://www.warisantc.com.my/index.php/styles/style1

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27. http://www.warisantc.com.my/index.php/layout
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20APPENDIX
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