ASSIGNMENT

JULYY 2015 SEMESTER

KOD KURSUS

NAMA KURSUS

PROGRAM

NAMA PELAJAR

NO. MATRIK

NAMA FASILITATOR
AKADEMIK
PUSAT PEMBELAJARAN

QUESTION 1

a. A brief description of the companys history, the nature of products / services in

operation and the objectives.
WCT Group was first established with the integration of WCT Earthworks & Building
Contractors SdnBhd on 14 January 1981 and consequently changed its name to WCT Berhad
(WCTB). WCT isprincipally involved in engineering and construction, property
development and investment & management activities.Its scope of engineering and
construction expertise the know-how in covering F1 racing circuits, airports, dams and water
supply schemes, expressways and highways, civil works, interior fit-out works and buildings.
The companys property development and investment & management portfolio includes
townships, luxury homes, high-rise residences, industrial properties, offices, integrated
commercial developments, concessions, hotels and shopping malls.

b. A fully worked out appendix on financial analysis of the financial statements that
highlights the profitability, liquidity and management efficiency and leverage
ratio.

Profitability Ratio
1. Gross Profit Margin
= Gross Profit / Net Sales x 100
Year Assessment 2013
= 280,003 / 1,654,951 x 100
= 16.92%
Year Assessment 2014
= 233,587 / 1,662,222 x 100
= 14.05%
2. Operating Margin

= Operating Profit / Net Sales x 100

Year Assessment 2013
= 302,673 / 1,654,951 x 100
= 18.29%
Year Assessment 2014
= 194,305 / 1,662,222 x 100
= 11.69%

3. Return On Assets (ROA)

= Net Income / Total Assets x 100
Year Assessment 2013
= 189,751 / 2,671,475 x 100
= 7.10%
Year Assessment 2014
= 120,971 / 2,748,740 x 100
= 4.40%

4. Return On Equity (ROE)

= Net Income / Owners Equity x 100
Year Assessment 2013
= 189,751 / 2,256,361 x 100
= 8.40%
Year Assessment 2014

= 120,971 / 2,287,142 x 100

= 5.29%

5. Return On Investments (ROI)

= Profit after Interests & Tax / Total Assets x 100
Year Assessment 2013
= 189,751 / 2,671,475 x 100
= 7.10%
Year Assessment 2014
= 120,971 / 2,748,740 x 100
= 4.40%

Liquidity Ratio
1. Acid-Test Ratio
= (Current Assets Inventory) / Current Liabilities
Year Assessment 2013
= (2,671,475 - 75,575) / 1,231,249
= 2.11
Year Assessment 2013
= (2,748,740 - 90,710) / 1,640,323
= 1.62

2. Cash Ratio

= Cash & Cash Equivalents / Current Liabilities

Year Assessment 2013
= 973,403 / 1,231,249
= 0.79
Year Assessment 2014
= 950,841 / 1,640,323
= 0.57

3. Current Ratio
= Current Assets / Current Liabilities
Year Assessment 2013
= 2,671,475 / 1,231,249
= 2.17
Year Assessment 2014
= 2,748,740 / 1,640,323
= 1.68

Management Efficiency Ratio

1. Debt Ratio
= Total Liabilities / Total Assets
Year Assessment 2013
= 3,278,261 / 5,534,622
= 0.59
Year Assessment 2014
= 3,939,872 / 6,227,014
= 0.63

2. Debt to Equity Ratio

= Total Liabilities / Owners Equity
Year Assessment 2013
= 3,278,261 /2,256,361
= 1.45
Year Assessment 2014
= 3,939,872 /2,287,142
= 1.72

3. Accounts receivable turnover ratio

= Total Sales / Accounts Receivable

Year Assessment 2013

= 1,654,951 / 990,808
= 1.67
Year Assessment 2014
= 1,662,222 / 954,143
= 1.74

4. Accounts payable turnover ratio

= Cost of Sales / Accounts Payable
Year Assessment 2013
= 1,374,948 / 842,727
= 1.63
Year Assessment 2014
= 1,428,635 / 1,043,011
= 1.36

c. Comment on the financial position of the business concern.

Ratios are an attempt to make an analysis of the past statement, so they are historical
documents. Now-a-days keeping in view the complexities of the business, it is important to
have an idea of the probable happening in future.Accounting ratio are tools of quantitative
analysis only. But sometimes qualification factors may surmount the quantitative aspects. The
calculation derived from the ratio analysis under such circumstances may get distorted.

For the financial year ended 31 December 2013, the Group registered a net profit of RM197.5
million as compared to RM358.9 million recorded in the previous year. The higher net profit
in 2012 was due to higher fair value gain in investment properties. The Groups revenue of
RM1,655.0million represented an increase of 6.1% compared to theprevious years revenue
of RM1,560.4 million. The Civil Engineering and Construction Division contributed
approximately RM1,168.4 million or 71% of the Groups total revenue. The Civil
Engineering and Construction Division remains the backbone of the Groups revenue stream.
The Property Development and Investment & Management division contributed about 57%
of the Groups operating profit. Moving forward, the Property Investment &Management
division will be an essential component in the Groups operations in ensuring the long term
sustainability of yield improvement for the respective assets, and providing a steady recurrent
income flow.
For the financial year ended 31 December 2014, the Group recorded a net profit after taxation
of RM122.9 million, as compared to RM197.5 million recorded in 2013. The decline in profit
was mostly attributed to lower fair value gain of RM9.4 million (2013: RM43.7million) on
investment properties and the decrease in profit margins.
Nonetheless, the Groups revenue of RM1,662.2 million represented a slight increase
compared to the previous years revenue of RM1,655.0million.The Engineering and
Construction Division contributed approximately RM1,210.6 million or 73% of the Groups
total revenue. The Engineering and Construction Division remains the backbone of the
Groups revenue stream.
The

Property

Development

and

Investment

&Management

division

contributed

approximately RM108.5 million or 56% of the Groups operating profit. Moving forward, the
Property Investment &Management division will be an essential component in the Groups
operations in ensuring the long term sustainability of yield improvement for the respective
assets, and providing a steady recurrent income flow.
Moreover, the company had shown a good financial stability throughout the year as they had
manage the company well in terms of business models and fundamental of making profits for
its subsidiaries. Therefore, we can look at the financial position, it had shown that the figures

are quite convincing and the demand from the outer markets had make the company to be
more competitive and to be more financially wise for the long run.

d. What further information would you require to fully understand the companys
strength and weaknesses?
In order to gather further information of a company, we have to be financial intelligence.
Financial intelligence has emerged as a best practice and core competency in many
organizations leading to improved financial results, increased employee morale, and reduced
employee turnover. Many organizations include financial intelligence programs in their
leadership development curriculum. Financial intelligence is not an distinctive skill rather it
is a learned set of skills that can be developed at all levels.
Firstly we have to understanding the foundation. Financial intelligence requires an
understanding of the basics of financial measurement including the income statement, the
balance sheet, and the cash flow statement. It also requires knowing the difference between
cash and profit and why a balance sheet balances.
Secondly, we have to understanding the art. Finance and accounting are an art as well as a
science. The two disciplines must try to quantify what can't always be quantified, and so must
rely on rules, estimates, and assumptions. Financial intelligence ensures people are able to
identify where the artful aspects of finance have been applied to the numbers and know how
applying them differently might lead to different conclusions.
Thirdly, we have to understanding analysis. Financial intelligence includes the ability to
analyse the numbers in greater depth. This includes being able to calculate profitability,
leverage, liquidity and efficiency ratios and understanding the meaning of the results.
Conducting ROI analysis and interpreting the results are also part of financial intelligence.
Lastly, we have to understanding the big picture. Financial intelligence also means being able
to understand a business's financial results in context that is, within the framework of the big
picture. Factors such as the economy, the competitive environment, regulations and changing

customer needs and expectations as well as new technologies all affect how the numbers are
interpreted.

QUESTION 2
a. Solve the equation [1-1 & 1-2] algebraically to find Q(BE) or the breakeven
output.

P = Selling Price
Q = Quantity of Output or Sales
TR = Total Revenue
TC = Total Cost
FC = Fixed Cost
V = Variable Cost per Unit
If TR = (P) (Q) equation 1-1
And TC = FC + V (Q) equation 1-2

Answer:
Breakeven Output is, TR = TC
PQ

FC + V Q

(FC / Q) + V

Therefore, the breakeven output equation would be, P = (FC / Q) + V

b. For the equation you solved in (a), what is the denominator of the breakeven
equation called?
The quantity of output or sales (Q) is the denominator in the equation above.

c. If selling price per unit (P) = $10

Variable cost per unit (V)

= $5

Fixed Costs (F)

= $200

i. What is the contribution margin?

Contribution Margin =

Fixed Costs / (Selling Price Variable Cost per unit)

$200 / ($10 - $5)

$200 / $5

$40

ii. What is the breakeven quantity / output?

Breakeven quantity

Fixed Cost / Contribution Margin

$200 / $40

5 units

d. Suppose that the firm wishes to earn a specific profits or a target profit of $100,
what is the new target output, Q (T)?
New Target Output

REFERENCES

(Fixed cost + target profit)/ Contribution Margin

($200 + $100) / $40

$300 / $40

7.5 or 8 units of output

Brigham, E., & Houston, J. (2009). Fundamentals of Financial Management. Mason:

Cengage Learning. Drake, P. (2010). Financial ratio analysis.
Frase, L., & Ormiston, A. (2004). Understanding Financial Statements. New Jersey: Pearson
Prentice Hall.
Hey-Cunningham, D. (1993). Financial Statements Demystified. New South Wales: Allen &
Unwin.
Johnstone, D. B. (2009). Worldwide Trends in Financing Higher Education. In J. Knight,
Financing Access and Equity in Higher Education. Rotterdam: Sense Publishers.