3.

1 Profitability ratios
1) Gross Profit ratio

It means that Gross profit ratio (GP ratio) is the ratio of gross profit to net sales expressed as
a percentage. It expresses the relationship between gross profit and sales.

The above graph shows the information about the gross profit of Bonia in the year 2005,
2006, 2007, and 2008. It was 93 (RM 'millions) rose to 121 (RM 'millions) in the year 2005
to 2006. Furthermore, the gross profit was 121 (RM 'millions) rose to 148 (RM 'millions) in
the year 2006 to 2007. And it was rose until 180 (RM 'millions) from the year 2007 to 2008.
There were increased their profit from the year 2005 to 2008 slowly. It also means that
Bonia’s gross profit is rising now and remains stable. According to the sales of Bonia, the
there are gross profit ration in the year 2005, 2006, 2007 and 2008. In the year 2005, the
gross profit ration was 0.4844 times and the year 2006, the gross profit ration was 0.5475
times in the year 2007, the ratio was 0.6016 times and the year 2008, the ratio was 0.6 times
(Horizon, 2008).

2) Operating Profit

The formula is the ratio of cost of goods sold plus operating expenses to net sales. It is
generally expressed in percentage. It measures the cost of operations per dollar of sales. This
is closely related to the ratio of operating profit to net sales.

According to the graph above, the operating income of Bonia are very stable since the year
2005 until 2008. In the year 2005, the operating income was 19.7 (RM 'millions). In the year
2006, the operating income was 27.2 (RM 'millions). In the year 2007, the operating income
was 42.6 (RM 'millions) and the year of 2008, the operating income was 43.3 (RM 'millions)
(Horizon, 2008).

3) Profit before tax

It means that the percentage of sales dollars left after subtracting the Cost of Goods sold and
all expenses, except income taxes. Besides that, this ratio provides a good opportunity to
compare your company's "return on sales" with the performance of other companies in your
industry.

According to the above information, it is related to the profit before taxation of Bonia. In the
year 2004, the profit was 14 (RM 'million) which is before taxation and in the year 2005, it
was 22 (RM 'million). There were 37 (RM 'million) and 38(RM 'million) in the year 2006 and
2007. The taxations of Bonia Corporation Berhad have current tax and deferred tax. Current
tax is the amount of income taxes payable or receivable in respect of the taxable profit or loss
for a period. The deferred tax is recognised in full using the liability method on temporary
differences arising between the carrying amount of an asset or liability in the balance sheet
and its tax base. All taxations have become the burden of Bonia (Horizon, 2008)..

4) Net profit
It referred to as the bottom line, net profit is calculated by subtracting a company's total
expenses from total revenue, thus showing what the company has earned (or lost) in a given
period of time (usually one year). It also called net income or net earnings.

Following the graph:

The graph is related to the net profit of Bonia Corporation Berhad. It shows that it obtained 8
(RM 'million) in the year 2005 and 14 (RM 'million) in the year 2006. It was increased 6 (RM
'million) from the year 2005 to 2006. However, the graph shows that it was the same profit in
the year 2007 and 2008 that was 28 (RM 'million). It means that, Bonia was not increased its
profit in 2008. Furthermore, the net profit ratios were 0.417 times and 0.633 times in the year
2005 and 2006. And it was the same ratio which was 0.1138 times in the year 2007 and 2008
(Horizon, 2008).

5) Return on investment (ROI)

The ROI is the most important ratio of the financial ratio. It is the percentage of return on
funds invested in the business by its owners. In short, this ratio tells the owner whether or not
all the effort put into the business has been worthwhile.

Following the below graph:

The graph is related to the return on investment of Bonia. There were 2.66 and 3.5 in the year
2005 and 2006. However, the returns on investments were the same in the year 2007 and
2008 which was 7 (Horizon, 2008). The return on investment is referred to the income of
investment. The graph above shows that there are the same incomes of investment in the year
2007 and 2008. It means that there are not changes from the year 2007 to 2008.

Conclusion

According to the financial statement of Bonia Corporation Berhad, it can find out that the
profits of Bonia are remaining stable in the year 2005 until 2008. Furthermore, Bonia
Corporation Bhd expects that its global retail network expansion will boost net profit to at
least RM50mil by the year 2010. Moreover, “the company foresees its net profit to increase
at a minimum of 10% from its projected total revenue of RM500mil in three years”, said by
the group managing director Albert Chiang (The Star, 2007). Besides that, the targeted
revenue and profit are achievable due to its further expansion of local and overseas retail
network. At the present, Bonia is looking to penetrate India, South Africa and two or three
more countries in the Middle East, Albert Chiang added. On the other hand, network
expansion, the company would also invest 5%-7% of its total revenue annually in advertising
and promotion as well as research and development, thus to enhance its brand image. The
company has also planned to set up a manufacturing facility in China within three years to
increase its production. For the financial year ended June 30, 2007, Bonia registered
RM246mil in revenue and net profit of RM28mil. The profits of Bonia are increased slowly
now. If the plans are achieved, it will be a good reputation in the word.
1) Salmon.F, 2009, "Bonia Corporation Bhd (Kuala Lumpur Stock Exchange)", online,
date accessed 15 July 2009. Available from:
http://www.reuters.com/finance/stocks/incomeStatement?
stmtType=INC&perType=INT&symbol=BONI.KL
2) Businessweek, 2009,"Bonia Corporation Berhad (BONI:Kuala Lumpur Stock
Exchange)”, online, date accessed 14 July 2009. Available from:
http://investing.businessweek.com/research/stocks/financials/financials.asp?
ric=BONI.KL
3) The Star, 2007, “Bonia expects to see 10% revenue growth”, online, date accessed 15
July 2009. Available from: http://biz.thestar.com.my/news/story.asp?
file=/2007/11/30/business/20071130155845&sec=business
4) THE FINANCIAL TIMES LTD, 2009, “Bonia Corporation Bhd 2nd”, online, date
accessed 13 Jul 2009. Available from:
http://markets.ft.com/tearsheets/financialsSummary.asp?s=MY%3ABONI
5) Horizon, 2008, “Bonia Corporation Berhad”, online, date accessed 14 Jul 2009.
Available from: http://www.horizon.my/investor/details.php?counter=bonia
6)