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 $2023$

$\backslash$table$[[,$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$)$

$\backslash$table$[[,$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,$250,000,000\mathrm{.}00]]$ 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 better$-$

than$-$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.