The company was just listed early this year and was targeting at reaching the market capitalisation of SAR 10,000,000 million by 2021 (taking into account the number of shares outstanding of 200,000 million shares).

Required:

Question 1

a)What should be the target share price at the end of 2021? (2m)

b)What should be the targeted Profit after tax to be achieved to meet the targeted share price? (6m)

c)What should be the targeted revenue to achieve the targeted share price? (9m)

d)If the current share price is achieved based on the average crude oil price of SAR 64, what should be the targeted crude oil price in 2021 (with 13,172 Total hydrocarbon productions (million barrel per day). (5m)

e)What are the other possible strategies and ways of achieving the targeted share price? (8m)

Question 2

Based on the Balance sheet presented above:

a)Determine what is the Net Tangible asset (NTA) per share of the company both in 2019 and 2018? What is your evaluation of the NTA value in relation to the share price? (4m)

b)Based on your evaluation, is the assets management of the company efficient? (7m)

c)Is the gearing/leverage ratio of the company optimal?

d)Based on the degree of the Financial leverage (DFL) of the company, is the company expected to benefit from the leverage level? (4m)

Question 3

a)Based on the Cash Flow statement of the company, does the company show better performance as compared to what was presented in the income statement? What is the implication? (5m)

b)What is the Free cashflow of the company? What is the implication? (5m)

Question 4

a)Based on your analysis of the financial statement of the company above, what is the safety level of the company in term of revenue level? (4m)

b)What is the performance potential of the company based on the upswing projection in the crude oil price? (3m)

c)If crude oil price go down as far as USD 15 per barrel compared to the current USD 25 per barrel price, how bad will the company performance be? (3m)

Question 5

The company receive a long term contract proposal from a group of least-developed nations in Africa and South America to purchase the company's products at 45% discount as part of a Corporate Social Responsibility (CSR) contribution of the company to these countries. The contract is for 5 years and this will be about 10% of the company's current output level. The company has the capacity to increase its production to meet the above contract obligation. There will be an extra costs of logistics and transportation that is estimated to be about RM 24,000 million per annum.

a)Should the company sign the special contract? Show the financial implications? (6m)

b)What are the qualitative factors that need to be taken into account in the decision? (4m)

Question 6

The company is implementing a strict budgeting system in trying to achieve the targeted market capitalisation.

a)How can budgeting system used effectively to strive to achieve the targeted performance? (5m)

b)How could Management by Exception be employed in the Budgeting system to control performance and ensure that the company meet the targeted performance as planned. (7m)

c)How else the company to strive to meet the targeted performance? (3m)

Question 7

The company is trying to implement the Activity based costing system (ABC) to cost the multi products of the company.

a)Advise the company of the strength and weaknesses of the proposed system. (7m)

b)What is your recommendation to the company? (3m)

Note: All the workings must clearly stated.

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