You are an intern working in Salam Berhad. Salam is interested to invest money in either Top Glove Berhad or Hartatelaga Berhad. Your manager has recently asked to interpret the financial statements of both companies for the financial year 2020. You are required to produce a report, which focuses on specific aspects of financial performance and financial position of Top Glove and Hartatelaga, which are of particular interest your manager. Your report should contain the following:

1. Analyse and interpret the financial statements of both companies based on the ratios calculated in part (b) above AND recommend which company should Salam Berhad invest in with proper justification. (500 words)

part B answers;

Ratios	Top Glove	Hartatelaga
1.Operating profit Margin=(Profit from operations/Revenues)*100	(2355886/7236317)*100=	(566221540/2924313603)*100=
	32.56%	19.36%
2.Net profit margin=(Profit Net of tax/Revenues)*100	(1903815/7236317)*100=	(434397384/2924313603)*100=
	26.31%	14.85%
3.Return on total assets(ROA)=(Net profit after tax /Average assets)*100
Av. Assets= (Total assets,2019+TA 2020)/2	(5688205+8672926)/2=	(2992095353+3313923868)/2=
	7180566	3153009611
ROA=	(1903815/7180566)*100=	(434397384/3153009611)*100=
	26.51%	13.78%
4.Return on Equity(ROE)=(Net profit after tax /Average SH Equity)*100
Av. SH Equity= (Total SH Equity ,2019+TE 2020)/2	(2554141+6309675)/2	(2259230061+2543123220)/2=
	4431908	2401176641
ROE=	(1903815/4431908)*100=	(434397384/2401176641)*100=
	42.96%	18.09%

All the profitability ratios are just about half or even less ,for Hartatelega , when compared to Top Glove

As gross profit is not available for Top Glove, to maintain comparability , operating profit margins have been worked out for both companies

Ratio	Top Glove	Hartatelaga
Current Ratio	(4,261561,000/1,978,799,000)	(1,088,521,433/407,039,182)
Current ratio	2.15	2.67

Ratio	Top Glove	Hartatelaga
Quick Ratio (Current Assets-iventory-prepaid expenses/ current liabilities)	((4,261,561,00-525,645,00)/ 1,978,799,000))	((1,088,521,433-273,908,980)/407,039,182)
Quick Ratio	1.89	2.00

Ratio & formula	Top Glove	Hartalega
Trade receivables collection period = ((Trade receivables/ credit sales)/365))
Av.Receivables = (Receivables,2019+Receivables 2020)/2	(592217+803059)/2=	(458263408+502054816)/2=
	697638	480159112
Trade receivables collection period=	365/(7236317/697638)=	365/(2924313603/480159112)=
Days	35.2	59.9
Trade payables payables payment period =((Trade payables/ credit sales)/365)
Av.Payables= (Payables,2019+Payables 2020)/2	(492414+670671)/2=	(259526314+273874382)/2=
	581543	266700348
Trade payables payment period=	365/(4932440/581543)=	365/(2182777927/266700348)=
Days	43.0	44.6
Inventory turnover = ( net sales / average inventory at selling price )
Av.Inventory= (Inventory,2019+Inventory, 2020)/2	(629896+525645)/2=	(275527359+273908980)/2=
	577771	274718170
Inventory turnover=	4932440/577771=	2182777927/274718170=
times in a year	8.5	7.9