A) TYPE OF BUSINESS

The company is operating under manufacturing business. Manufacturing business

is a business that the company produces its own products by itself. For example Proton
produces cars, Intel produces computers chips

and

Sony produces

stereos

and

televisions. Mahajaya is a company which provides building such as semi-Detached,

Bungalow and double storey terrace house. All these houses are the products which
manufactured by the company to generate income. Therefore, from the comparison
above, we are able to know that Mahajaya Sdn Bhd is a company operated under
manufacturing business.

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B) TYPE OF ORGANIZATION
The type of organization formed by the Mahajaya Berhad is corporation.
Corporation is a business that the ownership divides into shares of stock and it is also a
separate legal entity organized under state corporation law. By viewing the page 8 of
Mahajaya Berhads annual report, we are able to know that property division and
construction division are existed in this company. For example construction division is
separated into 7 parts. 7 different companies share the construction division at the same
time with the different percentages of share holding. Property division divides into more
parts than construction division. It is shared by many different companies with different
percentages of share holding. Therefore, based on the evidences given by the annual
report of the company, it shows that Mahajaya Berhad is a company which is operated
under corporation organization.

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C) ACCOUNTING CONCEPT
There are several accounting concepts used by Mahajaya Berhad. Among these
concepts, three of the concepts are business entity, historical cost and accrual concept.
Business entity is a concept that stated the business entity is a different entity
from its owners, creditors, employers, customers, and other person while all the dealings
or transaction of business are recorded as a separate entity. By viewing the statement of
financial position and comprehensive income statements of Mahajaya Berhad, we are
able to know that all the dealings and transactions are recorded under the business entity
without involving the owners account. Therefore, this shows that the company is
applying business entity concept.
Historical cost is a concept that all transactions of a business entity are recorded at
the original cost to the enterprise and the current market value is irrelevant. We can see
that there are no changes in any transaction in both financial position and comprehensive
income statements. This shows that the company is recording the transactions by using
historical cost.
The third concept is accrual concept, when applying accrual concept, revenue
reported when earned and expenses reported when incurred. Cash receipts and payment
are irrelevant. Mahajaya Berhad reports all the revenues when earned and expenses when
incurred. We can also notice that there is no cash receipt or payments are reported in the
comprehensive income statement. Thus, the company is applying accrual concept when
they recording transactions in their account.

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D) STATEMENT OF COMPREHENSIVE INCOME

Profit from operation

2010

2011

100,054,281

10,313,472

From the information given by the statement, we can see that the profit from
operation of Mahajaya Berhad have increased from RM 10,313,472 in year 2011 to
RM100,054,281 in year 2012. The profit had increased RM 89,740,809 in a year. There
have some reasons and examples to explain about it.
First of all, allowance for impaired losses on receivables had decreased from RM
1,161,947 in year 2010 to RM 411,073 in year 2011. The allowance had decreased RM
750,874 in a year, this increased the profit of Mahajaya Berhad inadvertently.
Besides that, staff costs that actually cost RM5,642,469 in year 2010 had decreased
to RM 5,089,243 in 2011. The staff cost are included salaries, wages, bonus, social
security costs, pension costs and other staff related expenses. Staff costs had decreased
RM 553,226 in total and this amount had decreased the expenses and increased the profit
at the same time.
Furthermore, the depreciation of investment properties had decrease from RM
118, 738 to RM 22,535. This had decreased the expenses of Mahajaya Berhad in total
RM96,203.
We can see that the decrease in expenses can increase the profit of a company
from the examples given above.

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D) STATEMENT OF COMPREHENSIVE INCOME

Revenue

2011

2010

RM 352,893,916

RM 169,244,433

The statement of comprehensive income showed that the amount of revenue in year
2011 is greater than amount in year 2010. The amount difference between in year 2011
and year 2010 is RM183, 649, 483. This means that the Mahajaya Berhad had earn
RM183, 649, 483 before subtract the expenses in 2011. Below are the examples that lead
to revenue increase in year 2011.
Firstly, According to the annual report, we can know that sale of development
properties increased RM190, 035, 396, rental income increased RM1, 975, administration
fee increased RM367, sale of good decreased RM5, 816, 713, contract revenue decreased
RM564, 729 and commission income decreased RM3, 813 between these two years.
Although sale of good, revenue and commission income decreased, but the total amount
of revenue is still increased RM 183, 649, 483.
The larger amount increased in revenue is sale of development properties. This was
because Mahajaya Berhad sold a lot of houses from year 2010 to 2011. To quote an
example, all the house in DExotica, Dvilla town houses, Dmajestice and Dregency
had been fully sold out in the year. It means that the Mahajaya Berhad majority house
sold out during year 2010 to 2011.
Finaly, the comparison of revenue between this two year have increased and
decreased but the sale of development was increased in large amount. So, it can afford all
the loss in the years.

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D) STATEMENT OF COMPREHENSIVE INCOME

Cost of sales

2011

2010

(236,058,612)

(146,423,018)

From the information given, Mahajaya Berhad increased its amount the cost of
sale from year 2010 which is RM146,423,018 to year 2011 which was RM236,058,612.
We can see that the finance cost of Mahajaya Berhad in increased by RM89,635,594.
Firstly, Property development costs greatly increased from year 2010 which was
RM102,766,513 to year 2011 which was RM189,680,506 by RM86,913,993. The
property development costs increased because the company increased many projects in
2011 especially in Bandar Damai Perdana. For instance, Damai Gayana, Semi-Detached
and Bungalow Houses which are in Bandar Damai Perdana, Cheras.
Besides, the cost of development properties sold of Mahajaya Berhad in year
2010 which was RM22,009,831 increased to RM30,432,901 in year 2011 by
RM8,423,070. The cost of development properties sold increased was caused by the
increase of develop project that construct by the company, for example, project Bandar
Damai Perdana, Bandar Damai, Taman Damai Utama and Taman Alam Indah.
On the other hand, the cost of goods sold in year 2010 which is RM18,496,297
was decreasing compare to year 2011 which was RM13,118,678 by RM5,3776,619.
However, the slightly decrease in both data didnt affect much more of the cost of sales.
In conclusion, the cost of sales of the Mahajaya Berhad was increased in year
2011 compare to year 2010 because the company invests more in development properties
in order to get greater revenue.

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D) STATEMENTS OF FINANCIAL POSITION
2011
Current liabilities: Trade Payables

RM 43, 468,272

2010
RM39, 270, 914

Trade payables are recognized initially at fair value plus directly attributable
transaction costs and subsequently measured at amortized cost using the effective interest
method. According to the comparison in the statements of financial position, we can
know that the amount of the trade payables in year 2011 is higher than in year 2010. It
increased RM 4, 197, 358 in year 2011. This means that Mahajaya Berhad had more
creditors and the amount of creditor is increased in year 2011.
According to the annual report, payable, due to landowners, progress billing in
respect of property development cost and retention sums were the thing that affected the
trade payables increase in year 2011. The progress billing in respect of property
development cost increased RM 4, 619, 838 whereas retention sums decreased RM 1,
001, 716. These two things were the largest amount of changing in that year.
Mahajaya Berhad needs a lot of development cost because the price of the house is
higher. Before selling the house, Mahajaya Berhad do not have enough development cost
to develop the house, so he need to borrow money from trade payable. The retention sum
is the amount of money which is held back for the duration of the defects period.
Mahajaya Berhad had paid the money back to the payables during 2011.
In conclusion, the trade payables had increase in 2011. If Mahajaya Berhad can
decrease their trade payables in following year then it will earn more money.

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D) STATEMENT OF FINANCIAL POSITION
2011
Land held for property development

2010

218,873,990

187,908,487

According to the statement of comprehensive land held for property development,

the amount of land in year 2011 was greater than amount in year 2010. The amount
difference between in year 2011 and year 2010 is RM30,965,503. This means that the
Mahajaya Berhad asset increased and earned RM30,965,503. Below are the example
shows that increase in year 2011.
Firstly, According to the annual report, we can know that the cost of land held for
property

development

decrease

RM143,004,649,

the

addition

increase

RM51,909,878,between this two years. Although the addition increase, and the cost of
land held decreased, but the total amount of land held for property was still increased to
RM218,685,595.
larger amount increase in land held for property development properties was
because Mahajaya Berhad sell a lot of houses from year 2010 to 2011 .for an example the
land to build the house in Dmajestice and Dregency, they estimated to sold it out due to
date.It means that the Mahajaya Berhad majority the land had used out during year 2010
to year 2011.
Finally, the comparison of land held for property development between this two
years have increased in large amount. So, it can afford all the loss in the years.

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D) STATEMENT OF FINANCIAL POSITION
2011
Total Equity

RM 341,313,370

2010
RM274,015,834

From the information given, we can see Mahajaya Berhads total equity was
increased from RM274,015,834 to RM341,313,370. It increased RM 67,297,536 in a year
which is from year 2010 to year 2011. There are some reasons and explanation for why
the total equity of the company were increased.
Firstly, according to the annual report, we can know the retained earns increased
RM60,143,734 from year 2010 to year 2011. It was increased from negative
RM3,601,746 to RM 63,745,480. This means the company make large profit in year
2011. Large profit of the company was came from great revenue of the company. There
were many projects 100% sold off , for example D Exotica in Bandar Damai Perdana, D
Majestica in Bandar Damai Perdana and DRegency in Bandar Damai Perdana.
Besides, the non-controlling interests of the company was decreased RM49,690
from year 2010 to year 2011. It was decreased from RM 3,603,776 to RM3,554,086. This
is because the percentage of noncontrolling interest was decreased in year 2011.
Furthermore, the share capital of the company remain the same which was
RM274,013,804 in both year 2010 and year 2011. There was no change in the share
capital of the company.

In conclusion, the total asset of Mahajaya Berhad was increased in year 2011
compare to year 2010. Therefore, the company was making profit in year 2011.
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E) CONCLUSION
Based on the analysis made, I would like to invest in Mahajaya Berhad because
the company has strong financial background and able to generate more income and
profit in the near future.
First of all, the revenue increased in year 2011. The revenue of the company
increased nearly 2 times compare to year 2010. Although sale of good and commission
income decreased but the great increasing in sale of development property cover all the
losses. Many projects of the company were 100% sold out. That means that consumers
have confidence to the companys products. Therefore, I believe that the company is able
to generate greater revenue and profit in near future.
Besides, the trade payable of the company increased in year 2011 compare to year
2010. The company had more creditors, but we can notice that the increase in trade
payable was causing by the development cost. It means that Mahajaya Berhad was
investing more in development property to generate more income. So, as the projects are
done and ready to sell, the company will get more income since it got confidence from all
the consumers.
Furthermore, land held for property development increased, it means that the
company has more assets to development their properties . As the company has more land

to develop the building, more revenue will gain by the company after the projects are
completed. Therefore, the profit of the following years will increase as well.
In the nutshell, Mahajaya Berhad is strong company which is able to generate
more income in the future, therefore, it is worth to invest in this company.

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