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FINANCIAL STATEMENT ANALYSIS (FAR670)

GROUP PROJECT (30%)

This is a team project involving both a class presentation and formal report worth 15 points each.
The group project will be performed in teams of 4 to 5 members. The objective of the group
project is to give you an opportunity to study in depth one firm.

Calculate the ratios listed at the end of this document from the financial statements of your
chosen company for 3 years. Once you have made these calculations, read the “Chairman’s
Statement” located in the annual report, as well as the footnotes to the various financial
statements. These are the pieces of information that are required for your analysis, in addition to
“the numbers.” After reading the Chairman’s Statement and footnotes, you should have a good
idea of why certain ratios and figures changed from one year to the next or why changes trend.
If certain changes are not explained, try to think of reasons why the figures or trend have
changed. Your project should demonstrate evidence of detailed analysis of financial statement
data and evidence of integrating the tools and concepts covered in the course (Ratios, vertical
and trend analysis).

The goal of this project is to not only give you a chance to calculate the ratios that accountant
and analysts use when evaluating a company but also to look for reasons, (i.e. drivers), for those
changes and to think of your reasons if none are given. If you only do the calculations but do not
discuss why certain changes took place, then you haven’t achieved the goal of the assignment.

In the end, you will hand in are required to prepare a report (maximum ten pages + supporting
exhibits) that summarizes the results of your financial analysis, using one-inch margins, a Times
Roman font size 12, and double spacing. Also, please make appropriate references to the source
material and submit copies of any different source material you use. You may include table and
charts in the body of your report.
The final report is due on Dec 13, 2018 and you are required to present your findings in the
following week. The presentation should include some media, preferably a PowerPoint
presentation. Each group member is expected to speak during the presentation. The presentation
should be about 6-8 minutes per person.

Places to find Annual Reports and financial information:

1. Your chosen company’s website

2. The Securities and Exchange Commission. Go to: http://www.sc.com.my

3. The Bursa Malaysia website: http://www.bursamalaysia.com.my

Required ratio calculations are listed below:

A. PROFITABILITY RATIOS

1. Profit margin

2. Return on assets

3. Return on equity

4. Total Asset Turnover

5. Operating income margin

B. ACTIVITY / EFFICIENCY RATIOS

1. Accounts receivable turnover

2. Average collection period

3. Inventory turnover

4. Average age of inventory

5. Accounts payable turnover

6. Accounts payable period


C. LEVERAGE RATIOS

1. Debt ratio

2. Debt-to-equity ratio

3. Times interest earned

4. Equity multiplier

D. LIQUIDITY RATIOS

1. Current ratio

2. Net Working capital

3. Quick (acid test) ratio

These ratios are explained in your textbook, so if you don’t understand, you can look up for more
information there.

Evidence of Ratio Calculations: Please show your calculations of the financial ratios for 3
years, and your formulas used. Please attach this sheet to the back of your written
project.

Ratio Measurement (formula) Ratio value (show calculation)


Year xxx Year xx Year xx

It is important to consider that with all the information, for all the research, past performance is
no guarantee of future performance.