BKAL1013

BUSINESS ACCOUNTING
(GROUP B)

GROUP PROJECT ASSIGNMENT

SEMESTER A181, SESSION 2018/2019

Company’s name:
B.I.G Industries Berhad
Submitted to:
Dr. Mohd Hadafi bin Sahdan

Prepared by:

1. CHEAH JIA BEI (263198)

2. CHEAH MEI ZI (263181)
3. FRANKIE HO MING CHUANG (263157)
4. CHIN JIA YI (261276)
5. ALYAA MAISARAH （261094）

Deadline: 17/12/2018

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1.0 Introduction

First of all, the purpose of annual report is to provide valuable financial information on
activities throughout the preceding year, to let the shareholders know how well the business of
the company has been doing and details on activities, financial performance and various reports
and financial statement. To make it simple, it determines what the company owns and owes,
how the company is funding operations and growth, and how good the company is at making
money for investors.

As such, we will obtain the information from financial reporting to do our ratio analysis.
According to Wikipedia, financial report (financial statement) is a formal record of the
financial activities and position of a business, person, or other entity. It consists of balance
sheet, income statements, statement of changes in equity and cash flow statement. The
objective of financial report is to provide useful information in making rational investment,
credit, and similar economic decisions. Another one is it will provide useful information in
assessing the amounts, timing and uncertainty of prospective cash receipts from dividends or
interest and the proceeds from the sale, redemption or maturity of securities or loans. The most
crucial thing in financial reporting is to provide information about the economic resources of
an entity which will affect transactions, events and circumstances that change its resource.

Purpose on doing the report on B.I.G Industries Berhad is to know about the company
financial information. Every annual report will provide information on the company financial,
by the information we will know that what the company earn or loss, how the company is
funding operations and growth and how good the company is making money for investors. Not
only that, with the report we will know if the company is doing well or not.

The financial year end that will be look at year 2017 and year 2018.The report will be
consisted of current ratio, ratio of fixed assets to long term liabilities, debt ratio, profit margin,
return on asset, return on equity and earning per share. All of these information will be used to
observe the condition of the company.

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2.0 Company’s Background and Strategies

B. I. G. Industries Bhd is engaged in manufacturing, distributing and marketing industrial gases.

B. I. G. Industries Bhd provides services and maintenance to the oil, gas and petrochemical
industry and producing quarry products and ready-mix concrete; and property development. Its
gas division manufactures, distributes and markets industrial gases in Peninsular Malaysia,
Sabah, and Sarawak under the brand name of BIG. Its Gas division offers industrial gases,
including liquid oxygen, helium, liquid nitrogen, hydrogen, acetylene, nitrous oxide and
gaseous nitrogen. The company, through its Gas division, undertakes project works and
services, and trading in related products, such as welding equipment and consumables.

B.I.G. Industries Bhd has three core businesses which are gas division, concrete division
and property division. In the part of gas division, B.I.G. Industries Bhd has three main sections
which are ASU main control room, CO2 production plant and liquid transfer activity. They
have a team of dedicated and service oriented staff to assist their customer in their product
selection and they assure that their customer they are providing quality service and product
satisfaction. B.I.G. Industries Bhd manufacture, distribute and market industrial gases in
Peninsular Malaysia, Sabah and Sarawak. With the strong network of branches, manufacturing
plants, refilling equipment, ISO tanks and cylinders across Sarawak, B.I.G. Industries Bhd
enjoys a unique position as one of the largest independent industrial gases manufacturers in
Sarawak. B.I.G. Industries Bhd also undertake project works and service in related products
such as welding or cutting equipment and consumables. B.I.G. Industries Bhd has an
established network of branches across Peninsular Malaysia, Sabah and Sarawak to service
their customer better. Moreover, the growing intended with the nation’s drive towards
industrialization, B.I.G. Industries Bhd has manufacturing plants strategically located in
Kuching, Bintulu, Miri and Pasir Gudang and refilling facilities in Sibu, Labuan, Sandakan and
Lumut.

In this sections, B.I.G. Industries Bhd has achieve three achievements include certified
food grade carbon dioxide gas supplier, MS ISO 9001:2015 Certified Company and Awarded
ECO Green Manufacturing Certificate (2002). Service and Maintenance of B.I.G. Industries

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Bhd include refilling of fire-fighting cylinders, gas piping, shutdown and maintenance works,
and purging of pipelines.

The second core business is concrete division. B.I.G. Industries Bhd operating under
the brand of UMIX since 1984, they are the pioneer and leading ready-mixed concrete (“RMC”)
operator in Sabah. In 2005, B.I.G. Industries Bhd started Pre-cast Concrete Products to
complement their RMC as well as expand their product base. UMIX is ISO 9001:2015 certified
and they are committed to manufacturing, distributing and marketing consistently high quality
products to their customers.

Lastly, property division is the third core business of B.I.G. Industries Bhd. B.I.G.
Industries Bhd vision and mission is to strive to be an innovative, inventive and pioneer
developer to deliver what the market needs. B.I.G. Industries Bhd is an established developer
and through the years has accumulated a vast experience in diverse property developments.
B.I.G. Industries Bhd philosophy and strategy is to deliver a competitive and innovative value
for money product to their customer. B.I.G. Industries Bhd believes in maximizing their
customers return through their philosophy and improving people’s lives by providing on time
and good quality homes.

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3.0 Ratio Analysis

Num Formula 2017 2018

1 Current Ratio =

2 Ratio of Fixed-Assets to Long-term Liabilities =

3 Inventory Turnover =

4 Total Assets turnover = 0.5683

5 Return on Equity =

6 Earning per share =

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4.0 Discussion

a. Current Ratio
The current ratio is a financial ratio used to examine the liquidity of a company and its ability
to pay short-term liabilities with its short-term assets. B.I.G Industries Berhad showed
increased current ratio from 1.0214 to 1.0278 from 2017 to 2018. It means that B.I.G Industries
Berhad slightly increase its ability to pay short-term liabilities with its short-term assets. This
change is affected by the increase of current asset and the decrease of current liabilities. Based
on the annual report, the increasing current asset is probably affected by the increasing in
inventories and cash and bank balance. With the high current ratio, the company is less likely
to convert long term assets into cash or borrow to cover liabilities.

b. Ratio of Fixed Asset to Long Term Liabilities

The ratio of fixed assets to long term liabilities is a solvency measure that indicates the margin
of safety of the bondholder. B.I.G Industries Berhad showed the decreased ratio of fixed assets
to long term liabilities from 4.8920 to 4.2344 from 2017 to 2018. It indicates that B.I.G
Industries Berhad has decreased its ability to borrow the additional funds on a long- term basis.
The major decrease of the ratio is mainly due to the decrease in property, plant and equipment
of the company form RM 38000546 to RM 33663880 which result in decreased fixed asset of
the company. If B.I.G Industries Berhad needs to borrow additional fund on a long term basis
in the future, it is still in a strong position to do so.

c. Inventory turnover

Inventory turnover is the relationship between the volume of goods sold and inventory.
Industries Berhad showed the decreased inventory turnover from 3.0189 to 2.9326 from 2017
to 2018. The major decrease of inventory turnover is mainly due to the increase in average
inventory as much as 5.06% from RM7114868 to RM7475142. It indicates that B.I.G
Industries Berhad has slightly decreased its ability to turn its inventory into cash. But for an
industry, it is still a reasonable turnover rate. This shows the company does not overspend by
buying too much inventory and still can sell the inventory it buys effectively.

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5.0 Conclusion

To sum up, B.I.G Industries Berhad is a company that has been able to maintain and
sustain the business it manages based on their annual report of two consecutive year, which is
2017 and 2018. Continuous improvements in every aspect of the company are needed to ensure
the company keep on going, survive and become more competitive. B.I.G Industries Berhad
could reform the liquidity and efficiency of the company, profitability and increase the
solvency of the company. The company’s management must overcome the declined aspect
hence this situation will improve for the future.

Based on this analysis process, the company will know its current financial position, its
stability and its liquidity and efficiency as well. Besides, the company will be able to know
about the changes in financial position from year to year through this analysis. Ratio analysis
will help companies and investors assess the overall management of B.I.G Industries Berhad
to guarantee their investments. The company’s management must monitor and focus on current
liabilities and assets throughout the year. Additionally, the company also needs to increase its
net income and profits by utilizing its materials and assets appropriately.

The company has a strong future even though the company has not been able to grow
at a pace that is expected from the company of such size and capacity. Investors and
shareholders must be aware of the rates obtained from shareholders' equity and managers. The
creditors also should take into account the liquidity of the company as shown in the ratio
analysis, rates derived from the total assets and earnings per share of ordinary shares in order
to make a wise choice for invest in this company. In order to maintain its business, B.I.G
Industries Berhad should continue to develop their strategy to cope with the change of the
economy as well as day-to-day changing of customer’s demand.

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