BKAF3123

Group Project Analysis and Use of Financial Statement

Required: Download the 2008, 2009 and 2010 Annual Reports of the companies given by your lecturer (whose shares are publicly traded in the Bursa Malaysia) from a given industry. Analyze the financial statements in detail, focusing on the analysis questions below. You may use external corroborating data or information if such data/information aids you in your analysis. Purpose of the Project: The purpose of the term project is to apply financial analysis tools and techniques to aid your decision making process as an investor or as an investment analyst. You should organize yourself into teams of two to four students for the project. The term project will give you the opportunity to study, in depth, the performance of selected companies for a number of years (3 years). It will also give you the opportunity to develop your research and report writing skills. Your project should evidence detailed analysis of financial statement data, including footnotes.
The written part of your project should be between 20-35 pages (double-spaced, word processing font no smaller than 12-point, one-inch margins all around), including tables, graphs, appendices, and references. Also include any supporting articles (these do not count as part of the 20-35 page maximum length). The full annual reports of the companies must be copied on a CD/DVD (Rewritable only).

Structure of the Project

1. You will be given 4 to 8 companies by your lecturer depending on the number of persons

in your group (one member is given 2 companies) and you have to find their annual reports from the Bursa Malaysia website: www.bursamalaysia.com). a. Print the financial statements (Income Statement/Statements of Comprehensive Income, Balance Sheet/ Statements of Financial Position, Statements of Changes in Equity and Statements of Cash Flow at both group and company levels) of the selected companies. Note: You must print comparative financial statements (for 2008, 2009 and 2010 only). The full annual reports for 2008, 2009 and 2010 must be copied on the DVD rewritable only, not to be printed. (10 marks).
2. You will complete a management report on these companies that will include the following, you must show all your workings (use the Microsoft Excel template provided or you can develop your own version): a. 1 liquidity ratio from the followings: (16 marks) i. Working capital ii. Current ratio iii. Quick ratio iv. Turnover ratio b. Explain what this means in terms of the performance of the corporation using trend analysis over the 3 years. (8 marks) 1

c. 1 borrowing capacity ratio from the followings: (8 marks) i. Equity ratio ii. Debt ratio d. Explain what this means in terms of the performance of the corporation using trend analysis over the 3 years. (8 marks) e. 1 profitability ratio from the followings: (8 marks) i. Rate of return on net sales ii. Rate of return on average owners (shareholders) equity f. Explain what this means in terms of the performance of the corporation using trend analysis over the 3 years. (8 marks) g. Based on (a) to (f) above , explain which company shows the best performance. (6 marks) 3. You have to explain whether the companies are complying with the new requirements on

the presentation of financial statements (refer to FRS101) as follows (use the Excel template provided or you can develop your own version): a. Do all the companies use the new names for their financial statement (e.g. statement of comprehensive income, statement of financial position etc) for the year ended on or after 31st December 2010? (6 marks) b. What is the format used by the companies to present the statement of comprehensive income and other comprehensive income (OCI), according to FRS101 (e.g. in a single statement, in a separate statement, or in the statement of changes in equity? (6 marks) c. What are the items reported in the statement of comprehensive income (e.g. below) (8 marks) : 1. Unrealized gains and losses on available for sale marketable securities . 2. Unrealized foreign currency translation gains and losses. 3. Some losses related to minimum pension obligations. 4. Unrealized actuarial gains and losses on pension assets and liabilities and increases (decreases) in pension obligations due to prior service cost adjustments. 5. Unrealized gains and losses associated with hedging certain risks d. How are the details of the items reported in the statement of comprehensive income being presented (e.g. in the body of the financial statement, or in the notes)? (4 marks) e. How many companies report an overall positive or negative OCI? (4 marks)
Total Marks = 100 marks Tip:

You can include any other data as you see fit (charts are encouraged). You should support your analytical inferences with figures/computations, making valid or reasonable assumptions as necessary. The cover/title page should include your group number, ALL names and matric numbers of each member of the group and your lecturers name.

Project Development Schedule

1) 12 October, 2011 provide one to two-page description of your companies background (year of incorporation, main/principal business activities). 2) 2 November, 2011 Provide the ratios for 2 (a), (c) and (e) above for the three years for your selected companies. 3) 7 December, 2011 - The final submission of the project paper. No late projects will

be accepted for any reason.