BASIC ACCOUNTING (ACC30205)

ASSIGNMENT: FINANCIAL RATIO

ANAYLSIS

GROUP MEMBER
1.
2.
3.
4.

CHAN YI FUNG
SOO YON LI
GOH SONG KIT
LIM HONG WEI

LECTURER
MS TAY SHIR MEN

0323057
0322821
0322013
0322741

TABLE OF CONTENT

No

Title
Brief History of Company

Pg.No
2

Recent Development of Company

Profitable Stability

Financial Stability

Company performance

P/E Ratio

Appendix

8-9

Investment Recommendation

10

Reference List

11

Brief history of MK Land Holding Bhd

Tan Sri Mustapha Kamal Abu Bakar and Kasi A/L K. L.

Palaniappan are the cofounder for MK Land Holding Bhd. Both
of them founded MK Land Holding Bhd on March 1, 1983 and is
headquartered in Petaling Jaya, Malaysia. MK Land Holding Bhd
make it on debut on the main board of Kuala Lumpur Stock
Exchange, now known as Bursa Malaysia on 27 August 1999.
Founder of MK Land Holding Bhd capitalised MK Land Holding
Bhd into one of the largest property company with nine of his
privately owned property companies and the capital reach up
to about RM1.2 billion.
MK Land Holding Bhd is a Malaysia Based property investment
company and provision of management services. MK Land
Holding Bhd operated in four segments: property development,
leisure segment, educational segment and investment holding
segment.

Recent Development

MK Land Holding Bhd launched three massive project

Rafflesia@Park, Rafflesia@Peak and Rafflesia@Hill. This three
massive project are located at Damansara Perdana. The sells
for Rafflesia@Park is about RM2.82billion.
MK Land Holding Bhd just launched two massive projects on
2015. MK Land Holding Bhd will lunch the projects within April
and June. The gross development of this two massive projects is
about RM600million. The projects comprise servicedapartments costing RM450,000 onwards in Damansara Damai
and apartments in Damansara Perdana, priced above
RM600,000 per unit.

Profitable Stability
The following table shows the profitable ratios and
interpretation for MK Land in the year 2012 and 2013
respectively.
Profitability
Ratios
Return on
Equity(ROE
)

Net Profit
Margin(NP
M)

Gross Profit
Margin(GP
M)

Selling
Exp.
Ratio(SER)

2012
RM 24205000
RM 1067759500

2013
x

RM 40345000
RM 1091000500

100%

100%

= 2.3%

= 3.7%

RM 24205000
RM 428530000

RM 40345000
RM 468239000

100%

100%

= 5.65%

= 8.6%

RM 153596000
RM 428530000

RM 176579000
RM 468239000

100%

100%

= 35.8%

= 37.7%

RM 10040000
RM 428530000

RM 11766000
RM 468239000

100%

100%

= 2.3%

= 2.5%

Interpretation
X

In the year 2013, the

ROE rate is 3.7%. As for
year 2012, the ROE
rate is 2.3%. Therefore,
the ROE rate has
increased; it means the
company is earning a
high return of the
owners capital.
In the year 2013, the
NPM rate is 8.6%. As
for year 2012, the NPM
rate is 5.65%.
Therefore, the rate has
increased resulting
lower overall expenses.
High net profit resulting
a high ROE.
In the year 2013, the
GPM rate is 37.7%. As
for year 2012, the GPM
rate is 35.8%.
Therefore the rate has
increased resulting a
high NPM and a lower
COGS.
In the year 2013, the
SER rate is 2.5%. As for
year 2012, the SER rate
is 2.3%. Therefore SER
increased resulting
lower NPM.

General
Exp.
Ratio(GER)

Financial
Exp.
Ratio(FER)

RM 54378000
RM 428530000

RM 72394000
RM 468239000

100%

100%

= 12.7%

= 15.5%

RM 20502000
RM 428530000

RM 20269000
RM 468239000

100%

100%

= 4.78%

=4.3%

In the year 2013, the

GER rate is 15.5%. As
for GER rate is 12.7%.
When GER has
increased, the NPM
decreased.
In the year 2013, the
FER rate is 4.3%. As for
year 2012, the FER rate
is 4.78%. This means
the FER has decreased
resulting in an increase
in NPM.

Financial Stability
The following Stability Ratios and interpretation for MK Land for
the year 2012
and 2013 respectively.
Stability
Ratios
Working
Capital
Ratio
(WCR)

Total Debt
Ratio(TDR)

Inventory
Turnover

2012

2013

Interpretation

RM 1013852000
RM 719071000

RM 951446000
RM 639694000

= 1.41:1

= 1.49:1

For every RM1 of

current liability in
the year 2013, the
business, MK Land
has 1.49 of current
assets. It has a
higher working
capital ratio than
2012.
For 2013, the Total
Debt Ratio is
45.4%. While the
ratio is 43.4% for
year 2012. This
results a higher
amount of owners
equity.
For year 2013, it
takes 149 days to
sell one batch of

RM 896383000
RM 1976245000

RM 845978000
RM 1948117000

100%

100%

=45.4%

= 43.4%

365 days

365 days

ratio (ITR)

RM 274934000
RM 119493500

RM 291660000
RM 118794000

= 159 days
= 149 days
Interest
Coverage
Ratio(ICR)

goods. While it
takes 159 days to
sell one batch of
goods in year 2012.
Liabilities can be
paid off quicker in
year 2013
compared to 2012

RM 20502000+ RM 24205000 RM 20269000+ RM 24205000For year 2013, the

RM 20502000
RM 20269000
Interest Coverage
Ratio (ICR) is 3
times. While the
= 2.2 times
= 3 times
ratio is 2.2 times
for year 2012.
Therefore MK Land
has enough profit
to pay its interest 3
times for year
2013.

Comparison between MK Land performance towards

KLCI
At 22 July 2012, the share price for MK Land is RM0.52 and the KLCI is
1871.35. While at 16 October 2012, the share price for MK Land
decreased to RM0.405 and the index decreased to 1767.77.
The decrease of share price is -22.1% whereas the index change is -5.5%.
From this statement, we can said the performance of the company is
worse than KLCI
0.4050.52
0.52
= -5.5%

x 100% = -22.1%

1757.771871.35
1871.35

x 100%

The second chosen point is at 11 November 2012, the share price for MK
Land is RM0.47 and the KLCI is 1825.11. While for 15 December 2012, the
share price for MK Land decreased to RM0.315 and the index decreased to
1697.31.
The decrease of share price is -33% whereas the index change is -7%
0.3150.47
0.47

1697.311825.11
1825.11

x 100% = -33%

x 100%

= -7%
The third chosen point is at 5 February 2013, the share price for MK Land
is RM0.465 and the KLCI is 1803.09. While for 4 March 2013, the share
price for MK Land decreased to RM0.425 and the index increased to
1825.54.
The decrease of share price is -8.6% whereas the index change is 1.3%
0.4250.465
0.465

1825.521803.09
1803,09

x 100% = -8.6%

x 100%

= 1.3%
The last chosen point is at 20 April 2013, the share price for MK Land is
RM0.45 and the KLCI is 1848.66. While for 11 May 2013, the share price
for MK Land decreased to RM0.42 and the index decreased to 1805.49.
The decrease of share price is -6.7%, whereas the index change is -2.3%
0.420.45
0.45

1805.491848.66
1848.66

x 100% = -7%

x 100%

= -2.3%

In short, since the fluctuation shows above the share price for MK Land in
both year is decreasing instead of rising. Hence, considering the share
price, it is not recommended to invest MK Land.
6

P/E Ratio
Price/Earnings or P/E Ratio
= Current share price/Earnings per share (in number of times)

2012 MK Lands P/E Ratio

MK Lands current share price is $0.30 per share. Its earnings per share
(based on the year 2012) is $2.00. This means the companys
price/earnings ratio is 0.15 ($0.30/$2.00).
This ratio shows the value of the share. The higher the P/E ratio, the more
expensive a share is. From what we have researched, the P/E of 0.15
which means that the investor who invests in this company will need
approximately 55 days to recoup his or her investment. A higher P/E will
make the investor to wait even longer to claim back to original money that
was invested.

P/E Ratio
= Current share price/Earnings per share (in number of times)
2013 MK Lands P/E Ratio
MK Lands current share price is $0.35 per share. Its earnings per share
(based on the year 2013) is $3.30. This means the companys
price/earnings ratio is $0.11 ($0.35/$3.30).
The ratio measures how expensive a share is. The higher the P/E ratio, the
more expensive a share is. By looking at the graph from MK Lands annual
report, the P/E of 0.11 stands for investor who invests in this company at
2013 will need to wait approximately 40 days to claim back his or her
original principle.

Appendix
2012

2013

Investment Recommendation

After analysing MK Lands annual report for year 2012 & 2013, we
as a team of analysers would suggest that investors should not invest on
MK Land. Definitely, there are always reasons behind it.
From the profitability ratio, we realized that the Return on Equity
(ROE) has increased from 2.3% to 3.7%. This shows that the company can
earn a high return of the owners capital. According to the Net Profit
Margin (NPM), we found out that it has a slight increase rate which is from
5.65% to 8.6%. This results that the company has a lower expense. Well,
they also have an increased in Gross Profit Margin (GPM) which is from
35.8% to 37.7%. The increase of Gross Profit Margin affects a higher Net
Profit Margin (NPM) and lower COGS. Not only that, the Selling Expenses
Ratio (SER) has increased a little from 2.3% to 2.5% and it results a lower
Net Profit Margin (NPM). A rate of 12.7% to 15.5% has shown in the
General Expense Ratio (GER). When the General Expense Ratio (GER)
increases, it results the Net Profit Margin (NPM) to drop. But, theres a
drop in Financial Expense Ratio (FER) which is from 4.78% to 4.3%. It is
good if the Financial Expense Ratio (FER) drops because it results the Net
Profit Margin (NPM) to increase.
According to the stability ratio, the Working Capital Ratio (WCR) for
2012 is 1.41 : 1 and 1.49 : 1 for 2013. For every RM1 of current liability in
the year 2013, the business, Mk Land has 1.49 of current assets. It has a
higher Working Capital Ratio (WCR) than 2012. The Total Debt Ratio (TDR)
has decreased from a percentage of 45.4% to 43.4%. This results a higher
amount of owners equity. The next one will be the Inventory Turnover
Ratio (ITR). For year 2013,it takes 149 days to sell one batch of goods.
While it takes 159 days to sell one batch of goods in year 2012. Liabilities
can be paid off quicker in year 2013 compared to 2012. Last but not least,
the Interest Coverage Ratio (ICR) in 2012 can cover 2.2 times of debt
owed but in 2013 it can cover 3 times of the debt owed. But, recommended
was it is better to be if the ICR can cover 5 times of debts owed.

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Reference List
1. Themalaymailonline.com,. (2014). MK land plans RM2.2b new launches in
two years. Retrieved 19 November 2015, from
http://www.themalaymailonline.com/money/article/mk-land-plans-rm2.2bnew-launches-in-two-years
2. Themalaymailonline.com,. (2014). MK land plans RM2.2b new launches in two
years. Retrieved 19 November 2015, from
http://www.themalaymailonline.com/money/article/mk-land-plans-rm2.2b-newlaunches-in-two-years
3. Mkland.com.my,. (2015). MKLAND Holdings Berhad. Retrieved 19
November 2015, from http://www.mkland.com.my/co_home.html
4. Yahoo Finance,. (2015). Yahoo Finance - Business Finance, Stock Market,
Quotes, News. Retrieved 19 November 2015, from
http://finance.yahoo.com/
5. Accountingtools.com,. (2015). Accounting CPE & Books - AccountingTools.
Retrieved 19 November 2015, from http://www.accountingtools.com/

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