This assessment requires students to demonstrate an understanding of how the financial ratios are calculated.
Students are required interpret the key financial ratios for investment decision-making. The assessment utilises a pre-populated Excel spreadsheet downloaded from EMIS database that contains summarised financial statements and ratios for Engtex Group Berhad for 5 years and students are required to incorporate the figures and calculate the ratios for the most recent two financial statements (2015 and 2016). This assessment is designed to ensure that students fully understand the inter-relationships that exist between the in financial statements based on the principles of double entry accounting. Secondly, this assignment isdesigned to ensure that students are able to interpret the ratios derived from financial statements in a meaningful way.
Requirements for Assessment 1
Students are to submit their individual case study exercise on Engtex Group Berhad and the Malaysian infrastructure and construction supplies industry. As Engtex has ventured into manufacturing, propertydevelopment, etc., there is a need to perform segmental analysis in order to size up the performance of its principal business as the leading distributor of pipes, valves, fittings, infrastructure and construction materials and other business segments.
(a) Students are required to collect and insert the year ending 31 December 2015 and 2016 data and compute the key ratios for 2015 and 2016 (highlighted in yellow) based on the Annual Report 2015 and 2016 of Engtex which was given out to each and every student in the MBA class, courtesy from Engtex Group Berhad (and the softcopy is downloadable at: www.bursamalaysia.com or at the investors relation section of www.engtex.com.my) so that students can perform analysis of financial performance and ratios for the latest 7 years.
(b) Download the assignment spreadsheet from the Moodle and rename the spreadsheet by insert your given name in front of the existing file name followed by a parentheses. Once students have obtained year 2015 and 2016 figures and the calculation of ratios for 2015 and 2016, you are required to prepare a report that incorporates to the following:
- Your understanding of the context of the business of Engtex and the industry dynamics.
- Identification and explanation of key aspects of financial performance as contained in your final spreadsheet (both in figures and ratios). Then, based on what you have learned in MBA5604 thus far, report on various types of ratios (profitability, liquidity, gearing (leverage), efficiency and shareholderreturns) in order to gain a more in-depth understanding of the financials of Engtex. Also identify the deficiencies or differences in the business report and how you overcome the deficiencies/differences.
- Explains your proposed financial strategy going forward for Engtex Group Berhad, based on the last seven years performance and the key decisions Engtex can make to move forward based on the 7-year financial results and ratios that you have calculated.
- It was stated in the Annual Report that as at 31 December 2016, 132,835,358 (2015: 143,965,800) Warrants (2007/2017) remained unexercised. How much is the exercise price per warrant and when is the last day to exercise the warrants? What is the warrant traded price on the last day of the year 2016. Determine whether the warrants are “in the money” or “out of the money” as at 31 December 2016. Discuss the effect of the conversion and non-conversion of the warrant on the due date?
- Discuss the significant mergers and acquisition (M&A) and equity capital markets (ECM) deals or events during the financial year and the financial implications to Engtex Group. (60% weightage)Instructions:
You shall submit the following:
- The completed spreadsheet for the year 2010 to 2016 (in softcopy) that incorporates your percentages and ratios computation and its formula based on what you have learned in class. Show all your workings in the spreadsheet.
- A report that report that incorporates your response to item (b)(i) to (b)(v) above, i.e. your interpretation of the 7-year performance of Engtex, explain your financial strategy going forward for Engtex Group Berhadand the key business decisions Engtex can make to move forward based on the 7-year financial results and ratios that you have calculated in the spreadsheet.