FINANCIAL ANALYSIS AND MANAGEMENT

Running head: FINANCIAL ANALYSIS AND MANAGEMENT
Financial Analysis and Management
Name of the Student
Name of the University
Author’s Note

FINANCIAL ANALYSIS AND MANAGEMENT1
Table of Contents
Part 1..........................................................................................................................................2
Introduction............................................................................................................................2
Introduction on the Companies..............................................................................................2
Comparison and Analysis of the Financial Performance.......................................................3
Identification of Strategic and Operational Issues...............................................................13
Conclusion............................................................................................................................16
Part 2........................................................................................................................................17
Introduction..........................................................................................................................17
Five Difference Sources of External Finance......................................................................17
Weighted Average Cost of Capital......................................................................................19
Conclusion............................................................................................................................20
References................................................................................................................................22

FINANCIAL ANALYSIS AND MANAGEMENT2
Part 1
Introduction
Determination of the overall financial health of a company demands assessing and
evaluating both financial performance and position of the same company with the use of
different financial analysis techniques. This helps the investors, creditors and other
stakeholders to know the trend of financial performance of the companies. In this regard,
analysis of ratios is considered as a major technique for assessing and comparing the financial
performance of more than one companies (Fatihudin 2018). In addition, the use of graphs and
charts largely helps in the analysis. This report intends at analysing as well as evaluating the
financial performance and financial position of two companies operating in the
telecommunication industry of Malaysia. These two companies are Axiata Group Berhad
(Axiata) and Digi.Com Berhad (Digi) that is the competitor company; and both of these
companies are listed in Bursa Malaysia. This report also discusses about the strategic and
operational issues in these two companies.
Introduction on the Companies
Axiata is considered a major telecommunication companies in Asia. The
transformation of this companies can be seen from a holding business entity with a portfolio
of pure-play mobile assets into a Triple Core Strategy-driven business organization with a
focus on Digital Telco, Digital Businesses and communication infrastructure. The main
products of the company include mobile network operation, network infrustrurure and digital
internet (axiata.com 2019). Digi is a major Malaysian company involves in providing mobile
connectivity and internet services on its advanced G+ network. Digi is famous for providing
its customers with relevant, personalized and engaging digital products and services with the
aim to enhance their digital lifestyle. The key product line of the business include mobile

FINANCIAL ANALYSIS AND MANAGEMENT3
services, telecommunication services and cable television (ocs.digi.com.my 2019). Both
Axiata and Digi operate in the telecommunication industry of Malaysia. In case of the market
share, Digi has the maximum share in the Malaysian telecommunication industry where
Axiata has less market share as compared to Digi (statista.com 2019). As per the chairman’s
statement of Axiata, the company had to face many business risks due to the presence of
volatile macroeconomic condition, market as well as technological disruption, shift in
demand and key regulatory uncertainties across the region (axiata.listedcompany.com 2019).
On the other hand, Digi has been able in providing a solid financial performance that
provided the shareholders with healthy returns. This has provided the company with major
confidence (digi.listedcompany.com 2019). In the presence of this reasons, Digi can be
considered as a major competitor of Axiata in case it want to become the market leader.
Comparison and Analysis of the Financial Performance
Ratio analysis is considered as a major tool to analyse and assess the financial
performance and financial position of the companies; and the same is also applicable in case
of Axiata and Digi. The following table shows the results of ratio analysis in five major
categories.
Table 1: Results of Ratio Analysis

FINANCIAL ANALYSIS AND MANAGEMENT4
It can be seen from the above table that both the companies have performed
differently under the ratios. The following discussion shows the use of graphs with the aim to
compare the financial performance and position of these two selected companies.
Profitability Ratios
Axiata Digi
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
45.00%
50.00%
34.89%
45.93%
37.82%
45.52%
37.16%
44.79%
36.63%
43.14%
37.40%
45.06%
Operating Profit Ratio
2018 2017 2016 2015 2014
Figure 1: Operating Profit Ratio
(Source: As created by Author)
Operating profit ratio can be considered as the return that a company achieves from
standard operations. This assesses how much profit a company makes after the payment of
variable costs like raw material, wages and others (Innocent, Mary and Matthew 2013).
Operating profit ration of Axiata is less for the last five years as compared to the same ratio
of Digi for the same period. Moreover, this ratio of Axiata has decreased in the current year
where this has increased in Digi. This leads the implication that there have been certain
operational flaws in Axiata along with inefficient management of organizational resources.
Since both the companies have same operational characteristics, this is a key negative aspect
of the profitability performance of Axiata.

FINANCIAL ANALYSIS AND MANAGEMENT5
Axiata Digi
-30.00%
-20.00%
-10.00%
0.00%
10.00%
20.00%
30.00%
40.00%
-21.97%
23.04%
4.76%
23.30%
3.05%
24.75%
13.26%
24.92%
12.66%
28.94%
Net Profit Ratio
2018 2017 2016 2015 2014
Figure 2: Net Profit Ratio
(Source: As created by Author)
The use of net profit ratio is seen for determining the overall efficiency of the
operationa of a company since this is an indicator of how well a firm’s trading activities are
performing. Axiata has registered net loss in the present year where Digi has registered
healthy net profit in the same period. In addition, Digi has better net profit ratio over the last
five years as compared to Axiata. It implies that Digi has performed better in term of
profitability than Axiata (Lartey, Antwi and Boadi 2013). Net loss indicates that Axiata may
have unnecessary direct and indirect cost that has contributed to net loss. This needs to be
considered as a major negative aspect of the financial performance of Axiata as compared to
Digi.