Financial Analysis Case Study | Report

Currently our group are investigating the company Top Glove Kossan Rubber Industries Bhd Supermax Corporation Berhad Word file name with (FMA Assignment _R), shows many graph. Kindly assist me to analyse and comment for the below contents based on graph. 1) Gross Profit Margin (+-250) 2) Operating Profit Margin (+-250) 3) Net Profit Margin (+-250) 4) Return on Capital Employed (ROCE) & Return on Equity (ROE) (+-250) 5) Current Ratio & Quick Ratio (+-250) 6) Inventory Turnover (+-250) 7) Received Turnover & Payable Payment Period (+-250) 8) Cash Conversion Cycle in days(+-250) 9) Gearing Ratio (+-250) 10) Interest CoverRatio (+-250) 11) Price over Earnings (P/E) Ratio (+-250) Each section required +-250 words. Sample document also attached, document name under Sample.

Running Head: FINANCIAL ANALYSIS 1
FINANCIAL ANALYSIS

FINANCIAL ANALYSIS
Contents
Overview.....................................................................................................................................................3
Kossar Rubber Industries.........................................................................................................................3
Supermax Corporation Berhad................................................................................................................3
Top Glove Corporation Berhad...............................................................................................................4
Measurement of financial performance.......................................................................................................5
Profitability ratios....................................................................................................................................5
Net Profit margin.................................................................................................................................5
Return on Equity..................................................................................................................................6
Liquidity ratios........................................................................................................................................7
Solvency ratios........................................................................................................................................8
Efficiency ratios......................................................................................................................................9
Market valuation....................................................................................................................................10
Recommendations and Conclusion............................................................................................................11
References.................................................................................................................................................12
Appendix...................................................................................................................................................14

FINANCIAL ANALYSIS
Overview
Kossar Rubber Industries
Kossan Rubber Industries or simply known as the Kossan group is one of the public companies
belonging to Malaysia and which came into existence in 1979. Initially, the company was mainly
engaged in cutlass bearing and started manufacturing globes in the year 1989. Recently the
primary activities in which the company is engaged are manufacturing, sale, and export of
rubber-based products. The headquarters of the company is situated in Malaysia. Dato Lim
Kuang Sia was the key person who brought this company into existence. The company has a
team of over 6000 employees and with them, the services and goods are being exported to 180
countries worldwide. The current revenue of the company is RM 21450571 it saw an increase
along with the profits RM 204599 (Kossar Rubber Industries, 2018).
(Source: Kossar Rubber Industries, 2018).

FINANCIAL ANALYSIS
Supermax Corporation Berhad
Supermax Corporation Berhad began as a dealer and exporter of latex gloves since the year 1987
preceding wandering into the line of manufacturing in 1989. It is Malaysia's biggest Own Brand
Manufacturer and the world's second-biggest maker of elastic gloves. Supermax has prevailed
with regards to setting up its brands with a solid existence in Canada, the U.S., the United
Kingdom, and Brazil. Practically 100% of its creation is sent out to clinical and dental
purchasers. This publicly-traded company has a revenue of RM 1304460 with a net profit of RM
161894. Over 5 years not much has increased as can be observed from the table below. Mr.
Albert Saychuan Cheok, the chairperson of the company is the key person, driving the company
towards the new medium in the market (Supermax Industries, 2018).
(Source: Supermax Industries, 2018).
Top Glove Corporation Berhad
Top Glove Corporation Berhad is a rubber glove manufacturer company situated in Malaysia.
Not restricted to just Malaysia, the company has also expanded its operations till the United
States, Germany, and Brazil. Founded in the year 1991 as a business venture with 1 glove
production line and 100 staff members the company has reached a team of 18000 employees.

FINANCIAL ANALYSIS
The current revenue structure of the company is RM 437906 and in comparison to the previous
years, the situation is in a positive direction (Top gloves Industries, 2018).
(Source: Top gloves Industries, 2018).
Measurement of financial performance
To measure the financial performance of all the three companies' altogether, in this report the
ratio analysis technique has been undertaken to understand the aspects of the company from each
perspective and to gain an understanding of which company is beneficial from the investment by
a layman (Robinson, Henry, Pirie, and Broihahn, (2015).

FINANCIAL ANALYSIS
Profitability ratios
Net Profit margin
2016 2017 2018
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
Net Profit Margin
Net Profit %
The net profit margin of Kossar Rubber Industries was of fluctuating nature over the last three
years from 10.255 and declining until 9.56%. The net profit margin is the percentage remaining
after the setting of all the operating expenses. On the comparative level, it can be seen that Top
Glove Industries has reversed the gear from the year 2017 where the net margin was 9.70% and
the same is 10.39% and the highest amongst all three companies. Supermax Industries were also
doing well in the year 2016, however, the same decreased due to an increase in the cost of goods
sold and also the interest-bearing liabilities have been increased. Further, the company makes a
U-turn and ratio improve until 8.44%. Kossar takes the second position on the comparative level
and this makes it is an attractive option also because there is not much decline over the periodic
term. Overall from the point of the net margin, Kossar and Top Gloves can maximize their
margins whereas Supermax needs to make some changes at the production level. It can be said
that Kossar adopted a prudent approach and at the same time the increasing financial costs can
reduce the net margins which shall be taken as an area of attention (Riyadi, 2017).

FINANCIAL ANALYSIS
Return on Equity
Return on equity is a financial measurement that gives an idea of the emphasis of the company
mainly on the shareholder's capital return. In the present case, Kossar again begs the second
position on the competitive level of a higher return on equity to its respective shareholders. At
15.24% which has been almost consistent for the past three years, the company is sure to give
stable returns to its investors (Kossar Rubber Industries, 2017). On the contrary, Top Gloves
retains the first position in the cumulative period of three years from starting as compared to
other companies. Earlier 19.85% return was given to the shareholders by Top Gloves and yet it
fell to 16.01% in the year 2017 due to increasing in the current debt and this implies the
company was not able to generate enough shareholders' value. A similar case was observed with
Supermax industries where the company was showering the return of 14.15%, however, it
declined to just half of what was given. From the overall analysis, it can be stated that Top
Gloves are creating value and Supermax needs to increase the margins. Kossar is at the middle
stage and can improve the position by distributing the idle cash (Laitinen and Laitinen, 2018).
2016 2017 2018
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
Return on Equity
Return on Equity %

FINANCIAL ANALYSIS
Liquidity ratios
The liquidity ratios are the direct communicators of how well the company can pay back the cash
to settle the current obligations with the help of realizing the cash from the existing assets of
current nature. As per the graph below it can be seen, the current ratio of Supermax Industries is
on the constant decline mode as the current assets are increasing at a slower pace whereas the
current liabilities are increasing at a faster pace (Supermax Industries, 2017). From 1.27 times to
1.01 times the ability of the company is reducing and the drastic situation may arise. When
compared to Top Gloves the situation is almost the same and the risk-taking capacity of the
company is declining as the current ratio declined from 1.93 times to 1.12 times over the last
three years. Kossar however, is strong in comparison to the other companies having the highest
current ratio at 1.78 times and this also implies that strict actions need to be taken by all the three
companies as they are taking time to convert the cash speedily. The quick ratio is also declining
for all three companies and this indicates the danger level that might be faced by the company on
account of a shortage of cash in hand (ElFayoumi, 2018).
2016
2017
2018
0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80
Quick Ratio

FINANCIAL ANALYSIS
2016
2017
2018
0.00 0.50 1.00 1.50 2.00 2.50
Current Ratio
Solvency ratios
Solvency ratios are the ratios that give an idea of the funds acquired by the business, its
proportion and its usage on an effective basis. To run the operations of the business, the capital is
required and hence, the debt to equity proportion of the company has been analyzed for all three
companies along with the times' interest coverage ratio and debt to assets ratio (Top gloves
Industries, 2017).
The interest coverage ratio defines the ability of the company to settle the financial costs in how
many days. In the view of the graph designed below, the figures imply, the ability of the Top
Gloves to be at topmost with 15.97 times faster payment. Kossar begs the second position in
setting the financial liabilities with 13.55 times speed, which came across as a shock as earlier
the company was efficient alongside 21.52 times (Du, Tepper and Verdelhan, 2018). Due to a
decline in the cost on the parallel level and despite the growing profits, the companies are not
able to reduce the financial stress immediately but have been quite steady (Muritala, 2018).

FINANCIAL ANALYSIS
2016 2017 2018
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
90.00
Interest coverage ratio
Efficiency ratios
Efficiency ratios define the ability to collect cash from receivables in terms of the number of
days to pay back to the creditors and enhance the overall performance of the company. The
accounts receivables ratio for three companies has been understood in detail in this section
(Weygandt, Kimmel and Kieso, 2015).
2016 2017 2018
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
90.00
Receivables Turnover ratio
The receivables turnover ratio of Kossar rubber Industries seems to be quite unhealthy as it takes
74.42 days in the current year and the same has been increased only from the previous year. Top
Glove Industries, on the other hand, has maintained the ratio of 55.96 days which is also higher
but still lower than Kossar Rubber Industries. Supermax has a lead in terms of efficiency at 52.62
days and there is a dramatic improvement in terms of the previous year where the company took
77.17 days to realize cash from receivables. To earn the faster cash, the invoices shall be

FINANCIAL ANALYSIS
generated fast and the credit terms shall be reduced and the right pricing schemes shall be set.
Overall Supermax and Top Gloves are walking parallel ways and can improve to a greater extent
(DeFusco, et al 2015).
Market valuation
P/E ratio has been analyzed in this section of the report and this gives an estimate of the
perception of the market on the prospects of the company. Top Gloves with the lowest P/E ratio
which is a shocking stage for the company as it is not feasible and the highest P/E ratio being
Kossar's and Supermax's P/E ratio is below 1 and this indicates that the stock is undervalued. To
improve the P/E ratio it is important to increase the net margins to get the higher earnings per
share (Uechi, et al 2015).
2016 2017 2018
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
0.45
0.50
P/E RATIO
Recommendations and Conclusion
After the in-depth analysis, it has been recommended to the investors to invest in Top Gloves
Limited, as in almost all areas the company is ahead of other companies. However, the two areas
where the company can improve is efficiency and market ratios. To improve the efficiency the
obsolete assets shall be disposed of and the company must shift its focus to long term liabilities.

FINANCIAL ANALYSIS
While to improve the P/E ratio of the company, the dividends shall be given to the shareholders
and. From the overall understanding Top Gloves is ahead of Kossar Rubber industries and
Supermax industries and d these companies can also improve themselves to get a fair market
share of the industry. From a layman investing in the company, Top Gloves shall be the right
choice, as it's a strong, liquid company having the higher net profit margins and the returns are
prospective for the shareholders and investors. Henceforth, Top Gloves Limited is truly a
company worth investing in.

FINANCIAL ANALYSIS
References
DeFusco, R.A., McLeavey, D.W., Pinto, J.E., Anson, M.J. and Runkle, D.E., (2015) Quantitative
investment analysis. United States: John Wiley & Sons.
Du, W., Tepper, A., and Verdelhan, A. (2018) Deviations from covered interest rate parity. The
Journal of Finance, 73(3), pp 915-957.
ElFayoumi, K. (2018) The balance sheet effects of oil market shocks: An industry-level analysis.
Journal of Banking and Finance.
Griffin, P. A. (2015) Financial Statement Analysis. Finding Alphas: A Quantitative Approach to
Building Trading Strategies, pp 119-125.
Kossar Rubber Industries, (2017) Annual Report [Online] Available from
https://kossan.com.my/investors/reports.html [Accessed on 22nd February 2020]
Kossar Rubber Industries, (2018) Annual Report [Online] Available from
https://kossan.com.my/investors/reports.html [Accessed on 22nd February 2020]
Laitinen, E.K. and Laitinen, T., (2018) Financial reporting: profitability ratios in the different
stages of the life cycle. Archives of Business Research, 6(11).
Muritala, T. A. (2018) An empirical analysis of capital structure on firms’ performance in
Nigeria. IJAME.
Riyadi, S. (2017) Financial performance efficiency of Indonesia government banks in improving
profitability. International Journal of Financial Innovation in Banking, 1(3-4), pp 239-252.

FINANCIAL ANALYSIS
Robinson, T. R., Henry, E., Pirie, W. L., and Broihahn, M. A. (2015) International financial
statement analysis. United States: John Wiley and Sons.
Supermax Industries, (2017) Annual Report [Online] Available from
http://www.supermax.com.my/html/annual_reports.aspx[Accessed on 22nd February 2020]
Supermax Industries, (2018) Annual Report [Online] Available from
http://www.supermax.com.my/html/annual_reports.aspx[Accessed on 22nd February 2020]
Top gloves Industries (2017) Annual Report [Online] Available from
https://www.topglove.com/annual-report/ [Accessed on 23rd February 2020]
Top gloves Industries (2018) Annual Report [Online] Available from
https://www.topglove.com/annual-report/ [Accessed on 23rd February 2020]
Uechi, L., Akutsu, T., Stanley, H. E., Marcus, A. J., and Kenett, D. Y. (2015) Sector dominance
ratio analysis of financial markets. Physica A: Statistical Mechanics and its Applications, 421, pp
488-509.
Weygandt, J.J., Kimmel, P.D. and Kieso, D.E., (2015) Financial & managerial accounting.
United States: John Wiley & Sons.

FINANCIAL ANALYSIS
Appendix
Kossar Rubber Industries
Berhad Top Glove Industries Supermax Industries
LIQUIDITY
2016 2017 2018 2016 2017 2018 2016 2017 2018
Current
Assets
676053 823643 866411 133673
8
125135
6
161929
5
58354
4
63857
4
57208
9
Current
Liabilities
336399 413182 486782 690909 795738 145104
4
45920
6
57059
6
56621
5
Quick Assets 465382 610693 617404 107305
9
935581 111110
9
42165
8
44891
3
38424
3
Current
Liabilities
336399 413182 486782 690909 795738 145104
4
45920
6
57059
6
56621
5
SOLVENCY
2016 2017 2018 2016 2017 2018 2016 2017 2018
Debt 477408 686793 805893 823303 925745
287679
2
62702
3
71971
2
67695
5
Equity
107419
6 489236 455347
182583
9
206443
2
239376
8
10175
41
10702
35
10227
10
EBIT 215959 235989 264351 447813 356657 563916
22241
5
11900
3
17587
8
Interest
Expense 10035 11324 19504 5611 6314 35321 15073 11064 13984
Debt 477408 686793 805893 823303 925745
287679
2
62702
3
71971
2
67695
5
Total Assets
155190
4
186506
4
214822
7
264914
2
299017
7
527056
0
16445
65
17899
49
16996
66
PROFITABILIT
Y
2016 2017 2018 2016 2017 2018 2016 2017 2018
Net income
171048 184235
204599 362439 330529 437906 14402
3
70294 11014
2
Net sales 166799
6
195762
7
214057
1
288851
5
340917
6
421448
2
15495
28
11268
79
13044
59
Net income 171048 184235 204599 362439 330529 437906 14402
3
70294 11014
2

FINANCIAL ANALYSIS
Net Equity 107419
6
117827
1
134237
4
182583
9
206443
2
239376
8
10175
41
10702
35
10227
10
Gross profit 721940 807483 876621 595546 605319 846871 24366 41735 2106
Net sales 166799
6
195762
7
214057
1
288851
5
340917
6
421448
2
15495
28
11268
79
13044
59
EFFICIENCY
2016 2017 2018 2016 2017 2018 2016 2017 2018
Net Sales 166799
6
195762
7
214057
1
288851
5
340917
6
421448
2
15495
28
11268
79
13044
59
Average Total
Assets
150396
4
170848
4
116736
6
260264
2
284565
3
413036
9
15939
25
17172
57
17448
08
Accounts
receivable *
365
121374
910
137795
895
159295
855
126180
500
153062
385
235855
335
85272
760
86965
995
68639
710
Credit sales
166799
6
195762
7
214057
1
288851
5
340917
6
421448
2
15495
28
11268
79
13044
59
MARKET
VALUE
2016 2017 2018 2016 2017 2018 2016 2017 2018
Market price 6.59 6.49 4.65 0.81 1.11 1.77 3.36 2.11 1.59
EPS 26.13 14.24 15.62 28.83 26.38 33.92 21.36 16.18 10.03
Kossar Rubber Industries
Berhad
Top Glove
Industries
Supermax
Industries
LIQUIDITY 2016 2017 2018
201
6
201
7
201
8
201
6
201
7
201
8
Current
Ratio
Current Assets 2.01 1.99 1.78 1.93 1.57 1.12 1.27 1.1
2
1.01
Current
Liabilities
Quick Ratio
Quick Assets 1.38 1.48 1.27 1.55 1.18 0.77 0.92 0.7
9
0.68
Current
Liabilities

FINANCIAL ANALYSIS

FINANCIAL ANALYSIS
Kossar Rubber
Industries Berhad
Top Glove
Industries
Supermax
Industries
SOLVENCY
2016 2017 2018
201
6
201
7
201
8
201
6
201
7
201
8
Debt to Equity Debt
0.44 1.40 1.77 0.45 0.45 1.20 0.62 0.6
7
0.66
Equity
Times interest
coverage ratio EBIT
21.52 20.84 13.55 79.8
1
56.4
9
15.9
7
14.7
6
10.
76
12.5
8
Interest
Expense
Debt to Total
Assets Debt
0.31 0.37 0.38 0.31 0.31 0.55 0.38 0.4
0
0.40
Total Assets
Kossar Rubber
Industries Berhad
Top Glove
Industries
Supermax
Industries
PROFITABILITY 2016 2017 2018
201
6
201
7
201
8
201
6
201
7
201
8
Net Profit
Net income 10.25
%
9.41
%
9.56
%
12.5
5%
9.70
%
10.3
9%
9.29
%
6.2
4%
8.44
%
Net sales
Return on Equity
Net income 15.92
%
15.64
%
15.24
%
19.8
5%
16.0
1%
18.2
9%
14.1
5%
6.5
7%
10.7
7%
Net Equity
Gross Profit
Margin
Gross profit 43.28
%
41.25
%
40.95
%
20.6
2%
17.7
6%
20.0
9%
1.57
%
3.7
0%
0.16
%
Net sales
Kossar Rubber
Industries Berhad
Top Glove
Industries
Supermax
Industries
EFFICIENCY
2016 2017 2018
201
6
201
7
201
8
201
6
201
7
201
8
Total Asset
turnover
Net Sales 1.11 1.15 1.83 1.11 1.20 1.02 0.97 0.6
6
0.75
Average
Total Assets
Days Receivable
Outstanding
Accounts
receivable *
365
72.77 70.39 74.42 43.6
8
44.9
0
55.9
6
55.0
3
77.
17
52.6
2

FINANCIAL ANALYSIS
Credit sales
Kossar Rubber
Industries Berhad
Top Glove
Industries
Supermax
Industries
MARKET VALUE 2016 2017 2018
201
6
201
7
201
8
201
6
201
7
201
8
Price to Earnings
Ratio Market price
0.25 0.46 0.30 0.03 0.04 0.05 0.16 0.1
3
0.16
EPS