Financial Performance Analysis Report: Amway and MUI Group Comparison

This report presents a financial performance analysis of Amway and MUI Group, two consumer product and service companies listed on Bursa Malaysia. It begins with an introduction to both companies, detailing their establishment, business activities, and market presence. The report then explains the objectives of financial statement analysis, emphasizing its role in assessing an organization's financial health and performance. The core of the analysis involves a comparative vertical analysis of the companies' financial statements for the years 2018 and 2019, examining key financial ratios such as gross margin, operating margin, and net profit margin. The report concludes with a comparison of the companies' financial positions and performances, offering insights into their strengths, weaknesses, and overall financial stability, based on the analysis conducted. The report fulfills the requirements of the assignment brief by providing a detailed assessment of the companies' financial health and performance, using comparative vertical analysis.

Financial
Performance
Analysis

Contents
Contents...........................................................................................................................................2
1. INTRODUCTION.......................................................................................................................3
MAIN BODY...................................................................................................................................4
2. Main purpose of analysis financial statement:.........................................................................4
3. Vertical analysis:......................................................................................................................6
4. Comparison of the companies’ financial position and performance:.....................................8
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

1. INTRODUCTION
Finance is the element which is necessary for the companies for running its activities.
Money is necessary element of business enterprises as it is consider as source of finance which
help in run business operations in effective manner in order to maintain stability of business
within the competitive environment. Statement of finance is formulated for finding position of
organization. These documents include income statement, balance sheet and cash flow. This
report is about financial statement analysis for the company’s. The company’s which are
includes for this report is Amway, MUI group. These are the consumer service company’s.
Financial analysis is the method by which valuations; campaigns, financial plans and
other money exchanges are determined to determine their presentation and appropriateness.
Monetary analysis is routinely used to establish whether a stable, distributable, mobile or
productive element is sufficient to guarantee a financial firm. Money analysis is used to evaluate
cash patterns, establish a cash flow approach, build long-range plans for business movement, and
identify profitable businesses or organizations. This is done through the merging of numbers of
money and information. A cash analyst will fully verify an organization's tax summaries: payroll
call, resource report, and income definition. Liquidity analysis can be conducted for both
corporate and profit accounts.
Amway (Malaysia) Berhad Holdings (Amway) is a company owned company. The
Company, through its sponsors, is heavily involved in the acquisition of consumer products
primarily under the Amway brand. Amway offers a range of items, including nutrition and
health, under the Nutrilite brand; management of skin health and beauty, under the Artistry
brand; household items including clothing, vehicle care items and household cleaners; individual
considerations, including Glister's oral considerations, Santique cosmetics and hair care items
and Home Tech, including the Atmosphere Air Treatment Frame, eSpring Water Treatment
Frame, and iCook Cookware. Amway was founded in 1995 and was headquartered in Shah
Alam, Selangor, Malaysia. The group is listed in Bursa Malaysia under the main market. This
report includes topics which are about companies, objectives for financial statements analysis,
Financial statement analysis for companies. Apart from this it includes topics which are vertical
financial analysis for the company’s, financial position for the company’s.
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MAIN BODY
About the company’s:
Amway Holding Berhad: It is the Malaysia multi national company which has business for
retail for beauty, home, retail goods, services. The company is founds for year 1959, the
headquarter situated in Malaysia. Amway holdings Berhad its sister company Alticor which are
views their sales for $8.4 for the 2019. It runs its business for various countries. The company
has invest for various countries as the Federal Trade Commission which aligns Pyramid schemes
practices. The company’s has retail goods which helps for better performance which helps for
higher profitability for the businesses (Aljarrah and Groof, 2017).
MUI properties Berhad: It is incorporated in Malaysia. It founded for 1965, headquarter
situated in Malaysia. The company is the investment holding company. MUI Properties Berhad
is an investment management company based in Malaysia. Components of the Company include
Real Estate and Investment Retention. Subsidiaries of the Company are involved in the
development of goods, the sale of oil products and the investment of goods The company has
property development projects in Bandar Springhill.
2. Main purpose of analysis financial statement:
Every business organization needs to analysis their performance of operations for this
purpose they use to analysis their financial statement. This term defines as systematic procedure
which helps in finding out strength as well as weakness of organization and financial stability by
evaluating and measuring final accounts.
According to Metcalf and Titard, analysing statement of finance “is the procedure of examining
the relation between the elements of financial statements to understand position of business
organization.
Manager use to analysis and interpret financial statements in order to evaluate secret behind
statistics data use in statement of finance. These statement help in recognize value &
interpretation of the financial statements in order to predict future income, interest rates & debt
maturity which includes short as well as long term debt and the benefits of a reasonable interest
policy (Minhas, Mishra. and Swami, 2017).
Financial statement analysis is the term which used to define the meaning of how effectively
organization able to generate revenue in order to run their business activities. Manager use to
analysis their financial statement on the basis of using principle of translation & analysis. The
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term analysis it related to evaluate and measure numerical data and information which is
provided under the financial reports and on the other side, interpretation of these data is related
with define significance of each data item which is included under financial statement.
1. A true and correct view of the financial situation
The term Balance Sheet indicates the monetary position of organization i.e. it includes assets &
liabilities. By calculating total value of these items help in identifying difference between them.
Total amount includes invested capital of owner and value of revenue earn for the given time
period.
The decline in total value is a bad indicator of growth. This gives managers a variety of
indicators to improve the financial situation.
The financial situation is presented in recent year as well as previous year. Increment in value of
assets defines volume growth and a decrease in debt reflects the return on business potential.
Therefore, the main purpose of truth and impartiality is relevant here.
3. Vertical analysis:
Direct analysis is a method of analyzing financial statements that lists each item of the
line as a percentage of the basic figure in the statement. The first line of the statement always
shows a basic value of 100%, each item of the next line represents a percentage of its total. For
example, each line of income statement represents the percentage of total sales, while each line
of cash flow statement represents each inflow and outflow as a percentage of total cash flows.
In context to Amway & MUI, Direct analysis in the income statement, balance statement
or cash flow statement to understand the size of each line item throughout, to understand key
trends occurring over time, compare multiple companies of different sizes or compare company
financial statements to the centre of their industry. The term income statement is used for define
capability of generate profit on the basis of this statement performance of organization has been
determine by evaluating profit and expenses value. On the basis of finding out difference
between revenue generate and expense incurred manager able to find out value of profit and loss
incurred for given time period.
Decreased income directly effect on the margin rate of organization. Cost increases have a
volatile effect of declining profits.
If accounting standard are not match it display that managers use revenue and expenditure
according to their own way.
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Therefore, truth and fairness are an important factor in formulating an income statement.
It is also considering as relevant factor of formulation of financial statement as on the basis of
preparing these statement, manager able to find out number of resource organization have to run
their operations. Theses includes financial as well as non-financial resource. Amway & MUI,
Manager by formulating of income statement, budget and cash flow statement able to understand
changes series between these resource as well as demand of essential financial resource which is
relevant for operating business activities.
Amway & MUI, This data helps to better understand the business organization as alteration in
the use and accessibility of resources help participants make financial judgement.
4. Provide Data on Profitability
Financial statements are useful in order to find out level of profitability to which organization
generate by selling their business products. On the basis of formulation of income statement
manager able to find out net revenue which organization for specific period of time and on the
basis of using ratio analysis difference between previous and current year performance has been
evaluated. On the bias of that manager formulate strategies regrading with increment in the level
of profitably ratio.
In context to Amway & MUI, Using percentages to perform these financial analyses and
comparisons makes the data you collect more meaningful and understandable. Because the
vertical analysis method uses percentages to represent each line item, you can equally compare
company account estimates related to that other company or company rating regardless of
whether the total sales of another company or industry rating is higher or lower than the
company you are analysing (Supriyadi, 2020).
When you want to make a direct analysis of a financial statement that does not show each line
item as a percentage, you can find the percentage of each line item by dividing the value of the
line by the base number and multiplying the division by 100.
For Amway:
Gross margin 20.48% 30.14%
Gross Margin 24.98% 31.96%
Operating margin 6.38% 15.28%
Operating margin 7.32% 14.64%
Pretax margin 6.31% 15.85%
Pretax margin 7.31% 14.28%
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Net Profit margin 4.96% 12.61%
Net Profit margin 5.5% 11.16%
MUI Properties Berhad:
Quick Ratio 6.22
Current Ratio 11.03
As per the calculation it views that MUI Properties Berhad
has better performance for the 2018, 2019.
All such decisions are based on the financial statements.
Owners of business corporations don't have time to observe and measure performance of their
organization, thus they need personal who can manage the overall financial capital and
operations of business in effective manner, for this purpose they hire managers. For maintain
financial performance their select financial manager who took relevant decision and adopt those
strategies which help in effective and optimality utilize financial resource in effective manner.
Effectiveness means that the goal is achieved or not. Therefore, owners may wonder if the
decision made by their management is appropriate or even necessary. It also indicates whether
internal policies are effective (Mitchell, Nørreklit and Nørreklit, 2017).
Efficiency defines that the targets are met in a timely manner. Owners can consider their
judgement by looking at the maximum profit margin and the total profit margin of current year.
4. Comparison of the companies’ financial position and performance:
Financial Performance - Understanding Its Concepts and Its Importance
The term financial performance define as level of organization at which they are able to attain
goals. It is consider as essential element , which use for mitigate risk. Financial statement help in
measuring performance of organization and on the basis of that manager evaluate it with rival
companies. Which will further help in finding out position of business organization in
competitive market. Investor on the basis of reviewing financial statement able to determine or
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take decision regarding in which company they invest their capital which further help in
increasing their source of finance.
This useful in finding answer following questions
1. What is the monetary status of firm period of time?
2. How is the company's financial performance in a particular period?
In context to Amway & MUI, Financial manager by formulating financial statement able to find
out answer of these questions. On the basis of identifying value of profit and measuring
difference between assets as well as liabilities they are able to understand relevance of financial
capital . They by formulating of trial balance able to find error and on the basis of that prepare
policies which useful in find out relevant solution of issue related with finance.
It may reflect the status of a period as in the case of a Spreadsheet Sheet, or it may indicate a
series of activities in a particular period, as in the case of a Benefit Statement. Therefore, the
term ‘financial statements’ usually means two basic statements: the Balance Sheet and the Profit
Statement.
The Balance Sheet indicates the financial status of the firm for a period of time. Provides a
summary that can be considered as a still image. "Balance Sheet is a summary of the firm's
financial position on a given date showing the total assets = Total liabilities + Owner equity."
The Profit Statement (referred to in India as a statement of profit and loss) reflects the company's
performance over a period of time. "A statement of income is a summary of the income and
expenses of a company's business over a period of time, ending in revenue or loss of time."
However, the financial statements do not provide all the information related to a company's
financial performance, but do provide some very useful information, highlighting two key factors
for profit and financial viability.
Financial Performance Analysis
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Amway & MUI, Financial performance analysis involves the analysis and interpretation of
financial statements in such a way as to maximize the profitability and financial viability of the
entity. The system of financial analysts provides important methods of financial analysis
(Rachma, and Ismaeni, 2020).
Areas of Financial Performance Analysis:
Amway & MUI, Financial analysts often evaluate the company's production and performance
(overall business performance), profitability, asset performance, operating performance, fixed
asset performance, fund performance and public performance. Analysis of various financial
estimates includes
1. Performance analysis
2. Financial structure analysis
3. Job Analysis
4. Benefit Analysis
Significance of Financial Performance Measurement:
The interests of the various related parties are affected by the financial performance of the
company. The type of analysis varies depending on the specific interest of the group involved:
Commercial lenders: are interested in the company's financial transactions
Bond holders: are interested in the company's cash flow (company structure inspections, capital
resources and expenditures, profit margins, and future profit estimates)
Investors: are interested in the current and future earnings and stability of the earnings (estimates
of corporate profits and financial position)
Management: is interested in internal control, better financial position and better performance
(assessment of current financial position, assessment of opportunities in relation to the current
position, return on investment given to various company assets etc (Rahayu and Riana, 2020).
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Amway:
 Total Revenue
 972.3
 966.3
Cost of Revenue
 73
2
.
0
 72
2
.
4
 Gross Profit
 240.3
 243.9

Selling, General and Administrative
 176.7
 184.9
 Research and Development
 Special Income/Charges
 0.0
 0.1
 Operating Expenses
 902.1
 901.1
 Operating Income
 70.2
 65.2
 Operating Expenses
 902.1
 901.1
 Operating Income
 70.2
 65.2
 Net Interest Income
 -
 -0.1
 Other Income/Expense, Net
 -
 -0.1
 Pre-tax Income
 70.2
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 64.6
 Provision for Income Ta
 -
 -
 Net Income
 54.5
 51.2
MUI Properties Berhad:
Revenue 25,644 15,434
Cost of sales (15,841) (8,681)
Gross profit 9,803 6,753
Other income 482 740
Administrative expenses (3,064) (2,694)
Other expenses (181) (261)
Exceptional items (1,758) 1,280
Finance costs (38) (37)
Profit before taxation 5,244 5,781
Income tax expense (2,132) (2,178)
Profit for the financial period 3,112 3,603
CONCLUSION
From the above report it has been concluded that financial statements are those which
helps company for negotiate the funds which helps for the better performance which helps for
the higher profitableness for the business organization. Finance is the element which is necessary
for the companies for running its activities. Money is necessary element for the company’s as it
provides the funds for the institution activities which helps company for better execution which
helps for higher gain for the business concern. Financial statements Helps Company’s for
knowing its business position. These financial statements includes balance sheet, income
statement etc. These statements help companies for knowing its financial position which helps
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for the better performance which helps for the higher profitability for the businesses. These
statements useful in resolve conflict arise between parties. Provide data on business integrity in
the financial world. Determining right time to renew factory assets with other one with increased
capabilities. Deciding whether to expend in other organizations to enlarge the empire. Assist the
authorities with data on the payment of taxes, etc. The term stakeholder defines as parties which
are directly or indirectly interested in organization's activities, these includes, director,
employees, public, media, manager, trainee management department and media.
Worker need to decide whether they will continue to be part of organization or not. The
client needs to decide whether to place additional orders. Providers need to conceive about
whether they will offer or not. Financial services providers also have to determine regarding
generating fund the business. The whole community needs to conceive about whether they can
invest in the business. Managers have to determine on dividends, raising revenue, hiring more
staff, access to resources and many other things to keep the business going. In every business
organization manager focus on formulate their financial statement in such a manager which can
easily understand by end user of these statement. End user includes, owners, shareholders, of
organization. On the basis of reviewing financial statement they able to recognize performance
of organization as evaluate those activities which become the reason of generate high rate of cash
outflow. On the basis of that they prepare plan through which they can control cost and expense
which become reason of generate high cash outflow.
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