AHB Holdings Berhad: Management Accounting Report and KPI Analysis

This report analyzes the financial statements of AHB Holdings Berhad, a furniture manufacturing company, focusing on key performance indicators (KPIs) for the year 2017. The assessment identifies and discusses five KPIs: Net Profit, Operating Costs, Total Assets, Cash Balance, and Earnings Per Share (EPS). It examines the significance of each KPI, noting the fall in net profit and the increase in total assets and cash balance. The report also analyzes the limitations of using KPIs, such as the continuous monitoring required and the potential for management bias in setting indicators. It concludes with recommendations for AHB Holdings Berhad, including implementing aggressive sales strategies, further reducing costs, and improving the capital structure to enhance financial performance and profitability. The report demonstrates critical analysis and application of financial concepts to the company's performance.

Running head: MANAGEMENT ACCOUNTING
Management Accounting
Name of the Student:
Name of the University:
Author’s Note

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Table of Contents
Introduction......................................................................................................................................2
Discussion........................................................................................................................................2
Key Performance Indicators........................................................................................................2
Analysis of KPI............................................................................................................................3
Limitation of KPI.........................................................................................................................4
Conclusion and Recommendation...................................................................................................5
Reference.........................................................................................................................................6

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Introduction
The main purpose of the assessment is to analyze the financial statements of AHB
Holdings Berhad and the business is engaged in manufacture of furniture. The management of
AHB Holdings Berhad is engaged in innovative production process so that the products of the
company are innovative (Ahb.com.my., 2018). The assessment identifies five key Performance
Indicators (KPI) of the business on the basis of the annual report of the company for the year
2017 and describe the importance of KPI in the business. The assessment would also identify
limitations of KPI of the business.
Discussion
Key Performance Indicators
The key Performance Indicators of the business reflect the key events which determine
the performance of the business. The key indicators which can be identified from the annual
report of the business are listed below in details:
 Net Profit: The net profit of AHB Holdings Berhad is shown to be RM 513,644 for the
year 2017. The profit of the business has fallen significantly in comparison to previous
year and thus it can be said that the performance of the business for the year is in
appropriate. The net profits of the business are the main indicators of financial
performance of a business.
 Operating Costs: The operating costs of any business determine the profitability of a
business and for AHB Holdings Berhad, the operating costs of the business is shown to
have reduced slightly for the year 2017. The decrease in costs can be considered to a
indicator for the success of the business.

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 Total Assets: The total assets which is shown in the balance sheet which is prepared by
the business is shown to be RM 31,885,321. The total assets of the business are shown to
have increased in comparison to previous year analysis which is favorable for the
business. The total assets show financial strengths of the business and therefore is
considered as KPI of the business.
 Cash Balance: The cash balance of the business reflects the liquidity position of the
business and thereby are considered to be one of KPI of the business. The closing cash
balance is shown in the cash flow statement and also in balance sheet of the business and
the same is shown to have increased in comparison to previous year analysis (Parmenter,
2015). The cash position always is considered to be an important factor in the operations
of the business.
 Earning Per Share: The Earning Per Share (EPS) of the business reflect the profit
generated by the business per shares for the owners of the business. The EPS of the
business is shown to have fallen and the same is shown to be RM 1.60 per share. The
EPS of the business are the basis which are considered by potential investors before they
take any investment decisions.
Analysis of KPI
The KPI of the business which are identified above are considered by not only the
management but also by the potential investors to be success areas of the business. The net profit
of the business is shown to have fallen which may be due to the fall in sales of the business and
therefore the profitability of the business is shown to be affected (Kylili, Fokaides & Jimenez,
2016). In this aspect it can be said that the business has underperformed and the business needs

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to improve the profitability of the business. The net profits rate has fallen as shown in the annual
report of the business.
The operating costs of the business is shown to have reduced in 2017 which is shown to
be a favorable fact and the same also shows that the operational management of the business is
effectively carried out by the management of the business. The savings in operating costs of the
business results in enhanced profitability of the business. Thus, the operating costs of the
business is shown to be profitable for the business.
The total assets reflect the financial strength of the business and is made of both current
and non-current assets of the business. The total assets are also indicators of financial health of
the business as the business earns its revenue on year to year basis using the fixed and current
assets of the business. Increase in the total assets of the business signifies financial strengths The
total assets of the business is therefore considered to be one of the KPI of the business.
The cash balance of the business reflects the cash position of the business and therefore
must be considered by the management of the business. The cash balance is shown to have
increased which reveal that business is performing well in this area. The liquidity of the business
is a crucial part of business as it determines the ability of the business to pay off its debt.
Limitation of KPI
The limitation which can be identified relating to the KPI of the business are listed
below:
 The indicators which are set by the business cover vast items and the same needs to be
followed up by the business on continuous basis which is a vigorous task for the business.

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 The setting process of KPI of a business is on the management of the company and the
judgement of the management which might not be able to ident6ify more significant
indicators of the business.
 The key performance indicators of a business should be linked with the goals and
objectives of the business which is most of the situation not the case.
Conclusion and Recommendation
The analysis of the above KPI of AHB Holdings Berhad reveals that the business is able
to maintain performance in most of the indicators except profitability which has reduced
significantly as shown in the annual report. The KPI of the business are shown to be related to
profitability and liquidity of the business and the same are also consistent with the goals and
objectives of the business. The recommendation which can be suggest to the management of
AHB Holdings Berhad are given below:
 The management needs to follow aggressive sales strategy in order to improve the sales
of the business.
 The business needs to further reduce the costs of the business which can also improve the
profitability of the business.
 The management of the company needs to improve the capital structure mix of the
business so that the business can finance the activities of the business properly.

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Reference
Ahb.com.my. (2018). [online] Available at: http://www.ahb.com.my/Annual%20Reports/AHB
%20Annual%20Report%20FY2017.pdf [Accessed 11 Nov. 2018].
Kylili, A., Fokaides, P. A., & Jimenez, P. A. L. (2016). Key Performance Indicators (KPIs)
approach in buildings renovation for the sustainability of the built environment: A
review. Renewable and sustainable energy reviews, 56, 906-915.
Parmenter, D. (2015). Key performance indicators: developing, implementing, and using
winning KPIs. John Wiley & Sons.