100
CENTRE FOR FOUNDATION STUDIES
FHBM1224 FINANCIAL MANAGEMENT
SEMESTER 202101
Lecturer: Ms. Haslina binti Ahmad Fauzi
Company: GDEX Bhd. & POS Malaysia Bhd.
Group: Group 1
Tutorial Group: T8
Prepared by
Lecture
No ID No. Name
Group
Signature
1 2001767 Lai Hui Yen 1
2 2003932 Lee Jia Yin 1
3 2003344 Oo Ming Zhou 1
4 2001364 Tan Zhe Yan 1
5 2001381 Tang Pei Ting 1
6 2003173 Wong Mei Yi 1
7 2001425 Wong Yi Tng 1
Date of submission:
22/03/2021
CONTENT
No. Components Page No.
Questions Paper and Making Scheme 1-3
1.0 Ratio Analysis
1.1 Liquidity Ratio-quick Ratio 4
1.2 Asset Management Ratio-Total Asset Turnover 5
1.3 Financial Leverage Management Ratio-Debt Ratio 6
1.4 Profitability Ratio-Net Profit Margin 7
1.5 Market-Based Ratio-Price to Earnings Ratio 8
2.0 Financial Report
2.1 Company Background 9
2.2 Investment Decision 10-13
3.0 Reference 14-15
4.0 Appendix 16-23
UNIVERSITI TUNKU ABDUL RAHMAN
FHBM1224 FINANCIAL MANAGEMENT
JANUARY 2021
MARKING SCHEME
Question 1 [50 Marks]:
(a) For each ratio categories (Liquidity, Asset Management, Financial leverage
Management, Profitability, and Market-based), choose and compute any ONE (1)
ratios. Analyze the results obtained in order to evaluate the performance of the
companies and to assess which is a better company to invest in. The calculations and
comments given must be based on the latest annual report either for the year 2019 or
year 2020.
Company A
Ratio Categories Computation Explanation Total
*mark given based
on the workings with
formula
1m Each Ratio Comparison 2.5m
(1.0m) (0.5m)
1. Liquidity
2. Asset Management
3. Financial Leverage
4. Profitability
5. Market-Based
Grand Total 12.5m
1
Company B
Ratio Categories Computation Explanation Total
*mark given based
on the workings with
formula
1m Each Ratio Comparison 2.5m
(1m) (0.5m)
1. Liquidity
2. Asset Management
3. Financial Leverage
4. Profitability
5. Market-Based
Total 12.5m
(b) Write a report to Finance Director of your findings in part (a) and provide relevant
reasons to support your decision on your selected company that you plan to proceed
with investment.
Excellent Good Satisfactory Poor Very Poor Total
5 4 3 2 1
Company Provides a Provides a Provides a Provides a Provides a
Background very well- well-organized moderately- disorganized disorganized
organized and and organized and and not and not
understandable understandable understandable understandable understandable
background of background of background of background of background of
the firm with the firm with the firm with the firm with the firm with
relevant relevant relevant relevant non-relevant /5
information information information information information
related to the related to the related to the related to the and not related
analysis. analysis. analysis. analysis. to the analysis.
Investment Provides an Provides an Provides an Provides an Provides an
Decision investment investment investment investment investment
decision based decision based decision based decision based decision based
on excellent on good on moderate on poor on very poor /16
2
justification. justification. justification. justification. justification.
Creativity Provide a very Provide a Provide a very Provide a Provide a
and format well-organized well-organized moderately - disorganized disorganized
of report and and organized and and and not
understandable understandable understandable understandable understandable /4
report. report. report. report. report.
Total /25
Overall Assessment:
Section Total Marks
1 (A)
1 (B)
Formatting
Grand Total
3
Part A
1.0 Computation of Ratio Categories
1.1 Liquidity Ratio (Quick ratio)
GDEX Bhd.
2018 2019
current assets−inventories current assets−inventories
Quick ratio = current liability
Quick ratio = current liability
376,343,548−1,078,365 374,816,477−1,465,802
= 37,042,343
= 49,411,340
= 10.13x = 7.56x
GDEX has RM 10.13 in liquid current GDEX has RM 7.56 in liquid current assets
assets for every RM1 in current liability. for every RM1 in current liability.
The quick ratio of GDEX has decreased by 2.57x in 2019 compared to 2018.
POS Malaysia Bhd.
2018 2019
current assets−inventories current assets−inventories
Quick ratio = current liability
Quick ratio = current liability
1,492,093000−14758000 1,432,930,000−11418000
= = 1,278,686,000
1,210,592,000
= 1.22x = 1.11x
The company has RM1.22 in liquid current The company has RM1.11 in liquid current
assets for every RM1 in current liabilities. assets for every RM1 in current liabilities.
The quick ratio of the company has decrease by 0.11x in 2019 compared to 2018.
4
1.2 Asset Management Ratio (Total asset turnover)
GDEX Bhd.
2018 2019
Sales Sales
Total asset turnover = Total Assets Total asset turnover = Total Assets
292,988,807 313,857,807
= 518,055,256 = 555,635,423
= 0.57x = 0.56x
For every RM 1 in total assets, GDEX For every RM 1 in total assets, GDEX
generated RM0.57 in sales. generated RM 0.56 in sales.
The total asset turnover ratio of GDEX has decreased by 0.01x in 2019 compared to 2018.
POS Malaysia Bhd.
2018 2019
Sales Sales
Total asset turnover = Total Assets Total asset turnover = Total Assets
2,472,578,000 2,355,117,000
= 3,374,615,000
= 3,281,938,000
= 0.73x = 0.72x
For every RM 1 in total assets, Pos Malaysia For every RM 1 in total assets, Pos Malaysia
Berhad generated RM 0.73 in sales. Berhad generated RM 0.72 in sales.
The total assets turnover of the company has decrease by 0.01x in 2019 compared to 2018.
5
1.3 Financial Leverage Management Ratio (Debt ratio)
GDEX Bhd.
2018 2019
Total Debt Total Debt
Debt ratio = Total Assets Debt ratio = Total Assets
68,374,056 76,471,031
= 518,055,256 = 555,635,423
= 13.2% = 13.76%
GDEX finances 13.2% of its assets with GDEX finances 13.76% of its assets with
debts. debts.
The percentage of assets financed by debts of GDEX has increase by 0.56% in 2019
compare to 2018.
POS Malaysia Bhd.
2018 2019
Total Debt Total Debt
Debt ratio = Total Assets Debt ratio = Total Assets
1,427,229,000 1,566,501,000
= 3,374,615,000 = 3,281,938,000
= 42.29% = 47.73%
Pos Malaysia Berhad finances 42.29% of its Pos Malaysia Berhad finances 47.73% of its
assets with debts. assets with debts.
The debt ratio of the company has increase by 5.44 % in 2019 compared to 2018.
6
1.4 Profitability Ratios (Return on equity)
GDEX Bhd.
2018 2019
Net Income Net Income
Return on equity = Shareholders' Equity Return on equity = Shareholders'Equity
23,503,209 32,524,183
= 449,681,200 = 479,164,392
= 5.23% = 6.79%
For every RM 1 invested by shareholders, For every ringgit Malaysia invested by
GDEX generated RM0.05 in profits. shareholders, GDEX generated RM0.06 in
profits.
GDEX generated 1.56% more in profits for every ringgit Malaysia invested by
shareholders in 2019 compared to 2018..
POS Malaysia Bhd.
2018 2019
Net Income Net Income
Return on equity = Shareholders' Equity Return on equity = Shareholders'Equity
94,629,000 (165,015,000)
= 1,947,386,000 = 1,715,437,000
= 4.86% = -9.62%
For every RM 1 invested by shareholders, For every RM 1 invested by shareholders,
Pos Malaysia Berhad generated RM 0.04 in Pos Malaysia Berhad generated (RM 0.09) in
profits. profits.
The profitability ratio of the company has decreased by 4.76% in 2019 compared to 2018.
7
1.5 Market-based Ratio (Price to earnings)
GDEX Bhd.
2018 2019
Market Price per Share Market Price per Share
Price to earning = Earning per Share
Price to earning = Earning per Share
0.36 0.24
= 0.42 = 0.58
= 0.86x = 0.41x
Investors were willing to pay RM 0.86 for Investors were willing to pay RM 0.41 for
every ringgit Malaysia of earnings per share every ringgit Malaysia of earnings per share
that GDEX produced. that GDEX produced.
Investors were willing to pay RM 0.45 less for every ringgit Malaysia of earnings per share
that GDEX produced in 2019 compared to 2018.
POS Malaysia Bhd.
2018 2019
Market Price per Share Market Price per Share
Price to earning = Price to earning = Earning per Share
Earning per Share
3.53 1.83
= 11.9 = (21.2)
= 0.3x = -0.09x
Investor were willing to pay RM0.30 for Investor were willing to pay (RM0.09) for
every dollar of earnings per share that every dollar of earnings per share that
company produced. company produced.
The price to earnings ratio of the company has decrease 0.21% in 2019 compared to 2018.
8
Part B
2.0 Financial Report
2.1 Company Background
GDEX was established in 1997, and its main office is in Petaling Jaya, Selangor,
Malaysia. The mission of the company is to provide the most trustworthy service to
customers, and its vision is to provide effective solutions which are value for money and
provide good service for the customers. From the year 2013 to 2016, GDEX received the
Frost & Sullivan Malaysia Excellence Awards – Domestic Express Service Provider of the
Year for the Private Sector awarded to GD Express Sdn Bhd. The award was given to GDEX
in appreciation for its outstanding achievements in the industry. The main service of this
company is to provide delivery for the markets domestically and globally as well as provides
shipping, logistics, and real estate investment services. There have two types of international
express carriers which are international delivery service and freight service. Freight service is
just for heavy shipments to other countries, and the international delivery service is for door-
to-door delivery and the company charges an affordable price for delivering service.
Pos Malaysia Berhad is Malaysia's main provider of postal services and has the
largest delivery service. The company’s mission is to create a logistics network that
encourages the growth and development of customers’ benefits; its vision is to motivate
customers to have possibilities. Pos Malaysia won 3 awards at the 2017 Frost & Sullivan
Malaysia Excellence Awards. The company is involved in three divisions which are postal,
courier, and retail. Mail provides the provision of essential mail services to organizational or
individual clients. Courier provides courier options to local and international destinations by
sea, air, and land. Retail provides off-site service which is used to pay bills and certain
financial services.
9
2.2 Investment Decision
It is advised that investment be made to GDEX company based on the following reasons:
1. GDEX has a healthier financial ratio compared to POS Bhd.
Liquidity Ratio (Quick Ratio):
Based on the chart above, it is observed that both companies have a decrease in their quick
ratio in 2019 compared to 2018. However, the preferred investment option is towards GDEX
because the company has a much higher quick ratio than POS concluding GDEX has the
better ability to cover its short-term obligations. It is estimated that GDEX manages its
company’s liquidity better than POS by planning its inventory purchases more cautiously so
that they can cope better when there are threats towards the company.
Financial Leverage Management Ratio (Debt ratio):
The debt ratio gives people an idea of how likely a company is to meet financial distress.
Based on the above chart, both companies had a significant increase in the proportion of
debts used to finance their assets. However, according to Investopedia, a debt ratio of 0.3 to
0.6 is considered balanced for a company, and the lower the debt ratio the better. Hence,
10
GDEX is a better option for investment as it has a very healthy debt ratio compared to POS’s
debt ratio. GDEX is seen to issue more share capitals in the market to obtain finance for its
investment and is considered to very unlikely to meet debts compared to POS.
Market-based Ratio (Price to earnings):
Although the market price per share for GDEX is not as high as POS’s market price per share,
it is still practical to choose GDEX as the better company to invest in. GDEX had a big
improvement in performance during 2019 compared to 2018. Their sales, other operating
income, and other comprehensive income improved significantly and could cover their costs
sufficiently. However, it was the opposite for POS as the company generated a loss in 2019.
Based on the price-to-earnings ratio of both companies, investors can expect better
improvement from GDEX in the future compared to POS.
Profitability Ratio
11
The chart above shows the return on equity of the two companies. The return on equity of
GDEX in the year 2018 and year 2019 is 5.23% and 6.79%. GDEX’s return on equity has
improved by 1.56% in the past two years. The reason GDEX has a better return on equity in
2019 is that GDEX had an increase in net income by RM 9,020,974 and shareholders’ equity
by RM29,483,192 from 2018 to 2017. In the year 2019, GDEX company had a partnership
with RedCargo Logistics, which is the cargo and logistics platform of AirAsia Group Bhd.
This new partnership began on 1 April 2019. They provided GDEX customers by using
AirAsia’s extensive network to efficiently transport and deliver goods with more than 5,000
flights per week in the Asia Pacific. This expansion provided an increase in their net income.
On the contrary, the return on equity of POS Malaysia has decreased by 4.76% in the past
two years. This is because, in 2019, the company has a negative value in their net income.
Therefore, GDEX had a better performance than POS Malaysia for both years 2018 and 2019
and is the better option for investment.
2. GDEX has good reputation and services.
Firstly, GDEX was awarded the 2016 Frost & Sullivan Malaysia Excellence Awards
– Domestic Express Service Provider of the Year for the Private Sector. With their
outstanding performances, they were proved worthy of trust and confidence. Secondly,
GDEX was reported to be doing well in business despite others being threatened by the
Covid-19 pandemic. Since the MCO period, people started spending on online platforms and
are reaching for GDEX’s service. Customers seem to be confident that GDEX promises
satisfaction in its services. GDEX has a well-adapted digital platform, my GDEX, for their
online services. Hence, customers may trust their parcels and shipments to be delivered safely
and on time. Moreover, customers trust the company to follow safety measures strictly with
workers wearing face masks and implementing social distancing whenever encountering
customers. Apart from that, GDEX always brings convenience to their customers and
partners by delivering to customer’s doorstep and letting shippers print consignment notes
themselves and lodge their shipments in any branches of GDEX.
12
3. GDEX is consistently improving and expanding itself.
According to MIDA, the company plans to expand its facilities to support the growth
in the e-commerce market. Firstly, the company intends to improve its IT establishment
structures to facilitate better communication and collaboration with its business partners. This
allows the company to plan for projects and be aware of business opportunities. Furthermore,
GD Express Carrier Bhd (GDEX) and Tasco Bhd will have joint market activities. They are
bringing in more complex logistic services such as inventory management, temperature-
controlled shipments, and more. They target improved competitiveness in their multinational
service and sharing of economies of scale with their capabilities. With better set-ups and
collaboration with strong partners, GDEX will establish more achievements.
In conclusion, GDEX is a better investment option compared to POS Bhd. because
they performed better in financing activities, customers have confidence in GDEX, and
GDEX is always improving themselves in every aspect they can.
13
Reference
Brand identity. (n.d.). Retrieved from https://www.pos.com.my/about-us/our-
company/identity
KONG, S. (2020, May 29). Gdex to still benefit from online purchasing if CMCO is lifted.
Retrieved from The Borneo Post Sdn Bhd: https://www.theborneopost.com/2020/05/29/gdex-
to-still-benefit-from-online-purchasing-if-cmco-is-lifted/
Malaysian Investment Development Authority (MIDA). (2020, December 8). GDEX partners
Tasco to improve logistics delivery services. Retrieved from Malaysian Investment
Development Authority (MIDA): https://www.mida.gov.my/mida-news/gdex-partners-tasco-
to-improve-logistics-delivery-services/
Malaysian Investment Development Authority (MIDA). (2020, November 25). GDEX
Expansion and Diversification Accelerates Malaysia’s E-Commerce Logistics Growth.
Retrieved from Malaysian Investment Development Authority (MIDA):
https://www.mida.gov.my/media-release/gdex-expansion-and-diversification-accelerates-
malaysias-e-commerce-logistics-growth/
POS Malaysia berhad p590-2390785 supplier profile. (n.d.). Retrieved from
https://service.ariba.com/Discovery.aw/ad/profile?key=AN01014528809
POS Malaysia berhad. (n.d.). Retrieved from https://prezi.com/ddwbgo-ekdxi/pos-malaysia-
berhad/
Reuters Editorial. (n.d.). Gdex Bhd. Retrieved from
https://www.reuters.com/companies/GDEX.KL
ShareInvestor - Kok Keong Lian. (n.d.). GD express Sdn Bhd - Home. Retrieved from
https://www.gdexpress.com/malaysia/home/
ShareInvestor - Kok Keong Lian. (n.d.). History & operations. Retrieved from
https://www.gdexpress.com/malaysia/corporate-info/history-operations/
ShareInvestor - Kok Keong Lian. (n.d.). Vision & mission. Retrieved from
https://www.gdexpress.com/malaysia/corporate-info/vision-mission/
14
The Edge Markets - Syahirah Syed Jaafar (March 29, 2019). GDEX forms strategic
partnership with AirAsia's RedCargo Logistics:
https://www.theedgemarkets.com/article/gdex-forms-strategic-partnership-airasias-redcargo-
logistics
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Appendix A
Statement of Profit or Loss and Other Comprehensive Income – GDEX Bhd.
16
Statements of Financial Position – GDEX Bhd.
17
18
Appendix B
Statement of Comprehensive Income – Pos Malaysia Bhd.
19
20
Statement of Financial Position – Pos Malaysia Bhd.
21
22
Appendix C
GDEX Market Share Price
Pos Malaysia Share Price
23
