acc - abc sdn bhd - final
TRANSCRIPT
1.0 COMPANY BACKGROUND
ABC Services was founded by two individuals named John Clixford and H. Mahalingam with
vast experience in both cleaning industry and management skills in 2010 and it was incorporated
to ABC Sdn. Bhd in 2011. Although it was started with a modest amount of capital but today
ABC Sdn. Bhd. is growing fast in every aspect in order to meet the demand of the fast growing
Industry. We are supported by a strong management team comprising people with relevant
technical experiences. Below is ABC Sdn. Bhd. facts:
Authorized capital : RM250,000
Paid Up Capital : RM180,000
NO. of Employye : 55 (28 male & 27 female)
Corporate Office : 3.2-17, Menara Ismail, Jalan Tun Ismail, 50150 Kuala Lumpur
Branch(es) : Penang & Johor
We specialized in hygiene cleaning for healthcare industry, special services such as tile
furnishing, carpet care, blind & window cleaning as well as customized cleaning as per our
client’s request. Our clients range are healthcare, retail, manufacturing, government and small
and medium offices. Some of our clients are Tropic Medical Centre, Sensational group of
companies, Kayu Hitam Sdn. Bhd., Plastics Pro Manufacturing Sdn, Bhd., etc.
We believe that a good health is conducive to the productivity and the quality of our
surrounding. W strived to provide excellent cleaning services to satisfy the challenging need of
1
our customers. Our customers are an evidence for our achievement. Based on our experience in
cleaning industry, we have a competitive edge in the following areas such as our professional
cleaning system is designed to cater our client’s customized need in order to achieve their
requirement based on their budget, our experience technical staff and trained workers aspire to
deliver high quality cleaning services and our modern equipment together with the right choice
and quality of chemical used in executing our task enable us to ensure a better finishing.
Entrusted with the task of your housekeeping services, being a professional people in the
cleaning industry will henceforth take full responsibility of your premises and ensure that we will
employ our best effort in meeting your requirement.
With the fast development in the house keeping department toward achieving certification of
ISO 14000 and the implementation of 5’s in the organization with experienced technical staff
will be able to support and assist in making efforts a reality. As the realization toward the
important of house keeping increase among the industrial society, it is our duty to upgrade our
house keeping requirement in order to the industrial standard. In doing all this we believe that
your business will be a success.
2
2.0 COMPANY OBJECTIVES
The commercial cleaning industry sector has traditionally been flooded with small, privately held
and operated businesses. But then again, there is a lack of professional and standardized service
in the commercial cleaning industry and so there is definitely plenty of room for new players like
us. In fact, the rate of turn-over in the industry is very high because of the number of commercial
cleaning suppliers who fail to deliver a consistently high level of service to their customers.
In order for any commercial cleaning supplier to be successful, it must be run as efficiently as
any other businesses. The employees are well trained and constantly trained by qualified industry
trainers. Our employees deliver consistent results when it comes to cleaning and there are
evaluated by our qualified supervisor. We have grading system for our cleaning staff as well all
our new staff required to undergo two(2) weeks hands on training before they were given the
responsibilities. For healthcare industries, we use innovative cleaning equipment and methods to
remove illness-causing germs and reduce cross-contamination and the spread of infection.
One of the biggest reasons that commercial cleaning companies lose their contracts is due to a
lack of service and non-performance. So, as a commercial cleaning provider, we guarantee 100%
customer satisfaction. This is achieved not only with high level of cleanliness but also with a
follow up on after service. After the cleaning services, if customer is not satisfied, we guarantee
free services again till it is rectified.
In the coming years, many analysts project that the greatest demand for commercial cleaning
suppliers will come from health care, education, nursing homes and other private facilities. As
most economists agree that the commercial cleaning industry is one to watch. As such ABC will
like to expand and diversify in the healthcare industry such as medical and surgical cleaning,
Aircraft cleaning as well as opening franchising opportunities for entrepreneurs.
3
As part of this objective in mind, ABC Sdn. Bhd. primary objectives are to fulfill stakeholders'
expectation as well by meeting company’s objectives by achieving at least a minimum of 10%
market share by the year 2012. Not only that, maximize share holders profit by ensuring that we
constantly improve our service level to achieve the target sales. We aim is to placing ABC as one
of the primary service provider in Malaysia.
Our guarantee to our customers is 100% commitment in providing quality products and services
at competitive prices. We deliver our service in timely manner and with high service level of
customer services satisfaction.
4
3.0 THE MARKET ANALYSIS
The commercial cleaning industry is one of the fastest growing areas in this country. The reason
is simply the fact that cleaning has been, and continues to be, a recession-proof sector. In fact,
despite the global down-turn in the economy, the commercial cleaning industry is expected to
outperform past years in 2010. We are planning to expand our services into three(3) key player
which are healthcare industry, aerospace and franchising industries. This is based on the findings
by our market analyst.
According to Department of Statistic, Malaysia a total of 9,152 establishments operated in health
and social work services in 2010, of which health services recorded the highest number of
establishments, 6,739 establishments (73.6 per cent). Between 2007 and 2010, health services
registered a compounding annual growth rate of 4.7 per cent (http://www.statistics.gov.my/portal
/images/stories/files/LatestReleases/BE/BI/BE2011_KesihatanBI.pdf). Hence, with this growth
we believe we can expand in various form of hygiene services to penetrate this market. Not
many commercial cleaning companies involve in this matter which is consider high costing.
Malaysian Aerospace Industry Outlook stated on their 2009 conference that the industry
recorded RM24.7 billion turnover in 2009. It contributed 3.63% of national 2009 growth of 4 to
6% in 2010. Turnover in 2009 RM600 million was projected to reach RM1 billion by 2011
http://www.bciaerospace.com/malaysia/images/stories/2011%20might%20presentation.pdf).
This clearly gives room for new opportunities for us to penetrate this less concentrated market by
other key players in our industry.
5
ABC Sdn.Bhd. have been planning to expand by creating a franchise opportunities for new
players. According to statistic report self employed for the year 2010 is 1,917.4 higher by 54.7 in
2009. This shows there is a growth interest in doing own business. Thus, creating opportunity
will increase the market share. This directly will increase the total number of ABC’s franchise
companies, annual turnover, sales on product supply, etc.
With new investment capital and forecast business strategic 2012 implementation we believe we
can achieve our stake holder expectation for the year 2012. Thus, achieving at least a minimum
10% of market share is possible.
6
4.0 FINANCIAL BUDGETING
Following is our financial budgeting which provide an important gauge of performance that
investors can use to review our company’s success. The main purpose of creating the financial
budget is to provides the knowledge gap between the company and the outside world, which in
turn reduces our small business’s cost of capital..
We have attached our financial budget for the 2012. This includes income statement 2012,
balance sheet (as at 2012) and cash budget (January 2012 till December 2012). We hope that the
information provided is sufficient to guide investors to invest in our company.
7
4.1 STATEMENT OF FINANCIAL PERFORMANCE
ABC SDN BHDBUDGETED STATEMENT OF FINANCIAL PERFORMANCE
FOR YEAR ENDING DECEMBER 31, 2012
YEAR TO DATE
RM
REVENUE 350,000.00
COST OF GOODS SOLD ( 250,000.00)
GROSS PROFIT 100,000.00 OTHER INCOMES
FD INTEREST RECEIVABLES 25,000.0
0
125,000.00 LESS : EXPENSES
ADVERTISEMENT (3,500.00)
DIRECTOR ALLOWANCE (27,000.00) AUDIT FEE (2,000.00)CASUAL WAGES (19,000.00) CONSULTANCY FEE (1,200.00) DIRECTOR FEE (48,000.00) ELECTRICITY AND WATER (6,000.00) EPF AND SOCSO (8,040.00) INSURANCE (2,250.00)PRINTING AND STATIONERY (660.00)UPKEEP OF OFFICE EQUIPMENT (1,500.00) (119,150.00)
NET PROFIT 5.850.00
8
9
4.2 STATEMENT OF FINANCIAL POSITION
A balance sheet, also known as a "statement of financial position", reveals a
company's assets, liabilities and owners' equity (net worth). The balance sheet, together
with the income statement and cash flow statement, make up the cornerstone of our
company's financial statements. Investors can review ABC's balance sheet to gauge its
financial strength. Reviewing a firm's solvency is key, because the practice tells investors
about the firm's short term financial survivor probability.
Financial-market participants call "going concern ability" a company's probability of
staying in business over a period of 2012 year. A statement of financial condition
provides insight into a company's assets, debts and equity capital. The following will be
our balance sheet budgeting for the year ended 2012.
10
ABC SDN.BHD.’S STATEMENT OF FINANCIAL POSITION AS AT 31/12/2012
11
31/12/2012 RM
FIXED ASSETS
FIXED ASSETS 93,438.
00
CURRENT ASSETS
TRADE DEBTORS 45,545.00
PREPAYMENT AND DEPOSITS 2,500.0
0
CASH AT BANK - CURRENT ACCOUNTS 75,000.0
0
CASH AT BANK - FIXED DEPOSIT (CIMB) 50,000.0
0
CASH IN HAND 1,000.00
INVENTORY 3,000.0
0
177,045.00
CURRENT LIABILITIES
TRADE CREDITORS 60,000.00
ACCRUALS 633.
00
AMOUNT DUE TO DIRECTOR 20,000
.00
OTHER CREDITORS 4,000.
00
84,633.00
NET CURRENT ASSETS 92,412.0
0 185,850.
00
FINANCED BY CAPITAL
SHARE CAPITAL 180,000.00 RETAINED PROFIT 5,850.00
185,850.00
4.3. FORECASTED CASH BUDGET FOR ABC SDN. BHD. AS YEAR 2012
January (actual)
February (projected)
March (projected)
April (projected)
May (projected)
June (projected)
EXPECTED REVENUES
Total Revenue $ 4,500 $ 9,500 $ 6,000 $ 7,500 $ 9,000 $ 11,000
EXPECTED EXPENSES
Staff Salaries & Fringe Benefits $ 2,000 $ 2,000 $ 4,000 $ 5,000 $ 5,000 $ 5,000
Executive Director’s Remuneration $ 3,167 $ 3,167 $ 3,167 $ 3,167 $ 3,167 $ 3,167
Rent $ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000
Supplies $ 5,000 $ 1,000
Telephone $ 300 $ 250 $ 300 $ 500 $ 350 $ 250
Postage $ 150 $ 150 $ 150 $ 150 $ 150 $ 150
Copying $ 100 $ 100 $ 100 $ 100 $ 100 $ 100
Total Expenses $11,717 $ 6,667 $ 8,717 $ 9,917 $ 9,767 $ 10,667
NET INCOME $ <7,217> $ 2,833 $ <2,717> $ <2,417> $ <767> $ 333
Cash on Hand - Beginning $ 2,648 $ <4,569> $ <1,736> $ <4,453> $ <6,870> $ <7,637>
Ending Cash Available(Befor
$ <4,569> $ <1,736> $ <4,453> $ <6,870> $ <7,637> $ <7,304>
12
e Loan Activity)
Total
BudgetJuly
(projected)August
(projected)September (projected)
October (projected)
November (projected)
December (projected)
EXPECTED REVENUES
Total Revenue $
350,000 $ 22,000 $
38,000 $
40,000 $ 45,000 $ 60,500 $ 97,000
EXPECTED EXPENSES
Salaries & Fringe Benefits $ 71,000 $ 8,000 $ 8,000 $ 8,000 $ 8,000 $ 8,000 $ 8,000
Executive Director
$ 38,000 $ 3,167 $ 3,167 $ 3,167 $ 3,167 $ 3,167 $ 3,167
Rent $
12,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000
Supplies $
18,000 $ 4,000 $ 8,000
Telephone $
4,000 $ 300 $ 250 $ 300 $ 500 $ 350 $ 350
Postage $
1,800 $ 150 $ 150 $ 150 $ 150 $ 150 $ 150
Copying $
1,200 $ 100 $ 100 $ 100 $ 1,00 $ 100 $ 100
Total Expenses $ 146,800 $ 12,717 $12,667 $ 16,717 $ 13,717 $ 12,767 $ 20,767
NET INCOME $ 203,200 $ 9,283 $ 25,333 $ 23,283 $ 30,183 $ 47,733 $ 76,233
Cash on Hand - Beginning $ 259,250 $ <7,304> $ 1,979 $ 27,312 $ 50,595 $ 80,778 $ 128,511
Ending Cash Available(Before Loan Activity) $ 468,654 $ 1,979 $ 27,312 $ 50,595 $ 80,778 $ 128,511 $ 204,744
13
5.0 RATIO ANALYSIS
5.1 Quick Ratio
As you can see the below the quick ratio (or quick assets ratio or the acid-test ratio), is a
liquidity indicator that further refines the current ratio of our company by measuring the
amount of the most liquid current assets there are to cover current liabilities. Therefore, a
higher ratio means a more liquid current position.
Formula:
Components:
Quick Ratio = RM126,000/RM84,633
= 1.489%
As of December 31, 20012, with amounts expressed in thousands, ABC Sdn.Bhd. quick
assets amounted to RM126,000 (balance sheet), while current liabilities amounted to
RM84,633.00 (balance sheet). By dividing, the equation gives us a quick ratio of
1.489%. The ratio shown in above calculation is higher. Thus it clearly indicates ABC
company has more liquid position.
14
Variations:
The quick ratio calculate quick assets (the formula's numerator) by simply subtracting the
inventory figure from the total current assets figure. The assumption is that by excluding
relatively less-liquid (harder to turn into cash) inventory, the remaining current assets are
all of the more-liquid variety. The investors should understand that the liquidity
remaining is healthier to the company as with the quick ratio of 1.489%
15
5.2 Current ratio
As per financial statement the current ratio is used to test a company's liquidity (also
referred to as its current or working capital position) by deriving the proportion of current
assets available to cover current liabilities. Below is our current ratio calculation for
references:
Formula:
Components:
Current Ratio =RM177,045/RM84,633
=2.09%
As of December 31, 2012, with amounts expressed in thousands, ABC’s current assets
amounted to RM177,045.00 (balance sheet), which is the numerator, while current
liabilities amounted to RM84,633.00 (balance sheet), which is the denominator. By
dividing, the equation gives us a current ratio of 2.09%.
Thus, the current ratio calculation shows ABC’s short-term assets, able to pay off
its short term liabilities. This is can be prove with the higher current ratio as stated
below.
16
5.3 Profitability Indicator Ratio
The objective of margin analysis is to detect consistency or positive/negative trends in a
ABC’ earnings. Positive profit margin analysis translates into positive investment quality.
As such, the amount of profit generate by ABCS as a percentage of the sales generated.
Formulas:
Components:
Gross Profit Margin = RM100,000/RM350,000
= 0.286
=28.6%
Net Profit Margin = RM5,850/RM100,000
= 0.059
=5.9%
17
All the dollar amounts in these ratios are found in the income statement. As of December
31, 2012, with amounts expressed in thousands, ABC Sdn. Bhd. had net sales, or
revenue, of RM350,000, which is the denominator in all of the profit margin ratios. The
numerators for ABC Sdn. Bhd. ratios are captioned as "gross profit", "operating profit",
"earnings before income taxes, minority interest and cumulative effect of change in
accounting principle", and "net earnings", respectively give the percentage profit
margins. Positive profit margin analysis shows the company consistent trend of earnings.
This margin indicates a promising, it is the quality, and growth, of a company's earnings
that drive our stock price of ABC Sdn. Bhd.
18
6.0 CONCLUSION
Summarizing the 3 ratios ensure the investor we are strong team to expand into new
market and is in well financial position. With the current ratio of 2:1, it is consider a ideal ratio in
the industry, it indicates ABC’s assets are able to cover its liabilities. Whereas, the gross profit
margin and the net profit margin with a positive percentage of 28.6% and 5.9% respectively is
still consider a good profit for a newly formed organization like ABC Sdn. Bhd. ABC Sdn Bhd.
has done the a market analysis and its objective is measurable and reliable, thus we are confident
on our endeavors to reap more market share in the coming years. In addition, ABC’s forecasted
cash flow has a negative cash flow for the first half of 2012, but it can be recover in the second
half of 2012. In fact, ABC’s will build a strong positive cash flow of $468,000 in the end of
2012. Therefore, ABC’s is a potential organization for growth with a robust plan of investment
2012. We will ensure our shareholder’s wealth to grow as ABC Sdn. Bhd. grows.
19
7.0 REFERENCES
BE2011_KesihatanBI.pdfhttp://www.statistics.gov.my/portal/images/stories/files/LatestReleases/BE/BI/
BE2011_KesihatanBI.pdf
Malaysian Aerospace Industry Outlook http://www.bciaerospace.com/malaysia/images/stories/2011%20might
%20presentation.pdf
Financial Ratio Analysishttp://educ.jmu.edu/~drakepp/principles/module2/fin_rat.pdf
Company & Industry Financial Ratios Analysishttp://www.ventureline.com/
Cash Budgethttp://www.cliffsnotes.com/study_guide/Cash-Budget.topicArticleId-21248,articleId-
21236.html
How to Prepare A Cash Budgethttps://www.zionsbank.com/pdfs/biz_resources_book-5.pdf
Investopediahttp://www.investopedia.com/terms/r/ratioanalysis.asp
Accounting for Managementhttp://www.accounting4management.com/accounting_ratios.htm
CPAClass.comhttp://cpaclass.com/fsa/ratio-01a.htm
About.comhttp://bizfinance.about.com/od/yourfinancialposition/a/incomestatement.htm
20