PERFORMANCE STUDY USING RATIO AND COMPARATIVE

ANALYSIS: A CASE STUDY OF KOPERASI

KAKITANGAN & KELUARGA AIR

KELANTAN BERHAD

MOHD MUSDA BIN YAACOB

2006117683

BACHELOR BUSINESS ADMINISTRATION (HONS) IN FINANCE

FACULTY OF BUSINESS MANAGEMENT

UNIVERSITI TEKNOLOGI MARA

KELANTAN

NOVEMBER 2008

ABSTRACT

This case study attempts to study the performance of the company (Koperasi

Kakitangan & Keluarga Air Kelantan Berhad) to determine whether the company follows

or not the trend analysis in term of their liquidity, operating, leverage and profitability in

order to evaluate their performance in making business decision. Data from a company's

financial statements reveal the company's financial condition. Examining financial ratios

and comparative financial statement analysis provides management, members, and

creditors a glimpse of the company's strengths and weaknesses. The methods used are

ratio analysis and comparative analysis, the result shows that there are good and poor

performance in term of liquidity, capital structure and solvency, return on investment,

operating performance and asset utilization. The result also shows the year to year

changes in the company accounts. The final result shows that apart of analysis meet

with the financial measurement performance and industry norms while the rest need

improvement in order to meet with the financial measurement performance and industry

norms.

vi

TABLE OF CONTENTS

PAGE

DECLARATION OF ORIGINAL WORK ii

LETTER OF TRANSMITTAL Hi

ACKNOWLEDGEMENT iv

ABSTRACT vi

TABLE OF CONTENTS vii

LIST OF TABLES x

LIST OF FIGURES xii

CHAPTER 1: INTRODUCTION

1.1 Background of Company 1

1.2 Issue 4

1.3 Objectives of the Study 5

1.4 Scopes of the Study 5

1.5 Limitation of the Study 5

1.6 Significance of study 6

CHAPTER 2: LITERATURE REVIEW

2.1 Meaning of Cooperative 7

2.2 Cooperative Identity 8

2.3 History and Movements of Cooperative 9

2.4 Cooperatives Today 12

2.5 Utility Cooperative 13

2.6 Cooperative Performance and Financial Analysis 14

vii

CHAPTER 3: RESEARCH METHODOLOGY

3.1 Sample Collection 20

3.1.1 Data Collection 20

3.2 Methodology 20

3.2.1 Ratio Analysis 20

3.2.1.1 Liquidity Ratio 21

3.2.1.2 Capital Structure and Solvency 23

3.2.1.3 Return on Investment 24

3.2.1.4 Operating Performance 25

3.2.1.5 Asset Utilization 26

3.2 .2 Comparative Financial Statement Analysis 28

3.2.2.1 Year to Year Change Analysis 29

CHAPTER 4: FINDINGS AND ANALYSIS

4.1 Ratio Analysis 30

4.1.1 Liquidity Ratio 30

4.1.1.1 Current Ratio 30

4.1.1.2 Acid Test Ratio 32

4.1.1.3 Collection Period 33

4.1.1.4 Days to Sell Inventory 35

4.1.2 Capital Structure and Solvency 36

4.1.2.1 Total Debt to Equity 36

4.1.3 Return on Investment 37

4.1.3.1 Return on Assets 38

4.1.4 Asset Utilization 39

4.1.4.1 Cash Turnover 39

4.1.4.2 Total Assets Turnover 41

4.1.4.3 Total Inventory Turnover 42

4.1.5 Operating Performance 43

4.1.5.1 Gross Profit Margin 44

4.1.5.2 Net Profit Margin 46

4.1.6 Ratio Analysis and Industry Norms 48

vii i

4.2 Comparative Financial Statement Analysis 50

4.2.1 Income Statement 50

4.2.1.1 Revenue 51

4.2.1.2 Cost of Sales 52

4.2.1.3 Gross Profit 53

4.2.1.4 Other Income 54

4.2.1.5 Administration Expenses 56

4.2.1.6 Other Expenses 57

4.2.1.7 Profit for the Year 58

4.2.2 Balance Sheet 60

4.2.2.1 Total Assets 61

4.2.2.2 Total Liabilities 62

4.2.2.3 Total Equity 63

CHAPTER 5: CONCLUSION AND RECOMMENDATIONS

5.1 Conclusions 65

5.2 Recommendations 67

BIBLIOGRAPHY 69

APPENDICES

ix