The Financial Ratio Analysis of BUMIPUTERA CONTROLLED PUBLIC

LISTED COMPANIES for the year 2008-2013

INTRODUCTION
A Bumiputera company must fulfil the following criteria, which is (a) established under
the Companies Act, 1965, (b) paid-up capital of at least RM25 000, (c) shareholders are
100% Bumiputera, (d) Board of Directors are at least 51% Bumiputera, (e) Managerial and
Professional Staff are at least 51% Bumiputera, and (f) supporting Staff are at least 51%
Bumiputera.
According to (Drake. P, 2010), financial statement analysis is the determination, assessment,
and translation of monetary information, alongside other correlated data, to support in venture
and budgetary choice making. In addition, it is likewise the methodology of recognizing
monetary qualities also, shortcomings of the firm by appropriately creating relationship
between the things of the asset report and the benefit and misfortune record (representing
administration website).
One of the apparatuses in financial statement analysis is money related proportion
investigation. As monetary proclamations are typically protracted, it will be more productive
and vital to simply get the assumes that matter and attachment them in predefined recipes
grew through time by money and bookkeeping researchers.
According to (Brigham,E , & Houston, J, 2009), financial analysis involves comparing the
firms performance to that of other firms in the same industry and evaluating trends in the
firms financial position over time. One rich source of information for financial statement
analysis is the audited financial statements. The financial statements are usually part of the
annual report that listed companies submit to regulatory agencies such as Securities and
Exchange Commission and Stock Exchange entities.
Past studies on the effect of financial factor on the disappointment of development firms have
recognized poor monetary administration and absence of capital as the fundamental
determinants of development (Kangari, R, 1988).
The purpose of this study is to identify the tools used to measure companies performance
from year 2008-2013. We are using 5 companies in our studies, which is Pasdec Corporation,
Perak Corporation, Suria Capital Holdings, TDM Berhad and Mentiga Corporation.

2.0 Problem statement

The failure of the construction firms in the construction industry become a common issue
around the world. Some of the past studies have analysed the performance of the contractors
in the contractors in the construction industry by following Noven (Noven, 1996), Osama
(Osama, 1997) , Kangari (Kangari, 1998) , Arditi et al. (Arditi, A. Koksal, & S. Kale, 2000),
Yin (Yin, 2006) , Munaain (Munaain, 2006), Ang (Ang, 2006), Jaafaf et al. (Jaafar & A.R.
Abdul-Aziz, 2005) , Laser (Lasher, 2003), and Lin (Lin, 2008). According to these several
studies, financial factors caused the failure of contractors significantly. Noven (Noven, 1996)
stated that poor financial management and shortage of capital are factors that caused to the
failure of construction firms. Kangari (Kangari, 1998) also stated that these two factors are
main factors that the failure of contracting firms. Low profit margin, shortage of capital
rolling to fund business operations because they do not have any fixed assets, scant
experience of firms, and difficulty in finding jobs are factors that failure of the contracting
firms in Saudi Arabia through Osama (Osama, 1997) studies. Other than that, some studies
have being conducted in Malaysia and researchers find that inefficiently management of
contractor firms, a contractor firms faces the high debt in their own company, a firms loss
their projects, and they faces shortage of cash to do their projects are main financial problems
that show that the failure of these contractor firms. This causes many constractor firms cannot
operate well and forced to shut down their operations. According to Munaain (Munaain,
2006) and Ang (Ang, 2006), the bankkruptcy rate among firms in Malaysia is higher than
other industries. This is because firms in Malaysia faced shortage in cash flow especially the
bumiputera to quit the construction industry. As a result, many constructor firms cannot
complete their projects on time and then affected the reputation and image of Malaysia
construction industry. This study aims to analyse the financial ratio analysis of bumiputera
controlled public listed companies that is Mentiga Corporation, Pasdec Holdings, Perak
Corporation, Suria Capital Holdings, and TDM Berhad for the year 2008-2013. Researcher
examine on the problem that might exist based on the six main ratio from financial statement
that is liquidity, capital structure, return on investment, profitability, efficiency and market
performance of these five listed companies. Liquidity measure a companys ability to pay off
its short-term debt obligations. Capital structure helps researcher measure a companys
financial leverage. ROE measures how much the shareholders earned for their investment in
the company. The higher the ratio percentage, the more efficient management is in utilizing
its equity base and the better return is to investors. Operating performance or profitability is

to understand the financial health of the company. Asset utilization or effiiciency give users a
good understanding of how well the company utilized its resources in generating profit and
shareholder value. Market performance looks at a wide array of ratios that can used by
investors to estimate the attractiveness of a potential or existing investment and get an idea of
its valuation. The questions regarding six main ratio is as below:
1. Liquidity- Is the company able to meet its obligations when they fall due?
2. Capital structure- How are the company assets financed?
3. ROI- How does the company investment to enhance company performance?
4. Profitability- How profitability can achieved by the company?
5. Efficiency- What is the efficiency of the company asset management?
6. Market performance- What is the market view of the company?
Due to financial problems that faces by local contractor firms, more depth studies about
financial difficulties faced by local construction industry should generate by researchers.

Research Objective
The objective of the research is to:

To identify if the liquidity are important for a company performance.

To determine a company assets is well financed and could contribute towards

company performance.
To identify if the important of investment can contribute towards company

performance.
To examine profitability of a company which can contribute towards company

performance
To find out efficiency of the company asset management in contribute to the company

performance.
To interpret the market value for the company.
To identify which of the determinants of company have the most influences toward
company performance

Literature Review
Hypothesis:
H1: When the liquiditi ratio became higher, the company performance will be greater..
H2: Increasing in the company performance cause by the well financed of the company asset
H3: The company investment have influence to the company performance.
H4: When the effiency of asset management became higher, the company performance will
be better.
H5: The positive market view have influence to the company performance.

Methodology

Data were collected through Secondary data which is obtained from company annual report.
Five Bumiputera controlled Public Listed companies were selected for this case study. Six
years of annual financial reports for the selected companies were examined. For the tools use
for this ratio analysis, 18 financial ratios were selected as measurement performance tools.
The ratios are based on data from 2008 2013 financial statements.
Proposed Theoretical Framework of the study:
Liquidity
Capital Structure
Return on Investment
Efficiency
Market Measure
Profitability

Company
Performance.