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ACKNOWLEDGEMENTPraise to Allah for the strength given, finally we have done our group assignment which is Assignment 1: Report of Financial Analysis (Ratio Analysis) FIN420. Alhamdulillah’s, we can complete the assignment given at the designated time. We would like to thanks Miss Azzah Binti Amran, ...

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ACKNOWLEDGEMENT

Praise to Allah for the strength given, finally we have done our group assignment which is Assignment 1: Report of Financial Analysis (Ratio Analysis) FIN420. Alhamdulillah’s, we can complete the assignment given at the designated time. We would like to thanks Miss Azzah Binti Amran, who is our lecturer of Financial Management, FIN420 of University of Technology Mara for her commitment, advice, guideline and encouragement to us that were invaluable during we finish this assignment in purpose to produce a good outcome. Also, do not forget the friends who are willing to give their support, ideas and opinion about the assignment. We also want to extend our deepest gratitude to everyone who directly and indirectly help us in complete this report. Lastly, in fact thanks to the group members who have worked hard on this assignment and willing to exchange ideas and effort to make sure this assignment complete. We hope that all the works we produce can add our knowledge and as well help us in future.

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INTRODUCTION What is analysis ratio? A ratio analysis is a comparison of line items in a company's financial statements. Ratio analysis is used to assess a variety of concerns with a company, including liquidity, operational efficiency, and profitability. Because financial statements are their primary source of knowledge on a company, this sort of analysis is especially valuable to analysts outside of a firm. It's very helpful when used in the following two ways:

The first way is Trend line. A trend line is a set of plotted data points that show a trend. Using a moving average calculation, exponential smoothing, or any comparable approach, the trend line can be stretched to represent a future direction. Trend line analysis is often used in technical analysis and is effective for budgeting and forecasting. This information is used by a technical analyst to help stock trading. The trend line also calculates each ratio across a large number of reporting periods to determine if the resulting data shows a pattern. When ratios are analyzed for a single time, the pattern might reveal financial concerns that would otherwise go undetected. Trend lines may also be used to forecast the future performance of ratios.

The last way is Industry comparison.

For sector analysis, the industry comparison

technique is used to discover which enterprises within a given industry are the most (and least) valuable. A comparison of industries is also possible. Calculate similar ratios for rivals in the same industry and compare the findings across all of the firms under consideration. Because these firms are expected to have similar fixed asset investments and capital structures, the ratio analysis results should be similar. If this is not the case, it may suggest a problem or, conversely, a company's capacity to earn a profit that is significantly greater than the industry average.

Objective of ratio analysis

     

Determines Profitability Determines Operational Efficiency Helping in evaluating solvency Determines Suitable Liquidity Better financial analysis Performance Financial Strength  Forecasting

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COMPANY BACKGROUND

Ajinomoto (Malaysia) Berhad started its business operations in 1961 as AJI-NO-MOTO® Monosodium Glutamate (MSG) producer. It is one of the very first Japanese companies to be set up in Malaysia. Ajinomoto (Malaysia) Berhad has since grown into a dynamic food and seasoning manufacturer marketing diverse brand name that is trusted by Malaysian for decades. Our AJI-NO-MOTO® Umami seasoning has become an indispensable item in almost every household.

THE MILESTONES OF AJINOMOTO (MALAYSIA) BERHAD Num. 1.

Years

Picture

Description

1961

Establishment of Ajinomoto (Malaysia) Co., Ltd

1963

Corporate name changed to Ajinomoto (Malaysia)

2. Sdn Bhd 3. 1965

Commencement of "AJI-NO-MOTO" plant operations Awarded Halal Certification

4. 1968

Company

name

was

changed

to

Ajinomoto

(Malaysia) Berhad as the public company 5. 1971

Launch of "AJI-EKI" (Hydrolyzed Vegetable Protein Liquid)

6. 1978

Launch of "AJI-SHIO" Table Topping Seasoning

1982

Inauguration of Effluent Treatment Management

7. (SALAM) 3

8. 1988

Launch of “AJI-PLUS” Blended Flavour Enhancer

9. Launch of "PAL SWEET" Sweetener 1989

Launch of Hydrolyzed Vegetable Protein (HVP) Powder

10. 1992

Launch

of

"AJI-AROMA"

Flavour

Enhancing

Seasoning 11. -

Establishment of Production 2 (Seasonings and food production line) factory

1993

Launch

of

"AJIMATE"

Taste

Seasoning -

Awarded

"AJI-NO-MOTO"

Certification 12. 1994

Enhancing

Launch of "AJI-MIX" Blended Seasoning

13. Launch of "SERI-AJI" Menu 1996

Specific Seasoning

1998

Awarded ISO 9001 Certification

2000

Launch of "Slim Up" Sweetener

14.

15.

4

Product

16. 2003

Launch of "TUMIX" Stock Seasoning

17. 2004

Awarded HACCP Certification

2005

Launch

18. of

"VONO"

Instant

Soup

Launch of "ACTIVA" TG Series

19. 2006

Awarded ISO 14001 Certification

2008

Awarded OHSAS 18001 Certification

2010

Launch of "Ajinomoto Brand" Chicken Stock

2011

50th Anniversary of Ajinomoto (Malaysia) Berhad

2012

Establishment of Chicken Meat Powder Plant

2014

Establishment of ASEAN Application Centre

20.

21.

22.

23.

24.

5

25. Hydrolysed

Vegetable

Protein

{HVP}

process

2017

improvement

2019

Rasa Sifu™ - Launch of "Rasa Sifu™" All in One

26.

Seasoning

27. 2020

Launch of aminoVITAL® - Sports Drink

2021

Launch of Seri-Aji® Fritter Seasoned Flour & Banana

28.

Fritter Flour

MISSION

VISION

We create better lives globally by

We aim to be a group of

contributing to significant

companies that contributes to

advances in Food and Health

human health globally by

and by working for life.

continually creating unique value to benefit customers.

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DIRECTOR’S PROFILE

Chairman, Independent Non-Executive Director

NAME:

Tan Sri Dato’ (Dr.) Teo Chiang Liang

AGE:

70 years old

DATE OF APPOINTED:

4 June 2020

On June 28, 2001, Tan Sri Dato' (Dr.) Teo was appointed to the Board of Directors of Ajinomoto (Malaysia) Berhad as an Independent Non-Executive Director. Tan Sri Teo was re-designated as a member of the Audit Committee from his prior position as Chairman, as well as Chairman of the Remuneration Committee from his previous position as a committee member, at the same time. In addition, he serves on the Nomination Committee. During the fiscal year, he attended all five (5) Board meetings. He was elected to the Malaysian Crime Prevention Foundation's Exco in 2006. Tan Sri Teo is not a director of any other publicly traded firm or listed entity. He has no conflict of interest with the Company, nor does he have any familial ties to any other Director or shareholder. He has not been convicted of any crimes, other than traffic offences, in the previous five (5) years, nor has he received any public censure or penalty imposed by regulatory agencies during the financial year.

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Tan Sri Teo earned a Bachelor of Arts (Honors) in Business Studies and a Master of Science in Management & Administration from the University of Manchester in the United Kingdom. In the United Kingdom, he received his training from The Chartered Bank and Pillar Naco Ltd. He has been a Director of the See Hoy Chan Holdings Collection since 1975, a welldiversified group of firms with primary interests in real estate investment and development. The Malaysian Insurance Institute gave him the Certificate in General Insurance in 1990, and he was named Principal Officer of See Hoy Chan (Malaysia) Sdn. Bhd Insurance’s Agency company.

SUSTANIBIITY

The Ajinomoto Group has continually engaged in projects to alleviate social challenges through their companies since its inception. These efforts have aided the Group's growth by creating shared value with society and local communities, which has improved economic value. These are referred to as ASV efforts (The Ajinomoto Group Creating Shared Value). Their Philosophy, the Group's approach to attaining the objective and vision set under this philosophy, is built around ASV. By 2030, they want to have extended the healthy life expectancy of one billion people while also reducing their environmental footprint by half. The main strategy of their Medium-Term Management Plan for 2020-2025 ("20-25 MTP") is to devote all of their management resources to resolving food and health challenges.

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Towards the 2030 outcomes The Ajinomoto Consortium's mission for 2030 is to create a group of firms that provides solutions to food and health challenges. To do this, they must assist one billion people live longer, healthier lives while reducing their environmental footprint by half. Sound food systems [1] based on reliable food resources and a lively natural environment underpin the Ajinomoto Group's operations. They are, nevertheless, mindful that their economic operations have an environmental impact. At a time when they are approaching the planet's limits, it is critical that they make efforts to renew the environment. They think that the only way to expand healthy life expectancy in a sustainable way is to reduce their environmental effect through actions like reacting to climate change, guaranteeing the sustainability of food supplies, and biodiversity protection. They provide products and services that are tasty, nutritionally balanced, and beneficial to people's dietary habits through their business activities, and they further promote a reduced environmental impact caused by greenhouse gases, plastic waste, and food loss and waste through their business activities. They also contribute to more resilient and sustainable food systems and worldwide environmental regeneration through their resource recycling-based amino acid fermentation technology (a bio-cycle). Furthermore, they will increase their amino acid strength and revolutionize food systems through innovation and ecosystem development.

Framework from ESG and sustainibility The Sustainability Advisory Council was created as a subordinate entity of the Board of Directors in April 2021, and the Sustainability Committee was established as a subordinate body of the Executive Committee. As a result, they reinforced their system for establishing essential policies aimed at enhancing business value on a long-term basis from a sustainability standpoint. The Sustainability Committee identifies risks and opportunities with a Groupwide impact based on materiality items approved by the Board of Directors based on the Sustainability Advisory Council's report and strategic direction provided by the Board of Directors, and incorporates these factors into business strategy, as well as reporting to the Executive Committee and the Board of Directors. The Sustainability Committee and the Sustainability Development Department develop the Group's sustainability strategy and roadmaps on topics such as nutrition, the environment, and society, as well as follow up on recommendations to incorporate sustainability into business plans, compile internal ESG data, and report to the Executive Committee and Board of Directors.

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Formulate policies and strategies / make proposals to business plans from the perspective of sustainability / follow up on measures together with the Sustainability Committee

There are two-point overview of the sustainability advisory council, which is in roles and structure. Roles, in response to the Board's consultations, submit a report to the Board of Directors after completing investigations into the following. 1) Long-term materiality (through 2050), which will be represented in Phase 2 of the Medium-Term Management Plan's material items and strategy (fiscal 2023-2025) 2) Materiality from a multi-stakeholder viewpoint, as well as strategies for reacting to materiality-related environmental changes (risks and opportunities). 3) Appropriate participation in the development of issues and social regulations that firms will be expected to follow in 2030 and beyond. 4) Goals for 2030 and beyond in terms of social value production, such as lowering environmental impact and expanding healthy life expectancy Structure, outside experts from a variety of fields, such as academics, emerging economy viewpoints, millennial and Gen Z perspectives, and ESG/impact investors, as well as outside directors and internal officials of the Company, including the president and CEO, make up the council.

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FOCUS POINT FINANCIAL STATEMENT Income Statement

11

Balance Sheet

12

Cash Flow

13

FOCUS POINT RATIO ANALYSIS

1.0 Liquidity Ratio Liquidity ratios are statistics used to determine whether a corporation can pay off its current and long-term commitments. Liquidity ratios also show if a firm has enough cash to pay off its debts or whether it needs to convert part of its assets (inventory, accounts receivable, or trading securities) to cash. Internal business officials can use liquidity ratios to uncover viable financial solutions, but creditors, investors, and loan firms can use them to analyze if a company can pay back its responsibilities with existing assets. 1.1 Quick Ratio Quick ratios, sometimes known as “acid-test ratios,” are used to assess a company’s current assets and liabilities. As a current asset, it excludes a company’s inventory. When a corporation needs to pay off creditors within 90 days, they implement the quick ratio.

Total Current Asset – Inventory – Prepaid Expenses Current Liabilities

Quick Ration Equation = Ajinomoto (Malaysia) Quick Ratio YEARS

Ratio

2017

2018

2019

2020

2021

Quick Ratio

2.6318

4.0504

7.2158

9.3784

8.3677

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1.2 Current Ratio The current assets to current liabilities ratio, commonly known as the "working capital ratio," is used to analyze a company's current assets and liabilities. It's worth noting that, unlike a quick ratio, this form of ratio considers inventories as a current asset.

Current Ratio =Current Asset Current Liabilities Ajinomoto (Malaysia) Current Ratio YEARS

Ratio

Current Ratio

2017

2018

2019

2020

2021

3.2644

5.4931

8.1204

10.6986

9.7370

2.0 EFFICIENCY RATIO

Efficiency Ratio is a measure of how the firm manages its routine affairs and current performance. Conceptually, this ratio analyzes how well the firm uses its assets & how it manages the liabilities. So the efficiency ratio is a measure of how effectively a firm manages its assets and liabilities and includes formulas such inventory turnover, average collection period, fixed asset turnover and total asset turnover.

2.1 Inventory Turnover Ratio Inventory turnover also called stock turn or inventory turn is a measurement of how many times inventory is sold in one year. Inventory turnover measures how quickly a firm sells inventory and how analysts compare it to the industry average. A low turnover ratio implies weak sales and possible overstocking or overstocking. High turnover ratio implies strong sales or insufficient inventory. A high turnover ratio is an ideal ratio. However, sometimes a low inventory turnover ratio can be a good indication.

Inventory Turnover Ratio=

Cost of Good Sold Inventory

2.2 Fixed Asset Turnover 15

Fixed Assets Turnover Ratio is to measure how effectively and efficiently the firm uses its fixed assets and assets to generate income. This ratio shows the productivity of fixed assets in generating income. Fixed assets are very important to take into account because these are the largest component of the firm's total assets.

Net ¿ Asset Turnover =

Sales Asset ¿ ¿

2.3 Total Asset Turnover Total Asset Turnover is to measure the sales value or company income from the total assets. This ratio can be used as an indicator of the firm's efficiency in managing assets to generate income.

Total Asset Turnover=

Sales Total Asset

Ajinomoto (Malaysia) Efficiency Ratio Years Ratio

2017

2018

2019

2020

2021

Turnover

5.873

8.303

8.404

7..325

6.808

Fixed Assets Turnover

4.689

5.171

5.920

2.556

1.167

Total Assets Turnover

0.789

0.897

0.840

0.795

0.609

Inventory Ratio

3.0 PROFITABILITY RATIO

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Profitability ratio is required for recording financial transactions, usually assessed by investors and creditors (banks) to assess the amount of investment profit.

3.1 Gross Profit Margin Gross profit is the profit earned by a business or firm after deducting the costs required to manufacture and sell its products, or the costs required to provide services.

Gross Profit Margin=

Gross Profit Sales

3.2 Operating Profit Margin Operating Profit Margin is one of the important topics in the analysis of financial ratios. Firms can use the operating profit margin to measure their ability to generate operating profit and net sales over a certain period. Operating profit in operating profit margin is net profit before tax and interest.

Operating Profit Margin=

Earnings Before Interest∧Tax Sales

3.3 Net Profit Margin Net Profit Margin is a profitability ratio that expresses the profit from business operations as a percentage of revenue or net sales. It takes into account all the costs the business faces, not just the cost of goods sold. It is also compares a firm's profit with the total amount of money it generates and measures how effectively the company operates.

Net Profit Margin=

Net Income Sales

3.4 Return on Assets Return On Assets is able to assess the firm's ability in terms of earning a profit from the assets used. ROA will assess the company's ability based on past profits so that it can 17

be used in the future or the next period. ROA is often used by top management to evaluate various business units in a multinati...