INTRODUCTION

Sri Canggih Global Sdn.Bhd is a company of garment manufacturing and was

established on 2006. And has been operated for around 10 years started from year 2006

until now. This company is owned by local entrepreneur, Mr.Nasri bin Saud. The Sri Canggih

Global Sdn. Bhd started the business in year 2006, which they starting with Stiching vendor

for KUB textiles. He start up the business from paid up capital with amount RM100,000.

Mr.Nasri started his business by using his own capital. He also borrowed the capital money

from his friends and relatives.He got the support system for his business from friends, banks

and Mara (Majlis Amanah Rakyat). He tried to survive in his business more than 20 years

without any mentor. The activities of that moment is manufacturing (makers and suppliers of

garments).

A year after they starting a stiching vendor for KUB textiles, they got the licensed

from Ministry of Finance (MOF) which is in 2007. He got better oppurtunity from government

to supply uniform for Program Latihan Khidmat Negara (PLKN) for 2008 until 2011 that worth

RM10 million. This is the first government tender that Sri Canggih Global Sdn.Bhd received.

The aim of this company, is to have their own brand and this motivate from overseas brand.

For example, they are motivated from Adidas, Nike, Puma and other brands that produced

garments product. From that, this motivate the company to produce an uniforms for

government and private sectors. For example is school uniforms, sport uniforms and other

private sector uniforms. Because of the demand keep increasing from time to time, Sri

Canggih Global is sturdy until now.

Sri Canggih Global Sdn.Bhd have their own factory located at Kota Bharu, Kelantan.

The marketing office is located at Sungai Buloh, Selangor. The branch market at Kota Bharu

is focus more in supplying garments to east coast of Malaysia. While the branch at Sungai

Buloh, Selangor is focus more in supplying to southern Malaysia. Mr. Nasri had said that this

is the base for him to expand his business in garment and strenghthen it in Malaysia market.

Marketing Office:Lot 5B, Lorong Elmina 4, Saujana Utama

47000 Sg Buloh, Selangor

Tel/Fax : 03-60382715

Main Office/Factory:Lot A-3, Kompleks Kilang SME Bank KB 2,

PT5045 Kawasan Perindustrian Pengkalan

Chepa Fasa 2, Kemumin 16100 Kota Bharu,

Kelantan

Tel No : 09-7715391

Fax No: 09-7715392

The Sri Canggih Global Sdn.Bhd

PRODUCT AND SERVICES

Sri Canggih Global Sdn.Bhd supply variety of uniforms, such as corporate, schools

and other uniforms. For example :

Uniforms and Office Wear

Casual and Sport wear items

PROBLEMS AND CHALLENGES OF SRI CANGGIH GLOBAL SDN.BHD

When we start up a business, there will be the problems and challenges occur that we

cannot avoid but we can reduce it, same goes to Sri Canggih Global Sdn.Bhd. There have

few problems and challenges due to operated this business. The problems are:

Orders

Sri Canggih Global Sdn.Bhd need to find their own tenders for the business. For

example, sometimes there will be an order, and sometimes there is no orders. The

ordering frequency is up and down.

Capital

Sri Canggih Global Sdn.Bhd need to buy all the machines by credit from supplier

because they didn’t have any cash to buy all things at the same time.

The Sources

The raw material that needed in business such as fabric, threat and other things also

need to buy on credit.

Overhead Cost

Maintenance, wages, rental and others.

Rival

Politic power that used by his rival to stop Mr.Nasri loan application

Credit

The biggest problem and challenges is he need to pay about RM 5 million to the

supplier because he did not get any claim for his delivery.

FINANCIAL RATIO ANALYSISSRI CANGGIH GLOBAL SDN.BHD.

Balance Sheet as at 31 December 2010

2010 2009RM RM

Property, Plant & EquipmentLand - 10,000Operational Equipment 96,556 113,011

96,556 123,011   

Current Assets    Closing Inventories 185,025 87,606Cash 286,652 102,900Accounts Receivable 323,483 1,020,318T-Bills 59,032 24,165Prepaid Expenses 30,718 24,700

884,910 1,259,689   

TOTAL ASSETS 981,466 1,382,700      

Liabilities & Stockholders’ Equity    Current Liabilities    Accounts Payable 637,337 1,075,127Accrued Expenses 167,008 59,758Taxes Payable 8,235 8,235Current portion, mortgage payable - 90,000

812,580 1,233,120Stockholders’ Equity    Capital Stock 100,000 100,000Retained Earnings 68,886 49,580

168,886 149,580   

TOTAL LIABILITIES & STOCKHOLDER’S EQUITY 981,466 1,382,700

SRI CANGGIH GLOBAL SDN.BHDCondensed Income Statement for the year ended 31 December 2010

Revenue RM 3,683,209Cost of salesDepreciation

(2,990,584)(16,455)

Gross ProfitAdditional Income

676,1704,468

Operation CostOperation IncomeInterest

(575,898)104,740(80,849)

Income before tax 23,891Income tax (4,585)Net Income 19,306

Financial Ratio for Sri Canggih Global SDN BHD 2010

Industry Average

Current Ratio 1.3 : 1

Quick Ratio 0.9 : 1

Account receivable as percentage of revenue 25%

Account receivable turnover 110 times

Average Collection Period 22 days

Total Assets to Total Liabilities Ratio 2 : 1

Total Liabilities to Total Assets ratio 0.5 : 1

Net Income to revenue ratio 35%

Net Income to assets ratio 55%

Asset turnover ratio 2.2 :1

Current Ratio = Current AssetsCurrent Liabilities

= 884,910812,580

= 1.09 : 1

Current Ratio – For every RM 1 short-term obligation, the company has RM 1.09 of cash and other short term resources to pay for the financial obligations. Compared to industry average, the company is not efficient in managing its short term resources to pay for its short term debts.

Quick Ratio = Quick assets (Current Assets – Closing Inventories – Prepaid Expenses)Current Liabilities

= ( 884,910 – 185,025 – 30,718)812,580

= 0.82 : 1

Quick Ratio – For every RM 1 in short term obligation, the company has RM 0.82 in quick assets to pay for its short-term obligations. Comparing to Industry average, the company is not efficient in managing its quick resources to pay for its short term debts.

Accounts receivable as = Average Ac ReceivablePercentage of Revenue Sales Revenue

= ((323,483 + 1,020,318)/2)3,683,209

= 0.18 %Account receivables as percentage of revenue From RM1 sales revenue, the company allows 0.18 cents credit sales. It is good practice to have a small credit transaction. Based on industry average, the company is efficient in managing cash from its sales revenues

Accounts receivable = Sales Revenueturnover Average Ac Receivable

= 3,683,209((323,483 + 1,020,318)/2)

= 5 timesAccount receivable turnoverBased on the sales revenue, the company has the ability to collect its debt for 5 times. Comparing to the Industry average, the frequent number of collection of its debt will give them disadvantage in holding less cash.

Average Collection Period = 365Receivables turnover

= 3655

= 73 daysAverage collection periodIn one year, the company only needs 73 days for collection of its debt. It can be concluded that the company has worse collection of debt and receive cash for other business purposes as compared to the industry average.

Total Assets to Total = Total AssetsLiabilities Ratio Total Liabilities

= 981,466812,580

= 1.2 : 1Total Assets to Total Liability ratioFor every RM 1 in financial obligation, the company has RM 1.2 to pay for the financial obligation and as compared to the industry average; the company’s performance is critical to pay debts with available resources.

Total Liabilities to Total = Total LiabilitiesAssets Ratio Total Assets

= 812,580981,466

= 0.8 : 1Total liabilities to total assets ratioIn every RM 1 resources that the company has, the company needs debt of RM 0.80 to run its operation. The company does have more cash or resources to run the operation.

Net Income to Revenue = Net IncomeRatio Sales Revenue

= 19,3063,683,209

= 0.5%Net Income to revenue ratioFrom RM 1 sales revenue, the company can generate 0.50 cents net income. The company generate not satisfy net income from its sales revenue. As comparing to the Industry average, the company is not better off in this ratio. It means the company needs to minimize its operational expenditures.

Net Income to Assets = Net Income

Ratio Total Average Assets = 19,306

(981,466 + 1,382,700)/2= 1.6%

Net Income to assets ratioFrom RM1 available resources, the company can generate 1.60 cents net income. Comparing with industry average, the company is not efficient in utilizing the resources to generate net income.

Assets Turnover Ratio = Sales RevenueTotal Average Assets

= 3,683,209(981,466 + 1,382,700)/2)

= 3.12 : 1

Asset turnover ratioFrom RM 1 investment in assets, the company can generate RM 3.12 sales revenue. The company is effective in utilizing its resources to generate sales revenue compared to industry average.

CONCLUSIONit can be concluded that the company has a bad financial performance. Most of the ratios recorded worse performance against the industry average. In addition, investors feel doubt because the company is at below level compared to the industry player’s performance.

SRI CANGGIH GLOBAL SDN BHD

Balance Sheet as at 31 December 2011

2011 2010RM RM

Property, Plant & EquipmentOperational Equipment 90,666 96,556

90,666 96,556   

Current Assets    Closing Inventories 94,080 185,025Cash 288,365 302,652Accounts Receivable 272,880 323,483T-Bills 40,580 59,032Prepaid Expenses 30,718 30,718

726,623 900,910   

TOTAL ASSETS 817,289 997,466      

Liabilities & Stockholders’ Equity    Current Liabilities    Accounts Payable 568,226 637,337Accrued Expenses 40,324 183,008Taxes Payable 18,236 8,235

626,786 828,580Stockholders’ Equity    Capital Stock 100,000 100,000Retained Earnings 90,503 68,886

190,503 168,886   

TOTAL LIABILITIES & STOCKHOLDER’S EQUITY 817,289 997,466

SRI CANGGIH GLOBAL SDN BHDCondensed Income Statement for the year ended 31 December 2011

Revenue RM 2,636,245Cost of SalesDepreciate

2,136,35317,630

Gross profitAdditional Income

482,262233

Operation CostOperation IncomeInterest

(402,362)80,133

(53,837)Income before tax 26,296Income tax (4,679)Net Income 21,617

Financial ratio for Sri Canggih Global SDN BHD 2011

Industry Average

Current Ratio 1.3 : 1

Quick Ratio 0.9 : 1

Account receivable as percentage of revenue 25%

Account receivable turnover 110 times

Average Collection Period 22 days

Total Assets to Total Liabilities Ratio 2 : 1

Total Liabilities to Total Assets ratio 0.5 : 1

Net Income to revenue ratio 35%

Net Income to assets ratio 55%

Asset turnover ratio 2.2 :1

Current Ratio = Current AssetsCurrent Liabilities

= 762,623626,786

= 1.21 : 1Current Ratio – For every RM 1 short-term obligation, the company has RM 1.21 of cash and other short term resources to pay for the financial obligations. As comparing to the industry average, it can be concluded that the company is not efficient to the most of the industry players.

Quick Ratio = Quick assets (Current Assets – Closing Inventories – Prepaid Expenses)Current Liabilities

= (762,623– 94,080– 30,718)626,786

= 1.02 : 1Quick Ratio – For every RM 1 in short term obligation, the company has RM 1.02 in quick assets to pay for its short-term obligations. As comparing to the industry average, it is noted that the company is efficient in managing its short term transactions

Accounts receivable as = Average Ac ReceivablePercentage of SR Sales Revenue

= ((272,880+ 323,483)/2)2,636,245

= 0.11%

Account receivables as percentage of revenue Of the entire sales revenue, the company only gives small credit sales for every RM 1 in short obligation, the company has RM 0.11 as compared to the cash sales. It is a good practice to have a small credit transaction as compared to the cash transactions. By looking at the industry average, the company is effective in making cash sales.

Accounts receivable = Sales RevenueTurnover Average Ac Receivable

= 2,636,245 ((272,880+ 323,483)/2)

= 9 timesAccount receivable turnoverBased on the sales revenue, the company has the ability to collect its debt for 9 times. In Account receivable turnover, the frequent number of collection of its debt will give them disadvantage in holding less cash. By comparing with the industry average, it shows that the company has worse in establishing credit sales.

Average Collection Period = 365Receivables turnover

= 3659

= 41 daysAverage collection periodThe company only needs 41 days for collection of its debt. It can be concluded that the company has worse collection of debt as compared to the industry average.

Total Assets to Total = Total AssetsLiabilities Ratio Total Liabilities

= 817,289626,786

= 1.3 : 1Total Assets to Total Liability ratioFor every RM 1 in financial obligation, the company has RM 1.30 to pay for the financial obligation and as compared to the industry average; the company’s performance is slightly lacked behind.

Total Liabilities to Total = Total LiabilitiesAssets Ratio Total Assets

= 626,786817,289

= 0.77 : 1Total liabilities to total assets ratioIn every RM 1 resources that the company has, the company needs debt of RM 0.77 to run its operation. It is at the under level with the industry average.

Net Income to Revenue = Net IncomeRatio Sales Revenue

= 21,6172,636,245

= 0.82 %

Net Income to revenue ratioFrom total sales revenue, the company can generate 0.82 cents net income. The company generate dissatisfactory net income from its sales revenue. As comparing to the Industry average, the company is better off in this ratio. It means the company needs to minimize its operational expenditures

Net Income to Assets = Net IncomeRatio Total Average Assets

= 21,617(817,289 + 997,466)/2

= 2.38%Net Income to assets ratioWith the total investment in assets and the short-term resources that the company has, it can generate 2.38 cents. The company is not efficient in generating returns from the investment and the comparison with industry average confirms this conclusion.

Assets Turnover Ratio = Sales RevenueTotal Average Assets

= 2,636,245(817,289 + 997,466)/2

= 2.91 : 1Asset turnover ratioFor every RM 1 investment in assets, the company can generate RM 2.91 sales revenue. It means the company can make revenues for the investment or the short term assets that it has invested. The company performance is better than most of the industry players.

CONCLUSIONIt can be concluded that the company has a bad financial performance. Most of the ratios recorded worse performance against the industry average. In addition, investors feel not confidence because the company is under level with most of the industry player’s performance.

ANALYSIS THE INCOME STATEMENT AND BALANCE SHEET

As comparing to the financial ratio for both years 2010 and 2011, on our observation

in income statement and balance sheet Sri Canggih Global Sdn. Bhd, the company was

facing lost for both years. From calculation in current ratio, both years was under the level

of industry average but the ratio in 2011 is better than 2010 because the total of liabilities of

the company was greater than the total assets. Same goes to quick ratio which is in 2011,

the ratio is 1.02:1 while in 2010 the ratio is 0.82:1 that was showing the company is more

efficient on 2011 in managing their short term transaction. Account receivables as

percentage of revenue in 2011 have a small credit sales that shows the company achieved

to decrease their credit sales compared to 2010 even though the ratio in industry average

much better in their performance. For the collections of its debt, the company has more

advantage in collecting their debt more frequent in order to increase their cash in year

2011. For 2010, average collection period is 73 days while on 2011, its only need 41 days

for collection its debt but the performance of the company has worse collection of debt as

compared to the industry average. Moreover, on total assets to total liabilities ratio for 2011

and 2010 there was slightly different in paying for the financial obligations. In 2011, the

company obtained more cash to run the operation in total liabilities to total assets ratio. The

company generate dissatisfactory net income for both years its sales revenue. As

comparing to the Industry average, the company is better off in 2011. It means the

company needs to minimize its operational expenditures. For net income to assets ratio,

the company is not efficient in generating returns from the investment on year 2010 and the

comparison with industry average confirms this conclusion. Lastly, assets turnover ratio for

2010 is 3 times that shows the company has better performance rather than year 2011

which is only 2 times. It can conclude that the company has bad financial performance.

Most of the ratio recorded loss against the industry average. So, the investor feel in doubt

to invest in this business.

CONCLUSION TO THE PERFORMANCE

Based on the performance according to income statement and balance

sheet from year 2010 and year 2011, Sri Canggih Global was in critical situation.

This is because the income statement and balance sheet is not working well.

Based on that study, the Sri Canggih Global Sdn.Bhd should reduce the cost

of production. This is because, the cost of production is too higher, that’s why they

should reduce it to avoid any bad circumstances happened.

Other than that, they also have to manage the cost of administration which is

they must reduce the cost itself. For example, they have to manage the salaries of

workers properly. This is also happen because of the problem occurs when they

didn’t received the modal. Means that, the modal will receiving, but it really takes

time to received. So, Sri Canggih Global Sdn.Bhd buy all the raw materials in credit

because they not have enough money to pay the all material in cash. So that’s why

they buy it in credit.

Now, they should recover all the cost, when the money received from the

customers whether government or private sectors.

FUTURE DIRECTION OF THE COMPANY

Every company have their own target for future direction as well as Sri Canggih

Global Sdn.Bhd. For future direction of Sri Canggih Sdn.Bhd, according to the pioneer of the

company which is Mr. Nasri, the networking for Sri Canggih Global getting larger. So these

are the benefit to Sri Canggih Global itself. So, Mr.Nasri will merge with Uniform Gallery to

be their business partner and open a retail shop of Uniform Gallery.

In future direction from analysis that we get, we predict that 2010 until 2011 Sri

Canggih Global Sdn.Bhd has been faced loss, so to overcome this for the future purposes

the profitability is an important element that helps a business gain market share, giving

corporate managers the means to innovate and produce better goods. As an entrepreneur,

the manager should strategically manage the profit and loss (P&L). A positive P&L plants the

seeds for a stable economic future for Sri Canggih Global Sdn.Bhd.

Next, devise a business strategy, It is never a good sign when a business starts

losing money or when the returns on its investments are low or non-existent. Failure to

generate enough revenue to cover operating expenses means the business will most likely

be saddled with debts. To consistently make money, it’s important for a business to have a

set strategy, whether that’s to become a market leader, be number one in providing excellent

customer service, or be recognized as a top innovator in the industry.

Sri Canggih Global Sdn.Bhd, should make a strategists often break down a master

plan into smaller, more detailed initiatives called tactics. For example, if the company’s

strategy is to be one of the top five players in its sector, write down the tactics and action

plans that can help achieve that goal. They may consider things like reducing costs,

expanding revenue, advertising in select or previously ignored markets, and upgrading the

company technological infrastructure, including computers and servers.

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and-reporting/business-tax-levies/what-to-do-if-your-business-is-operating-at-a-loss

Anonymous Blogger. Retrieved June 12,2015 from

https://www.smallbusiness.wa.gov.au/business-topics/planning-structures/business-

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APPENDICES

Company Licensed