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Analysis For Construction Company ( Accounting Decision Making )



Study Analysis for Construction Company
CONTENT:
EXECUTIVE SUMMARY 3
1. BACKGROUND 4
2. NON- FINANCIAL HIGHLIGHTS 6
3.0 FINANCIAL HIGHLIGHTS 7
4. FINANCIAL ANALYSIS (Based on ratios in Appendix II) 9
4.1 MEASURES OF PROFITABILITY 9
4.2 MEASURES OF SHORT TERM LIQUIDITY:- 10
4.3 MEASURES OF LONG-TERM CREDIT RISK 11
4.4 MEASURES FOR EVALUATING COMMON STOCK 12
5. PERFORMANCE VERSUS INDUSTRY 12
5.1 PERFORMANCE OF COMPETITORS 12
5.2 OVERALL PERFORMANCE OF LLCB COMPARED TO GLOMAC BERHAD AND RANHILL CORPORATION. 17
6. INVESTOR’S EXPECTATIONS. 17
7. SUGGESTIONS FOR IMPROVEMENT 18
8. CONCLUSION 21
APPENDIX II: FINANCIAL ANALYSIS RATIOS 24
APPENDIX III: COMPARISON WITH COMPETITORS 32
LEVERAGE RATIOS 34
APPENDIX IV:PERFORMANCE VERSUS INDUSTRY 35

EXECUTIVE SUMMARY

LOH & LOH CORPORATION BERHAD (LLCB) is a company operating in the civil engineering construction industry. Financial Analysis is done on the company’s five-year performance. The first 3 years of the period are depressed, with a low in 2005. The reasons for this performance are the lack of projects in the industry. 2006 and 2007 see a reversal of fortunes under the Ninth Malaysia Plan (‘9MP’) as the government commits to increased spending on infrastructure.

A comparison is made of LLCB against competitors Glomac Berhad and Ranhill Corporation and the comparison shows that LLCB has a capable Board of Directors and is very strong on liquidity management as well as on keeping gearing low. However, LLCB is weak on managing profitability as well as Corporate Social Responsibility.

Against the industry as a whole, LLCB is a strong performer as it out-performs on most indicators. The future looks bright for the company.

1. BACKGROUND
LOH & LOH CORPORATION BERHAD (LLCB) started in the mid-1960s as a sole proprietorship founded by Mr. P.K. Loh. It was later incorporated in 1974 under its present name “Loh & Loh Constructions Sdn Bhd (“LLCSB”). Since then the company has grown to be...