Subject Code : CIA1001
Country : Malaysia
Assignment Task
 

TASKS
Helang Air Berhad (Helang Air) is an airline company listed on Bursa Malaysia. The business has grown rapidly since its establishment seven years ago but in the recent periods it has been criticised for under-investing of its non-current assets. Assume you are working for Helang Air and you have been tasked to prepare a ratio analysis based on the comparative financial statements of Helang Air. Extracts from Helang Air’s financial statements are as follows:
Statements of financial position as at 30 June:
2020
RM’000 2021
RM’000
ASSETS Non-current assets Intangible assets 32,000 40,000
Property, plant and equipment 348,000 634,000
380,000 674,000
Current assets Inventories 980 1,160
Trade and other receivables 12,600 12,200
Cash and cash equivalents 44,200 18,600
57,780 31,960
Total assets 437,780 705,960
LIABILITIES Non-current liabilities 6% loan notes 300,800 261,920
Current liabilities Trade and other payables 8,500 20,960
6% loan notes 38,880 38,880
47,380 59,840
EQUITY Equity shares 6,000 6,000
Retained earnings 83,600 88,200
Revaluation surplus Nil 290,000
89,600 384,200
Total liabilities and equity 437,780 705,960
Other extracts from Helang Air’s financial statements for the years ended 30 June:
2020
RM’000 2021
RM’000
Revenue 318,000 308,000
Profit from operations 37,200 24,600
Finance costs (20,400) (18,400)
Cash generated from operations 48,620 36,960
The results of the ratio analysis are as follows:
As at 30 June 2020 As at 30 June 2021
Gearing (Debt/Equity) 379.1% 78.3%
Current ratio 1.22:1 0.53:1
Interest cover 1.8 times 1.3 times
Net asset turnover 0.74 times 0.45 times
Operating profit margin 11.7% 8.0%
Return on capital employed 8.7% 3.6%

The flight schedule, the number of flights and destinations were the same in both 2020 and 2021. Helang Air is currently negotiating with the nine major airports to renew its licences that are due to expire in November 2021. The licence will give Helang Air the right to operate flights in the respective airports.
 

Required:
Prepare a list of comments on the financial performance and position of Helang Air for the year ended 30 June 2021.
Explain any issues that Helang Air should be considering in the near future.

 

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  • Uploaded By : Brett
  • Posted on : July 23rd, 2019

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