5.2 RELEVANCY AND PERFORMANCE
RELEVANCY
The goal of this study was to give a detailed analysis of the financial statements that
Sime Darby has provided, which is extremely relevant and valuable for the purposes of
decision-making. This analysis provides insights into the company's financial situation,
profitability, and cash flow by including a balance sheet, income statement, statement of
stakeholder's equity, and cash flow statement. Both vertical and horizontal analysis approaches
were utilized in the process of analyzing Sime Darby's financial accounts. The results of this
analysis have been compiled into a report. The objective of the study was to decide on the
development of the organization over a period of three years, more especially in the years 2020,
2021, and 2022. In the vertical analysis, the proportions of various financial statement items to
total income were analyzed, whereas in the horizontal analysis, changes in financial statement
items were compared over the course of the three-year period. The findings of the investigation
shed light on the financial performance of Sime Darby and the growth tendencies that have
been seen.
This study also includes data on the company's industry-specific measures, such as the
rate of increase in revenue and the margin of net income. Through the examination of these
indicators, stakeholders are able to evaluate the performance of the company in comparison to
that of its competitors and to determine its position in the market. This study also includes
information on the timeliness, correctness, and significance of the financial data that is
delivered. The data on the company's finances are up to date and accurate, giving stakeholders
access to the latest information that is currently accessible. The significance of the information
is also considered, which helps to make certain that only pertinent data is discussed in this
investigation. In general, the information that is offered in this study is quite pertinent and
helpful for the purposes of decision-making. It does this by giving stakeholders with vital
insights into the financial position, profitability, and overall financial health of the organization.
PERFORMANCE
Evaluation of the company's financial outcomes and its capacity to earn profits and
create value over a predetermined time span is a necessary component of the performance
analysis. This study presents a variety of financial ratios, indicators, and trends that can be used
to analyze the company's operational efficiency, profitability, and overall financial
performance. These metrics are provided in this study. The gross profit margin, the net profit
margin, and the return on equity are the three types of profitability ratios that are presented in
this case study. For example, the company's gross profit margin for 2020 is 16.88% and
decrease in 2021 with percentage of 16.72% but it is increasing in 2022 with percentage of
19.89%. This indicates that Sime Darby generating a significant amount of revenue after
deducting the cost of goods sold. In addition, the Sime Darby’s net profit margin for 2020 is
2.36% and increase to 3.44% in 2021. This indicates that Sime Darby generating a healthy
amount of profit after deducting all expenses, including taxes and interest. Meanwhile, Sime
Darby’s current ratio for 2020 is 1.53 and increasing to 1.63 in 2021 and 1.66 in 2022, which
indicates that it has sufficient current assets to cover its current liabilities. The company's debtto-equity ratio for 2020 is 0.77 and increase to 0.85 in 2022, which indicates that it has a
relatively low level of debt compared to its equity. Lastly, Sime Darby’s return on common
equity for the 2020 is 5.7% and increase to 9.7% in 2021 which indicates that it is generating
a healthy return on its equity investment.
The company's ability to make profits from its activities and how effectively it is able
to manage its costs can both be gleaned from these ratios, which provide valuable insights. The
current ratio and the quick ratio are examples of liquidity ratios that are mentioned in this study.
These ratios offer insight into the ability of the company to meet its short-term obligations
because they compare the company's current assets to its short-term liabilities. One of the
leverage ratios that is mentioned in the paper is the debt-to-equity ratio. This ratio offers insight
into the capital structure of the company as well as the company's capacity to satisfy its longterm obligations. This case study also covers efficiency ratios such as inventory turnover and
asset turnover, which provide insights into the company's operational efficiency and how well
it is utilizing its assets. For example, the inventory turnover ratio is equal to the number of
times an inventory item is sold in one year. In addition, this analysis compares the company's
financial results to its previous performance, industry norms, and the companies that are in
direct competition with the company. This gives stakeholders an in-depth understanding of the
company's financial performance as well as its place in the market. In conclusion, this case
study offers insightful information regarding the company's general financial health as well as
its financial performance and profitability. Stakeholders are able to evaluate the company's
operational efficiency, liquidity, and leverage by utilizing a variety of financial ratios,
indicators, and trends. The information provided in the document can be utilized to facilitate
the making of well-informed judgements regarding matters of investing, lending, and other
financial matters.