INTRODUCTION TO FINANCIAL MANAGEMENT

Question 1 (50 marks)

7-Eleven Malaysia Holding Berhad’s annual report for the fiscal year ending 2021 is available at https://www.7eleven.com.my/financial-reports. (At least two years of comparable financial statements are required.)

a) Assess 7-Eleven’s financial position for year 2020 and 2021 according to

i) liquidity position, and how the liquidity position has changed over time from 2020 to 2021. (6 marks)

ii) asset management position, and how its asset management efficiency has changed over time. (6 marks)

iii) debt management position, and how its debt management has changed over time.  (6 marks)

iv) profitability ratios, and how its profitability position has changed over time. (6 marks)

v) market value ratios, and how its valuation has changed over time. (6 marks)

b) Calculate 7-Eleven’s ROE as well as the industry average ROE, using the DuPont equation. From this analysis, how does 7-Eleven’s financial position. (10 marks)

c) Write your opinion on what you think would happen to its ratios if the company initiated cost-cutting measures that allowed it to hold lower levels of inventory and substantially decreased the cost of goods sold. No calculations are necessary. Think about which ratios would be affected by changes in these two accounts  (10 marks)

QUESTION 2 (25 MARKS)

Explain whether the following instruments are examples of money market or capital market securities. (25 marks)

a) Malaysian Treasury Bills (MTB)

b) Safura Berhad corporate bonds

c) AM Fujiya Berhad Common stocks

d) AEON CO (M) Berhad Preferred stocks

e) Bank Negara Monetary Notes-i