GRADUATE BUSINESS SCHOOL

MASTER IN BUSINESS ADMINISTRATION

(COOPERATIVE MANAGEMENT)

MCM 5053 ACCOUNTING FOR COOPERATIVE MANAGERS

SIMULATION EXERCISE

PREPARED BY

NOOR AZLINA BINTI SHARIF (MBACM23010012)

NURHANNAN BINTI AB RAFAR (MBACM23010014)

PREPARED FOR
ASSOC PROF DR RIMA MELINI BINTI MAD TAMIN

30 APRIL 2024
MCM5053 Accounting for Cooperative Managers Simulation Exercise 1

Simulation Exercise
Subject: Key Financial Statement Analysis
Facilitator: Assoc Prof Dr Rima Melini Md Tamin

NOOR AZLINA BINTI SHARIF MBACM23100

NURHANNAN BINTI AB RAFAR MBACM2310014

Find ONE (1) of your own specific Cooperator’s Annual Report (you may use your current
Cooperative Companies or others from the web). Refer to the Financial Statement for the
cooperator for the year ended of TWO (2) consecutive period, preferably year 2021 to 2022,
do the following analysis:
Co-opBank Pertama Berhad's annual reports for 2021 and 2022 show a minor decline in
liquidity, a greater reliance on debt, and better asset utilization. Enhancing asset performance,
balancing capital structure, and improving liquidity management are important areas of
concentration. The bank's competitive advantage and long-term viability depend heavily on its
capacity to adapt to the market and make strategic financial plans.
1. For each financial years, identify:
a. The type and amount of revenue, cost of sales, and gross profit for each year.

CO-OPBANK 2021 2022

TYPE
PERTAMA / YEAR RM’000 RM’000
REVENUE INCOME 358,537 407,314
INCOME – GROSS 358,537 – 107,981 407, 314 - 136,752
PROFIT
COST OF SALES
= 250, 556 = 270,562

INCOME – NET 358,537 - 250,556 407,314 - 270,562

INCOME
GROSS PROFIT
= 107,981 = 136,752

b. The total amount of accumulated in the shareholders’ equity for each year.

CO-OPBANK 2021 2022

TYPE
PERTAMA / YEAR RM’000 RM’000

250,556 + (4,629)
Total NET INCOME + 270,562 + 2,117
Shareholders’ COMPREHENSIVE
= 245,927
Equity INCOME /LOSS = 272, 679

UNIVERSITI KEUSAHAWANAN KOPERASI MALAYSIA (UKKM)

MCM5053 Accounting for Cooperative Managers Simulation Exercise 2

c. The major contributors to its current assets for each year.

CO-OPBANK PERTAMA / YEAR

2022 2021
CURRENT ASSETS
RM’000 RM’000
Cash and short-term funds 255,989 183,529
Deposits and Placement in Financial
1,091,806 790,308
Institutions
Financial investments at fair value
618,192 471,731
through other comprehensive income
Financial investments at amortised cost 487,292 340,262

Financing and advances 5,048,191 4,133,334

Other assets 123,592 91,591

d. The major contributors of its current liabilities for each year.

CO-OPBANK PERTAMA / YEAR

2022 2021
CURRENT LIABILITIES
RM’000 RM’000
Customer savings and deposits 6,267,929 4,926,378
Obligations on securities transactions
under secured murabahah commodity 179,533 -
instruments
Other liabilities 69,936 52,387

Proposed honorarium 600 500

Financing from financial institutions 58,000 -

Hire-Purchase payables - 32

Grants 300 300

Proposed dividend 60,913 58,943

UNIVERSITI KEUSAHAWANAN KOPERASI MALAYSIA (UKKM)

MCM5053 Accounting for Cooperative Managers Simulation Exercise 3

e. Develop a trend analysis graph for (a) and (b).

[5 marks]

YEAR REVENUE (RM COST OF GROSS SHAREHOLDE

'000) SALES PROFIT R EQUITY
(RM'000) (RM'000) (RM'000)
2022 358537 250556 107981 245927

2021 407314 270562 136752 272679

TREND ANALYSIS : CO-OPBANK PERTAMA

BERHAD 2021- 2022
407314

358537

270562 272679
AMOUNT (RM'000)

250556 245927

136752
107981

REVENUE (RM '000) COST OF SALES (RM'000) GROSS PROFIT (RM'000) SHAREHOLDER EQUITY
(RM'000)
FINANCIAL STATEMENT OF POSITION

2022 2021 Linear (2022)

UNIVERSITI KEUSAHAWANAN KOPERASI MALAYSIA (UKKM)

MCM5053 Accounting for Cooperative Managers Simulation Exercise 4

2. For each of the financial year ended, identify:

a. The working capital ratio and gearing ratio for each year.

CO-OPBANK 2022 2021

FORMULA
PERTAMA / YEAR RM’000 RM’000

6,010,755
7,625,062 /
/5,038,540
Working Capital Current Assets / Current 6,637,211
Ratio Liabilities
= 1.192
= 1.1488

=6,637,211 /
5,038,540 /
[7,734,396 -
[6,065,403 -
6,637,211]
5,038,540]
Gearing Ratio Total Debt / Total Equity =6,637,211 /
= 5,038,540 /
1,097,158
1,026,863
= 6.049
= 4.906

b. The current ratio and quick ratio for each year.

CO-OPBANK 2022 2021

FORMULA
PERTAMA / YEAR RM’000 RM’000

6,010,755
7,625,062 /
5,038,540
Current Assets / Current 6,637,211
Current Ratio
Liabilities
= 1.192
= 1.1488

6,010,755
7,625,062 +
Cash and Cash +4,133,334
5,048,191 /
Equivalents + Short-Term /5,038,540
6,637,211
Investments+ Accounts
Quick Ratio
Receivable / Current =10,144,089 /
= 12,673,253 /
Liabilities 5,038,540
6,637,211
= 1.909
= 2.013

UNIVERSITI KEUSAHAWANAN KOPERASI MALAYSIA (UKKM)

MCM5053 Accounting for Cooperative Managers Simulation Exercise 5

c. The return on asset (return on investment) for each year.

CO-OPBANK 2022 2021

FORMULA
PERTAMA / YEAR RM’000 RM’000

407,314/ = 358,537 /
(6,065,403 + (6,065,403 +
7,734,396) / 2 7,734,396) / 2
Return On Asset
Net Income / = 407,314/ = 358,537 /
(Return on
Average Total Assets [13,799,799 / 2] [13,799,799 / 2]
Investment)
ROA
=407,314/ = 358,537
6,899,899 /6,899,899

= 0.059 =0.0159

d. The major contributors of its cash balance for each year.

CO-OPBANK PERTAMA / YEAR

2022 2021
CASH BALANCE
RM’000 RM’000
Cash and short-term funds 255,989 183,529
Deposits and Placement in Financial
1,091,806 790,308
Institutions

UNIVERSITI KEUSAHAWANAN KOPERASI MALAYSIA (UKKM)

MCM5053 Accounting for Cooperative Managers Simulation Exercise 6

e. Develop a trend analysis graph for (a), (b) and (c). [5 marks]

RATIO 2022 2021

Working Capital Ratio 1.1488 1.192

Gearing Ratio 6.049 4.906
Current Ratio 1.1488 1.192
Quick Ratio 1.909 2.013
Return on Asset 0.059 0.0159

Ratio Trend Analysis : Co-opBank Pertama

Berhad

6.049

4.906
AMOUNT (RM'000)

1.909 2.013

1.1488 1.192 1.1488 1.192

0.059 0.0159

WORKING CAPITAL GEARING RATIO CURRENT RATIO QUICK RATIO RETURN ON ASSET
RATIO RATIO

2022 2021 Linear (2022)

UNIVERSITI KEUSAHAWANAN KOPERASI MALAYSIA (UKKM)

MCM5053 Accounting for Cooperative Managers Simulation Exercise 7

3. From the above analysis, in your opinion, what are the factors that may influence the
sustainability of such cooperators? List out and explain FIVE (5) factors.
A decline in liquidity is seen in the company's financial ratios for 2022 and 2021, which
could have an effect on operational stability. A greater gearing ratio indicates a riskier financial
situation due to a greater reliance on debt. On the other hand, a rise in return on assets points
to increased resource efficiency, which boosts operational effectiveness and profitability. The
approach emphasizes the importance of flexibility in responding to market and economic
conditions, requiring inventiveness and agility in product lines and marketing tactics. Strategic
financial planning, balanced liquidity, debt management, and asset use are crucial for long-
term sustainability and a company's resilience and growth potential.
Liquidity management is crucial for Co-opBank Pertama Berhad, as evidenced by
the decline in both the current ratio (from 1.192 in 2021 to 1.1488 in 2022) and the quick ratio
(from 2.013 to 1.909). This reduction in liquidity ratios suggests a decreased ability of the bank
to cover short-term liabilities with its short-term assets, potentially making it more challenging
to handle unforeseen financial demands or economic downturns. Maintaining adequate
liquidity is vital for sustaining creditor confidence and ensuring operational stability,
underscoring the importance of robust liquidity management strategies for the bank’s
sustainability.
Then, Capital structure and gearing are key aspects of financial management for
Co-opBank Pertama Berhad, as demonstrated by the increase in the gearing ratio from 4.906
in 2021 to 6.049 in 2022. This elevation indicates a greater reliance on debt compared to
equity, exposing the bank to heightened financial risks, including higher interest obligations.
Managing a sustainable capital structure is crucial; excessive debt, especially with volatile
revenues, can lead to unsustainable interest costs and increase bankruptcy risks. Therefore,
maintaining a balance between debt and equity is essential to enhance financial stability and
bolster investor confidence.
The dramatic increase in Co-opBank Pertama Berhad’s return on assets from 0.0159
in 2021 to 0.059 in 2022 underscores significant improvements in asset utilization and
management efficiency. This enhancement indicates that the bank is utilizing its assets more
profitably, demonstrating better management and operational effectiveness. Efficient asset
utilization not only boosts profitability but also contributes to the bank’s long-term sustainability
by optimizing returns on asset investments, a crucial factor for maintaining competitive edge
and financial health.
Having to concentrate on the market dynamics and economic conditions between
2021 and 2022 has also had a noticeable effect on Co-opBank Pertama Berhad, as seen by
the decrease in the quick ratio (from 2.013 to 1.909) and current ratio (from 1.192 to
1.1488).This reduction in liquidity ratios suggests challenges in using short-term assets to
cover short-term liabilities, potentially complicating the bank's ability to manage unexpected
costs or economic downturns. Effective liquidity management becomes crucial under such
circumstances, ensuring the bank maintains sufficient liquidity to meet its immediate
obligations, which is key to sustaining creditor trust and operational stability.

UNIVERSITI KEUSAHAWANAN KOPERASI MALAYSIA (UKKM)

MCM5053 Accounting for Cooperative Managers Simulation Exercise 8

The observed changes in financial ratios within just a year highlight the critical role of
strategic financial planning in managing Co-opBank Pertama Berhad’s finances. Strategic
planning is not just about immediate gains but encompasses proactive risk management and
long-term financial sustainability. This includes carefully controlling debt levels to avoid over-
leverage, maintaining robust liquidity ratios to ensure operational fluidity, and optimizing asset
utilization to secure adequate returns. Such comprehensive financial management practices
are essential for the bank to thrive in a volatile economic environment, ensuring it remains
robust and resilient over time.
To ensure long-term financial viability, cooperatives should explore various financing
methods, diversify income sources, and manage debt effectively. Lean management practices
and cost containment strategies enhance operational efficiency and profit margins. Investing
in technology can enhance competitiveness and growth opportunities. Strengthening liquidity
management, maintaining reserves, forming strategic alliances, and regularly reviewing
financial status are essential strategies. Regular financial appraisals and adaptive planning
help cooperatives maintain financial goals and respond to market changes.
Co-opBank Pertama Berhad's financial analysis for 2021–2022 shows that strong
liquidity management is necessary and that controlling short-term liabilities can be difficult.
The drop in liquidity ratios points to an increasing reliance on debt, which raises questions
about the sustainability of interest commitments and financial risk. But the increase in return
on assets points to increased profitability and efficiency. For long-term sustainability, these
metrics highlight the significance of risk management, strategic financial planning, and
financial practice optimization. Maintaining a healthy balance between debt, asset
management, and liquidity can help Co-opBank withstand economic ups and downs and act
as a model for other cooperatives operating in unstable markets.

[10 marks]

UNIVERSITI KEUSAHAWANAN KOPERASI MALAYSIA (UKKM)