ACCOUNTING FOR BUSINESS DECISION MAKING:

FINANCIAL STATEMENT ANALYSIS

(VERTICAL ANALYSIS)
VERTICAL ANALYSIS:
• Also known as Common-Size Financial Statement Analysis
• Balance Sheet: to ascertain company’s Total assets, liabilities and
capital
• Income Statement: to ascertain company’s Net revenues
• Useful for inter-company comparison by alerts our attention to
differences in account structure or distribution
• However this analysis is unable to reflect the size of the company

Source: Analysis of Financial Statement, 5th Edition (Leopold A. Bernstein & John J. Wild)
INTRODUCTION:

Objectives
To compare TH’s Financial positions using the vertical analysis from year
2012 to 2014 and to relate it with current problems that TH encountered
since 2014.
COMPANY BACKGROUND & EXECUTIVE SUMMARY

Company’s Background
 Lembaga Tabung Haji – TH (Pilgrims Fund Board) was incorporated in 1962 and was formerly
known as Pilgrims Savings Corporation

 It was established as a premiere economic-based Islamic financial institution inspired with a

realization to help provide investment services and opportunities, enhance economic
empowerment of Malaysian Muslim, and manage pilgrimage activities for the Malaysian Muslim
community

 Besides investment and pilgrimage activities, TH creates opportunities in other sectors,

including plantations, constructions, and other heavy industries through its subsidiaries

 TH’s performance is analysed in the next slide onwards

 VERTICAL ANALYSIS
LEMBAGA TABUNG HAJI
ANALYSIS: Comparative Condensed Income Statements for the
Comparative Condensed Income Statements
Year Ended December 31 December 31
For the Year Ended

2012 2013 2014

RM '000 Percent RM '000 Percent RM '000 Percent
Net Sales 2,751,508 100.00% 3,521,552 100.00% 2,979,041 100.00%
3.05% -3.42%
Cost of Good Sold - 0.00% - 0.00% - 0.00%
Gross Profit 2,751,508 100.00% 3,521,552 100.00% 2,979,041 100.00%
Operating Expenses 477,534 17.36% 718,745 20.41% 506,237 16.99%
Net Income 2,273,974 82.64% 2,802,807 79.59% 2,472,804 83.01%
-3.05% 3.42%
1. Net Income in 2013 decreased by 3.05% compared to the year of 145.00%

2012. However, in 2014, Net Income has increased by 3.42% 125.00%

compared to the year of 2013. There is an Inverse Relationship 105.00% Net

between Total Operating Expenses and Net Income. 85.00%
82.64% 79.59% 83.01% Income
Operating
65.00% Expenses
Expenses:
45.00%
i. Staff Costs (Training)
17.36% 20.41%
ii. Provision for Retirement Benefits 25.00% 16.99%

5.00%
2012 2013 2014
 VERTICAL ANALYSIS

ANALYSIS: Comparative Condensed Balance Sheet For LEMBAGA TABUNG HAJI

Comparative Condensed Balance Sheets
For the Year Ended December 31
The Year Ended December 31 (TOTAL ASSET)
1. Total Assets in 2012 has
2012 2013 2014
RM '000 Percent RM '000 Percent RM '000 Percent
increased by 20% for 2013 and
ASSET gradually increase for 2014 with
Cash and cash equivalents 5,211,930 12.85% 8,557,140 17.54% 6,981,887 12.75% 12%
Derivative assets 9,066 0.02% 149,510 0.31% 75,569 0.14%
Total Asset
Securities held-for-sale 19,052,183 46.97% 20,660,894 42.36% 27,393,144 50.03%
↑ 12%
Assets held for sale 3,172,303 7.82% 2,954,648 6.06% 2,439,577 4.46% (5,973,528)
↑ 20% 54,751,281
Tax recoverable 64,204 0.16% 64,204 0.13% 64,204 0.12% (8,217,119)
48,777,753
Trade and other receivables 1,586,063 3.91% 705,395 1.45% 518,194 0.95%
Financing 1,693,188 4.17% 2,186,960 4.48% 1,448,290 2.65% 40,560,634
Securities held-to-maturity 2,400,000 5.92% 4,498,837 9.22% 5,596,231 10.22%
Investment in jointly controlled entities 215,961 0.53% 215,961 0.44% 295,961 0.54%
Investment in associates 809,328 2.00% 757,748 1.55% 570,500 1.04% 2012 2013 2014

Investment in subsidiaries 2,596,226 6.40% 3,408,987 6.99% 3,752,555 6.85%

Investment in property 3,253,262 8.02% 3,921,032 8.04% 5,196,758 9.49%
Property,Plant and equipment 448,540 1.11% 643,926 1.32% 395,552 0.72%
Intangible assets 48,380 0.12% 52,511 0.11% 22,859 0.04%

TOTAL ASSETS 40,560,634 100.00% 48,777,753 100.00% 54,751,281 100.00%