QUESTION 5
In my opinion, Zhulian Corporation Sdn Bhd would be a better company for me to invest in. Zhulian Corporation Sdn Bhd has a higher liquidity and profitability compared to Poh Kong Holdings Berhad. First of all, this is because Zhulian Corporation Sdn Bhd’s current ratio which measures the short-term debt-paying ability of the company is 4.45 times, which was 0.96 times greater than Poh Kong Holdings Berhad. Besides, the Acid-Test Ratio of Zhulian Corporation Sdn Bhdis 3.58 times which was greater than Poh Kong Holdings Berhad, only 0.30 times. This tell us that Zhulian Corporation Sdn Bhd has more than enough assets to pay its liability. Secondly, according to its inventory turnover, which measures the number of times merchandise is sold and replaced during the year, we know that Zhulian Corporation Sdn Bhd is able to sell its inventory and change to a new one 5.63 times a year. This showed quite a difference from Poh Kong Holdings Berhad which is only 1.05 times a year. Also, this tell us that Zhulian Corporation Sdn Bhd has a higher liquidity compared to Poh Kong Holdings Berhad. Next, referring to the debt ratios and equity ratios, Zhulian Corporation Sdn Bhd showed a better ratios among them.This is because there is less than half of Zhulian Corporation Sdn Bhd’s assets are contributed by creditors which was 25.86% lesser than Poh Kong Holdings Berhad, 39.07%. On the other hand, the owner of Zhulian Corporation Sdn Bhd can contribute more assets to the company which was 86.79%, greater than 60.93% by Poh Kong Holdings Berhad.
From the view of the profitability, Zhulian Corporation Sdn Bhd performed better than Poh Kong Holdings Berhad. One of the reason is that Zhulian Corporation Sdn Bhd is able to earn more net income from sales, 27.75%, which was greater than Poh Kong Holdings Berhad, 5.79%. Besides, according to Zhulian