1.0 COMPANY BACKGROUND

ABC Services was founded by two individuals named John Clixford and H. Mahalingam with

vast experience in both cleaning industry and management skills in 2010 and it was incorporated

to ABC Sdn. Bhd in 2011. Although it was started with a modest amount of capital but today

ABC Sdn. Bhd. is growing fast in every aspect in order to meet the demand of the fast growing

Industry. We are supported by a strong management team comprising people with relevant

technical experiences. Below is ABC Sdn. Bhd. facts:

Authorized capital : RM250,000

Paid Up Capital : RM180,000

NO. of Employye : 55 (28 male & 27 female)

Corporate Office : 3.2-17, Menara Ismail, Jalan Tun Ismail, 50150 Kuala Lumpur

Branch(es) : Penang & Johor

We specialized in hygiene cleaning for healthcare industry, special services such as tile

furnishing, carpet care, blind & window cleaning as well as customized cleaning as per our

client’s request. Our clients range are healthcare, retail, manufacturing, government and small

and medium offices. Some of our clients are Tropic Medical Centre, Sensational group of

companies, Kayu Hitam Sdn. Bhd., Plastics Pro Manufacturing Sdn, Bhd., etc.

We believe that a good health is conducive to the productivity and the quality of our

surrounding. W strived to provide excellent cleaning services to satisfy the challenging need of

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our customers. Our customers are an evidence for our achievement. Based on our experience in

cleaning industry, we have a competitive edge in the following areas such as our professional

cleaning system is designed to cater our client’s customized need in order to achieve their

requirement based on their budget, our experience technical staff and trained workers aspire to

deliver high quality cleaning services and our modern equipment together with the right choice

and quality of chemical used in executing our task enable us to ensure a better finishing.

Entrusted with the task of your housekeeping services, being a professional people in the

cleaning industry will henceforth take full responsibility of your premises and ensure that we will

employ our best effort in meeting your requirement.

With the fast development in the house keeping department toward achieving certification of

ISO 14000 and the implementation of 5’s in the organization with experienced technical staff

will be able to support and assist in making efforts a reality. As the realization toward the

important of house keeping increase among the industrial society, it is our duty to upgrade our

house keeping requirement in order to the industrial standard. In doing all this we believe that

your business will be a success.

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2.0 COMPANY OBJECTIVES

The commercial cleaning industry sector has traditionally been flooded with small, privately held

and operated businesses. But then again, there is a lack of professional and standardized service

in the commercial cleaning industry and so there is definitely plenty of room for new players like

us. In fact, the rate of turn-over in the industry is very high because of the number of commercial

cleaning suppliers who fail to deliver a consistently high level of service to their customers.

In order for any commercial cleaning supplier to be successful, it must be run as efficiently as

any other businesses. The employees are well trained and constantly trained by qualified industry

trainers. Our employees deliver consistent results when it comes to cleaning and there are

evaluated by our qualified supervisor. We have grading system for our cleaning staff as well all

our new staff required to undergo two(2) weeks hands on training before they were given the

responsibilities. For healthcare industries, we use innovative cleaning equipment and methods to

remove illness-causing germs and reduce cross-contamination and the spread of infection.

One of the biggest reasons that commercial cleaning companies lose their contracts is due to a

lack of service and non-performance. So, as a commercial cleaning provider, we guarantee 100%

customer satisfaction. This is achieved not only with high level of cleanliness but also with a

follow up on after service. After the cleaning services, if customer is not satisfied, we guarantee

free services again till it is rectified.

In the coming years, many analysts project that the greatest demand for commercial cleaning

suppliers will come from health care, education, nursing homes and other private facilities. As

most economists agree that the commercial cleaning industry is one to watch. As such ABC will

like to expand and diversify in the healthcare industry such as medical and surgical cleaning,

Aircraft cleaning as well as opening franchising opportunities for entrepreneurs.

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As part of this objective in mind, ABC Sdn. Bhd. primary objectives are to fulfill stakeholders'

expectation as well by meeting company’s objectives by achieving at least a minimum of 10%

market share by the year 2012. Not only that, maximize share holders profit by ensuring that we

constantly improve our service level to achieve the target sales. We aim is to placing ABC as one

of the primary service provider in Malaysia.

Our guarantee to our customers is 100% commitment in providing quality products and services

at competitive prices. We deliver our service in timely manner and with high service level of

customer services satisfaction.

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3.0 THE MARKET ANALYSIS

The commercial cleaning industry is one of the fastest growing areas in this country. The reason

is simply the fact that cleaning has been, and continues to be, a recession-proof sector. In fact,

despite the global down-turn in the economy, the commercial cleaning industry is expected to

outperform past years in 2010. We are planning to expand our services into three(3) key player

which are healthcare industry, aerospace and franchising industries. This is based on the findings

by our market analyst.

According to Department of Statistic, Malaysia a total of 9,152 establishments operated in health

and social work services in 2010, of which health services recorded the highest number of

establishments, 6,739 establishments (73.6 per cent). Between 2007 and 2010, health services

registered a compounding annual growth rate of 4.7 per cent (http://www.statistics.gov.my/portal

/images/stories/files/LatestReleases/BE/BI/BE2011_KesihatanBI.pdf). Hence, with this growth

we believe we can expand in various form of hygiene services to penetrate this market. Not

many commercial cleaning companies involve in this matter which is consider high costing.

Malaysian Aerospace Industry Outlook stated on their 2009 conference that the industry

recorded RM24.7 billion turnover in 2009. It contributed 3.63% of national 2009 growth of 4 to

6% in 2010. Turnover in 2009 RM600 million was projected to reach RM1 billion by 2011

http://www.bciaerospace.com/malaysia/images/stories/2011%20might%20presentation.pdf).

This clearly gives room for new opportunities for us to penetrate this less concentrated market by

other key players in our industry.

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ABC Sdn.Bhd. have been planning to expand by creating a franchise opportunities for new

players. According to statistic report self employed for the year 2010 is 1,917.4 higher by 54.7 in

2009. This shows there is a growth interest in doing own business. Thus, creating opportunity

will increase the market share. This directly will increase the total number of ABC’s franchise

companies, annual turnover, sales on product supply, etc.

With new investment capital and forecast business strategic 2012 implementation we believe we

can achieve our stake holder expectation for the year 2012. Thus, achieving at least a minimum

10% of market share is possible.

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4.0 FINANCIAL BUDGETING

Following is our financial budgeting which provide an important gauge of performance that

investors can use to review our company’s success. The main purpose of creating the financial

budget is to provides the knowledge gap between the company and the outside world, which in

turn reduces our small business’s cost of capital..

We have attached our financial budget for the 2012. This includes income statement 2012,

balance sheet (as at 2012) and cash budget (January 2012 till December 2012). We hope that the

information provided is sufficient to guide investors to invest in our company.

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4.1 STATEMENT OF FINANCIAL PERFORMANCE

ABC SDN BHDBUDGETED STATEMENT OF FINANCIAL PERFORMANCE

FOR YEAR ENDING DECEMBER 31, 2012

YEAR TO DATE

RM

REVENUE 350,000.00

COST OF GOODS SOLD ( 250,000.00)

GROSS PROFIT 100,000.00 OTHER INCOMES

FD INTEREST RECEIVABLES 25,000.0

0

125,000.00 LESS : EXPENSES

ADVERTISEMENT (3,500.00)

DIRECTOR ALLOWANCE (27,000.00) AUDIT FEE (2,000.00)CASUAL WAGES (19,000.00) CONSULTANCY FEE (1,200.00) DIRECTOR FEE (48,000.00) ELECTRICITY AND WATER (6,000.00) EPF AND SOCSO (8,040.00) INSURANCE (2,250.00)PRINTING AND STATIONERY (660.00)UPKEEP OF OFFICE EQUIPMENT (1,500.00) (119,150.00)

NET PROFIT 5.850.00

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4.2 STATEMENT OF FINANCIAL POSITION

A balance sheet, also known as a "statement of financial position", reveals a

company's assets, liabilities and owners' equity (net worth). The balance sheet, together

with the income statement and cash flow statement, make up the cornerstone of our

company's financial statements. Investors can review ABC's balance sheet to gauge its

financial strength. Reviewing a firm's solvency is key, because the practice tells investors

about the firm's short term financial survivor probability.

Financial-market participants call "going concern ability" a company's probability of

staying in business over a period of 2012 year. A statement of financial condition

provides insight into a company's assets, debts and equity capital. The following will be

our balance sheet budgeting for the year ended 2012.

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ABC SDN.BHD.’S STATEMENT OF FINANCIAL POSITION AS AT 31/12/2012

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31/12/2012 RM

FIXED ASSETS

FIXED ASSETS 93,438.

00

CURRENT ASSETS

TRADE DEBTORS 45,545.00

PREPAYMENT AND DEPOSITS 2,500.0

0

CASH AT BANK - CURRENT ACCOUNTS 75,000.0

0

CASH AT BANK - FIXED DEPOSIT (CIMB) 50,000.0

0

CASH IN HAND 1,000.00

INVENTORY 3,000.0

0

177,045.00

CURRENT LIABILITIES

TRADE CREDITORS 60,000.00

ACCRUALS 633.

00

AMOUNT DUE TO DIRECTOR 20,000

.00

OTHER CREDITORS 4,000.

00

84,633.00

NET CURRENT ASSETS 92,412.0

0 185,850.

00

FINANCED BY CAPITAL

SHARE CAPITAL 180,000.00 RETAINED PROFIT 5,850.00

185,850.00

4.3. FORECASTED CASH BUDGET FOR ABC SDN. BHD. AS YEAR 2012

 January (actual)

February (projected)

March (projected)

April (projected)

May (projected)

June (projected)

EXPECTED REVENUES            

Total Revenue $ 4,500 $ 9,500 $ 6,000 $ 7,500 $ 9,000 $ 11,000

             

EXPECTED EXPENSES            

             

Staff Salaries & Fringe Benefits   $ 2,000   $ 2,000  $ 4,000   $ 5,000   $ 5,000   $ 5,000

Executive Director’s Remuneration $ 3,167 $ 3,167 $ 3,167 $ 3,167 $ 3,167 $ 3,167

Rent $ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000

Supplies $ 5,000         $ 1,000

Telephone $ 300 $ 250 $ 300 $ 500 $ 350 $ 250

Postage $ 150 $ 150 $ 150 $ 150 $ 150 $ 150

Copying $ 100 $ 100 $ 100 $ 100 $ 100 $ 100

             

Total Expenses $11,717 $ 6,667 $ 8,717 $ 9,917 $ 9,767 $ 10,667

             

NET INCOME $ <7,217> $ 2,833 $ <2,717> $ <2,417> $ <767> $ 333

             

Cash on Hand - Beginning $ 2,648 $ <4,569> $ <1,736> $ <4,453> $ <6,870> $ <7,637>

Ending Cash Available(Befor

$ <4,569> $ <1,736> $ <4,453> $ <6,870> $ <7,637> $ <7,304>

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e Loan Activity)

 Total

BudgetJuly

(projected)August

(projected)September (projected)

October (projected)

November (projected)

December (projected)

EXPECTED REVENUES              

Total Revenue $

350,000 $ 22,000 $

38,000 $

40,000 $ 45,000 $ 60,500 $ 97,000

EXPECTED EXPENSES              

Salaries & Fringe Benefits  $ 71,000   $ 8,000   $ 8,000  $ 8,000   $ 8,000   $ 8,000   $ 8,000

Executive Director

$ 38,000 $ 3,167 $ 3,167 $ 3,167 $ 3,167 $ 3,167 $ 3,167

Rent $

12,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000

Supplies $

18,000     $ 4,000      $ 8,000

Telephone $

4,000 $ 300 $ 250 $ 300 $ 500 $ 350 $ 350

Postage $

1,800 $ 150 $ 150 $ 150 $ 150 $ 150 $ 150

Copying $

1,200 $ 100 $ 100 $ 100 $ 1,00 $ 100 $ 100

Total Expenses $ 146,800 $ 12,717 $12,667 $ 16,717 $ 13,717 $ 12,767 $ 20,767

NET INCOME $ 203,200 $ 9,283 $ 25,333 $ 23,283 $ 30,183 $ 47,733 $ 76,233

Cash on Hand - Beginning $ 259,250 $ <7,304> $ 1,979 $ 27,312 $ 50,595 $ 80,778 $ 128,511

Ending Cash Available(Before Loan Activity) $ 468,654 $ 1,979 $ 27,312 $ 50,595 $ 80,778 $ 128,511 $ 204,744

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5.0 RATIO ANALYSIS

5.1 Quick Ratio

As you can see the below the quick ratio (or quick assets ratio or the acid-test ratio), is a

liquidity indicator that further refines the current ratio of our company by measuring the

amount of the most liquid current assets there are to cover current liabilities. Therefore, a

higher ratio means a more liquid current position.

Formula:

Components:

Quick Ratio = RM126,000/RM84,633

= 1.489%

As of December 31, 20012, with amounts expressed in thousands, ABC Sdn.Bhd. quick

assets amounted to RM126,000 (balance sheet), while current liabilities amounted to

RM84,633.00 (balance sheet). By dividing, the equation gives us a quick ratio of

1.489%. The ratio shown in above calculation is higher. Thus it clearly indicates ABC

company has more liquid position.

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Variations:

The quick ratio calculate quick assets (the formula's numerator) by simply subtracting the

inventory figure from the total current assets figure. The assumption is that by excluding

relatively less-liquid (harder to turn into cash) inventory, the remaining current assets are

all of the more-liquid variety. The investors should understand that the liquidity

remaining is healthier to the company as with the quick ratio of 1.489%

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5.2 Current ratio

As per financial statement the current ratio is used to test a company's liquidity (also

referred to as its current or working capital position) by deriving the proportion of current

assets available to cover current liabilities. Below is our current ratio calculation for

references:

Formula:

Components:

Current Ratio =RM177,045/RM84,633

=2.09%

As of December 31, 2012, with amounts expressed in thousands, ABC’s current assets

amounted to RM177,045.00 (balance sheet), which is the numerator, while current

liabilities amounted to RM84,633.00 (balance sheet), which is the denominator. By

dividing, the equation gives us a current ratio of 2.09%.

Thus, the current ratio calculation shows ABC’s short-term assets, able to pay off

its short term liabilities. This is can be prove with the higher current ratio as stated

below.

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5.3 Profitability Indicator Ratio

The objective of margin analysis is to detect consistency or positive/negative trends in a

ABC’ earnings. Positive profit margin analysis translates into positive investment quality.

As such, the amount of profit generate by ABCS as a percentage of the sales generated.

Formulas:

Components:

Gross Profit Margin = RM100,000/RM350,000

= 0.286

=28.6%

Net Profit Margin = RM5,850/RM100,000

= 0.059

=5.9%

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All the dollar amounts in these ratios are found in the income statement. As of December

31, 2012, with amounts expressed in thousands, ABC Sdn. Bhd. had net sales, or

revenue, of RM350,000, which is the denominator in all of the profit margin ratios. The

numerators for ABC Sdn. Bhd. ratios are captioned as "gross profit", "operating profit",

"earnings before income taxes, minority interest and cumulative effect of change in

accounting principle", and "net earnings", respectively give the percentage profit

margins. Positive profit margin analysis shows the company consistent trend of earnings.

This margin indicates a promising, it is the quality, and growth, of a company's earnings

that drive our stock price of ABC Sdn. Bhd.

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6.0 CONCLUSION

Summarizing the 3 ratios ensure the investor we are strong team to expand into new

market and is in well financial position. With the current ratio of 2:1, it is consider a ideal ratio in

the industry, it indicates ABC’s assets are able to cover its liabilities. Whereas, the gross profit

margin and the net profit margin with a positive percentage of 28.6% and 5.9% respectively is

still consider a good profit for a newly formed organization like ABC Sdn. Bhd. ABC Sdn Bhd.

has done the a market analysis and its objective is measurable and reliable, thus we are confident

on our endeavors to reap more market share in the coming years. In addition, ABC’s forecasted

cash flow has a negative cash flow for the first half of 2012, but it can be recover in the second

half of 2012. In fact, ABC’s will build a strong positive cash flow of $468,000 in the end of

2012. Therefore, ABC’s is a potential organization for growth with a robust plan of investment

2012. We will ensure our shareholder’s wealth to grow as ABC Sdn. Bhd. grows.

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7.0 REFERENCES

BE2011_KesihatanBI.pdfhttp://www.statistics.gov.my/portal/images/stories/files/LatestReleases/BE/BI/

BE2011_KesihatanBI.pdf

Malaysian Aerospace Industry Outlook http://www.bciaerospace.com/malaysia/images/stories/2011%20might

%20presentation.pdf

Financial Ratio Analysishttp://educ.jmu.edu/~drakepp/principles/module2/fin_rat.pdf

Company & Industry Financial Ratios Analysishttp://www.ventureline.com/

Cash Budgethttp://www.cliffsnotes.com/study_guide/Cash-Budget.topicArticleId-21248,articleId-

21236.html

How to Prepare A Cash Budgethttps://www.zionsbank.com/pdfs/biz_resources_book-5.pdf

Investopediahttp://www.investopedia.com/terms/r/ratioanalysis.asp

Accounting for Managementhttp://www.accounting4management.com/accounting_ratios.htm

CPAClass.comhttp://cpaclass.com/fsa/ratio-01a.htm

About.comhttp://bizfinance.about.com/od/yourfinancialposition/a/incomestatement.htm

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