Question

In: Finance

Select TWO companies listed in the construction sector of the Main Market of Bursa Malaysia Compute...

Select TWO companies listed in the construction sector of the Main Market of Bursa Malaysia

Compute the relevant ratios for the analysis of the companies’ capital structure for the years 2015, 2016, 2017, 2018 and 2019

Solutions

Expert Solution

The Construction companies we select for analysis are

Company 1 :UMSB Corp Malaysia

Company 2: YTLS Corp Malaysia

In order to analyse the capital structute we need to take a look at their balance sheets ,

UMSB Balance Sheet

YTLS Corp B/S

New we calculate the following financial ratios to check for their relevant capital structure-

and for the

So we can see that YTLS corp is on a higher leverage in comparison to UMSB corp in its capital structure . This is evident from both of its Debt to equit and Debt to Asset raios of the two corporation .

Generally a high debt-to - equity ratio reveals that a corporation funded its debt growth vigorously. The added interest cost will contribute to unpredictable profits. If the interest cost of the corporation is too high, the risk of default or insolvency will increase.

jeff jeffy answered 1 year ago
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