(i) Based on the analysis in the group report, I would invest in GDEX Berhad.

First
of all, GDEX has a higher current ratio than Pos Malaysia, this mean that GDEX has a stronger
liquidation than Pos Malaysia, as an investor perspective, I don’t have to worry about GDEX
couldn’t pay off his loan due to higher current ratio and strong liquidity. Furthermore, the current
ratio of Pos Malaysia is lower than 1 which means that Pos Malaysia has a serious liquidity
problem on that time which will lead to the incapable to pay off the debts. As we look back to
2020, many company decided to close down due to the bad economic situation, the company that
survived on that time have one common thing, which is strong liquidity. It is important that a
company has a strong liquidity but not too high, but Pos Malaysia has entered a negative current
ratio which I wouldn’t consider it.
Second, GDEX has a shorter days sales outstanding. This means that GDEX can receive
money form its trade debtors faster, which also mean GDEX is very efficiency in debt
collections and has a stricter credit policy to the trade debtors. With this, I believe that GDEX
will has a stronger cash flow due to the efficiency in debt collections and has more money to do
financial decision whether for further expansion or attract more investor. With a longer day sale
outstanding by Pos Malaysia, this will make Pos Malaysia lack of money for other usage, not
only that, the longer the day sales outstanding, the higher risk of it having a bad debt. So, I
wouldn’t consider Pos Malaysia also at this point.
Third, GDEX has a shorter day payable outstanding. This means that GDEX is able to pay
his supplier the credited amount faster. In this scenario, this may lead to a difficulty to increasing
loan and also increasing the risk of bankruptcy but I think that is a good decision at time 2020. It
is because that at 2020, the economy is in a state of tension because the purchasing and paying
debt had decreased. If I were the supplier, I’m eager that others will pay their debts as soon as
possible, GDEX did a good decision here as it can earn more credit from the supplier and
supplier are willing to give more discount if the creditor pay early, and this will also reduce the
cost of the company.
Fourth, GDEX has the higher net profit margin than Pos Malaysia. This mean GDEX is
more profitable than Pos Malaysia at 2020. This may due to GDEX has better pricing strategies
and better efficient management than Pos Malaysia at the time. Meanwhile, Pos Malaysia is
having a negative net profit margin which mean that Pos Malaysia is having a loss at the year
maybe due to weaker pricing strategies, inefficient management and higher expenses. Net profit
margin is important as it can let the investor less worry about the company is going to face
bankruptcy. In the following year 2020, Pos Malaysia has a negative net profit margin that I
definitely wouldn’t consider it.
Lastly, GDEX has the higher P/E ratio. This means that the profit of GDEX is higher than
Pos Malaysia, investors are more having positive image and expectation growth with GDEX
rather than Pos Malaysia. It is because Pos Malaysia is showing a negative P/E ratio and it is
making investor losing confidence to Pos Malaysia. I believe that Pos Malaysia is undervalue at
that time due to the bad economy environment but I still decided to invest in GDEX because it
has a positive value of P/E ratio and not too high, which mean the bad economy environment is
just slowing down GDEX growth so it definitely has the potential to growth faster when to
economy goes normal, it also has a stable net profit which not to make the investor panic.

(ii) The first limitations of the analysis are the analysis is based on past data. In the
financial accounts that are analyzed, only historical accounting data is used. The future cannot be
identical to the past. As a result, financial statement analysis cannot serve as a foundation for
future estimating, forecasting, budgeting, or planning. To improve the analysis, prepare
forecasted financial statement and analyze the data also. With this the analysis will be more
suitable for future estimating.
Second, there is an issue in comparability. The size of a firm is determined by the
number of transactions. As a result, the figures of different financial accounts lose their
comparability. To improve the analysis, first, conduct a value chain analysis for the industry,
which identifies the chain of activities involved in the production, manufacture, and distribution
of the firm's products and services. This will reduce the gap of the company and make your
analysis more accurate.
Third, financial analysis can’t count inflation. The average inflation of each year
is about 2 percent, and this year expected to have an 8 percent inflation, as the higher the
inflation, the lower the purchasing power, it leads to issues when comparing financial statements
from different years. To improve the analysis, we can do the financial analysis including the
average inflation rate of each year to let our analysis more accurate.