Petaling Tin Berhad is a public listed property development and investment holding company in Malaysia. Based on its 2016 annual report: - Total assets were RM436.7 million, with non-current assets of RM385.9 million and current assets of RM44 million. - Total revenue was RM28.8 million with a net profit of RM8.1 million. - The company has 3 types of shares - ordinary shares worth RM346.1 million, treasury shares worth RM68,236, and premium shares worth RM44 million. No dividends have been paid in the current period. - Financial ratios like the acid-test ratio of 1.21 and debt-to

1. Question 1
In the case, I would not agree to this quote because some situation is not true to the
private company. Overall, there are few reasons for false statement of this quote.
Firstly, the limited company is a company whose liability is limited. That’s the short
version. The longer version is that a limited company is a type of company which when set-up
allows an entrepreneur to keep their own assets and finances separate from the business itself.
This means that people who have invested in the business (the shareholders) are only responsible
for any company debts up-to-the amount that they have invested and no more. It is, therefore, a
good way for a business to get investment without risk to a personal wealth. A limited company
cannot set a limit on a number of debts when they will meet. This is because the company debt is
that company borrows funds from the bank having other debt options. Bonds and commercial
paper are common types of corporate debt that are not available to individuals.
The company cannot set the limit a number of debts. Actually, the limited company would set a
limit on a number of their company liabilities.
Secondly, a limited company has the reserves of cash from the share premium. Share
premium is typically listed on a company’s balance sheet. This is credited money paid, or
promised to be paid, by a shareholder for a share but only when the shareholder pays more than
the cost of a share but it does not allow paying dividends to the shareholders. The retained
earnings are the accumulated net income of the corporation that is retained by the corporation at
a particular point of time, such as at the end of the reporting period. At the end of that period, the
net income at that point is transferred from the Profit and Loss Account to the retained earnings
account. If the balance of the retained earnings account is negative it may be called accumulated
losses, retained losses or accumulated deficit. Thus, the retained earnings are a final statement to
pay the dividend for the shareholder.
Thirdly, most companies only ever have one type of share. The shares are commonly
called ordinary shares and will be the ones the company was incorporated with. Ordinary shares,
also known as common shares, have a lower priority for company assets and only receive
dividends at the discretion of the corporation’s management. Ordinary shares are generally
entitled to one vote per share. One way to think of preference shares is a hybrid of a bond and a
security. Besides, preference shares, also known as preferred shares, have the advantage of a

2. higher priority claim to the assets of a corporation in case of insolvency and receive a fixed
dividend distribution. Preference shares often do not have voting rights and can be converted into
common shares. For this reason, preference shares are often used by venture capitalists for
startup companies.
Moreover, the shares of many companies can be bought and sold on Kuala Lumpur Stock
Exchange (KLSE) and shareholders selling their shares can represent a useful source of new
capital to the company. However, not all companies can sell their shares to the public. Only a
public listed company can sell their shares to the public at the (KLSE) such as Apple and Wal-
Mart Stores. While the private company only can sell shares to a limited number of shareholders.
However, when shareholders sell their shares, it cannot be a useful source of new capital to the
company because of its just transfer the ownership of the shares to the new shareholder. While
there is no additional capital surge into the company. For example, Adam sells his shares to
Julian to earn profit from the difference of the Initial Public Offering and the selling price.
Question 2
Net income earned by partnership is distributed to partners in a numbers of forms which
includes salaries, interest on opening capital balances and in the form of share in the
remaining net income. The problem that face by Ganny and Manny is the disagreement of
formula for dividing partnership income. This is because there is unequal capital contribution
and unequal time and efforts. Ganny provides the majority capital and Manny provides the
majority of efforts in running the partnership business. To solve this problem, they can give a
basic salary to partners, adjust the interest on partners’ capital account and reserve percentages
units of participation.
A partnership agreement may allow some partners’ a specific salary in addition to their
ultimate profit share. Financial accounting textbook stated that salaries paid to partners is not an
expenses of a partnership rather it just a form of distribution. This is the reason that partners’
salaries are not deducted from revenues in arriving at partnership net income. Manny – who is
contributing more time to partnership that the other partner could receive a basic salary to
compensate for the additional time. Both of them can split any remaining profits with the ratio
that both of them agreed.

3. For example, Manny can get RM 42,000 which is RM3,500 per month as basic salary.
After paying Manny basic salary, commission and interest on capital they can split any
remaining profit which both of them agree. They can also to pay partners only for work
performed based on pre-agreed rates for certain projects. Whatever they decide put in place a
profit-sharing agreement and make it part of the larger partnership agreement
Besides, a partnership deed may also specify that partners are to be compensated for their
capital balances at a specific rate of interest, interest on opening capital. It might be a situation
where some partners have contributed more capital than other partners and the ultimate profit
sharing ratio is not based on opening partner capital. Greater the capital contributed, greater the
interest will be earned. This would set right the difference in contributions in the form of capital.
Same as partners’ salaries, interest paid to partners is not a partnership expense but is a
distribution of partnership net income. It is accounted for by debiting partnership income
summary account by the total interest and crediting the respective interest account to each
partner capital account.
Based on the question given, we knew that Ganny have contributed more capital than
Manny. So that Ganny could receive a higher rate of interest of capital. The ratio of the
contribution of capital is 10:1. So the partnership will pay the interest of capital based on the
ratio given. Rest of the profits can be shared equally if all other contributions are equal.
Furthermore, Ganny and Manny can use the plans that reserve percentages or units of
participation. They can reserve ranging from 5 to10 percent of net profit which based on the
year’s performance. The reserve is allocated to individual partners based upon their perceived
contribution to the firm, determined either under a formula or subjectively. There will have an
example to illustrate how the reserve is allocated.
The partnership company has a net profit of RM444,000 and a 10 percent reserved. The
reserved amount RM44,400 is allocated to deserving partners subjectively, based on their
contribution to the previous year's performance. Factors that a committee may consider in
determining how to allocate the reserve may include hours worked, fees collected, consequential
non-billable hours devoted, business origination, profitability as the result of billings and
collections, administrative skills and the like. In this method, Manny works 45 hours, so she can

4. get more of the reserved amount which is more than Ganny. It is because Ganny working hours
is less than Manny which is 5 hours in a week.
We have calculated out that Ganny work 240 hours in a year and Manny work 2160
hours a year. After analysing the partners’ respective contribution which is working hours the
committee may determine that Ganny should reserve 10 percent of the reserve which amount
RM4,440 and Manny should receive 90 percent of the reserve which amount RM39,960.
Question 3
Petaling Tin Berhad is a public listed company and it was founded on October 26, 1920
and is headquartered in Petaling Jaya, Malaysia. Petaling Tin Berhad engages in the businesses
of property development, investment holding and provision of management services. It operates
through the following segments such as Property Development and Other Operation. The
Property Development segment focuses on the property development, contract works and
investment property businesses, whereas the Other Operations segment involves in investment
holding, provision of management and secretarial services and others.
Total assets of a company are the sum of the non-current assets and the current assets.
Based on their annual report in year 2016, the Statement of the Financial Position (Appendix I),
it shown that the amount of non-current assets were RM385,946,822, the current assets were RM
44,020,011, and non-current assets classified for sales were RM6,701,442. Therefore the total
assets of the company were RM436,668,275.
Based on Statement of Profit or Loss and Other Comprehensive Income, the company has
a total revenue of RM28,799,150, from 1 January 2015 to 31 March 2016.The company has a
total net profit of RM8,076,80 for the period which had been added other income and minus off
all the cost such as direct cost, administrative cost, other cost, finance cost, and tax.
3. 1 Classes of Shares
Petaling Tin Berhad has differentiated the shares into 3 types of shares such as Share Capital,
Treasury Share and Premium Share. The following is the details:

5. Type of Share Definition Value(RM)
Share Capital Portion of a public company’s equity that has been
obtained by the issue of shares neither ordinary
shares nor preferred share in the public company to
a shareholder, usually for cash form. It normally
sells at nominal value and shareholders have the
right to vote.
346,102,679
Treasury Share Portion of shares that a public company keeps in it
is own treasury. It may have come from
repurchasing or buyback from previous or current
shareholders, or it may have never been issued to
the public in the first place. These shares do not pay
dividends and have no voting rights.
68,236
Premium Share A public company issues a share of it is stock at
price above the nominal value. The excess amount
received by the public company is place in a shared
premium account and can be used to pay up
unissued shares for distribution as bonus shares and
paying a premium on the redemption of preferred
stock or writing down company expenses or
expenses incurred in the issuance of the shares.
43,953,998
3.2 Dividend Distribute
No dividend has been paid or declared by the Petaling Tin Berhad since the end of previous
financial year and the Directors do not recommend any divided payment for the current period.
3.3 Investment of shares in Petaling Tin Berhad
We have use 3 types of financial ratio in determining the decision whether the company able to
pay debt on time or distribute dividend in long term.
3.3.1 Acid-Test Ratio
Acid-Test Ratio is a strong indicator to determine whether the company have sufficient current
assets to cover it is current liabilities.
The formula:
Acid-Test Ratio = (Cash + Accounts Receivable + Short Term Investments)/ Current liabilities
= 44, 020, 011 / 36, 359, 841
= 1.2107

6. Therefore, Petaling Tin Berhad able to cover it is current liabilities with current assets.
3.3.2 Debt/Equity Ratio
Debt/Equity Ratio is a debt ratio used to measure a company's financial leverage. The ratio
Debt/Equity indicates how much debt a company is using to finance it is assets relative to the
amount of value represented in shareholders' equity.
The Formula:
Debt/Equity Ratio = Total Liabilities / Shareholder’s Equity
= 67, 863, 984 / 346, 102, 679
= 0.1961
Therefore, Petaling Tin Berhad has low debt and low risk.
3.3.3 Operating Cash Flow Ratio
Operating Cash Flow Ratio is a measure of how well current liabilities are covered by the cash
flow generated from a company's operations.
The Formula:
Operating Cash Flow Ratio = Cash Flow from Operations / Current Liabilities
= 10, 686, 180 / 36, 359, 841
= 0.2939
Therefore, the company has low Operating Cash Flow Ratio which means it cannot cover it is
current debts more frequent.
3.4 Conclusion
Petaling Tin Berhad did not declared shares paid or issues new shares into the market.
However, Petaling Tin Berhad able giving high dividend in the future because high Acid Test
Ratio and low Debt/Equity Ratio.

7. Citation
(n.d.). Retrieved from Annual Report: http://www.bursamalaysia.com/market/listed-
companies/company-announcements/5162561
(2017, September 30). Retrieved from CONDENSED CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME FOR FINANCIAL PERIOD:
http://www.financialreport.biz/File/2016/11/18/2208%20-%201717562508311.pdf
(2014). GAAP guidebook. Centennial, CO: AccountingTools, Inc.
(2015, August 17). Accounting for partnerships. Retrieved from
http://www.accaglobal.com/in/en/student/exam-support-resources/foundation-level-study-
resources/fa2/fa2-technical-articles/accounting-for-partnerships.html
Beesley, C. (2016, June 23). How to Split Profits in a Small Business Partnership. Retrieved
from https://fundbox.com/blog/how-to-split-profits-in-a-small-business-
partnership/Bragg, S. M.
Equities. (2017 , March 21). Retrieved from
https://markets.ft.com/data/equities/tearsheet/profile?s=PTGTIN:KLS
Investopedia . (2016, August 27). Retrieved from Ratio Analysis: Using Financial Ratios:
http://www.investopedia.com/university/ratio-analysis/using-ratios.asp