(g) Calculate and evaluate the company’s free cash flow for its most recent five financial

years.

TABLE G.1: INFORMATION (From Financial Year 2013-2018)

NO 2013 2014 2015 2016 2017 2018

1 Cash (used in)/generated from 14,472,000.00 (35,925,000.00) (48,614,000.00) 49,317,000.00 49,581,000.00 (42,920,000.00)
operations

2 Tax paid 13,000.00 18,000.00 1,370,000.00 6,403,000.00 14,090,000.00 7,540,000.00

3 Current asset 226,225,000.00 341,836,000.00 400,968,000.00 455,883,000.00 604,593,000.00 801,580,000.00

4 Change in current asset - (115,611,000.00 (59,132,000.00) (54,915,000.00) (148,710,000.00 (196,987,000.00)

) )

5 Contract Liabilities 30,229,000.00 9,663,000.00 11,159,000.00 8,729,000.00 25,421,000.00 3,917,000.00

6 Provision for liquidated 21,956,000.00 1,770,000.00 62,000.00 62,000.00 - 13,119,000.00

ascertained damages

7 Trade Payables 30,843,000.00 90,464,000.00 47,838,000.00 61,462,000.00 109,106,000.00 175,946,000.00

8 Non-interest Bearing Current 83,028,000.00 101,897,000.00 59,059,000.00 70,253,000.00 134,527,000.00 192,982,000.00

Liabilities (NICBL)
9 Change in (NICBL) - (18,869,000.00) 42,838,000.00 (11,194,000.00) (64,274,000.00) (58,455,000.00)

10 Non-current asset 125,036,000.00 21,461,000.00 122,185,000.00 227,296,000.00 291,098,000.00 286,392,000.00

11 Change in non-current asset - 103,575,000.00 (100,724,000.00 (105,111,000.00 (63,802,000.00) 4,706,000.00

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 ) )

TABLE G.2: FREE CASH FLOW CALCULATION FORMULA

NO FORMULA
1 Change in Current Asset =Current Asset (previous year-current year)
2 Non-Interest Bearing Current =Contract liabilities+ Provision for liquidated Ascertained damages+ Trade Payables
Liabilities
3 Change in Non-Interest Bearing =Non-Interest Bearing Current Liabilities (previous year-current year)
Current Liabilities
4 Net Operating Working Capital =Change in current asset- Change in Non-Interest Bearing Current Liabilities
5 Change in Non-Current Asset =Non-Current Asset (previous year-current year)
6 Free Cash Flow =Cash (used in)/generated from operations
-Tax Paid +/- Net Operating Working Capital +/-Change in Non-Current Asset

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 TABLE G.3 FINACIAL YEAR FROM 2014-2018 FREE CASH FLOW CALCULATION

NO 2014 2015 2016 2017 2018

1 Change in Current 226,225,000- 341,836,000- 400,968,000- 455,883,000- 604,593,000-
Asset 341,836,000= 400,968,000= 455,883,000= 604,593,000= 801,580,000=
(115,611,000.00) (59,132,000.00) (54,915,000.00) (148,710,000.00) (196,987,000)
2 Non-Interest Bearing 9,663,000+1,770,000 11,159,000+62,000+ 8,729,000+62,000+ 25,421,000+0+ 3,917,000-
Current Liabilities +90,464,000= 47,838,000= 61,462,000.00= 109,106,000= 13,119,000-
101,897,000.00 59,059,000 70,253,000.00 134,527,000.00 175,946,000=
192,982,000
3 Change in Non-Interest83,028,000- 101,897,000- 59,059,000- 70,253,000- 134,527,000-
Bearing Current 101,897,000= 59,059,000= 70,253,000= 134,527,000= 192,982,000=
Liabilities (18,869,000.00) 42,838,000.00 (11,194,000) (64,274,000.00) (58,455,000.00)
4 Net Operating Working (115,611,000)- (59,132,000)- (54,915,000)- (148,710,000) - (196,987,000)-
Capital (18,869,000)= 42,838,000= (11,194,000)= (64,274,000)= (58,455,000)=(138,53
(96,742,000.00) (101,970,000.00) (43,721,000.00) (84,436,000) 2,000.00)
5 Change in Non-Current 125,036,000- 21,461,000- 122,185,000- 227,296,000- 291,098,000-
Asset 21,461,000= 122,185,000= 227,296,000= 291,098,000 286,392,000=
103,575,000.00 (100,724,000.00) (105,111,000.00) = (63,802,000.00) 4,706,000.00
6 Free Cash Flow (35,925,000)-18,000- (48,614,000)- 49,317,000- 49,581,000- (42,920,000)-
96,742,000+103,575, 1,370,000- 6,403,000- 14,090,000- 7,540,000-
000= (29,110,000.00) 101,970,000- 43,721,000- 84,436,000- 138,532,000+
100,724,000= 105,111,000= 63,802,000= 34,706,000=
(252,678,000.00) (105,918,000.00) (112,747,000.00) (184,286,000.00)

TABLE G.4: Free Cash Flow from 2014 to 2018 for HOHUP Construction Company Berhad
N FINANCIAL YEAR FREE CASH FLOW AMOUNT

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 O (RM)
1 2014 (29,110,000.00)
2 2015 (252,678,000.00)
3 2016 (105,918,000.00)
4 2017 (112,747,000.00)
5 2018 (184,286,000.00)

Fr ee Cas h Flow
2014 2015 2016 2017 2018
0
3
-29,110,000
-50,000,000

-100,000,000
-105,918,000.00 -112,747,000.00
-150,000,000

-200,000,000 -184,286,000.00

-250,000,000
-252,678,000.00

-300,000,000

Based on above the free cash flow graft, it shows Ho Hup Construction Company Berhad from financial year 2014 to 2018 all show the negative
free cash flow. Ho Hup Construction Company Berhad can’t sustain a business with long-term negative cash flow. Over time, it will run out of funds
if you cannot earn enough profit to cover expenses. Based on the free cash flow graph above, Ho Hup Construction Company Berhad shows a
negative free cash flow from financial year 2014 to 2018. The company will not be able to sustain a business with a negative cash flow in the long
term because over time, it will run out of funds if the company is unable to earn sufficient profit to cover the expenses.

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In a conclusion, for the last five financial years, Ho Hup’s profits have been on a declining trend. It we just refer this 5 years information we are not
encourage and recommend to invest Ho Hup Construction Company Berhad due to their time interest earned.had declined from 2014 to 2015.
This is because due to the reason that, a higher times interest earned ratio is favorable because it means that the company presents less of a risk
to investors and creditors in terms of solvency. From an investor or creditor's viewpoint, an organization that has a times interest earned ratio
greater than 2.5 is considered an acceptable risk. Ho Hup’s Company that shows a times interest earned ratio are less than 2.5 are considered a
much higher risk for bankruptcy or default and, therefore, financially unstable. Not only that, The inventory turnover of the company also declined
from 1.77 declined to 0.46 which means a low inventory turnover implies excess inventory and weak sales. Inventory turnover measures the speed
at which a company convert its inventory to sales.

The current ratio equalled 1.63 at the end of the period analysed. For the 5 years, the current ratio significantly incresed (+0.07). The quick ratio was equal to
0.78 on 2018. For the reviewed period (2014-2018), the quick ratio was found to undergo a significant increase of 0.21, moreover, tendency of the quick ratio to
increase is also proven with an average (linear) trend. An increase in the ratio was monitored during the whole of the period. On the last day of the period

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analysed, the value of the quick ratio can be deemed as a satisfactory one. It means that Ho Hup’s Company ve enough assets which can be transferred to
monetary funds in a very short time to meet current liabilities.

From 2014 to 2018, the average collection period is increasing. In other words, customers are paying their bills more slowly. Compare that to the receivables
turnover ratio. Receivables turnover is decreasing and average collection period is rising.

In 2014 had the highest ratio among this 5 years, value of 1 or less in debt ratios shows good financial health of a company. Gearing ratio in 2018 is the
highest, a high gearing ratio means the company has a larger proportion of debt versus equity. Times interest earned ratio measures a company’s ability to
continue to service its debt. It is an indicator to tell if a company is running into financial trouble. In years 2014 had a highest ratio means that a company is able
to meet its interest obligations because earnings are significantly greater than annual interest obligations.

For the period 2014-2018, the company gained gross profit and profit from operational and financial activities, which became a reason for positive values of all
three profitability ratios given in the table for this period. The gross margin was equal to 0.33% during the last year. During the entire reviewed period, the gross
margin moderately increase. The higher a company's EPS, the mAore profitable it is considered.

The earning per share from years 2014 to 2018 had decreasing. The higher a company's EPS, the more profitable it is considered which means is decreasing the
profit year by year. Years of 2015 have the highest P/E ratio 5.18. The higher the P/E ratio, the more the market is willing to pay for each dollar of annual
earnings. Among these 5 years, did’t have the dividen yield.

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