Digi Telecommunications Sdn Bhd Company Case Study

1. INTRODUCTION OF THE SELECTED COMPANY

Established in 1995, Digi Telecommunications Sdn. Bhd. was one of various mobile communication services providers in Malaysia and became the first telco to launch a fully digital cellular network. In 1997, Digi Telecommunications Sdn. Bhd. listed on the Bursa Malaysia Securities Berhad under the infrastructure category act, which known as DiGi.Com Berhad. Today, DiGi.Com Berhad listed on the Main Market of Bursa Malaysia Securities Berhad and is part of the global telecommunications service provider. The company services included are mobile voice plans, international roaming, data plans, Internet plans and digital services.

Indeed, DiGi.Com Berhad has provide mobile voice, Internet and digital services

Refer to figure 2.2, DiGi.Com Berhad had higher debt ratio from 2010 to 2014, especially in 2014, which is 217.23 per cent of debt ratio. In other words, the higher debt ratio which means higher figure of total assets are financed by creditors. For instance, certain company are preferring to have higher debt ratio due to all funds financed by loans can generate higher returns. According to Halil D. Kaya and Gaurango Banerjee (2014), larger firms with higher revenues are found to significantly increase accounts payables, current liabilities and long-term liabilities, which means higher sales revenues of firms need support by increased short-term and long-term debt financing. On the other hand, refer to figure 2.2, equity ratio is show the positive figure of total asset financed by owner, except in 2012 with 18.61 per cent of equity ratio. Usually, creditors prefer higher equity ratio due to the chances to receive their claim upon maturity. Furthermore, refer to figure 2.2, debt to equity ratio on 2010 is the higher figure, which is 1041.99 per cent. This higher debt to equity ratio reflected the total owner equity own by the owner is lower than total liability. In overall, DiGi.Com Berhad was obtaining higher rate of debt management ratios to continues its operation, except

The probability ratios are classified gross profit margin ratio, net profit margin ratio, return on asset ratio, return on owner’s equity ratio and many more. Refer to figure 2.3, DiGi.Com Berhad shows average gross profit margin ratio from 2010 to 2014, which is more than 25 per cent. This higher ratio resulted the company proceed efficient purchasing management with low purchasing cost. Besides, based on figure 2.3, net profit margin ratio shows the positive margin from 2010 to 2014, which is each year more than 18 per cent. A high net profit margin ratio means DiGi.Com Berhad obtaining lower expenditures or costs involved in executing sales activities. Moreover, refer to figure 2.3, return on asset ratio on 2010 to 2014 shows positive value, except 2012 was slightly lower value with 79.66 per cent. Normally, a higher return on asset ratio means effective management’s decision to generate profit regardless of resources. Besides, return on owner’s equity is show positive value, which means the success of business in generating profit, especially in 2014 with 301.54 per cent. In overall, DiGi.Com Berhad was in stable position of probability ratios and the company was able to generate profits within a specified