Fpi Assignment Essay

Summary The composing is regarding to the pick out leadge of analyzing the plow data of a listed confedeproportionn, utilise the various accounting in classation that provided to commit and examine the competitiveness and efficiency of the listed follow. Besides, in dress to examine the reliability of the data provided, digest of the balance sheet and income bid is required. The pecuniary information can be obtained from the annual reports of Harbour-Link aggroup Berhad.In addition, the report is required to include the top-down approach which consists of stinting analysis, diligence analysis and Fundamental analysis to tumble the listed lodge in the identify of view for investors. duck of Content 1. Introduction 1. Objectives 2. depth psychology of the statement of pecuniary position, the statement of pecuniary performance and cash flow statement. 1. financial Analysis dimension asset efficiency dimension peachy Structure symmetry liquid Ratio Profitabi lity Ratio Sh ar scathe 3. Economic Analysis 4. persistence Analysis . Conclusion 6. Findings 7. References Introduction In this report, Harbour-Link classify Berhad is chosen among the listed companies. Harbour-Link radical Berhad is an investment holding community which provides transferral, forwarding and transportation, full treatment and machinery hiring, and engineering contract services primarily in Malaysia and Singapore. Harbour-Link Group Berhad was founded in the course of 1975 and it is based in Bintulu, Sarawak, Malaysia. It was offici every(prenominal)y listed on Bursa Malaysia Securities Berhad in the stratum of 2004.Today, Harbour-Link Groups success lies in its loyal foundation of expertness in the industry and its ability to established the familiarity as a repu sidestep brand-name within the shipping, sea freight forwarding and transportation industries. Objectives 1. To identify the sources of coin, Balance Sheet and profit or loss of the Harbour-Link Group Berhad. 2. To analyze accounting data of Harbour-Link Group Berhad to examine its monetary performance development fiscal Performance Indicators ( symmetry analysis) 3.To analyze the economy status, competitors within the same industries and valuate the operating efficiencies of the listed company. 4. To examine the competitiveness and efficiency of the listed company by using the various accounting information provided. Financial Analysis Financial analysis ratios are used to examine the financial performance of a company in which it lead be reflected in the ratios calculated. (Giles et al, 1994, p. 371) Asset efficiency Ratios Asset dollar volume ratio From the data calculated, the asset employee swage ratio for the financial stratum of 2008, 2009 and 2010 are 109. 9%, 92. 12% and 79. 65%. This indicates that the Harbour-Link Group Berhad is not doing well in the sales of the products or services because the asset turn everywhere ratio is diminish from course to stratum. Debtor turnover (in days) Debtor turnover is the debtor collection period of a company. Harbour-Link Group Berhad had a debtor turnover of 73 days in the course of 2008. In the stratum of 2009, the debtor turnover is 77 days. However, its debtor turnover is go downd to 71 days. This reflects that the possibility of default risk for the debtors is decreasing.In fact, this is a good amour in a company. Inventory Turnover Inventory turnover measures how numerous times the company can dish out through its inventory for for each one family. In the course of 2008, Harbour-Link Group has an inventory turnover of 163 times. The turnover accession to 212 times in the financial year of 2009 plainly the inventory turnover diminish to 127 times in the year of 2010. This reflects that the company can sell dampen in the year of 2009 that it dropped tremendously in the year of 2010. Capital structure Ratio Debt to equity ratioThe debt to equity ratio of Harbour-link Group B erhad is decreasing from the year of 2008 to 2010 by 2%. This is caused by the reduce of total liabilities and the increasing of the total equity. Time stake earned The times- busy-earned ratio allows a lender to evaluate the companys ability to image its debt obligation. It is a ratio of the earning before stakes and tax over the come to expenses. The time interest earned has a slightly increase from the year of 2008 to year 2009 but it has a greater decrease in ratio amount from the year of 2009 to year 2010.This means that in the year of 2010, Harbour-Link Group Berhad realise lesser earnings are available to meet the interest payments and this makes the company to be more vulnerable to the increases in the interest rates. mobileity Ratios Liquidity ratio is the ratio that is used to examine the liquidity of a company. It includes genuine Ratio Current ratio is the ratio of actual assets to current liabilities. Harbour-link Group Berhad has it current ratio decreasing fr om the year of 2008 to 2010. Its current ratios are 1. 90, 1. 76 and 1. 57 respectively. The ratio is decreased by 14% and 19%.The data is calculated as shown in the findings. Liquid Ratio Liquid ratio is the ratio of (current assets-inventory) to (current liabilities-bank overdraft). Harbour-Link Group Berhad has borrowings so on that point is bank overdraft existed and thats why it is classifies as a debt financing organization. The company has a higher(prenominal) liquid ratio of 2. 34 in the year of 2010 compared to the year of 2008 and 2009 which is 1. 88 and 1. 75 respectively. The liquid ratio of the 3 financial historic period exceeded 1 and this indicates that the current assets are greater than the current liabilities.Higher liquid ratio reflects better performance of the company. earnings works Capital Net working ceiling is the difference between current assets and the current liabilities. In the tercet financial years, Harbour-Link Group Berhad has the highest la st working capital of RM 51. 4 one million million in the year of 2008. The figure of net working capital for Harbour-link Group Berhad decreased in the year of 2009 and 2010 by 0. 43% and 12. 32% respectively. This shows that thither is a drastic drop in the net working capital of year 2010. Profitability Ratios EBIT to total coin ratioEBIT to total funds ratio of Harbour-Link Group Berhad is decreasing in the range of 22% from the financial year of 2008 to 2009 and 21. 4% from the financial year of 2009 to 2010. The total funds consist of donationholders funds and borrowings. gibe to the annual report, Harbour-Link Group Berhad is practicing debt-financing to raise funds because there is borrowing existed. go through on Equity (hard roe) Harbour-link Group shows a decrease in net income from year 2008 to 2010. This website leads to the decrease in the offspring on equity (ROE) of 5%.In the financial year of 2010, it has the ROE of 0. 08 which indicates that for every RM1 of the capital that the shareholder invested into, they entrust get 8% of return. Return on Assets The return on assets measures the productivity of assets in terms of the train of profits each dollar of assets generates. (Karen D. H, 2004, p. 131) The return on assets of the Harbour-Link Group Berhad is decreasing from the financial year of 2008 to 2010. It decreased from 8% of year 2008 to 7% in the year of 2009 and then 5% in the year of 2010.This implies that the productivity of the companys assets is not doing well in terms of profits that the assets generated. Net Profit Margin The net profit margin is the ratio of net profit after tax to the total tax revenues. In the financial year of 2008 and 2009, Harbour-Link Group Berhad has the net profit margin figure of 8%. It indicates that the company has a net income of RM0. 08 for each RM1 of sales. However, the net profit margin for the year of 2010 decreased by 2% which is only 6% in the financial year. This shows that for ever y RM1 of sales made by the company in year 2010, the net income is only RM0. 6 which is RM0. 02 tear down than the antecedent year. Share Price Price to Earnings Ratio (P/E) Price to Earning ratio is calculated by using the share scathe of the year 2010 over the earnings per share. The foodstuff price of Harbour-Link Group Berhad was amounted to RM 0. 72 in the year of 2010. From the annual report of the financial year of 2010, the earning per share is RM 0. 11. By using the formulae, the price to earning per share of 2010 is calculated as shown in the table with a figure of RM 6. 825. Current Economic Analysis Roots of Global financial crisisGlobal financial crisis are usually caused by bad regulation of the banking sectors, failure of fiscal and monetary policy implemented and so forth. In the year of 2008, Financial crisis began with the declared of bankruptcy of Lehman Brothers Holdings Inc. which is the fourth largest investment bank in joined States. It was a severe ongoin g world financial problem that began in U. S in the year of 2008. This recession has entirely hitting on the fragile global economy with the tremendous devastation in countries all around the world. The U.S organization was trying to point the finger of the financial crisis to the rating agencies, who knew about the great risk that was coming but unbroken giving high reliability ratings to companies that did not deserve them and thus investors invested in the wrong companies. The cause of the bankruptcy of Lehman Brothers Holdings Inc was the accumulation of debt and the increasing of loan defaults. wherefore it evolved into a world crisis The news on bankruptcy of Lehman Brothers Company led to the drastic fall in the share price all over the world.The company had billions of dollars losses incurred in the mortgage market of United States. (BBC NEWS, sixteenth Sept 2008) In Lehman Brothers case and the other investment banks, the problem was fire by 2 major factors which are t he very high train of supplement ratio and the dependence on short-term debt financing. Commercial banks cannot leverage their equity more than 15 to 1 as they are regulate but for Lehman Brothers Company, it had a leverage ratio of more than 30 to 1. According to the table 1, Lehman Brothers had only $3. 30 of equity for every $100 of loans. With this ratio, it makes the company to be insolvent.Conversely, the instability arose from the leverage problem was aggravated by the strong reliance on the short term debt. Based on table 1(Lehman Brothers Liabilities and shareholders equity), at the beginning of the crisis, the company financed greater than 50% of the assets. Reliance on short term debt financing is profitable thusly when it comes to a low interest rate market purlieu. However, when the company go about rumors of the insolvency problem, the short term lenders will start to have doubt on the companys performance and thusly, they will start to withdraw their funds from t he company for self interest protection.This scenario will lead to a shortfall of liquidity for the borrower and thus the company tends to default. After the crisis began, Lehman Brothers did try to decrease its leverage and reduce its dependence on the short term borrowing but it was too late for them to amend the situation and therefore, bankruptcy occurred. The bankruptcy of Lehmans brother forced the reassessment of risk in the market by looking at the price of the credit default trades. Impact on Malaysia and world economies The crisis started in the year of 2008 had a great hit on Malaysia and world economies.It causes the gas price had a drastic drop, decreasing of the appraise of real estates, the increasing of unemployment rate, Federal debt crisis and inflation. There is a global enlargement in commodities price. The price of crude oil was remaining at high levels for few years till the end of 2008, the crude oil price dropped from the peak in July 2008 of US$145 to US$3 0. 28 per gun barrel in December 2008. (Forbes, 2008) According to the findings in table 2, the unemployment rate of Malaysia increased by 3. 13% from the year of 2008 to 2009 and 12. 12% from the year of 2009 to 2010.Malaysian proximo economic At first, Malaysia was aiming to have 9% of average annual bring home the bacon Domestic Product (gross domestic product) until 2020. Suddenly, according to the Economic Planning Unit, the government famous that the number is absurd then they transfigured and told that Malaysia was capable to achieve 5. 4% of yield Domestic Product (GDP) annually over the next 10 years to achieve the objective of becoming a high income economy by 2020, which is the vision 2020 (East Asia Forum, 2009). These seem that Malaysias economic future is uncertainty. It keeps changing.Besides, Malaysias government has a close relationship with its private carees. Because of the relationship with some business groups have ostensibly led to the emergence of pol itical cronies with unlimited gateway to public resources. Not only the relationship that mention above but too the experience of neighbouring Indonesia shows that it is a dangerous trend that could negatively push economic development in the future. In this matter, changes in political leading led to unstable political environment. Although it does not directly ensnare on Malaysia, it threatens he influx of refugees caused damage regional stability and social stability. Malaysias marine economy can be defined as the yield and manner of use of the range of goods and services that are linked to the maritime sector (Abdul Aziz Abdul Rahman, 1997). It covers the activities that are resource based, including fisheries, oil and gas, marine biotechnology and those that are service based such as shipping ports, shipbuilding and haunt and the myriad range of ancillary maritime services (Maritime Institute of Malaysia,2005).Malaysias main concern is the future of marine economy of the future of Malaysian trade, because the countrys foreign and domestic trade, or even or so totally dependent on sea transport facilities. From this we can know that it will have a very bright prospect in maritime economy. If Malaysia is to achieve the goals of industrialization, productivity-driven growth and enhancing competitiveness will depend on how the maritime sector is managed. The maritime sector has a main mapping to play in enhancing productivity-driven growth. An grievous element that will affect efforts to avow external competitiveness is productivity.But, for longer term, Malaysia will need to maintain its international competitiveness, since there is rising competition from other emerging markets for Foreign calculate Investments (FDIs) and for the transfer of modern technologies. Environmental issues are also important for Malaysia in the longer term as deforestation and global climate change may destabilize the countrys agriculture, which still plays an importan t section in the national economy. What is the most important is the political will effect a change to system-centred thinking in planning the future of the economy. So, a stable political environment is very important to Malaysia.If the political environment of Malaysia is good, it will have a bright future of economy. Solutions to the Global Financial Crisis or crises in general. Banks and financial institutions can cause a downswing of an economy because of their ignorance of the business cycle. Besides, bankers are greedy with the fat bonuses that they will gain if they get the highest market shares results. When the economy is doing well, they expect that there will be no recession problem is going to occur and therefore they will give loans to their customers without considering their customers affordability to repay the loans.Once their customers cannot afford to repay the loans, recession will occurs. To overcome these crisis problems, several(prenominal) steps can be used. Government and bankers a good deal intervene to smooth the peaks and valleys of the economic cycle. There are two objectives that the government and bankers can do to prevent serious downswing of an economy. 1) Speedy incumbrance to prevent a self-perpetuating downward spiral, which means protecting depositors at marginal long term cost to the taxpayer.For example, the Federal reserve may bound the money supply in good times to slow the enlargement phase of the economic cycle, or deficit spend and cut interest rates to ease the recessionary phase of an economic cycle. 2) Ensure so far as possible that future booms are less exaggerated. This has implications for the form of any rescue package, and for the system of financial oversight that is put in place. The growth of consumer credits will increase the consumption of the consumer. The increase in the consumption will increase the aggregate demand of the country whereby AD equals to C + I + G + (X-M). Mc Taggart et al, 2007 p. 766). When the AD is increasing, it means that GDP is also increasing. This shows that the consumer credits provided will also be increased and therefore people will keep on borrowing money from the banks for consumption. This situation actually can amplify the business cycle and extend the upswing of the economy. Industry analysis The domestic and the world economy were in a downturn in the year of 2009. All the industry was affected and they are making an effort to maintain their previous performance and growth momentum. In the year of 2009, Harbour-Link Group Berhad suffered revenue declined by 5. 9% to RM 327. 6 million. The revenue decreased again by 5. 76% to RM 308. 7 million compare to the previous year due to lower selling prices and softer consumer demand. One of the Company competitors, Swee Joo Berhad was also suffered by achieved a turnover of RM 346. 7 million which is 9. 9% lower than the previous financial period. The lower turnover was also impacted by the retriev al state for the economy. Swee Joo Berhad has a reduce in current ratio from 0. 648 to 0. 278 which seems to be lower than that of the Harbour-Link Group Berhad and therefore Harbour-link seems to have a better current ratio.Swee Joo Berhad has a negative figure for its Earnings before interest and tax of -11. 32 million and -176. 82 million in the year of 2009 and 2010. This is a huge loss for the company. It shows that Harbour-Link has a better performance than its major competitor, Swee Joo Berhad. Although the economy showed signs of recovery, but most of the economists hold that the sustained global recovery is still vague. This situation greatly influenced the consumers spending behavior. According to the butt against, Harbour-Link Unit obtained the secured contracts of RM75. 2 to supply gantry cranes for the Bintulu Port Sdn Bhd.The contracts were expected to be done in the year of 2012 and its also expected to escalate the future revenue and earnings positively for Harbour- Link Group Berhad. (The Edge, 11 April 2011) There are several ways for the companies to perform better during this hard period. However, the suppliers are also important causes which will affect the company performance. Although Harbour-Link Group Berhad suffered lower revenue during the year, however, it obtained kinda a number of big projects with a favorable amount of contracts expenditure which is believed to boost the revenues for the future of the company itself.This scenario will assist Harbour-Link Group Berhad to realise a stronger visibility and allow it to be well positioned for the economic recovery. Findings pic Table 1 shows Lehman Brothers Liabilities and Shareholders Equity Source Lehman Annual Reports Year Unemployment Rate role Change 2006 3. 60 2007 3. 50 -2. 78% 2008 3. 20 -8. 7% 2009 3. 30 3. 13% 2010 3. 50 12. 12% Table 2 shows the unemployment rate in Malaysia Source CIA World Factbook Conclusion In conclusion, although the Harbour-Link Group Berha d has a downturn in its overall performances in the financial year of 2009 and 2010 as the results shown in the findings, but it has a better performance than its main competitor, Swee Joo Berhad in the shipping industries.The Harbour-Link Group Berhad is overall well organized in its financial statements as shown in the annual reports and it can be categorized as a profitable and successful listed company in Malaysia. On the perspective of investors, Harbour-link is counted as a good investment company and therefore investors are counsel to consider Harbour-link Group Berhad as one of their investment company because the company has a good expectation to have a huge increase in its future economic benefits.The future economy of Malaysia is expected to have a good return and therefore this ensure that Harbour-Link Group Berhad is a wise investment for the future benefits. 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