This research paper will use intra-entity basis (within the company) and industry (differences between entities within the industrial product industry) analyses to examine the competitiveness of Choo Bee Metal Industries Berhad (CB). Ann Joo Resources Berhad (AJ) will be used for comparative studies.
It begins with the external environment analysis, followed by industry attractiveness (Porter’s Five Forces) and SWOT analysis. The main focus is evaluating CB from the accounting management perspective. It includes horizontal analysis, vertical analysis and ratio analysis. The horizontal and vertical analyses cover income statement, statement of financial position and cash flow. The ratio analysis will examine liquidity, solvency and
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For this industry, there is high market risks exposure mainly due to changes in steel raw materials and finished goods prices (Annual Report 2012).
Operating Income (OI) for year 2010 and 2012 were similar, however in 2011 there was a huge increase of 88% to RM 46,483,000. However, net income of the company decreased from RM 15,796,584 to RM 9,640,000 in 2012. This is due to the impairment in goodwill of RM 87,000 relating to its subsidiary, Taik Bee Hardware Sdn. Bhd. because of the declining trading business operations (Annual Report 2012). However, comparatively to AJ, who is incurring loss in 2012, their OI dropped from RM 62,113,000 to a net loss of RM 18,867,000. The loss is mainly due to a sharp increase in COGS as severe price increase of raw materials, and a high Selling General and Admin Expenses (SGA). Although AJ’s sales is nearly half of CB’s sales for the year, but AJ SGA amounted to a high RM 84,457,000 which is almost 7 times of CB. This leads to the negative in net income for year 2012.
5.2 Statement of Financial Position
Total Assets (TA) for year 2010 to 2012 were similar with minimum changes. However, there was a huge decrease in Total Liabilities (TL) from RM 51,518,054 (2010) to RM 27,533,000 in 2012. This is mainly due to the decrease in Accounts Payable (AP) of almost 58%. CB managed to settle its unsecured payables of RM 60,000 from previous year in this financial year, thus leading to a decrease in its total
• Net profit margin has been negative and no major patterns over the 9 year period on net profit since the trend of the industry is based mostly on economic factors, and whether or not they secure contracts. Due to high percentage of COGS they are only left with a net profit of $980 or
Abstract : Analysis of financial statement of a company is an important because it is useful to obtain Information
during year 12 and year 13. However, in year 13 and year 14 total current assets fell
Between years 6 and 7 CBI’s Accounts Payable and Notes Payable increased by 192% for a change of $128,820. This indicates a weakness as the company has more than doubled their debts between these two years. Significantly increasing debt can impact shareholder confidence, which could impact the market value of CBI stock.
In order to ascertain how well a company is performing, analyses must be done in regard to the business being stable, including its’ ability to pay debts, how much cash or other liquid assets are available, and whether the organization is viable enough to continue operations. These analyses typically look at income statements, balance sheets, and statements of cash flow, where current and past performance will be studied with the goal of predicting how the company will perform in the future.
A vertical and horizontal analysis of each company's balance sheet and income statement in this particular case will be enlightening. A vertical analysis will for instance shed some light on how revenue is being used. In this case, each component of the companies' financial statements will be converted into a percentage of a key component of either the balance sheet or the income statement. A special common size balance sheet and income statement will be utilized to ease comparison. The
By using the consolidated income statements, balance sheet and cash flow statement, we can assess the company’s financial position. On the income statement, the company’s operation revenue increased by 4.5% ($393.4 million) from year 2006 while its operating income decreased by $65.1 million in the same period. Without considering the net-cash settlement feature expense recorded in 2007, operating income increased $103.6 million. Even though including the net-cash settlement feature
The return on shareholders’ fund, capital employed, total assets all have gone down during this period. The ability of the company to pay its short term debt hasn’t varied much, but the administrative expenses have gone up by a very large amount.
Income statements and balance sheets were reviewed to summarize the following key points that could
The significant changes I found on the balance sheet was that current assets increased by 7.2% in 2015 compared to 2014. All other assets listed took a hit at decreasing by -26.8%. As well as Ac-cumulated other comprehensive Income also took a big hit by decreasing
Assess the degree to which the firm’s accounting reflects the underlying business reality. Identify accounting distortions and evaluate their impact on profits and the sustainability of profits.
The operating review of the company lists down the operating losses that the company faced over year and compared it with the past years operating performance. The results suggest that the sales revenue for the company grew over the year; however, due to higher increase in the cost of sales the company had to face a higher gross loss than the past year (Refer to appendix A). Moreover, the company discontinued its noncore retailing operations for the year in an attempt to reduce the losses sustained in the past year, but the result was not positive, and the company had to face higher loss from its core business in 2010 then both the operations combined in the past year (JJB Sports PLC, 2011).
1 In Ravi Suria’s analysis, “we believe that the current cash balances will last the company through the first quarter of 2001.” According to Exhibit 12c the cash flow statement, in contrast, the cash balance could last for the first quarter of 2001, when it suffered from 407 losses in operating activities, though positive in investing and
In the year 2007, there is a drop in financial performance within the company. Earnings have dropped
It can be evaluated in three broad categories namely asset performance, working capital adequacy and the capitalization structure.