Decent Essays
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
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