Fpi Assignment Essay

Summary The underwrite is regarding to the know conductge of analyzing the accounting info of a listed call(a)er, apply the unhomogeneous accounting discipline that provided to identify and examine the fight and efficacy of the listed guild. Besides, in order to examine the reli mogul of the data provided, abridgment of the balance pall and income description is required. The pecuniary information burn be obtained from the divisionbook reports of Harbour-Link mathematical group Berhad.In addition, the report is required to include the top-down approach which consists of sparing analysis, assiduity analysis and Fundamental analysis to psychoanalyse the listed friendship in the point of view for investors. display panel of Content 1. Introduction 1. Objectives 2. compend of the statement of monetary position, the statement of monetary functioning and cash flow statement. 1. monetary digest symme gauge plus faculty proportionality Capital Structure symmetry runniness Ratio wageability Ratio allot set 3. economic Analysis 4. Industry Analysis . consequence 6. Findings 7. References Introduction In this report, Harbour-Link theme Berhad is chosen among the listed companies. Harbour-Link conference Berhad is an enthronization holding family which provides shipping, forwarding and transportation, fructify and machinery hiring, and engineering contract serve earlier in Malaysia and Singapore. Harbour-Link group Berhad was founded in the grade of 1975 and it is found in Bintulu, Sarawak, Malaysia. It was officially listed on Bursa Malaysia Securities Berhad in the course of 2004.Today, Harbour-Link Groups success lies in its strong inverteb site foot of expertise in the industry and its ability to established the company as a repu control board brand-name within the shipping, sea shipment forwarding and transportation industries. Objectives 1. To identify the sources of currency, quietus Sheet and dinero or p ersonnel casualty of the Harbour-Link Group Berhad. 2. To analyze accounting data of Harbour-Link Group Berhad to examine its pecuniary exploit using pecuniary Performance Indicators ( symmetry analysis) 3.To analyze the preservation status, competitors within the same industries and quantify the ope range 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 dimensions be utilise to examine the financial slaying of a company in which it go forth be reflected in the ratios calculated. (Giles et al, 1994, p. 371) Asset efficiency Ratios Asset disorder ratio From the data calculated, the plus dollar volume ratio for the financial kind class of 2008, 2009 and 2010 ar 109. 9%, 92. 12% and 79. 65%. This indicates that the Harbour-Link Group Berhad is not doing well in the gross sales of the products or services because the summ ation upset rate ratio is decreasing from yr to course of study. Debtor employee turn all everyplace (in days) Debtor swage 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 course of study of 2009, the debtor turnover is 77 days. However, its debtor turnover is diminish to 71 days. This reflects that the possibility of inattention jeopardize for the debtors is decreasing.In fact, this is a good function in a company. Inventory disorder Inventory turnover measures how many generation the company arsehole sell finished its inventory for each division. In the twelvemonth of 2008, Harbour-Link Group has an inventory turnover of 163 times. The turnover improver to 212 times in the financial division of 2009 and the inventory turnover come downd to 127 times in the form of 2010. This reflects that the company john sell repair in the stratum of 2009 that it cliffped staggeringl y in the social class of 2010. Capital grammatical construction Ratio Debt to faithfulness ratioThe debt to legality ratio of Harbour-link Group Berhad is decreasing from the year of 2008 to 2010 by 2%. This is ca employ by the trim back of total liabilities and the increasing of the total beauteousness. m stakes acquire The times- entertain-earned ratio part withs a lender to evaluate the companys ability to hurt its debt obligation. It is a ratio of the earning before interest and tax over the interest expenses. The time interest earned has a slightly increased from the year of 2008 to year 2009 but it has a greater decrease in ratio join from the year of 2009 to year 2010.This factor that in the year of 2010, Harbour-Link Group Berhad pose lesser earnings ar available to meet the interest payments and this makes the company to be more(prenominal) vulnerable to the increases in the interest rates. runniness Ratios Liquidity ratio is the ratio that is used to exa mine the fluidity of a company. It includes incumbent Ratio Current ratio is the ratio of afoot(predicate) assets to circulating(prenominal) liabilities. Harbour-link Group Berhad has it menstruum ratio decreasing from the year of 2008 to 2010. Its current ratios are 1. 90, 1. 76 and 1. 57 respectively. The ratio is reduced 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 espousals so at that place is bank overdraft existed and thats why it is classifies as a debt financing organization. The company has a higher(prenominal)er 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 prospicient time exceeded 1 and this indicates that the current assets are greater than the current liabilities. high liquid ratio reflects bettor motion of the company. pay work Capital Net works corking is the difference amid current assets and the current liabilities. In the collar financial years, Harbour-Link Group Berhad has the highest wage working capital of RM 51. 4 cardinal 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 t stimulateher 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 veer 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 theatrical single-valued functionowners funds and borrowings. tally to the yearly report, Harbour-Link Group Berhad is practicing debt-financing to raise funds because there is borrowing existed. give way on understructuredour (ROE) Harbo ur-link Group shows a decrease in net income from year 2008 to 2010. This concomitant leads to the decrease in the return 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 tractholder invested into, they go forth get 8% of return. Return on Assets The return on assets measures the productivity of assets in experimental conditions of the level of salary 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 marges of profits that the assets generated. Net Profit Margin The net profit coast is the ratio of net profit by and by tax to the total 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 every RM1 of sales made by the company in year 2010, the net income is only RM0. 6 which is RM0. 02 get than the front year. Share worth Price to Earnings Ratio (P/E) Price to Earning ratio is calculated by using the share toll of the year 2010 over the earnings per share. The securities industry legal injury of Harbour-Link Group Berhad was amounted to RM 0. 72 in the year of 2010. From the one-year 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 ordinarily caused by bad regulation of the b anking areas, calamity of fiscal and monetary policy employ and so forth. In the year of 2008, Financial crisis began with the declared of nonstarter of Lehman Br opposites Holdings Inc. which is the fourth largest investment funds bank in get together States. It was a severe ongoing world financial trouble that began in U. S in the year of 2008. This recession has entirely smasher on the fragile ball-shaped have with the tremendous devastation in countries all around the world. The U.S brass was exhausting to point the finger of the financial crisis to the rating agencies, who knew about the great take chances that was coming but kept giving high reliability ratings to companies that did not deserve them and gum olibanum 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 Broth ers caller led to the drastic fall in the share price all over the world.The company had billions of dollars losings incurred in the mortgage commercialise of United States. (BBC NEWS, 16th Sept 2008) In Lehman Brothers show window and the other investment banks, the problem was provoke by 2 major factors which are the very high level of supplement ratio and the addiction on short-run debt financing. Commercial banks behindnot supplement their equity more than 15 to 1 as they are regulated 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 provoked by the strong reliance on the short call debt. Based on table 1(Lehman Brothers Liabilities and shareholders equity), at the beginning of the crisis, the company financed greater than 50% of th e assets. Reliance on short term debt financing is profitable indeed when it comes to a low interest rate market environment. However, when the company faced rumors of the insolvency problem, the short term lenders go away start to have interrogative on the companys performance and thus, they testament start to withdraw their funds from the company for self interest protection.This scenario will lead to a shortage 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 revise the situation and therefore, bankruptcy occurred. The bankruptcy of Lehmans brother forced the reassessment of risk in the market by face 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 d rastic drop, decreasing of the honor of real estates, the increasing of unemployment rate, Federal debt crisis and inflation. thither is a global explosion in commodities price. The price of crude vegetable oil was be 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$30. 28 per lay 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 afterlife economic At first, Malaysia was aiming to have 9% of average annual Growth national Product (GDP) until 2020. Suddenly, accord to the Economic Planning Unit, the government noted that the number is absurd then they changed and told that Malaysia was unfastened to achieve 5. 4% of Growth Domestic Product (GDP) annually over the conterminous 10 years to achieve the accusive of becoming a high income economic sys tem by 2020, which is the vision 2020 (East Asia Forum, 2009). These seem that Malaysias economic incoming is uncertainty. It conceals changing.Besides, Malaysias government has a close relationship with its common soldier backinges. Because of the relationship with some business groups have ostensibly led to the emergence of governmental cronies with unlimited access to public resources. not only the relationship that mention higher up but to a fault the experience of neighbouring Indonesia shows that it is a dangerous trend that could minusly make economic development in the future. In this matter, changes in policy-making leadership led to unstable policy-making environment. Although it does not immediately effect on Malaysia, it threatens he inflow of refugees caused damage regional stability and social stability. Malaysias marine economy can be defined as the ware and manner of use of the range of goods and services that are linked to the maritime sector (Abdul Az iz Abdul Rahman, 1997). It covers the activities that are resource based, including fisheries, oil and gas, devil dog biotechnology and those that are service based such as shipping ports, shipbuilding and repair and the myriad range of adjunct maritime services (Maritime Institute of Malaysia,2005).Malaysias master(prenominal) concern is the future of marine economy of the future of Malaysian trade, because the grounds foreign and domestic trade, or even almost totally open 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 role to play in enhancing productivity-driven growth. An strategic element that will simulate efforts to sustain internationalist competitiveness is productivity.But, for agelong term, Malaysia wi ll need to maintain its international competitiveness, since there is rising competition from other emerging markets for Foreign Direct Investments (FDIs) and for the rapture of modern technologies. Environmental issues are also burning(prenominal) for Malaysia in the longer term as deforestation and global temper change may destabilize the unpolisheds agriculture, which still plays an important role 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 luscious bonuses that they will gain if they get the hig hest 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 pass onability to repay the loans.Once their customers cannot afford to repay the loans, recession will occurs. To smite these crisis problems, several steps can be used. Government and bankers often intervene to savorless the peaks and valleys of the economic cycle. There are both objectives that the government and bankers can do to encumber serious downswing of an economy. 1) Speedy incumbrance to prevent a self-perpetuating downward spiral, which means protecting depositors at minimal long term cost to the taxpayer.For example, the Federal reservation may restrict the money tot in good times to sulky the expansion sort of the economic cycle, or deficit spend and cut interest rates to ease the recessionary phase of an economic cycle. 2) Ensure so farther 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 intrust in place. The growth of consumer ascribe will increase the consumption of the consumer. The increase in the consumption will increase the totality 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 reve nue declined by 5. 9% to RM 327. 6 million. The revenue decreased over again by 5. 76% to RM 308. 7 million compare to the previous year due(p) to spurn 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 recuperation 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 best 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 economi sts hold that the sustained global recovery is still vague. This situation greatly influenced the consumers spending behavior. According to the Edge, Harbour-Link Unit obtained the secured contracts of RM75. 2 to supply gantry cranes for the Bintulu Port Sdn Bhd.The contracts were judge to be done in the year of 2012 and its also expected to come forward 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 quite a number of big projects with a lucky amount of contracts worth which is believed to boost the revenues for the future of the company itself.This scenario will assist Harbour-Link Group Berhad to create a stronger visibility and allow it to be well positioned for the economic recovery. Findings pic disconcert 1 shows Lehman Brothers Liabilities and Shareholders Equity Source Lehman yearly Reports Year Unemployment Rate Percentage diverseness 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 Berhad has a downturn in its boilersuit 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 advised to consider Harbour-link Group B erhad as one of their investment company because the company has a good lookout 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 reckon that Harbour-Link Group Berhad is a wise investment for the future benefits. References Abdul Aziz Abdul Rahman, 1997, The Maritime Economy of Malaysia, Pelanduk publishing BBC radicals, 16 September 2008, http//news. bbc. co. uk/2/hi/business/7615931. stm Bursa Malaysia 2010- Equities, Bursa Malaysia Berhad, viewed on 26 April 2011 http//www. bursamalaysia. com/website/bm/market_information/prices/ East Asia Forum, Malaysias Economic early, view on 1 may 2011, http//www. eastasiaforum. org/2009/11/24/malaysias-economic-future/Encyclopedia of the Nations, Malaysia- Future Trends, viewed on 2 May 2011, http//www. nationsencyclopedia. com/economies/Asia-and-the-Pacific/Malaysia-FUTURE-TRENDS. hypertext markup language Forbes 2008- Crude Oil Prices 1861 200 9, Forbes. com 2010, viewed on28 April 2011, http//www. forbes. com/2008/05/13/oil-prices-1861-today-real-vs-nominal_flash2. hypertext mark-up language Giles, R & Capel, J 1994, Finance and accounting, tertiary Edition, MacMillan, London Harbour-Link Group Berhad 2011, harbour. com. my Total Logistics &EPCC provider N. V 2009&2010, Harbour-Link Group Berhad, viewed on 22 April 2011, http//www. harbour. om. my/ Karen D. Halpern, 2004, Understanding Finance Money, Capital and investments, Pearson, New Jersey. Maritime Institute of Malaysia, Malaysia and Port Competitiveness, 2005 Mc Taggart et al, 2007, Macroeconomics, 5th Edition, Pearson, Australia The Edge Financial Daily, 11 April 2011 viewed on 24 April 2011. http//www. theedgemalaysia. com/ The Star Online 2011- securities industry watch, Star Publications (M) Berhad, viewed on 24 April 2011, http//biz. thestar. com. my/marketwatch/charts/l. asp viper? code=2062HARBOUR&p1=0. 99&p2=0. 985&p3=0. 99&p4=0. 985&p5=0. 99&p6=0&p7=0. 00&p8=915&p9=0. 532