CHAPTER 17  EXPANDING BUSINESS
LEARNING OBJECTIVES <ul><ul><ul><li>Explain the alternative that can be used to expand the business.  </li></ul></ul></ul>...
INTRODUCTION  <ul><li>Objective of conventional business is to maximize shareholders wealth while in Islamic business the ...
INVESTMENT DECISION  <ul><li>Companies venturing outside Malaysia </li></ul><ul><li>Tabung Haji </li></ul><ul><li>CIMB Ban...
CLASSIFICATION OF CAPITAL EXPENDITURE  <ul><li>Expension of current business </li></ul><ul><ul><li>AirAsia </li></ul></ul>...
CAPITAL BUDGETTING TASK   <ul><li>Capital Budgeting  </li></ul><ul><li>Capital budgeting is a required managerial tool.  <...
CAPITAL BUDGETING TASK <ul><li>Propose New Projects </li></ul><ul><li>Estimate Cash Flows of Projects </li></ul><ul><li>De...
SHORT TERM INVESTMENT DECISION <ul><li>Types of investment is known as working capital management which also known as shor...
INVESTMENT STRATEGY  Liquidity  Management Accounts  Receivable Management  Inventory Management
MERGER & OTHR FORMS OF RESTRUCTURING <ul><li>Immediate Growth – TM Touch (013) under Telekom Malaysia with Celcom (019) </...
MERGER ANALYSIS  Identify Potential Merger Prospect Make Merger Decision Evaluate Potential Merger  Prospect
MERGER PROCEDURES  Financing of  Merger Integrating the Business Tender Offer Post Merger Evaluation
<ul><ul><li>Tutorial Questions  </li></ul></ul><ul><ul><ul><li>As per discuss questions page 218… </li></ul></ul></ul>
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Chapter 17

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Chapter 17

  1. 1.
  2. 2. CHAPTER 17 EXPANDING BUSINESS
  3. 3. LEARNING OBJECTIVES <ul><ul><ul><li>Explain the alternative that can be used to expand the business. </li></ul></ul></ul><ul><ul><ul><li>Describe how capital budgeting can be used to evaluate investment </li></ul></ul></ul><ul><ul><ul><li>Explain the purposes of merger and acquisition, the process and benefits </li></ul></ul></ul><ul><ul><ul><li>Explain how business can have an effective short term asset management </li></ul></ul></ul>
  4. 4. INTRODUCTION <ul><li>Objective of conventional business is to maximize shareholders wealth while in Islamic business the goal is not to maximize but to have a just profit. </li></ul><ul><li>One of the method is to have good investment plan. In expending business, investment plays a major role. </li></ul><ul><li>Other alternative can be done is through merger and acquisition. </li></ul>
  5. 5. INVESTMENT DECISION <ul><li>Companies venturing outside Malaysia </li></ul><ul><li>Tabung Haji </li></ul><ul><li>CIMB Bank </li></ul><ul><li>AirAsia </li></ul><ul><li>Felda </li></ul>
  6. 6. CLASSIFICATION OF CAPITAL EXPENDITURE <ul><li>Expension of current business </li></ul><ul><ul><li>AirAsia </li></ul></ul><ul><ul><li>Felda </li></ul></ul><ul><ul><li>Tabung Haji </li></ul></ul><ul><li>Developing new business </li></ul><ul><ul><li>Proton </li></ul></ul><ul><ul><li>Honda </li></ul></ul><ul><li>Investment in an assets </li></ul><ul><ul><li>Industries from labour intensive to technology intensve </li></ul></ul>
  7. 7. CAPITAL BUDGETTING TASK <ul><li>Capital Budgeting </li></ul><ul><li>Capital budgeting is a required managerial tool. </li></ul><ul><li>One duty of a financial manager is to choose investments with satisfactory cash flows and rates of return. </li></ul><ul><li>Therefore, a financial manager must be able to decide whether an investment is worth undertaking and be able to choose intelligently between two or more alternatives through evaluating and comparing before selecting the project. </li></ul>
  8. 8. CAPITAL BUDGETING TASK <ul><li>Propose New Projects </li></ul><ul><li>Estimate Cash Flows of Projects </li></ul><ul><li>Determine Whether Projects Are Feasible </li></ul><ul><li>Implementing Feasible Projects </li></ul><ul><li>Monitor Projects that were implemented </li></ul>
  9. 9. SHORT TERM INVESTMENT DECISION <ul><li>Types of investment is known as working capital management which also known as short term assets and liabilities. </li></ul><ul><li>Short Term </li></ul><ul><li>Assets </li></ul><ul><li>Cash </li></ul><ul><li>S/term securities </li></ul><ul><li>Acct receivable </li></ul><ul><li>Inventory </li></ul><ul><li>Short Term </li></ul><ul><li>Liabilities </li></ul><ul><li>Acct Payable </li></ul><ul><li>S/term loan </li></ul>
  10. 10. INVESTMENT STRATEGY Liquidity Management Accounts Receivable Management Inventory Management
  11. 11. MERGER & OTHR FORMS OF RESTRUCTURING <ul><li>Immediate Growth – TM Touch (013) under Telekom Malaysia with Celcom (019) </li></ul><ul><li>Economic of Scale – TM Touch and Celcom. Media Prima (TV3, Channel 9, 8 TV, NTV7, Hot FM, Fly FM, 1 FM) </li></ul><ul><li>Managerial Benefits – BOC-BBMB then BCB merge CIMB becomes CIMB Bank acquire Southern Bank </li></ul><ul><li>Tax Benefit </li></ul>
  12. 12. MERGER ANALYSIS Identify Potential Merger Prospect Make Merger Decision Evaluate Potential Merger Prospect
  13. 13. MERGER PROCEDURES Financing of Merger Integrating the Business Tender Offer Post Merger Evaluation
  14. 14. <ul><ul><li>Tutorial Questions </li></ul></ul><ul><ul><ul><li>As per discuss questions page 218… </li></ul></ul></ul>

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