KOLEJ MULTIMEDIA JALAN GURNEY KIRI, KUALA LUMPUR Intro to Financial Management FIN 2063NAME :I/D NO. :COURSE :LECTURER :
COMPANY BACKGROUNDOVERVIEWThe late Tan Sri Konosuke Matsushita founded the Matsushita companies. TheMatsushita miracle began with his vision to contribute to the well-being of mankind byproviding reasonably-priced products and services in sufficient quantities.Today that vision has turned into a giant global business in more than 130 countriesaround the world.The famous brand name Panasonic is easily recognised. But behind this popularhousehold name and the extensive range of consumer durables that carry its labelstands its manufacturer, the foundation of the brands success, PanasonicManufacturing Malaysia Berhad - PMMA.The PMMA story in Malaysia is an inspirational one made remarkable and reflected inits string of proud achievements that have successfully spanned two decades. Being thefirst plant to manufacture household electrical appliances in Malaysia, the Companyconfidently took on its parent company in Japan.Throughout the years, the corporation has observed a swift progress from its humblestart as producer of dry-cell batteries to Malaysias leading manufacturer ofsophisticated electrical appliances.Today, the Panasonic brand name has emerged as one of the most welcome andtrusted brand names for electrical home appliances chosen by most Malaysianhouseholds. At Panasonic, we manufacture, operate, deliver, and maintain a series ofproduct range with globally competitive models under the Panasonic brand name tothe market, incorporating new features, enhanced capability and improved quality, andequally important, with our excellent after-sales-services.
HISTORYPMMA was born from the pursuit of two burning ambitions. Malaysias embarking on anambitious industrialisation programme aimed at import substitution in the early 60s andMatsushitas pursuit of an active internationalisation policy .Work on the factory started in early 1966 and PMMA was the first factory in the newly-opened industrial site. With the help of 15 pioneer workers mainly from Klang and 20Japanese engineers, PMMA produced it first product - dry cell batteries, black and whitetelevision sets, electric fans and later, refrigerators.After Year 2005, MELCOM is known as PMMA.
BOARD OF DIRECTOR’STan Sri Datuk Asmat bin Kamaludin : Chairman,Independent Non-Executive DirectorNaoya Nishiwaki : Managing DirectorTan Sri Dato’ Zaki bin Tun Azmi : Independent Non-Executive DirectorHiroshi Fukutomi : Executive DirectorRaja Dato’ Seri Abdul Aziz bin Raja Salim : Independent Non-Executive DirectorRamanaidu a/l Semenchalam : Executive DirectorRazman Hafidz bin Abu Zarim : Independent Non-Executive DirectorSoh Beng Kuan : Executive DirectorChen Ah Huat : Executive DirectorHiroshi Nakamura : Non-Independent Non-Executive DirectorHironori Otsuka : Executive DirectorNobuyuki Kochi : Executive Director
THE COMPANY PRODUCTThis company nature of business is an electronic devices which is divided into two types ofproduct that been manufactured. The type of product is Kitchen Appliences and LifeAppliences.Kitchen Appliences 1. Rice cooker 2. Slow cooker 3. Blender 4. Juicer 5. Food processerLife Appliences 1. Home shower 2. Fan 3. Iron 4. Vaccuum cleaner
PROFITABILITY RATIO Gross Profit Margin =Year Gross Profit Sales Gross profit margin (%)2008 RM 79652 RM 562490 14.162009 RM 89799 RM 600868 14.942010 RM 133633 RM 679764 19.66 Gross profit margin25.0020.0015.00 Gross profit margin (%)10.00 5.00 0.00 2008 2009 2010 The gross profit margin increase within these 3 years. It increase 0.78% in year 2009 and increase highly on 2010 around 4.72% of ratio. It shows that this increasing matter is good for the company especially on 2010.
Operating Profit Margin =Year Operating income Revenue Operating Profit Margin (% )2008 RM 61618 RM 562490 10.952009 RM 55086 RM 600868 9.172010 RM 76720 RM 679764 11.29 Operating Profit Margin12.0010.00 8.00 6.00 Operating Profit Margin 4.00 2.00 0.00 2008 2009 2010 The graph shows that this ratio is not stabilized during year 2009. It decrease around 1.78% of ratio but increase around 2.12% of ratio on year 2010. This means that this company make lot of revenue and less expenses during the year 2010.
Net Profit Margin =Year Net Income Sales Net Profit Margin (%)2008 RM 48478 RM 562490 8.622009 RM 43247 RM 600868 7.202010 RM 61199 RM 679764 9.0 Net Profit Margin10.00 9.00 8.00 7.00 6.00 5.00 Net Profit Margin 4.00 3.00 2.00 1.00 0.00 2008 2009 2010 In the year 2008, the net profit margin is 8.62% but it decrease around 1.42% on year 2009. It increase back around 1.0% on year 2010. It shows that this company pricing strategies and how well it controls costs at the year 2010 is very good and well- organized.
Return on Asset (ROA) =Year Net Income Average Total Return on Asset Asset (ROA)2008 RM 48478 RM 590596 0.0822009 RM 43247 RM 579729 0.0752010 RM 61199 RM 639719 0.096 Return on Asset (ROA)0.12 0.10.080.06 Return on Asset (ROA)0.040.02 0 2008 2009 2010 In the year 2009, the ROA decrease 0.007% but it increase back 0.021% by the year 2010. It shows that this company generating revenue by the year 2010 and shows that in the year 2009 , the company did not uses its assets effectively.
ROA Du-Pont =Year Net Income Net Sales Average Total Return on Asset Asset (ROA) Du Pont2008 RM 48478 RM 562490 RM 590596 0.0822009 RM 43247 RM 600868 RM 579729 0.0752010 RM 61199 RM 679764 RM 639719 0.096 Return on Asset (ROA) Du Pont0.1200.1000.0800.060 Return on Asset (ROA) Du Pont0.0400.0200.000 2008 2009 2010 Return on Asset Du Pont is similar as ROA usuall. On the year 2009, the company didn’t manage to use the asset in proper sequence and because of that the ratio is the lowest within the 3 years. On year 2010 is the highest ratio shows the stabilize the asset of the company.
Return on Equity (ROE) =Year Net Income Common Return on Equity Equity (ROE)2008 RM 48478 RM 484083 0.102009 RM 43247 RM 493229 0.0882010 RM 61199 RM 497445 0.123 Return on Equity (ROE)0.140.12 0.10.080.06 Return on Equity (ROE)0.040.02 0 2008 2009 2010 The ROE decrease 0.012% at the year 2009 and it shows that this company efficiency at generating profit from every unit of shareholder by that year was very low. ROE shows how well a company uses investment funds to generate earnings growth. But in the year of 2010, the ROE increase 0.035% and it consider desirable.
ROE Du-Pont =Year Return on Asset Debt Ratio ROE Du-Pont (ROA)2008 0.082 0.165 0.09822009 0.075 0.165 0.08982010 0.096 0.222 0.1232 ROE Du-Pont0.14000.12000.10000.08000.0600 ROE Du-Pont0.04000.02000.0000 2008 2009 2010 With the Du-Pont formula, the ROE is highly increase by the year 2010 around 0.0334% from the year 2009. It decrease 0.0084% by the year 2009 from the year 2008. The Du Pont identity breaks down Return on Equity (that is, the returns that investors receive from the firm) into three distinct elements. This analysis enables the analyst to understand the source of superior return by comparison with companies in similar industries.
LIQUIDITY RATIO Net working capital = –Year Current Asset Current Liability Net Working Capital2008 RM 522127 RM 90947 RM 4311802009 RM 512536 RM 94169 RM 4183672010 RM 561221 RM 139801 RM 421420 Net Working CapitalRM435,000RM430,000RM425,000 Net Working CapitalRM420,000RM415,000RM410,000 2008 2009 2010 The net working capital for the year 2008 was the highest.However, the ratio was decreased in the year 2009. The different between 2008 and 2009 is RM 12813 but increase for a 1.01% in the year 2010, RM 3053. Positive working capital is required to ensure that a firm is able to continue its operations and that it has sufficient funds to satisfy both maturing short-term debt and upcoming operational expenses.
Current Ratio =Year Current Asset Current Liability Current Ratio2008 RM 522127 RM 90947 5.742009 RM 512536 RM 94169 5.442010 RM 561221 RM 139801 4.01 Current Ratio7.006.005.004.003.00 Current Ratio2.001.000.00 2008 2009 2010 The current ratio decrease 0.3 from the year 2008 to 2009 and decrease again 1.43 from the year 2009 to 2010. A current ratio of assets to liabilities of 2:1 is usually considered to be acceptable. This current ratio measures whether or not a firm has enough resources to pay its debts over the next 12 months. A high current ratio is better than a low current ratio, because a high current ratio means that the company is more likely to meet its liabilities which fall due in the next 12 months.
Quick Ratio =Year Current Asset Inventories Current Quick Ratio Liability2008 RM 522127 RM 12352 RM 90947 5.612009 RM 512536 RM 9064 RM 94169 5.352010 RM 561221 RM 16373 RM 139801 3.90 Quick Ratio6.005.004.003.00 Quick Ratio2.001.000.00 2008 2009 2010 The quick ratio is to measures the ability of a company to use its near cash or quick assets to extinguish or retire its current liabilities immediately. At the year 2009, it decrease 10.95 from the year 2008 and decrease again 1.45 at the year 2010 from the year 2009. A company with a Quick Ratio of less than 1 can not currently pay back its current liabilities. In general, the higher the ratio, the greater the companys liquidity.
Quick Asset =Year Cash Acc Recv Quick Asset2008 RM 460551 RM 48120 RM 5086312009 RM 466562 RM 35432 RM 5019942010 RM 496002 RM 48846 RM 544848 Quick AssetRM550,000RM540,000RM530,000RM520,000RM510,000 Quick AssetRM500,000RM490,000RM480,000 2008 2009 2010 The quick assets ratio is to measure how many account receivable can be convert into cash. It decrease from the year 2008 to year 2009 around RM 6637 but increase from the year 2009 to year 2010 around RM 42854.
SOLVENCY RATIO Debt Ratio =Year Total Liability Total Asset Debt Ratio2008 RM 97367 RM 590596 0.1652009 RM 95646 RM 579729 0.1652010 RM 142274 RM 639719 0.222 Debt Ratio0.2500.2000.150 Debt Ratio0.1000.0500.000 2008 2009 2010 Debt ratio indicates that the company assets that provided via debt. The debt ratio are equally within the years of 2008 and 2009 but increase at the year 2010 around 0.057 from the year of 2008 and 2009. The higher the ratio, the greater risk will be associated with the firms operation. In addition, high debt to assets ratio may indicate low borrowing capacity of a firm, which in turn will lower the firms financial flexibility.
Total Debt Equity Ratio =Year Total Debt Total Equity Total Debt Equity Ratio2008 RM 97367 RM 493229 0.19742009 RM 95646 RM 484083 0.19762010 RM 142274 RM 497445 0.2860 Total Debt Equity Ratio0.35000.30000.25000.20000.1500 Total Debt Equity Ratio0.10000.05000.0000 2008 2009 2010 Total debt equity ration is indicating the relative proportion of shareholders equity and debt used to finance a companys assets. The total equity debt is increase within the 3 years. It increase 0.0002 from year 2008 to 2009 and increase again 0.0884 from the year 2009 to 2010. The greater a companys leverage, the higher the ratio. Generally, companies with higher ratios are thought to be more risky because they have more liabilities and less equity.
Total Equity Multiplier =Year Total Debt Equity Total Equity Ratio Multiplier2008 0.1974 1.19742009 1+ 0.1976 1.19762010 0.2860 1.2860 Total Equity Multiplier1.30001.28001.26001.24001.2200 Total Equity Multiplier1.20001.18001.16001.1400 2008 2009 2010 The total equity multiplier is increases considerable around the year of 2010. It increase 0.0002 from the year 2008 to 2009 and increase 0.0884 from the year 2009 to year 2010. The higher the ratio is, the more the company is relying on debt to finance it’s assets
EFFICIENCY RATIO Inventory Turnover =Year Sales Inventory Inventory Turnover2008 RM 562490 RM 12352 45.522009 RM 600868 RM 9064 66.292010 RM 679764 RM 15373 44.22 Inventory Turnover70.0060.0050.0040.0030.00 Inventory Turnover20.0010.00 0.00 2008 2009 2010 Inventory turnover is is a measure of the number of times inventory is sold or used in a time period such as a year. The highest inventory turnover at the year 2009. It increase 20.77 from the year 2008 to year 2009. The lowest inventory turnover is in the year 2010. It decrease 22.07 from the year 2009 to year 2010. A high inventory turnover is generally desirable.
Average Inventory Turnover Per Year =Year Inventory Average Turnover Turnover per Year2008 45.52 8.02 365 Days2009 66.29 5.512010 44.22 8.25 Average Turnover per Year9.008.007.006.005.004.00 Average Turnover per Year3.002.001.000.00 2008 2009 2010 The average turnover per year is calculated from 365 days per the value of inventory turnover to measure how many days the inventory stay on average before it is sold. This is how the company can measure how fast the company can sell the product. At the year 2009, the inventory turnover decrease 2.51 from the year 2008 to year 2009. By the year 2010, it increase back 2.74 from year 2009 to year 2010.
Receivable Turnover =Year Sales Acc Receivable Receivable Turnover2008 RM 562490 RM 48120 11.692009 RM 600868 RM 35432 16.962010 RM 679764 RM 48846 13.92 Receivable Turnover18.0016.0014.0012.0010.00 8.00 Receivable Turnover 6.00 4.00 2.00 0.00 2008 2009 2010 This ratio measures the number of times, on average, receivables are collected during the period. At the year 2008, the receivable turnover is 11.69 and it increase of 5.27 on the year 2009. By the year 2010, it decrease 3.04 from the year 2009.
Day’s Sales in Receivable =Year Receivable Day’s Sales in Turnover Receivable2008 11.69 31.22 365 Days2009 16.96 21.522010 13.92 26.22 Day’s Sales in Receivable35.0030.0025.0020.0015.00 Day’s Sales in Receivable10.00 5.00 0.00 2008 2009 2010 Average number of days a firm takes to collect payments on goods sold. At year 2008, the ratio is 31.22 and decrease 9.7 at the yaer 2009. It incerase 4.7 at the year 2010 from year 2009. So that, the average at year 2009 is very low compared year 2008 and 2010.
Average Collection Period =Year Acc Receivable Sales Average Collection Period2008 RM 48120 RM 562490 8.552009 RM 35432 RM 600868 5.902010 RM 48846 RM 679764 7.19 Average Collection Period9.008.007.006.005.004.00 Average Collection Period3.002.001.000.00 2008 2009 2010 The average collection period is the number of days, on average, that it takes a company to collect their credit accounts or their accounts receivables. The average for the year 2008 is higher than year 2009 and year 2010 as well. It decrease 2.65 from year 2008 to year 2009 and increase 1.29 from the year 2009 to year 2010. If it increases, that means this company’s accounts receivables are not liquid and not being able to be converted into cash quickly. If the average collection period is decreasing, the opposite is true.
Average Payment Period = %Year Acc Payable Sales Average Payment Period2008 RM 72042 RM 562490 12.812009 RM 73412 RM 600868 12.222010 RM 116375 RM 679764 17.12 Average Payment Period18.0016.0014.0012.0010.00 8.00 Average Payment Period 6.00 4.00 2.00 0.00 2008 2009 2010 The average payment period ratio represents the number of days by the firm to pay its creditors. This ratio decrease 0.59 from the year 2008 to year 2009 and increase highly from year 2009 to year 2010 around 4.9. As the average payment period increases, cash should increase as well, but working capital remains the same. Most companies try to decrease the average payment period to keep their larger suppliers satisfied and possibly take advantage of trade discounts.
Total Asset Turnover =Year Sales Total Asset Total Asset Turnover2008 RM 562490 RM 590596 0.9522009 RM 600868 RM 579729 1.0362010 RM 679764 RM 639719 1.063 Total Asset Turnover1.0801.0601.0401.0201.0000.980 Total Asset Turnover0.9600.9400.9200.9000.880 2008 2009 2010 Asset turnover is that measures the efficiency of a companys use of its assets in generating sales revenue or sales income to the company. At year 2008, the total asset turnover is 0.952 and its the lowest ratio. It increase 0.084 from year 2008 to year 2009. The ratio continuosly increase 0.027 from the year 2009 to year 2010.
PERFORMANCE ANALYSIS Earning Per Share (EPS) Year Earning Per Share (EPS) 2008 0.80 2009 0.71 2010 1.01 Earning Per Share (EPS)1.201.000.800.60 Earning Per Share (EPS)0.400.200.00 2008 2009 2010 Earnings per share (EPS) is the amount of earnings per each outstanding share of a companys stock. The EPS at the year 2008 is 0.80 and it increase 0.09 from the year 2008 to year 2009. This EPS increase 0.3 from the year 2009 to year 2010.
Return On Net Sales =Year Net Income Net Sales Return On Net Sales2008 RM 48478 RM 562490 0.08622009 RM 43247 RM 600868 0.07202010 RM 61199 RM 679764 0.0900 Return On Net Sales0.10000.09000.08000.07000.06000.0500 Return On Net Sales0.04000.03000.02000.01000.0000 2008 2009 2010 Return on net sales what percentage of each ringgit of sales is made up of net income or net profit. By the year 2008, the return on net sales is 0.0862 and it decrease 0.0142 from year 2008 to year 2009 and it increase 0.0180 from year 2009 to year 2010. An increasing ROS indicates the company is growing more efficient, while a decreasing ROS could signal looming financial troubles.
Return on Total Asset =Year Net Income Average Total Return on Total Asset Asset2008 RM 48478 RM 590596 0.0822009 RM 43247 RM 579729 0.0752010 RM 61199 RM 639719 0.096 Return on Total Asset0.1200.1000.0800.060 Return on Total Asset0.0400.0200.000 2008 2009 2010 Return on total assets are aims to measure the company efficiency in utilizing its asset. From year 2008 to year 2009, the asset decrease 0.007 and from year 2009 to year 2010, it increase 0.021. It shows the company that attains a level of profitability with little asset is more efficient than a company that attains the same level of profit but utilizing more assets. The greater a companys earnings in proportion to its assets, the more effectively that company is said to be using its assets.