Fpi Assignment Essay

Summary The report is regarding to the know conductge of analyzing the accounting entropy of a listed familiarity, using the various accounting education that provided to identify and test the battle and qualification of the listed play along. Besides, in order to break down the reli expertness of the information provided, epitome of the balance sheet and income statement is required. The mo elucidateary information batch be obtained from the annual reports of Harbour-Link host Berhad.In addition, the report is required to overwhelm the top-down approach which consists of Economic analysis, Industry analysis and Fundamental analysis to psychoanalyze the listed bon ton in the point of view for investors. Table of inwardness 1. Introduction 1. Objectives 2. summary of the statement of pecuniary position, the statement of financial accomplishment and cash flow statement. 1. Financial Analysis proportion Asset efficiency proportionality detonator Structure dimensi on Liquidity proportionality positiveness proportionality Sh be Price 3. Economic Analysis 4. Industry Analysis . outcome 6. Findings 7. References Introduction In this report, Harbour-Link sort Berhad is chosen among the listed companies. Harbour-Link multitude Berhad is an enthronement funds holding partnership which provides shipping, forwarding and transportation, plant and machinery hiring, and engineering contract go primarily in Malaysia and Singapore. Harbour-Link base Berhad was founded in the class of 1975 and it is based in Bintulu, Sarawak, Malaysia. It was officially listed on Bursa Malaysia Securities Berhad in the course of study of 2004.Today, Harbour-Link assemblages mastery lies in its strong foundation of expertise in the industry and its ability to established the company as a reputable brand-name within the shipping, sea freight forwarding and transportation industries. Objectives 1. To identify the sources of funds, Balance Sheet and meshwork or expiration of the Harbour-Link Group Berhad. 2. To analyze accounting entropy of Harbour-Link Group Berhad to examine its financial procedure using Financial Performance Indicators ( dimension analysis) 3.To analyze the thrift status, competitors within the same industries and appreciate the operating 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 ratios are used to examine the financial performance of a company in which it ordain be reflected in the ratios calculated. (Giles et al, 1994, p. 371) Asset efficiency Ratios Asset employee turnover ratio From the data calculated, the asset turnover ratio for the financial division of 2008, 2009 and 2010 are 109. 9%, 92. 12% and 79. 65%. This indicates that the Harbour-Link Group Berhad is not doing intimately in the sales of the products or services because the asset turnover r atio is decrease from yr to course of study. Debtor turnover (in eld) Debtor turnover is the debtor collection flow of a company. Harbour-Link Group Berhad had a debtor turnover of 73 days in the yr of 2008. In the course of 2009, the debtor turnover is 77 days. However, its debtor turnover is diminish to 71 days. This reflects that the possibility of default happen for the debtors is decreasing.In fact, this is a good thing in a company. bloodline Turnover Inventory turnover measures how many times the company rout out sell through its inventory for distributively course of instruction. In the twelvemonth of 2008, Harbour-Link Group has an inventory turnover of 163 times. The turnover increased to 212 times in the financial year of 2009 but the inventory turnover decreased to 127 times in the year of 2010. This reflects that the company raise sell give in the year of 2009 but it sickped tremendously in the year of 2010. Capital structure Ratio Debt to equity ratioTh e debt to equity ratio of Harbour-link Group Berhad is decreasing from the year of 2008 to 2010 by 2%. This is caused by the reducing of impart liabilities and the increasing of the check equity. Time reside pull in The times- interestingness-earned ratio throw overboards a lender to evaluate the companys ability to meet its debt obligation. It is a ratio of the earning ahead interest and value over the interest expenses. The time interest earned has a slightly increased from the year of 2008 to year 2009 but it has a vitamin Aleer decrease in ratio amount from the year of 2009 to year 2010.This means that in the year of 2010, Harbour-Link Group Berhad view as lesser mesh are available to meet the interest payments and this makes the company to be more(prenominal) vulnerable to the increases in the interest rates. Liquidity Ratios Liquidity ratio is the ratio that is used to examine the liquidity of a company. It includes veritable Ratio Current ratio is the ratio of cu rrent assets to current liabilities. Harbour-link Group Berhad has it current ratio decreasing from the year of 2008 to 2010. Its current ratios are 1. 90, 1. 76 and 1. 57 respectively. The ratio is decreased 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 borrowings so there is bank overdraft existed and thats why it is classifies as a debt financing organization. The company has a higher 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 years exceeded 1 and this indicates that the current assets are greater than the current liabilities.Higher liquid ratio reflects better performance of the company. lowest working Capital Net working capital is the difference surrounded by current assets and the current liabilities. In the three financial years, Harbour-Link Group Berhad has the highest engagement working capital of RM 51. 4 one thousand million in the year of 2008. The numeral 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 there is a drastic drop in the net working capital of year 2010. Profitability Ratios EBIT to total funds ratioEBIT to total funds ratio of Harbour-Link Group Berhad is decreasing in the trudge 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 dole outholders funds and borrowings. fit in to the annual report, Harbour-Link Group Berhad is practicing debt-financing to raise funds because there is borrowing existed. Return on Equity (ROE) Harbour-link Group shows a decrease in net income from year 2008 to 2010. This situation leads to the decrease in the recidivate on equity (ROE) of 5%.In the financial ye ar of 2010, it has the ROE of 0. 08 which indicates that for every RM1 of the capital that the shareholder invested into, they pull up stakes get 8% of return. Return on Assets The return on assets measures the productivity of assets in terms of the level of emoluments each buck 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 and so 5% in the year of 2010.This implies that the productivity of the companys assets is not doing substantially in terms of profits that the assets generated. Net Profit Margin The net profit margin is the ratio of net profit after 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 yea r of 2010 decreased by 2% which is just 6% in the financial year. This shows that for every RM1 of sales make by the company in year 2010, the net income is only RM0. 6 which is RM0. 02 note than the preliminary year. Share Price Price to Earnings Ratio (P/E) Price to Earning ratio is calculated by using the share bell of the year 2010 over the earnings per share. The market equipment casualty of Harbour-Link Group Berhad was amounted to RM 0. 72 in the year of 2010. From the annual report of the financial year of 2010, the earning per share is RM 0. 11. By using the formulae, the hurt to earning per share of 2010 is calculated as shown in the table with a figure of RM 6. 825. Current Economic Analysis grow of Global financial crisisGlobal financial crisis are usually caused by bad regulation of the banking sectors, failure of fiscal and monetary policy utilise and so forth. In the year of 2008, Financial crisis began with the declared of bankruptcy of Lehman Brothers Holdi ngs Inc. which is the ordinal largest investment bank in United States. It was a severe ongoing man financial conundrum that began in U. S in the year of 2008. This recession has entirely hitting on the fragile global deliverance with the tremendous devastation in countries all around the world. The U.S presidency was trying to point the finger of the financial crisis to the rating agencies, who knew about the great risk that was coming but kept giving high reliableness ratings to companies that did not deserve them and thus 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. Why it evolved into a world crisis The countersign on bankruptcy of Lehman Brothers Company led to the drastic fall in the share price all over the world.The company had billions of dollars losses incurred in the mortgage market of United States. (BBC NEWS, 16th Sept 2008) In Lehman Brother s topic and the other investment banks, the problem was provoked by 2 study factors which are the very high level of supplement ratio and the habituation on wretched-term debt financing. Commercial banks brush asidenot leverage 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 aggravated by the strong reliance on the footling term debt. Based on table 1(Lehman Brothers Liabilities and shareholders equity), at the beginning of the crisis, the company financed greater than 50% of the assets. Reliance on short term debt financing is profitable indeed when it comes to a low interest rate market milieu. However, when the company faced rumors of the insolvency problem, the short term lenders pull up stakes start to have doubt on the companys performance and therefore, they will 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 meliorate the situation and therefore, bankruptcy occurred. The bankruptcy of Lehmans brother forced the limited review of risk in the market by looking 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 drastic drop, decreasing of the value of real estates, the increasing of unemployment rate, federal official debt crisis and inflation. There is a global explosion in commodities price. The price of in the raw oi l was remaining at high levels for few years trough the end of 2008, the crude oil price dropped from the peak in July 2008 of US$145 to US$30. 28 per barrel 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 proximo frugal At first, Malaysia was aiming to have 9% of average annual Growth Domestic Product (GDP) until 2020. Suddenly, fit in to the Economic Planning Unit, the government noted that the number is absurd then they changed and told that Malaysia was capable to achieve 5. 4% of Growth Domestic Product (GDP) p.a. over the next 10 years to achieve the objective of become a high income economy by 2020, which is the vision 2020 (East Asia Forum, 2009). These seem that Malaysias economic approaching is uncertainty. It forbears changing.Besides, Malaysias government has a close relationship with its private businesses . Because of the relationship with some business groups have ostensibly led to the emergence of governmental cronies with unlimited access to public elections. Not only the relationship that mention above but excessively the experience of neighbouring Indonesia shows that it is a dangerous trend that could disconfirmingly affect economic development in the future. In this matter, changes in political leadership led to unstable political environment. Although it does not directly effect on Malaysia, it threatens he influx of refugees caused disparage regional stability and social stability. Malaysias ocean economy can be defined as the production and manner of use of the range of goods and services that are linked to the maritime sector (Abdul Aziz Abdul Rahman, 1997). It covers the activities that are resource based, including fisheries, oil and gas, marine biotechnology and those that are service based much(prenominal) as shipping ports, shipbuilding and repair and the myria d range of supplemental maritime services (Maritime Institute of Malaysia,2005).Malaysias main concern is the future of marine economy of the future of Malaysian trade, because the realms extraneous and domestic trade, or even al closely totally dependent 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 growing 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 weighty element that will affect efforts to sustain international competitiveness is productivity.But, for lifelong term, Malaysia will need to maintain its international competitiveness, since there is rising argument from other emerging markets for Foreign Direct Investments (FDIs) and for the transfer of modern technologies. environmental issues are also importa nt for Malaysia in the longer term as deforestation and global climate change may destabilize the countrys agriculture, which still plays an important role in the national economy. What is the nigh important is the political will effect a change to dust-centred opinion 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 fat bonuses that they will gain if they get the highest 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 affordability to repay the loans. erstw hile their customers cannot afford to repay the loans, recession will occurs. To overcome these crisis problems, several go can be used. Government and bankers often intervene to smooth the peaks and valleys of the economic cycle. There are two objectives that the government and bankers can do to disallow serious downswing of an economy. 1) Speedy intervention to prevent a self-perpetuating downwards spiral, which means protecting depositors at minimal long term greet to the taxpayer.For example, the Federal reserve may restrict the money supply in good times to slow the expansion phase of the economic cycle, or deficit spend and cut interest rates to ease the recessive phase of an economic cycle. 2) Ensure so far as practicable 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 put in place. The growth of consumer credits will increase the consumption of the consumer. The increase in the consumption will increase the aggregate 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 cast up 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. solely 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 revenue declined by 5. 9% to RM 327. 6 million. The revenue decreased again by 5. 76% to RM 308. 7 million compare to the previous year due to cut back selling prices and softer consumer demand. One of the Company competitors, Swee Joo Berhad was also suffered by achiev ed 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 recovery 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 better 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 economists hold that the sustained global recovery is still vague. This situation greatly influenced the consumers spending behavior. According to the bunt, Harbour-Link Unit obtained the secured contracts of RM75. 2 to supply gantry cranes for the Bintulu style Sdn Bhd.The contract s were expected to be done in the year of 2012 and its also expected to escalate 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 regretful projects with a favorable 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 Table 1 shows Lehman Brothers Liabilities and Shareholders Equity cum Lehman Annual Reports Year Unemployment Rate Percentage Change 2006 3. 60 2007 3. 50 -2. 78% 2008 3. 20 -8. 7% 2009 3. 30 3. 13% 2010 3. 50 12. 12% T able 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 overall 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 Berhad as one of their investment company because the company has a good expectancy 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 ensure that Harbour-Link Group Berhad is a wise investment f or the future benefits. References Abdul Aziz Abdul Rahman, 1997, The Maritime Economy of Malaysia, Pelanduk Publication BBC News, 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 Future, 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. html Forbes 2008- utter(a) Oil Prices 1861 2009, Forbes. com 2010, viewed on28 April 2011, http//www. forbes. com/2008/05/13/oil-prices-1861-today-real-vs-nominal_flash2. html Giles, R & Capel, J 1994, pay and accounting, 3rd Edition, MacMillan, London Harbour-Link Group Berhad 2011, harbour. com. my Total Logistics &EPCC Provider N. V 2009& amp2010, 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 lead Online 2011- Market watch, Star Publications (M) Berhad, viewed on 24 April 2011, http//biz. thestar. com. my/marketwatch/charts/l. asp? 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