Living by Numbers

March 23, 2018 | Author: Sitti Najwa | Category: Profit (Accounting), Dividend, Investing, Money, Financial Economics



NAMEUK NUMBER YONG KUENT HAN SITTI NAJWA BT SULONG @ ABDUL RAZAK SITI HAMIZA SHAIRA BT RIFIN NURUL NAZIRAH BT GHAZALI JAMALIA BT ABDUL GHANI UK22685 UK23521 UK23624 UK23660 UK23728 • Hafiz was dilemma whether to use economic earnings as required by the Group or profits as practised by MarineCorp to report the financial performance of MarineCorp and its subsidiaries. . • Implementing a comprehensive value-based management system helps a company to attain the goal of value maximization. • Value based management (VBM) system is where the performance of the company would be linked to performance evaluation and appraisal of the employees.• Creating value requires investments on which returns exceed the capital cost of investment. . and the value of a company would be measured by economic earnings. • Increase the operating performance of its existing divisions thus increasing the net operating profits after tax (NOPAT) without increasing the finance charge. . Ways to improve economic earnings: • Invest in divisions where the returns on those divisions exceed the costs of capital.• Economic earnings reveal where value is created and where value is destroyed. • In practice. . Companies only generate wealth when they generate a return in excess of the return required by providers of capital which is both equity and debt. Two problems relating to profit in this area are: • Profit ignores the cost of equity capital. • Profits calculated in accordance with accounting standards do not truly reflect the wealth that has been created. and are subject to manipulation by accountants. many organisations use profit-based measures as the primary measure of their financial performance. 841.370.694.Profit (RM) Green Port 27.381.917-(10% x 8.004) =(14.878.218.168-(10% X 459.543.030.007) =5.609 Sungai Emas Port 5.232) 5.563 15.348.128.524 MarineCorp 15.792 Economic Earnings (RM) 31.611 .274.364-(10% x 1.064) =14.588. . To rank this we need to consider all factors which is profit based.• Hafiz needs to rank the companies in terms of their financial performance. economic earnings. current ratio and return on asset. profit margin. 792 21.588.503 =2.348.274.348.96 5.370.370.682.370.563 Profit Margin 15.030.13 27.311.253 7.94% Current Ratio Return on Asset .57% 27.792 Economic Earnings 14.184.654.841.648 =5.524 21.474 =26.348.46% 32.304 =2.340 =70.47 15.159 =28.841.123.750.217.524 Profit based 27.03% 21.56% 5.524 24.165.792 53.065 =24.609 15.016.994 28.445.419 8.89% 21.611 (14.074 =1.609 492.171 =28.232) 5.841.517.609 96.MarineCorp Green Port Sungai Emas Port 5.433. • Marine Corp has better financial performance compare to other companies even current ratio Sungai Emas is higher than Marine Corp but the different is not too large. . Follow by Sungai Emas Port and lastly Green Port. Marine Corp still can pay the debt. Capitalize expenses: dredging cost Dividend payback back or invest? . . • Why? . it gives benefits to Anita because the higher the profit. the higher bonus she will get.violate the accounting principle of prudent -increase the profit because expense will decrease • Therefore.• GM Green Port asked Hafiz to amortize the dredging cost. • Investor will interested more to invest in company that have high profit • When the profit is high. it will give the company be in top rank • Therefore. generate interest income on fund investment is better than giving dividend to shareholder. this will make as his performance review is good in company .• GM MarineCorp refuses to pay dividend to shareholder • Why? Because for him. Review back goals. mission and vision of the organization Identify key metrics and measure key performance indicator (KPI) Create balanced scorecard to strategic performance Conduct research and implement the SWOT analysis Focus more in welfare of the employees Appoint employee that fulfill the requirement that have been set by the companies Focus on stakeholders retention .
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