FIN430 GROUP ASSIGNMENTS_SEP19 PDF

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FACULTY OF BUSINESS AND ADMINISTRATION BACHELOR OF BUSINESS ADMINISTRATION (HONS) FINANCE BA242 INTRODUCTION TO CORPORATE FINANCE (FIN 430) TITLE: PERFORMANCE OF PANASONIC MALAYSIA BERHADS CLASS: NBF2C BA242 PREPARED FOR: MARYAM JAMEELAH BINTI MOHD HASHIM PREPARED BY:

NAME

ID NUMBER

ANIS HAZIRAH BINTI ZAINOL ABIDIN

2019742915

MOHD FADZZRAI BIN AZMAN

2019325481

FARAH AQILA BINTI ZULKIFLI

2019798147

NUR ILLYANA BINTI RAHMAN

2019768337

RASHIDI BIN BASURI

2019301337

TABLE OF CONTENT

CONTENT

PAGE

Introduction

3-4

Content a) Calculation on Financial Ratio

5 - 23

b) Trend and Comparative Analysis c) Recommendations and Suggestions 24

Summary Bibliography or References

25

Appendices a) Annual Report 2017

26 - 39

b) Annual Report 2018 c) Annual Report 2019

2

INTRODUCTION

Panasonic was founded by Kosuke Matsushita in 1918 as a two-phase lamp supplier. In the 1927s he produced a series of bicycles, which were sold for the first time under the national brand. During World War II, companies and factories in other parts of Asia, manufactured electronic tools and equipment such as lamps, motors, electric motors, wireless devices and the first vacuum tube. After the war, Panasonic reorganized Keiretsu and began supplying radios, equipment and bicycles to post-war explosives in Japan. Matsushita's brother Toshio Inoue founded Sanyo as a sub-contractor for parts and components after World War II. Sanyo gradually became a Panasonic competitor, but was acquired by Panasonic in December 2009. In 1961, Panasonic went to the United States to visit American distributors. The company started producing televisions for the US market under the Panasonic brand name, and in 1979 expanded its use to Europe. The company used the National brand in countries outside North America from the 1950s to the 1970s (because the trademark is already in use, it cannot be used in the United States). Failure to use a national brand name resulted in the creation of the Panasonic brand in the United States. Over the next few decades, Panasonic released more products, including black and white televisions (1952), electric blenders, refrigerators (1953), rice cookers (1959), color TVs and microwave ovens (1966). The company launched Technics branded high quality audio speakers in Japan in 1965. This high-quality stereo component series has become the world's most popular product, the most famous being a turntable, such as the famous SL-1200 recorder. high

3

performance. High accuracy and durability. Throughout the 1970s and early 1980s, Panasonic continued to produce high quality specialized electronics for market segments such as shortwave radios and successfully developed stereo receivers, CD players, and other components. In 1973, Panasonic and Anam Group jointly established "Anam National" in South Korea.In 1983, Panasonic introduced the Panasonic Advanced Partner, the first Japanesemade computer fully compatible with the IBM PC. In November 1990, Panasonic agreed to acquire US media company MCA Inc. for $ 6.59 billion. Panasonic subsequently sold 80% of the MCA to the Seagram Company for $ 7 billion in April 1995.

4

PANASONIC MALAYSIA BHD RATIOS CALCULATION

Liquidity ratio Current ratio (CR)

Quick ratio (QR)

=

2017 769849 183428 4.20

2018 834463 189197 4.41

2019 779055 172448 4.52

=

Current Asset-Inventory Current Liabilities =

719565 183428 3.92

784132 189197 4.14

729475 172448 4.23

=

COGS

899,105.00

956,561.00

919,762.00

Inventory

50,284.00 17.88

50,331.00 19.01

49,580.00 18.55

42,070,680.00

45,226,800.00

37,886,400.00

1,122,964.00 37.46

1,199,120.00 37.72

1,127,886.00 33.59

1,122,964.00

1,199,120.00

1,127,886.00

1,005,444.00 1.12

1,071,194.00 1.12

1,009,729.00 1.12

1,122,964.00

1,199,120.00

1,127,886.00

235,595.00 4.77

236,731.00 5.07

230,674.00 4.89

183,660.00

189,458.00

172,891.00

1,005,444.00 18.27%

1,071,194.00 17.69%

1,009,729.00 17.12%

183,660.00

189,458.00

172,891.00

=

Current Asset Current Liabilities

Efficiency ratio

Inventory TurnOver (ITO)

=

Average Collection Period

=

(ACP)

Account receivables x 360 Sales =

Total Asset Turnover

=

(TATO)

Sales Total Asset =

Fixed Asset Turnover =Sales

Sales Fixed Asset

(FATO)

= Leverage ratio

Debt Ratio

=

(DR)

Total Liabilities x 100 Total Assets =

Debt Equity Ratio

=

Total Liabilities x 100

5

(DER)

Total Equity

821,784.00 22.35%

881,736.00 21.49%

836,838.00 20.66%

223,859.00

242,559.00

208,124.00

1,122,964.00 19.93%

1,199,120.00 20.23%

1,127,886.00 18.45%

EBIT x 100

158,099.00

166,312.00

131,310.00

Sales

1,122,964.00 14.08%

1,199,120.00 13.87%

1,127,886.00 11.64%

Net Profit x 100

127,118.00

131,025.00

105,752.00

Sales

1,122,964.00 11.32%

1,199,120.00 10.93%

1,127,886.00 9.38%

Net Profit x 100

127,118.00

131,025.00

105,752.00

Total Assets

1,005,444.00 12.64%

1,071,194.00 12.23%

1,009,729.00 10.47%

127,118.00

131,025.00

105,752.00

821,784.00 15.47%

881,736.00 14.86%

836,838.00 12.64%

= Profitability ratio

Gross Profit Margin

=

(GPM)

Gross Profit x 100 Sales =

Operating Profit Margin

=

(OPM)

=

Net Profit Margin

=

(NPM)

=

Return on Assets

=

(ROA)

=

Return on Equity (ROE)

=

Net Profit x 100 Total Equity =

6

RATIO ANALYSIS

1. LIQUIDITY RATIO CURRENT RATIO (CR)

YEAR COMPANY

2017

2018

2019

PANASONIC

4.20

4.41

4.52

CURRENT RATIO 4.6 4.5

4.4 4.3 4.2 4.1 4 2017

2018 PANASONIC

7

2019

QUICK RATIO (QR)

YEAR COMPANY

2017

2018

2019

PANASONIC

3.92

4.14

4.23

QUICK RATIO 4.3 4.25 4.2 4.15 4.1 4.05 4 3.95 3.9 3.85 3.8 3.75 2017

2018 PANASONIC

8

2019

RATIO ANALYSIS FOR LIQUIDITY RATIO Liquidity ratio show a firm’s ability to meet its short-term financial obligations, whether the company has the resources to pay its creditor when payment is due. Based on a liquidity ratio shows in the table and graph above, Panasonic Malaysia Berhad’s Current Ratio for year 2017, 2018 and year 2019 is 4.20 times, 4.41 times and 4.52 times respectively. Quick Ratio for Panasonic Malaysia Berhad’s are also showing a good ratio because the ratio is increasing from year 2017 to year 2019. The graph shows that even though there is an increase and decrease of liquidity ratio for the companies, Panasonic Malaysia Berhad’s still showing a good liquidity ratio by having an increasing. A company is considered more capable in paying its obligations when it has current ratio above that 1 as it has assets greater than total liabilities. The higher the liquidity, the easier it is for the company to pay its on time. From the above calculation, it can be concluded that Panasonic Malaysia Berhad’s has the ability to pay its short-term liabilities on time.

9

2. EFFICIENCY RATIO INVENTORY TURNOVER (ITO) YEAR COMPANY

2017

2018

2019

PANASONIC

17.88

19.01

18.55

INVENTORY TURNOVER 19.2

19 18.8 18.6

18.4 18.2 18 17.8 17.6 17.4 17.2 2017

2018 PANASONIC

10

2019

AVERAGE COLLECTION PERIOD (ACP) YEAR COMPANY

2017

2018

2019

PANASONIC

37.46

37.72

33.59

AVERAGE COLLECTION PERIOD 39 38 37 36

35 34 33 32 31 2017

2018

PANASONIC

11

2019

FIXED ASSET TURNOVER (FATO) YEAR COMPANY

2017

2018

2019

PANASONIC

4.77

5.07

4.89

FIXED ASSET TURNOVER 5.1 5.05

5 4.95 4.9

4.85 4.8 4.75 4.7 4.65 4.6 2017

2018

PANASONIC

12

2019

TOTAL ASSET TURNOVER (TATO) YEAR COMPANY

2017

2018

2019

PANASONIC

1.12

1.12

1.12

TOTAL ASSET TURNOVER 1.2 1 0.8

0.6 0.4 0.2 0 2016

2017

PANASONIC

13

2018

RATIO ANALYSIS FOR EFFICIENCY RATIO

Efficiency ratios measures how effectively the firm is managing its asset in generating sales. For Panasonic Malaysia Berhad’s, the inventory turnover (ITO) is having a positive increasing ratio for year 2017 (17.88) and year 2018 (19.01 times) and declined on 2019 (18.55). However, this indicates that the company’s inventory turnover is good. For Average Collection Period (ACP) ratio, the ratio is increasing from year 2017 (37.46 days) to year 2018 (37.72). This shows that Panasonic Malaysia Berhad’s is taking a longer time in collecting its receivable. But in 2019, the improved their performance when ratio declined to 33.59 days. The lower this ratio, the more efficient the business is at collecting payment from its customers. For fixed Asset turnover ratio, the company performed well in 2017 to 2018 which is increased from 4.77 times to 5.07 times. However, in 2019 their performance a little bit poor when the ratio drops to 4.89 times. However, the company still in a good performance in managing their fixed asset to generate sales. Lastly for Total Asset Turnover for Panasonic Malaysia Berhad’s, there is a stagnant from year 2017 to year 2019, it shows that the company is maintaining their performance in uses its fixed asset to generate sales. It can be concluded that Panasonic Malaysia Berhad’s is efficient in managing its assets.

14

3. LEVERAGE RATIO DEBT RATIO (DR) YEAR COMPANY

2017

2018

2019

PANASONIC

18.27%

17.69%

17.12%

DEBT RATIO 18.4

18.2 18 17.8

17.6 17.4 17.2 17 16.8 16.6 16.4 2016

2017 PANASONIC

15

2018

DEBT EQUITY RATIO (DR) YEAR COMPANY

2017

2018

2019

PANASONIC

22.35%

21.49%

20.66%

PANASONIC 25

20

15

10

5

0 2017

2018 PANASONIC

16

2019

RATIO ANALYSIS FOR LEVERAGE RATIO

Leverage ratio measures the level of debt or borrowing in a firm. The ratio tells whether the company uses more debt financing to finance its assets and operations as compared to equity financing. Based on Debt Ratio (DR) shown above, Panasonic Malaysia Berhad’s debt ratio is decreased from 18.27% in year 2017 to 17.12% for year 2019. This indicates that Panasonic Malaysia Berhad’s has a lower debt and it will not have a difficulty in raising additional borrowings. The company also performed well by reducing their debt every year consistently.

17

4. PROFITABILITY RATIO GROSS PROFIT MARGIN (GPM) YEAR COMPANY

2017

2018

2019

PANASONIC

19.93%

20.23%

18.45%

GROSS PROFIT MARGIN 20.5 20 19.5 19 18.5 18 17.5 2017

2018 PANASONIC

18

2019

NET PROFIT MARGIN (NPM) YEAR COMPANY

2017

2018

2019

PANASONIC

11.32%

10.93%

9.38%

NET PROFIT MARGIN 12 10 8

6 4 2 0 2017

2018

PANASONIC

19

2019

RETURN ON EQUITY (ROE)

YEAR COMPANY

2017

2018

2019

PANASONIC

15.47%

14.86%

12.64%

RETURN ON EQUITY 18

16 14 12 10 8 6 4 2

0 2017

2018 PANASONIC

20

2019

RETURN ON ASSET (ROA) YEAR COMPANY

2017

2018

2019

PANASONIC

12.64%

12.23%

10.47%

RETURN ON ASSET 14 12 10 8 6

4 2 0 2017

2018

PANASONIC

21

2019

RATIO ANALYSIS FOR PROFITABILITY RATIO

Profitability ratio measures how effectively the company uses its asset to make profit. These ratios also indicate the firm’s efficiency in controlling costs and its pricing policy. Gross Profit Margin (GPM) ratio for Panasonic Malaysia Berhad’s is 19.93% on 2017, 20.23% on 2018, and 18.45% on 2019. The performance is a bit poor on 2019 when it drops from 20.23% to 18.45%. However, this can be stated that Panasonic Malaysia Berhad’s is good at controlling its costs of goods sold. Meanwhile, the Net Profit Margin (NPM) for Panasonic Malaysia Berhad’s is having a declining from year 2017 (11.32%) to (10.93%) for the year 2018 and to 9.38% in 2019. This shows that the company performed poor to generate profit from their given level of sales generated. For Return on Equity (ROE) ratio for Panasonic Malaysia Berhad’s shows an decreased every year from 2016 to year 2019 which is 15.47%, 14.86% and 12.64% respectively. This shows that the company performed poor to generate profit from their given level of equity. For Return on Assets (ROA) ratio for Panasonic Malaysia Berhad’s shows an decreased every year from 2016 to year 2019 which is 12.64%, 12.23% and 10.47% respectively. This shows that the company performed poor to generate profit from their given level of assets. This can be concluded that Gamuda Berhad has a poor performance and the company may be unable to maximize the owner’s wealth.

22

RECOMMENDATION AND SUGGESTIONS

Early invoices submission From the ratio calculation, we could see that there is decrease in ITO and unchanged ROA for the current year compare to last year. The ability for Panasonic to generate income from existing inventory and other potential assets could be improved for next year if they take an immediate action by submit the invoices to customers earlier and this will help Panasonic to gain income faster than before.

Switch from short term debt to long term debt Short term debt is good for small businesses but for Panasonic, a big corporation it is not suitable for long term planning. By removing short term debts and focusing more on long term debt will gives benefit in terms of smaller monthly instalments and lower interest rate. Plus, there will no pressure from debtors for immediate repayment. At the same time, it will allow Panasonic to save some of their liquidity in the near term and utilize it for better concerns.

Get rid of useless assets Unproductive assets are burden to company. These passive assets not earning any income for company even cost company some amount of money to maintain it. Company could choose either to dispose it or sell it to the market if it worth for some value. Cash balance will be up if they worth for some value and no depreciation account will be recorded also the financial ratios will be improved.

23

To control overhead and expenses Unnecessary expenses on some overhead such as marketing, rent, labor, professional fees and etc. should be stop immediately. Panasonic have to revise the need of company for overhead expenses. Any organizations will be surprised on how they short term expenses will be decrease by stop paying for unnecessary expenses. Current and Quick ratio directly will be improved.

Negotiate for longer payments cycles Communicate to vendors on negotiate for longer payment cycles or maybe Panasonic could offer them discounts. Indeed, this way maybe required some cost but it worth for long term benefit.

24

Summary

In Liquidity ratio, Panasonic perform better compared to two last year before. They be able to pay off its current obligation. Quick ratio, company is able to manage their obligation by using their most liquid assets. For Inventory Turnover, company perform slightly better than two year before in managing its inventory. Average collection period, less ratio is desirable as it indicates higher sales and fast collections. Fixed assets turnover, the company performs worse in utilizing its fixed assets to generate sales. In total assets turnover, company perform flat in managing its total assets. In debt ratio, the lower ratio the higher desirable as it lower risk. Debt equity ratio, lower ratio is high desirable as its lower risk. Gross profit margin, the company performs quite worse based on the gross profit margin compared to the last year before. Operating profit margin, company perform worse in term of operating profit due to high operation expenses than the last year. Net profit margin, the lower ratio indicates lower ability of the firm to obtain profit from the given level of sales. Return on investment OR Return on assets, lower ratio indicates lower ability of the firm to obtain profit from the given level of assets. Last but not least, return on equity, lower ratio indicates lower ability of the company to obtain profit from the given level of equity.

25

BIBLIOGRAPHY AND REFERENCES

1) https://www.panasonic.com/my/corporate.html 2) https://news.panasonic.com/global/press/data/2019/11/en191125-3/en191125-3.html 3) https://www.panasonic.com/global/corporate/profile/overview.html

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APPENDICES

27...