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Table of Contents
1.0. INTRODUCTION ................................................................................................................... 4 1.1. COMPANY BACKGROUND ............................................................................................ 4 1.2. PRODUCT SERVICES ....................................................................................................... 5 1.3. VISION AND VALUES...................................................................................................... 6 2.0. MANAGAMENT TEAM ........................................................................................................ 6 2.1. AUDIT COMMITTEE ........................................................................................................ 7 2.2. NOMINATION COMMITTEE ........................................................................................... 8 2.3. REMUNERATION COMMITTEE ..................................................................................... 8 3.0. INDUSTRY ANALYSIS......................................................................................................... 9 3.1. GROWTH RATE................................................................................................................. 9 3.2. COMPETITION, PLAYER, AND MARKET SHARE ...................................................... 9 3.3. SUPLIERS RESSURE ...................................................................................................... 10 3.3. CUSTOMER NEEDS, PREASSURE ............................................................................... 10 3.2. THREAT IN THE INDUSTRY......................................................................................... 10 4.0. RATIO ANALYSIS............................................................................................................... 12 4.1 PROFITABILITY ............................................................................................................... 12 4.1.1. GROSS MARGIN FOR COMPANY ......................................................................... 12 4.1.2. NET PROFIT MARGIN ............................................................................................. 12 4.1.3. RETURN ON CAPITAL EMPLOYED ..................................................................... 12 4.1.4. RETURN ON ORDINARY SHAREHOLDERS FUNDS ........................................ 13 4.1.5. RETURN ON EQUITY .............................................................................................. 13 4.2. LIQUIDITY RATIOS .................................................................................................... 13 4.2.1. CURRENT RATIO ..................................................................................................... 13 4.2.2. LIQUID RATIO/ACID TEST/QUICK ASSETS RATIO .......................................... 14 4.3. EFFICIENCY RATIO ....................................................................................................... 14 4.3.1. ASSETS TURNOVER ............................................................................................... 14 4.3.2. DEBTORS COLLECTION PERIOD ......................................................................... 14 4.3.3. CREDITORS PAYMENT PERIOD .......................................................................... 15 4.4. GEARING RATIO ............................................................................................................ 15 4.5. INTEREST COVER .......................................................................................................... 15 4.6. GROWTH RATIOS........................................................................................................... 15 4.6.1. EARNINGS PER SHARE .......................................................................................... 15
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4.7. DISCUSSION ON THE LIMITATIONS OF RATIO ANALYSIS ................................. 16 5.0 CONCLUSION ....................................................................................................................... 16 APPENDIX-1 ............................................................................................................................... 17 FINANCIAL STATEMENTS .................................................................................................. 17 APPENDIX-2 ............................................................................................................................... 22 WORKINGS ............................................................................................................................. 22 REFFERENCES ........................................................................................................................... 25 BIBLIOGRAPHY ......................................................................................................................... 25
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1.0. INTRODUCTION
It is important to mention that Genting Plantations Berhad engages in the oil palm plantation, property development, and genomics research and development businesses primarily in Malaysia and Indonesia. It also engages the processing of fresh fruit bunches; property investment; provision of project management services; research, development, and production of oil palm planting materials; and golf course operations. The company is headquartered in Kuala Lumpur, Malaysia. Genting Plantations Berhad is a subsidiary of Genting Berhad. During the year ended December 31, 2010, the Company produced 1.20 million metric tons of fresh fruit bunches. During 2010, the Company had a total planted area of 89,075 hectares of oil palm. During 2010, the Company acquired 70% interest in PT Surya Agro Palma (PTSAP). (Bursa Malaysia Stock Information, 2011)
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The companys other activities include the operation of golf course in Malaysia. It has five oil mills in Johor and Sabah of Malaysia. The company is a subsidiary of Genting Berhad. Genting operates through its 26 direct subsidiaries, 17 indirect subsidiaries and four associate companies. (Genting Plantations Berhad, 2011)
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awarded BioNexus status in 2009. MAS is a biotechnology tool that enables scientists to improve crops without resorting to alien genes or creating genetically modified organisms. Conventional plant breeding methods select plants based on phenotypic assessment from field records, while MAS uses genetic markers to identify the presence of a specific gene or combination of genes that have desirable traits, such as high yield and disease resistance. GGT aims to combine conventional oil palm breeding with todays knowledge of oil palm genomics to produce high yielding palms with desirable traits within a much shorter time frame. This is significant for oil palm breeding as one conventional breeding cycle can take up to 12 years. GGT signed a Memorandum of Agreement with the Department of Agriculture, Sabah (DOA Sabah) on 27 July 2010 for the development of superior oil palm planting materials. The collaboration combines DOA Sabahs oil palm breeding experience that spans 50 years with GGTs MAS platform technology. (Genting Plantations Berhad, 2011)
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operating plan, capital expenditure plan, acquisitions and disposals, major capital projects and the monitoring of the Groups operating and financial performance. Formal Board Committees established by the Board in accordance with the Code namely, the Audit Committee, Nomination Committee and Remuneration Committee assist the Board in the discharge of its duties. LT. GEN. (B) DATO HAJI ABDUL JAMIL BIN HAJI AHMAD Independent NonExecutive Director
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Member/Independent Non-Executive Director LT. GEN. (B) DATO ABDUL GHANI BIN ABDULLAH Member/Independent Non-Executive Director (Reuters , 2011)
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It is important to mention that the company revenue has increased dramatically. If we compare growth rate the highest revenue in the history of the Company was 2008. The Genting Plantation Berhad has achieved selling prices of palm products were considerably higher, with the average achieved price of CPO at RM2, 738 per metric tonne in 2010 compared with RM2, 236 in 2009. The average achieved palm kernel price was RM1, 754 per metric tonne, up from RM1, 063 in 2009. The Companys total oil palm area in Malaysia amounted to 59,662 hectares as at 31 December 2010, a marginal decline from the end of 2009. (Ecmlibra Investment Research, 2011)
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upstream palm oil play, with no midstrem or downstream operations which can compete with its competitors. GENP should mainly be seen as an upstream palm oil company (which contributes more than 96% of group PBT). In our opinion, it is considered one of the purer plays on CPO price strength like other companies under our coverage such as London Sumatra and Astra Agro, and thus offers a greater leverage to CPO prices during an up cycle, unlike other larger Malaysian planters such as Sime Darby, IOI Corp and Kuala Lumpur, which are main competitors and have downstream refinery and consumer oil pack exposure (where margins may be squeezed by higher palm oil feedstock prices),or even on palm oil related businesses. (bg.panlv.net, 2011)
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decline in at least three and half decades. The national average oil yield contracted for the year, hitting the lowest level since 2002.Lower yields and falling CPO prices are key downside risks The key threat to any upstream plantations company is selling prices (especially give that producers are price takers, where prices are set by global markets). Here, downside threats to CPO prices would include: 1) If CPO production (together with other vegetable oils globally) comes in stronger than expected, or if extremely strong soybean crushing increase the overall supply of vegetable oils and lower realised CPO prices. 2) Changes in the import duty structure in China to favour substitutes such as soybean oil could alter world demand patterns and pose a downside risk to prices. 3) Slower-than-expected demand from main CPO consuming markets of China, India and the Eurozone due to demand destruction from the current high CPO prices. 4) Lower-than-expected biofuel demand, which could in turn reduce the demand for vegetable oils (including palm oil) globally. 5) Possible restrictive regulations if CPO prices (and other food commodities) continue its strength, posing a threat on consumer price inflation. 6) A quick withdrawal of managed money or portfolio funds (which have been buyers of agricommodity futures) could see a rapid softening of soft commodity prices Elsewhere, the next most important downside threat would be lower-than-expected CPO production. We are assuming 9% FFB production growth for the group in FY12F, which we think is conservative given that the young trees of Genting Plantation Berhad should provide a good base for growth. However, should production come in below our assumption, CPO production growth would suffer. The other negative threats to the group include not being able to maintain its planting targets, or commercialize the biotechnology venture, which it has so far sunk RM280mn, or lower-thanexpected footfalls in the Johor Premium outlets. (Nomura Securities Malaysia , 2011)
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long-term capital invested in the business during that period ital put in the business, besides it also shows efficiency and profitability on invested money. (McLaney & Atrili, 2010) The Return on Capital Employed of Genting Plantation has a ratio of 13.96% and 10.03%
from 2009 to 2010 respectively. The ROCE of Genting Plantation became better than 2009, company had less borrowings in 2010 and the amount of payable share prices was increased. 4.1.4. RETURN ON ORDINARY SHAREHOLDERS FUNDS The return on ordinary shareholders funds ratio compares the amount of profit for the period available to the owners, with the owners average stake in the business during the same period. It simply means, a payable dividend depends on the profit after tax. (McLaney & Atrili, 2010) 4.1.5. RETURN ON EQUITY The amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested. It means whether the company is using the investors money in profitable way, the higher the percentage higher the dividends. (Investopedia ULC, 2011)
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4.2.2. LIQUID RATIO/ACID TEST/QUICK ASSETS RATIO Acid test shows how well the company is going to do well within the main time, company must have enough money to pay back to the creditors. The normal division is 1:1. If it is high that the company has much surplus cash resources. If it is low the company wont be able to pay their borrowed money. (Frank & Sangster, 2008) The Acid Test of Genting Plantation has a ratio of 6.5 and 7.2 from 2009 to 20010. The
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4.3.3. CREDITORS PAYMENT PERIOD How fast the company is paying its credit, company must pay it on time. High ratio means payment of credits is slow, we can know from this ratio that if the ratio is high is high there are less cash in the company. If it is low ratio the company has enough money for payment or they have good relationship with suppliers, in other words suppliers demanding for payment without delay. (Stock 300 Investing classroom , 2010) The Creditors Payment period of Genting Plantation has a ratio of 69.8 days and 11.1 days from 2009 to 2010 respectively. The company was facing money problems; they didnt pay the credits promptly despite of 2 day faster than being in 2009.
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The Earning per share of Genting Plantation has a ratio of 31.12p and 42.76 from 2009 to 2010 respectively.
5.0 CONCLUSION
None company or firm including Genting Plantation Company in the world can check whether is it making profit or loss, these are very common for business named liquidity ratios. Every business institutions use liquidity ratios. From the calculations done companies can know their position in business environment. By checking the results company can improve its economic situation. They know how assets are used, how the stock turnover and how efficiently they collecting money from debtors, and paying credits. Company directors can know about the return on investments, means money from the selling shares, how profitably are they using that money in order to run the business. And the investors (shareholders) are also interested in these ratios like earnings per share. If the return is high the relationship between customers and the company will grow further. By all these above this is the way how to check the companys business actions for making profit. If these ratios dont exist there wont any order, for example they dont know how much they owe and borrow, and all information will be mixed.
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APPENDIX-1
FINANCIAL STATEMENTS
INCOME STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010
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APPENDIX-2
WORKINGS
Profitability
1 Formulas Gross Margin= 2010 2009
x100%
x 100%
= 50.35%
2010
2009
Profit Margin=
x 100%
x 100% = 43.99%
x 100% = 39.24%
2010
2009
x 100% = 13.96%
x 100% = 10.03%
Capital Employed= =Share capital +reserves +Long term Liabilities (non-current liabilities)
Efficiency
1 Formulae ASSETS TURNOVER= 2010 2009
= 0.3 times
= 0.2 times
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2,385,057+847,078=3,232,135 2,440,995+605,896=3,046,891
2010
2009
Liquidity ratio
ACID TEST/LIQUID RATIO/QUICK ASSETS RATIO=
2010
2009
7.2:1
2
6.5:1
2009
Liquidity ratio
CURRENT RATIO=
2010
7.2:1
6.6:1
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Capital Structure
1 Capital Structure 2010 2009
GEARING= =
( ( ) )
Investors Ratio
Investors Ratio Return on capital employed (ROCE)=
100%
2010
2009
= 13.9%
= 10.03%
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REFFERENCES
Accounting for managament , 2011. Current ratio. [Online] Available at: http://www.accountingformanagement.com/current_ratio.htm. Accounting for managament, 2011. Liquidity or Acid Test or Quick Ratio. [Online] Available at: http://www.accountingformanagement.com/liquid_ratio.htm. bg.panlv.net, 2011. [Online] Available at: http://www.einvest.com.my/ArchiveCompanyFocus/1.%20Company%20Focus/By%20Company%20Name/Counter%20Name%20A %20-%20L/GENP%2020110128%20Update.pdf. Bloomberg Businessweek, 2011. GENTING PLANTATIONS BHD. [Online] Available at: http://investing.businessweek.com/research/stocks/people/people.asp?ticker=GENP:MK. Bursa Malaysia Stock Information, 2011. BursaWave.com. [Online] Available at: http://www.bursawave.com/stock-search/stock/genting-plantations-bhd-1985/. Ecmlibra Investment Research, 2011. Genting Plantation. [Online] Available at: http://www.ecmmoney.com/wpcontent/uploads/downloads/2010/08/GENP_100826_2QFY10.pdf [Accessed 26 August 2010]. Genting Plantations Berhad, 2011. Genting Plantation. [Online] Available at: http://www.gentingplantations.com/aboutus/background.htm. Genting Plantations Berhad, 2011. Genting Plantations. [Online] Available at: http://www.gentingplantations.com/plantation/index.htm. Investopedia ULC, 2011. Gross Profit Margin. [Online] Available at: http://www.investopedia.com/university/ratios/grossprofitmargin.asp. Investopedia ULC, 2011. Profitability Ratios. [Online] Available at: http://www.investopedia.com/terms/p/profitabilityratios.asp#axzz1USeuFw1e. Investopedia ULC, 2011. Return On Equity - ROE. [Online] Available at: http://www.investopedia.com/terms/r/returnonequity.asp#axzz1USeuFw1e. Nomura Securities Malaysia , 2011. Genting Plantation. [Online] Available at: http://bg.panlv.net/file2/2011/03/08/94ad26b6f290bece.pdf [Accessed 8 March 2011]. Reuters , 2011. Genting Plantations Bhd (GENP.KL). [Online] Available at: http://www.reuters.com/finance/stocks/companyOfficers?symbol=GENP.KL. Stock 300 Investing classroom , 2010. Efficiency Ratios. [Online] Available at: Efficiency Ratios.
BIBLIOGRAPHY
Frank, W. & Sangster, A., 2008. Business Accounting. 7th ed. Edinburg Gate, Harlow,Essex CM 20 2JE: Pearson Education Limited. McLaney, A. & Atrili, a.P., 2010. Accounting anintroduction. 5th ed. Edinburg Gate,Harlow, Essax CM20 2 JE England: Pearson Education Limited.
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