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8/7/2019 I-POWER BERHAD
http://slidepdf.com/reader/full/i-power-berhad 1/28
UNIVERSITY TENAGA NASIONAL
SULTAN HAJI AHMAD SHAH CAMPUS BANDAR MUADZAM SHAH
I-POWER BERHAD
FICB223
FINANCIAL STATEMENT ANALYSIS
SEM 1 2010/2011
SUBMITTED TO: MADAM.SUZAIDA BTE BAKAR
DOH SIEW FONG BF 083978 1AM
KHAIRULBARIAH BINTI RAMLI BF 083205 1BM
NAZLYN STELLA ANAK SA-EK BF 083220 1BM
SITI AISYA AZYANI BT MOHD ZAHARI BF 083242 2BM
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CONTENT
A. Executive summary
B. Background of the company
C. Ratio Calculation
• Short-term liquidity
Current ratio
Acid test (quick) ratio
Account receivable turnover
Cash flow ratio
• Capital structure and solvency
Total debt ratio
Total debt to equity capital
Long term to equity capital
Altman Z-score
Smith Z-score
• Profitability analysis
Net profit margin
Total asset turnover
Return on equity
Net operating profit margin
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• Equity analysis
Earning yield
Price/ earnings ratio
Percentage of earning retained
D. Graphical analysis
E. Conclusion and recommendation
F. References
G. Appendix
EXCECUTIVE SUMMARY
The main aim for this research paper is to measure the performance of theorganization which we have chosen, the I-POWER BHD based on several areas
which determine the financial strength of the organization. The task of this study is to
finalize whether or not it is a good company to invest in, by using the elements
provided by the financial statements.
We begin with our collection of financial statements from the annual reports
of the organization for five consecutive years, 2005 until 2009. From which, we have
chosen 4 different areas which are; Short-term liquidity, solvency, profitability and
the equity analyses. Each of these areas we are required to gather at least three ratios
in order to be more precise on our findings and the ratios which we have chosen
cannot be any more detailed. As for the equity analysis, we had to look for the market
prices of the organization through the websites listed in the references, in search for
historic prices.
Graphical analyses were constructed for the convenience of illustrating,
together with the definitions and contributions of the ratios would be to the
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organization. With our findings and fundamental analyses of calculations of the
ratios, we also provided relevant announcements, news and events accordingly to the
ratios, which can be referred to as technical analysis, to extricate any financial doubts
and to encourage a better understanding of the financial data. Also, important and
essential financial data were collected from the financial statements for five years,
relevant only to the ratios we selected, for a much better observation rather than
viewing the annual reports. As for the detailed calculations, they are attached in the
appendices at the end of this research paper, together with only relevant financial
statements.
Lastly, we provide suggestions whether or not this organization should invest
more in other business-related opportunities and if the financial performance of this
organization is increasing at a rapid pace. Based on the results of the ratios, we
provide promising and guaranteed views to investors based on the fundamental and
technical analyses, if the organization is worth investing in.
A. BACKGROUND OF COMPANY
I-POWER BERHAD
I-Power is a system integrator and e-Business solution provider with a passion
to deliver first class e-business solutions to your total satisfaction.
I-Power is a MSC status company and an IBM Premier Business Partner. Our e-Store, eHR, eCRM, and ePOS solutions are also certified by SAP as powered by
NetWeaver. We are also the first company in Malaysia to be certified as an IBM
eBusiness Certified Business Partner.
I-Power being a niche player in system integration and e-business solutions
development, takes great pride in providing world class Internet solutions and system
integration services to the corporate world.
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The company has established a solid reputation for building solutions that are
user friendly, quick to deploy, and customizable to meet your specific business needs.
At I-Power, we guarantee all our solutions, and walk the extra mile to deliver at all
times customer and service excellence.
We are committed to support the global industry by:
Developing professional and value added services in response to the changing
needs of the business industry.
Setting the standard for computer-assisted data analysis by incorporating
continuous research & customer feedback.
Working closely with customers, professional organizations and partnering
with industry leaders.
We endeavour to develop lasting relationships with our customers by
providing application and consulting services of the highest quality. We strive to
demonstrate integrity in all facets of our operation and believe that what is best for
the client is best for us.
Our goal is to provide our customers with services appropriate to their needs
with a high level of expertise and dedication. With our combined years of practical
experience, we will assist our customers in the selection of software and hardware
that best suits their requirements and budgets.
THE BUSINESS MODEL :
Sound management fundamentals.
Strategic alliances with its business partners
Solid business track record
VISSION
To become Malaysia leading e-Business Solution Specialist and be well-recognized
internationally with I-Power on demand E-Solution that are completely priced with
world class standards, competing with the best in the global arena.
MISSION
Our mission is to empower business enterprises to access online information anytime,
anywhere, and to connect critical business systems directly to customers, employees
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and trading partners via the Web with the aim of achieving the following business
objectives:
• Improve time to market.
• Reduce cost of reaching and serving customers and trading partners.
• Extend and reach new global market.
• Enhance business processes.
• Improve business efficiency.
• Increase competitive edge through enhanced customer service and support
At I-Power Bhd, we supply enterprises with the best business solutions that
integrate your business environment. You can improve and streamline your business
with the help of I-Power as we use IBM’s and I-Power’s technology to provide the
core engine of our solutions. I-Power is a forefront business solution provider in
Malaysia that specializes in e-Business Solutions, Turnkey Applications, Workflow
Management, Knowledge Management, Business Intelligence, Systems Integration,
Consultancy and Services
CONTENTS
Every organization in the world today depends on their financial statements
and according to their analysis based on those financial statements, theseorganizations take the opportunities to make any financial changes due to certain
restricted or non-restricted obligations. Financial statement analysis, which is an
integral and important part of the broader field of business analysis, includes
analyzing a company’s business environment, its strategies and its financial standing
and performance. It is useful to make business decisions such as whether to invest in
equity or in debt securities, whether to extend credit through short or long term loans,
how to value a business in an initial public offering, and how to evaluaterestructurings including mergers, acquisitions and divestitures.
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SHORT TERM LIQUIDITY
B. RATIO CALCULATION
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CAPITAL STRUCTURE AND SOLVENCY
Ratio 2009 2008 2007 2006
Current Ratio
Current Asset
Current Liability
85,802,0402,020,347= 42.47
92,074,455929,277= 99.08
61,753,09918,353,896
= 3.36
13,504,118481,317
= 28.06
Quick Ratio
Cash & Cash
Equivalent +
Marketable
Security +Account
Receivable
Current Liability
(8,663,721
+15,470,732+ 756,343)
2,020,347
=24,890,796
2,020,347= 12.32
(26,572,142+
21,494,985+
1,068,633)929,27
7
=49,135,760
929,277= 52.88
(32,009,703 +
28,317,988+
1,425,408)18,353,896
=61,753,099
18,353,896= 3.36
(4,291,614+
9,212,504+ 143,981)
481,317
=3,648,099
481,317=28.36
Account
Receivable
Turnover
Net Sales
Average
Receivable
25,847,000
(15,470,732
+ 756,343)= 1.59
83,320,097(21,494,985
+1,068,633)= 3.69
57,840,393
(28,317,988
+1,425,408)= 1.94
18,297,815(9,212,504+ 143,981)
= 1.96
Cash Flow
Ratio
Operating Cash
Flow
Current Liability
9,418,972
2,020,347= 4.66
37,686,661
929,277= 40.55
10,128,461
18,353,896= 0.55
2,878,232
481,317= 5.98
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Ratio Year
2009 2008 2007 2006
Total debt
ratio
Total debt /
total capital
2020347
122886284=0.016
929277
124428078=0.0074
18353896
67829680=0.27
481317
20581697=0.023
Total debt to
equity capital
Total debt/
total equity to
capital
2020347
120865937
=0.017
929277
123498801
=0.0075
18353896
49475784
=0.371
481317
20100380
=0.024
Long term
debt to equity
capital
Long term
debt/ total
equity capital
141124
120865937
=0.0011
126521
123498801
=0.0010
68500
49475784
=0.0014
69500
20100380
=0.0025
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Altman’s Z-score
Z= 0.717X1 + 0.847X2 + 3.107X3 + 0.420X4 + 0.998X5
X1 = working capital / total assets
X2 = retained earnings / total assets
X3 = earnings before interest and taxes/ total assets
X4 = shareholders’ equity / total liabilities
X5 = sales/ total assets
X1
81761346
122886284
=0.67
90215901
124428078
=0.73
25045307
67829680
=0.37
125414884
20581697
=0.61
X2
29611960
122886284
=0.24
29553083
124428078
=0.24
17086517
67829680
=0.25
49475784
20581697
=2.40
X3
82123
122886284
=0.0006
12514339
124428078
=0.10
10233675
67829680
=0.15
7197032
20581697
=0.35
X4120865937
122886284
=0.983
123498801
124428078
=0.992
49475784
67829680
=0.729
20100380
20581697
=0.976
X5
25847000
122886284
=0.21
83320097
124428078
=0.67
57840393
67829680
=0.85
155,866
20581697
=0.89
Altman’s Z-
score
0.9428 1.7246 1.8958 4.5227
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Z<1.20 implies a high probability of bankruptcy
Z>2.90 implies a low probability of bankruptcy
1.20<Z<2.90 implies ambiguous area
Smith’s Z-score
Z = -0.018 + 1.829X1 + 0.114 X2 – 0.080X3
Z = Value of the discriminant score
X1 = PBT (Profit before Tax) / Current Liabilities (profitability)
X2 = Current Assets / Current Liabilities (Liquidity)
X3 = Total Liabilities/ Total Assets (Gearing)
Z < 0 = distressed condition
Z > 0 = healthy condition
Ratio Year
2009 2008 2007 2006
X182123
2020347=0.041
12514339
929277=13.467
10233675
18353896=0.558
7197032
481317=14.953
X2837816932020347=41.469
91145178929277
=98.082
4339920318353896
=2.365
13022801481317=27.057
X3202034712886284
=0.016
929277124428078
=0.0075
1835389667829680
=0.270
48131720581697=0.0234
Smith’s Z-
score
4.78 35.79 1.25 30.41
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PROFITABILITY ANALYSIS
Ratio 2009 2008 2007 2006
Net Profit
Margin
Net Income
Sales
58,877
25,847,000
= 0.00227
12,466,566
83,320,097
= 0.149
10,233,675
57,840,393
= 0.177
7,197,032
18,297,815
= 0.393
Total Asset
Turnover
Sales
Average
Total Asset
25,847,000
[(132,022,000+
124,428,078)/2]
25,847,000
123,725,039
= 0.2089
83,320,097
[(124,428,078 +
67,829,680)/2]
83,320,097
96,128,879
= 0.8667
57,840,393
[(67,829,680 +
20,581,697)/2]
57,840,393
44,205,688.50
= 1.3084
18,297,815
[(20,581,697+
13,268,397)/2]
18,297,815
16,925,047
= 1.0810
Return On
Total
Equity
Net Income
Total
Common
Equity
58,877
43,819,600
= 0.00134
12,466,566
43,819,600
= 0.284
10,233,675
21,279,800
= 0.481
7,197,032
6,300,000
= 1.142
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EQUITY ANALYSIS
Ratio Years
2009 2008 2007 2006
Earning yield
Earnings per
share/ market price per share
0.01
0.10
=0.1
3.68
0.10
=36.8
5.80.10
=58
11.420.10
=114.2
Price /earnings
ratio
Market price of
the share/earnings
per share
0.100.01=10
0.103.68
=0.027
0.105.8
=0.0172
0.1011.42
=0.0008
Percentage of
earning retained
(%)
Net income-all
dividend/ net
income
58877-058877= 1
12466566-012466566
= 1
10233675-0
10233675= 1
7197032-07197032
= 1
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C. GRAPHICAL ANALYSIS
Short-term liquidity
Liquidity is the ability to convert assets into cash or to obtain cash to meet
short-term obligations. Short-term is conventionally viewed as a period up to one
year, though it is identified with the normal operating cycle of a company (the time
period encompassing the buying-producing-selling-colleting cycle). The importance
of liquidity is best seen by considering repercussion stemming from a company’sinability to meet short-term obligations. It compares all the current assets of a
company to all the current liabilities.
CURRENT RATIO ANALYSIS
0
50
100
150
2006 2007 2008 2009
T m e s
Years
current ratio
Current ratio is current asset divide by current liabilities. The purpose is to
measures the liquid assets that provide a safety cushion to creditors and the liquid
reserve available to meet contingencies and the uncertainties surrounding a
company’s balance of cash flow.
Current ratio for I-POWER BHD for year 2006 is 28.06:1, 2007 is 3.36:1,
2008 is 99.08:1,and 2009 is 42.47:. In the year of 2008, I-POWER BHD has 99.08:1
of current assets for every single RM of current liabilities.
We can conclude that current assets is easy to convert into cash and available
to cover current liabilities. Company can decrease their current ratio by making
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payoff of current liabilities. In the rules of thumb showed that the four year is an
inefficient use of resources reduced rate of return which it is >2:1.
ACID TEST RATIO ANALYSIS
0
20
40
60
2006 2007 2008 2009
m e s
year
Acid test ratio
A more stringent test of liquidity uses the acid-test (quick) ratio. There are
28.36:1 in year 2006, 3.36 in year 2007, 52.88 in year 2008 and 12.32:1 in year 2009.
This shows that, provided creditors and debtors are paid at approximately the
different time, a view might be made as to whether the business has sufficient liquid
resources to meet its current liabilities.
ACCOUNT RECEIVABLE TURNOVER
0
1
2
3
4
2006 2007 2008 2009
m e s
year
account
receivable
turnover
Account receivable turnover is measures the number of times account
receivables were collected during the year. It also measure of how well the company
collects sales on credit from its customers, just as average collection period measures
this in days. A high or increasing in accounts receivables turnover is usually a
positive sign and showing that company is successfully executing its credit policies
and quickly turning its account receivable into cash. So we can see that the account
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receivable turnover ratio in year 2006 is 1.96:1, 2007 is 1.94:1, year 2008 is 3.69:1,
and year 2009 is 3.19:1. The high in account receivable turnover for year 2008 and
2009 has given the positive impact to the I-POWER BERHAD.
CAPITAL STRUCTURE AND SOLVENCY ANALYSIS
0
0.050.1
0.15
0.2
0.25
0.3
0.35
0.4
2006 2007 2008 2009
p e r c e n t a g e %
year
total debt ratio
total debt to equity
capital
long term debt to equity
capital
Capital structure refers to the sources of financing for a company. Financingcan range from relatively permanent equity capital to more risky or temporary short-
term financing sources. Once a company obtains financing, it subsequently invests it
in various assets. Assets represent secondary sources of security for lenders and range
from loans secured by specific assets to assets available as general security for
unsecured creditors. These and other factors yield different risks associated with
different assets and financing sources.
It is showed that positions of company are very well in 2006, which is 0.023,
0.0074 in 2008 and 0.016 in 2009. While in 2007, it showed a quite high the total
debt than total capital. The lowest the total debt ratio is the better, liabilities less,
asset more.
It also compared the company’s amount owed to creditor (total liabilities) to
the amount supplied by investors of the company (total shareholders’ equity), total
debt to equity capital. As we can see from the calculation is for the year 2006 to
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2009 is 0.024:1, 0.371:1, 0.0075:1, 0.017:1, and 0.88:1 respectively. Total debt less
than shareholder showed that the company is solvency.
The long-term debt to equity capital is measures the relation of long-term
debt (usually defined as all non-current liabilities) to equity capital. A ratio in excess
of 1:1 indicates greater long-term debt financing compared to equity capital. This
ratio is commonly referred to as the debt to equity ratio and it is computed as long-
term debt / shareholders’ equity. For the year 2006, long term debt to shareholder
equity is 0.25 %, 0.14% in 2007, 0.1% in 2008 and 0.11% in 2009. We can conclude
that equity for the four years is higher than long term debt.
SMITH Z-SCORE
0
510
15
20
25
30
35
40
2006 2007 2008 2009
Smith Z-score
Smith Z-score is use to measure whether a company is a healthy or distressed
condition. From the graph above showed that I-POWER BERHAD is in a healthy
condition but in year 2007 it in verge of distress condition which Z is 1.25
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ALTMAN’S Z-SCORE
0
1
2
3
4
5
2006 2007 2008 2009
t m e s
year
Altman's Z score is the tried and tested formula for bankruptcy prediction. It has
been demonstrated to be quite reliable in a variety of contexts and countries. It is not
designed to be used in every situation. Before using a Z score to make predictions,one must ensure the firm being examined is comparable to the database.
It is a fact that if the Z-Score of less than 1.20, it shows that the company is
most likely to witness a high probability of bankruptcy, and if the Z-Score shows a
value of more than 2.90, it implies a low probability of bankruptcy for the
organization. As for values between 1.20 and 2.90, they represent ambiguous area.
As we can see, in the year 2006, the organization implies a low probability of
bankruptcy, while in year 2007 and 2008, its show that organization is between the
range of zone of ignorance of bankrupt and non-bankrupt probability. In the year
2009 for the I-POWER BHD, the organization was on the verge of bankruptcy due to
the values for the years which show less than 1.20.
We can finalize that the organization has tried its best to maintain a financial
standing which impose situations where they avoid such risks of loss in year 2007 and
2008, but it cannot maintain in a long run until 2009.
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PROFITABILITY ANALYSIS
Profitability refers to a company’s earnings relative to both the level and
source of financing and it is a measure of a company’s success in using financing to
generate profits. In the world of finance, the performance measures which are always
in common use are revenue, net income and asset growth. It is an important indicator
of a company’s long-term financial strength.
Return on invested capital can also be known as profitability. It allows
comparisons with alternative investment opportunities and it impacts a company’s
ability to succeed, attract financing, repay creditors and reward owners. Profitability
conveys return on invested capital from different financing perspectives and it allows
managers to conduct proper financing plans, budgets, activities co ordinations and
control.
I-POWER BHD studies on profitability area were finalized mainly using three
ratios and they are net profit margin, total asset turnover, and return on total
equity Those ratios would aid many parties especially the investors, to properly
analyze the organization’s financial performance, based on the observations of the
annual reports from the years 2005 to 2009.
PROFITABILITY ANALYSIS
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We can conclude that even I-POWER BHD is a company in healthy condition
but it showed the company has an inefficient in management because the percentage
earned by shareholder for their investment are decrease from 2006 until 2009. Total
turnover increased from 2006 1.0810 to 1.3084 in 2007, but it decrease in the
following two years, that is 0.8667 and 0.2089 in 2008 and 2009 respectively.
EQUITY ANALYSIS
Equity analysis extends the analyses of financial statements to consider
earnings persistence, valuation and forecasting. Earnings persistence is defined to
include the stability, predictability, variability, and trend in earnings. The equity
valuation analysis emphasizes earnings and other accounting measures for computing
company value. The earnings forecasting considers earning power, estimation
techniques, and monitoring mechanisms. Equity basically refers to shareholders
financing and the analysis of this area involves analyzing equity characteristics which
include classifying and distinguishing different equity sources, examining rights for
equity classes and priorities in liquidation, evaluation legal restrictions for equity
distribution, reviewing restrictions on retained earnings distribution and lastly,
assessing terms and provisions of potential equity issuances.
PRICE / EARNING RATIO ANALYSIS
0.0008 0.01720.027
10
0
5
10
15
2006 2007 2008 2009
price / earning ratio
Price / earnings ratio is to expresses the relationship between the market
price of a share of common stock and that stock’s current earnings per share. High
price / earnings ratio means that the more market is willing to pay for the company’s
earnings or overpriced stock, as a gauge of future earning power of the firm.
Normally high growth opportunities showed by high price / earnings ratio. In year
2006 to 2009, it is showed lower growth opportunities, which is 0.0008 times in
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2006, 0.0172 times in year 2007 and 0.027 times in 2008 than 10 times of growth
opportunities in 2009.
EARNING YIELD
114.2
58
36.8
0.1
0
20
4060
80
100
120
2006 2007 2008 2009
earning yield
Earning yield expresses the relationship between earnings and market price per share. It is the inverse of the price-earnings ratio. Basically, it is the earning
amount you buy for every dollar worth of stock.
In 2006, it is worth to buy for stock which you will earn 114.2% with every
ringgit. While, it shows a decreasing from 2007 onward, which in 2009, earn only 0.1
% with every ringgit.
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D. CONCLUSION AND RECOMMENDATION
I-POWER BHD are being analysed in term of its capital structure, short term
liquidity, profitability analysis and equity analysis. We can conclude that the
company was not efficiently operated based on their performance. Current asset of
the company is easy to convert into cash quick and fast to create a new business
opportunity and it is a clear signal that a company pay its debts that are coming due in
the near future and still fund its ongoing operations. It also showed that the company
available to cover liabilities, while it is an inefficient use of resource reduced rate of
return.
I-POWER BHD was in healthy condition which showed by Smith Z-score in
every year is above zero. From Altman Z-score, it showed that the company is in low
probability for bankruptcy in 2006 but the company is in high probability for
bankruptcy in 2009, it is mean the creditors are not in well protected. The company
has an inefficient management and an inefficient in utilized all their assets to generate
a profit. It is showed an increasing in growth opportunity from 2006 to 2009. But in
the other hands, it is show a decreasing in worth value that can be gain with every
ringgit year by year.
Corporate social responsibility is a concept whereby I-Power holds with
utmost importance in taking responsibilities for the impact of activities on customers,
employees, shareholders, communities and the environment in all aspect of
organizations operations. I-Power is fully aware that the obligation extends beyond in
statutory obligation to comply with legislation and therefore voluntarily taking further
steps to improve the quality of life for employees and their families as well as for the
local community and society at large.
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Various activities were planned and implemented to fulfil its CSR obligations,
which is the workforce, community, and environment. The company organizes
gatherings and recreational events on regular intervals for its staff and family
members to foster and cultivate a happy and productive workforce with a strong sense
belonging. I-Power team make donations annually to various welfare bodies and
NGOs for welfare purposes. In the other hands, the company also has adopted eco-
friendly practices in its day-to-day work in order to minimize the impact on the
environment, such as paperless environment, recycling and energy savings.
a. From a point of view of a banker, does the company deserve additional
working capital loan? Justify your answer.
I-POWER BERHAD raise their fund from borrow loans from bank or issue
share or debentures to public. Either banker or investor, they will analysis company’s
performance from financial ratios to decide whether company worth to invest or not.
But the ratios that banker and investors used to decide whether they should invest in
that company are different.
For bankers, they will more consent on company future performance and ability
to pay back the loans. Ratios which show the company liquidity, profitability, capitalstructure and solvency are more important for banker. They will use these ratios to
decide they should approve a loan to that company. I-POWER BERHAD liquidity is
favourable to bankers.
I-POWER BERHAD acid test ratio is considered in good condition because it
has a ratio of more than 1 for each year in the rule of thumb. Company’s solvency
ratios had make bankers reassurance about company ability to pay back the loan.
Total debts to equity capital ratios are not more than 1 for past 5 years, which mean
company do not have heavily rely on debt.
The profitability for the company is decreased. Net profit margin is decreased
from 2006 to 2009. Nevertheless, this show that the company performance in
management has to improve in their operating activities which will reduce their
operating costs. The profitability for I-POWER BHD is showing a bad sign in
company capital structure and solvency. The banker will facing a long term period in
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collected the loan and the loan borrowed to the company have the higher risk will
become bad debt to the banker.
b. From a point of view of an investor, is this company considered as a good
investment? Justify your answer.
Investors will use profitability and equity analysis to decide they should invest
in that company or sell the company shares. Net profit margin for the company is
constant for this few years. One of the important ratios for investor is return on
common equity. This ratio will boost investor’s confidence to invest in this company.
The company had changed their operating activities to more efficient which will
reduce the operating costs. A good operating company will attract more investors. In
the other hand, the highest of the P/E ratio indicates the highest growth opportunities.
Since the I-POWER BERHAD P/E ratio is keep decreasing from the year of 2006 till
2009, it has made the investor dare not to invest in that company.
c. From a point of view as a citizen, do you think that the organization has been
contributing to the welfare and social development of our country? Justify your
recommendation.
I-POWER BERHAD has been contributing to the welfare and social development for
our country. The company holds with utmost importance in taking responsibilities for
the impact of activities on customers, employees, shareholders, communities and the
environment in all aspect of organizations operations. I-Power is fully aware that theobligation extends beyond in statutory obligation to comply with legislation and
therefore voluntarily taking further steps to improve the quality of life for employees
and their families as well as for the local community and society at large.
As a socially responsible corporation, I-POWER BERHAD has always
shown care for the environment, care for employees, fostering strong relationships
with business associates and supporting many community welfare causes as part of its
business ethics and responsibilities.
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I-POWER BERHAD is a caring and responsible corporation and has various
activities were planned and implemented by the company to fulfil its CSR obligations
in the workforce, the community, and the environment. I-POWER team make
donations every year, organizes gatherings and recreational events on a regular
intervals for staff and family members, and also adopted eco-friendly practices in its
day-to-day work in order to minimizes the impact on the environment such as
recycling, energy savings and paperless environment.
REFERENCES
Financial Statement Analysis Book, 10th Edition, --- K.R Subramanyam .
John J. Wild
http://cpaclass.com/fsa/ratio-01a.thm
http://tippie.viowa.edu
http://announcements.bursamalaysia.com
http://yahoofinance.com
http://www.klse.com.my/
http://www.ipowerbiz.com.my
E. APPENDIX (FORMULA)
Short- term liquidity Capital structure and solvency:
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Profitability analysis Equity Analysis:
Current ratio
Current assets/Current liabilities
Total debt ratio
Total debt / total capital
Acid test ratio (quick ratio)
(Current assets – inventory) /current
liabilities
Total debt to equity capital
Total debt/ total equity to capital
Account receivable turnover
Net sales/Average gross receivable
Long term debt to equity capital
Long term debt/ total equity capital
Cash flow ratio
Operating cash flow/current liabilities
Altman’s Z-score
Z= 0.717X1 + 0.847X2 + 3.107X3 +
0.420X4 + 0.998X5
Smith’s Z-score
Z = -0.018 + 1.829X1 + 0.114 X2 –
0.080X3
Net profit margin
Net income/sales
Earning yield
Earnings per share/ market price per
share
Total assets turnover
Sales / average total assets
Price / earnings ratio
Market price of the share/earnings per
share
Return on total equity
Net income/average common equity
Percentage of earning retained (%)
Net income-all dividend/ net income
Net operating profit margin
Net operating profit after tax/sales