INTEGRATED CASE STUDY
REPORT ON CASE STUDY NO 4:
Based on the financial information given in Appendix A, what is HCF’s current financial position, how it is performing, perform ratio analysis to assess its current financial position and financial performance.
(a) HCF’S Current Financial Position.
(b) How HCF is performing.
* Falling margins and profits
* Revenue decreased by 7.7% (RM10mil) but COGS increased by 6.5% (RM4740mil) in 2008
* Operating profit decreased by 67% (RM9240mil) in 2008
* Increase in current liabilities
* Trade payables increased by 92% (RM6654mil)
* Overdraft increased by 86% (RM1415mil)
PROFITABILITY | FORMULA | YEAR 2008 | YEAR 2007 |
Return on Capital Employed (ROCE) | EBITNET ASSETS ×100 | 330054841 ×100=6% | 1259049437 ×100=25.47% |
Profit Margin | EBITNET NET SALES×100 | 3300120000 ×100=2.75% | 12590130,000 ×100=9.68% |
Return on Assets | NET PROFITTOTAL ASSETS×100 | 244272661 ×100=3.36% | 919161729 ×100=14.89% |
Gross Profit Margin | GROSS PROFIT SALES×100 | 42750120000 ×100=35.63% | 57490130000 ×100=10.65% |
Operating Profit Margin | OPERATING PROFIT SALES×100 | 4600 120000×100=3.83% | 13840 130000×100=10.65% |
* Resulting in overall increase of current liabilities by 45% (RM5528mil)
To measure of the return that a business in achieving from the capital employed, usually expressed in percentage terms. ROCE indicates the efficiency and profitability of a company’s capital investment. The higher the percentage figure was the better. The result of ROCE on year 2007 is higher than year 2008.
* Profit Margin
Profit margin is very useful when comparing companies in similar industries. The...