Genting Group Comprises Of Five Public Companies Finance Essay

Genting Group Comprises Of Five Public Companies Finance Essay

The Genting Group comprises of five public companies that are involved in assorted industries. The chief company of the group is Genting Berhad. Genting Berhad is an investing retention and direction company ( Genting Berhad 2012 ) . It had made its investing in different industries such as cordial reception, amusement, plantation and many more through the other companies under “ Genting ”

The Genting group was founded by the late Tan Sri ( Dr. ) Lim Goh Tong in 1965 as he began to develop the acme of Mount Kila to construct his really ain resort known as Genting Highlands Hotel. The hotel operated as both a hotel and a casino. Subsequently in 1980, Genting Group via Genting Berhad, involved itself in thenar oil production after buying The Rubber Trust Group which consist of three Hong Kong plantation companies. Today, under the name Genting Plantations Berhad, the Genting Group is one of the primary thenar oil manufacturers in Malaysia with 166,000 hectares of land in Malaysia and Indonesia.

The Genting Group continued to venture into other industries such as electricity power coevals and supply and the paper fabrication concerns in 1994 through Genting International Paper Holding Limited and production of oil and gas in 1996 under Genting Oil and Gas Limited.

The Genting Group besides made its manner to obtain international acknowledgment. Presently they have a company in Hong Kong known as Genting Hong Kong Limited and in Singapore known as Genting Singapore P.L.C..

Genting Berhad is said to hold a positive hereafter prospective. This is because the Genting group has began their programs to further spread out their concern into the western states. In recent intelligence ( Walker E. 2013 ) , The Miami Herald has reported that the Genting Group has made its first footmark in the state, Bahamas, by holding a joint venture with a local company, RAV Bahamas, to open a resort and a casino. Bahamas is be aftering to hold Genting Group to foster put into the other island of the state.

In add-on, the fiscal statements of Genting Berhad are demoing a positive mentality based on the fiscal ratios calculated. The consequence and the reading of the ratios will be further explained subsequently in this study.

2.0 List of Board of Directors and independent hearer and

their functions

2.1 Board of Directors

Genting Group Board of Directors consist of chiefly six members which includes two executive managers and four independent non-executive managers. In general, the board is duty for the proper behavior of the company ‘s concern. They are besides required to hold formal agenda of affairs specifically reserved for its determination, including overall strategic way, one-year operating program, capital outgo program, acquisitions and disposals, major capital undertakings and the monitoring of the Group ‘s operating and fiscal public presentation. ( Genting Group Annual Report 2011 )

The following tabular array shows the list of Board of Directors and a brief description of their function.

No.

Name and Position

Description of function

1.

Tan Sri Lim Kok Thay

( Chairman and Chief Executive )

Ensure that the board is effectual in its undertakings of puting and implementing the company ‘s way and scheme

Put the docket, manner and tone of Board treatments to advance constructive argument and effectual decision-making.

Develop and advance effectual communicating with stockholders and other relevant constituencies.

2.

Tun Mohammed Hanif bin Omar ( Deputy Chairman )

Help the Chairman in his undertaking and assist equilibrate the president ‘s double function

3.

a. Dato ‘ Dr. R. Thillainathan

b. Dato ‘ Paduka Nik Hashim

Bin Nik Yusoff

d. Tan Sri Dr. Lin See Yan

e. Mr Chin Kwai Yoong

( Independent Non-Executive

Director )

Provide equal position of the company ‘s standing from an ‘outsider ‘ position

Give advice or counsel relating to board affairs without biasness

2.2 Independent Hearers

Harmonizing to U.S Securities and Exchange Commission ( 2002 ) , an hearer is a certified comptroller who examines the financials statement of a company. This is to guarantee that the information shown is true, accurate, complete and in conformity to the standards set by the authorities. A big company like Genting Berhad has both internal and external ( independent ) hearers. Independent hearers are a group of hearers or comptrollers that do non hold any sort of relationship with the company and are able to reexamine the statements reasonably. These hearers will first reappraisal and so compose a study about the statements saying whether there is a job with the statements or non.

The Independent hearer that is working with Genting Berhad is PricewaterhouseCoopers ( Pwc ) . Hearers of Pwc are responsible to scrutinize the fiscal statements of Genting Berhad and do certain that it is in conformity with the demands set by the Malayan Accounting Standard Board ( MASB ) . They besides obtain necessary grounds about the sums and revelation in the statements ( Annual Report 2011 ) . Lastly Pwc will supply their sentiment sing the statement and saying whether the statements are done accurately. All these are done based on the judgements of the hearers.

3.0 Ratio Calculations and Analysis

Accounting ratios are used to compare different parts of the fiscal statements. For illustration, current assets and current liabilities. This allows the readers to understand the fiscal standings of the company better every bit good as how the company making compared to other companies of the same field. Companies besides calculates their ain ratios to see how good they are making compared to the old old ages. There are a four different types of ratio that can be calculated. To hold a clearer apprehension of Genting Berhad ‘s fiscal standings, this assignment will be comparing the ratios of twelvemonth 2010 and 2011 ( mention to appendix for the fiscal statements ) .

3.1 Liquidity Ratio

The intent of liquidness ratios is to mensurate the ability of the company to pay its liabilities ( Wood F. 2012 ) . There are two ways to cipher this ratio ; current ratio and acerb trial ratio.

3.1.1 Current Ratio

Current Ratio is used to compare the current assets of the company and its current liabilities. If the ratio falls under 1, it means that the company is unable to pay its liabilities if it is due at that clip.

Formula:

Current Asset

Current Liabilitiess

Current Ratio of 2010

Current Ratio of 2011

19189.7

=

3.2482

5907.8

18498.3

=

2.5569

7234.8

A

In both old ages, Genting berhad has the ability to refund its liabilities when it is due at that clip. But the ratio lessening in 2011. This is due to the lessening in plus and increase in liabilities. However, it does non intend that it is bad have more liabilities. Genting Berhad could hold taken more loans that increase its influx of hard currency. It is non harmful every bit long as the ratio is more than 1.

3.1.2 Acid Test Ratio

Similar to the current ratio, the lone difference is that the acerb trial ratio does non take into history the stock list held by the company.

Formula:

Current Asset – Inventory

Current Liabilitiess

Acid Test Ratio of 2010

Acid Test Ratio of 2011

19189.7-520.6

=

18669.1

=

3.1601

5907.8

5907.8

18498.3-539

=

17959.3

=

2.4823

7234.8

7234.8

A

Merely like the analysis for current ratio, the ratio had lessening in 2011 but still above 1. The ground stock lists is non taken into history in this computation is because it is non every bit liquid as the other assets. Inventories comes in many signifier such as natural stuff, work in advancement and finished goods which is hard to be valued unless it is sold. Genting Berhad need non to worry approximately when its liabilities is due as it can be settled at any given clip.

3.2 Asset Management Ratio

Asset direction ratio is use to analyze how efficaciously is the company utilizing its plus to bring forth gross ( Peavler R. 2013 ) . There are a sum of four ways to cipher this ratio but merely two will be discussed.

3.2.1 Inventory Employee turnover

This measures how rapidly the company sells its goods and clears the stock lists from its shelves. It besides shows how good the company is in pull offing their stock lists. The higher ratio indicates how rapidly is the stock lists sold ( Lane M.A. ) .

Formula:

Cost of Goods Sold

Average Inventory

Inventory Turnover of 2010

Inventory Turnover of 2011

8537.7

=

8537.7

( 520.6+387.1 ) /2

453.85

=

18.8117

11733.2

=

11733.2

( 539+520.6 ) /2

529.8

=

22.1465

Inventory turnover is read as the ‘number of times ‘ the stock list is sold and replaced during a certain period. For illustration, in 2010, the stock list turnover is 18.8117 times. The addition in the rate shows that there is a shorter clip where stock list stayedsayeiz idle in 2011. It besides means that Genting Berhad had done more gross revenues and derive more gross.

3.2.2 Asset Employee turnover

Asset turnover shows how expeditiously the company is utilizing its plus to do gross revenues.

Formula:

Net Gross saless

Entire Asset

Asset Turnover of 2010

Asset Turnover of 2011

15194.7

=

0.3100

49014.1

19559

=

0.3599

54344.7

A

Asset turnover is used to cipher the efficiency of utilizing assets to bring forth gross. Examples are the usage of equipment, premises and others. Since the ratio in 2011 is higher than 2010, it can be said that Genting Berhad had better direction of its plus during that twelvemonth. However, the ratio of both old ages is considered to be low. It is possible that Genting Berhad is more dependent on the usage of its capital ( hard currency ) instead than assets to bring forth gross.

3.3 Fiscal Leverage

Fiscal Leverage is besides known as the debt direction ratio. As its name implies, it evaluates how good the company is pull offing its debts. There are times where a company get debts to buy assets alternatively of the utilizing the concern ‘s capital ( shareholders ‘ equity ) .

3.3.1 Debt ( liabilities ) to Total Assetss

Debt to entire plus ratio step the sum of assets that are financed by debts taken by the company ( Peavler R ) .

Formula:

Entire Liabilitiess

Entire Assetss

Debt to Total Assets of 2010

Debt to Total Assets of 2011

19567.6

=

0.3992

49014.1

21177.8

=

0.3897

54344.7

A

This ratio is used to cipher the proportion of Genting Berhad ‘s liabilities against its plus. The lessening in ratio shows that Genting Berhad is no longer depending on debts to buy or finance its plus. Although some might reason that the lessening in ratio is due to the colony of loans by Genting Berhad while the sum of its assets remains the same. However, as it is shown, both the plus and the liabilities had addition. It proves that the company is still geting assets but has taken up lesser loans or settled some of it.

3.3.2 Debt to Stockholders ‘ Equity

This ratio is used to mensurate how much debt comparison to capital is used to finance the assets in the company ( Ycharts ) . The higher the ratio, the more debts the company has taken to finance its assets.

Formula:

Entire Liabilitiess

=

Entire Liabilitiess

Stockholder ‘s equity

Entire Asset – Entire Liabilitiess

Debt to Stockholders ‘ equity of 2010

Debt to Stockholders ‘ equity of 2011

19567.6

=

19567.6

( 49014.1 – 19567.6 )

29446.5

=

0.6645

21177.8

=

21177.8

( 54344.7 – 21177.8 )

33166.9

=

0.6385

The bead in the ratio shows that Genting Berhad is be aftering to utilize more of its capital to get assets instead than depending on debts. Though sometimes, holding liabilities is a better option than utilizing capital. Without liabilities, a company can run its concern without worrying about the sum they need to settle the debts. But utilizing excessively much capital will demo a negative hard currency flow on the statements which will pull away investors. Having a balance debt direction ratio is of import.

3.4 Profitability Ratio

Profitability ratio is used to mensurate the net income net incomes by the company. It indicates the ability of the company to do gaining relation to plus, gross revenues and equity ( Nelson S.L. 2011 ) . It is the most of import ratio as people from the populace are chiefly interested in the net incomes earned by the company. There are entire four types of computation but merely two will be shown.

3.4.1 Gross Net income Rate

The Gross net income rate shows how much is left after covering all the disbursals such as administrative, gross revenues and distribution. Basically it shows how much a company makes taking into consideration the costs that it used for fabricating its merchandises or services ( ReadyRatios )

Formula:

Gross Net income

Net Sale

Gross Profit Ratio of 2010

Gross Profit Ratio of 2011

6657

=

0.4381

15194.7

7825.8

=

0.4001

19559

A

The gross net income ratio had lessening in 2011. This indicates the sum of gross revenues used to cover the disbursals. In this instance, in twelvemonth 2011, Genting Berhad uses about 40 % of their gross revenues available to cover the production costs. The lessening in value could besides intend that Genting Berhad is passing more in their production costs.

3.4.2 Return on Gross saless

Tax return on gross revenues, besides known as operating net income border. It shows how much the company makes after paying for variable costs such as rewards and natural stuffs excepting revenue enhancements. Variable costs are disbursals that alterations in proportion to the activities of the concern ( ReadyRatios ) .

Formula:

Net Income Before Taxes

Net Sale

Tax return on Gross saless 2010

Tax return on Gross saless 2011

4394.3

=

0.2892

15194.7

6673.3

=

0.3412

19559

A

The return on gross revenues ratio reflects Genting Berhad ‘s pricing scheme and it ‘s capableness in commanding their costs. It shows how much net income is earned per RM of gross revenues. The addition in 2011 indicates that Genting Berhad is going more efficient as the company is acquiring better at managing their variable costs.

4.0 Five other measurings

Rather than utilizing the ratio analysis, there are other ways to mensurate a company ‘s fiscal standings and public presentations.

One of them is Free Cash Flow ( FCF ) . Free hard currency flow can be defined as the hard currency available after deducting the sum the company had used for its concern ( N.A 2010 ) . Unlike net incomes, the FCF is the existent sum that the company has in manus or at the bank. FCF is used to do investings, spread outing the concern and paying the stockholders.

Besides that, there is the Capital Asset Pricing Model ( CAPM ) . It is used to mensurate the expected return rate from purchasing the company ‘s portions ( McCraken M. n.d ) . This computation is done by the investors. When executing investings, investors are expected to take certain sum of hazards. They would desire to measure the value of the hazard and how much should be expected to be return to them for taking such a hazard. The higher the hazard, the higher the expected return value. If the investors feel that the company could non supply the expected return rate, they might take to put in something else.

The 3rd is Market Value Added ( MVA ) . MVA can be defined as the difference between the market value of the house ‘s stock and the capital invested by stockholders ( Jermanis D. 2006 ) . This can be seen as the sum the stockholders earn or acquire back if they were to sell their portions. The MVA shows how good the company is pull offing its scarce resources. The more efficient they are, the more MVA they have. It can merely be used for publically listed portion monetary values as it is non easy to find the value otherwise.

The 4th is Economic Value Added ( EVA ) . Unlike MVA, EVA is used to mensurate a company ‘s public presentation during a certain period of clip. It is normally used by internal direction. EVA can be calculated by deducting capital invested times leaden mean cost of capital from net operating net income after revenue enhancement ( EVA = Net Operating Net income After Tax – ( Capital Invested x WACC ) ) . The computations for EVA will state if the net income earned in a undertaking is adequate to cover the capital invested in it. A negative EVA figure shows loss ( Investing Answers n.d. ) .

A company ‘s public presentation can besides be evaluated through clients ‘ position. If the company is making good and handling their clients right, their clients will urge the company to others. High net incomes merely show the gross revenues the company made. It does non intend that it has good client keeping program. Without a good keeping program, the company will finally lose all its clients to other companies. The company must besides be able to present the promised degree of satisfaction and manage the clients ‘ ailment expeditiously.

5.0 Recommendation

I would purchase and urge Genting Berhad ‘s portions. The overall ratio analysis shows a positive mentality of the company. By comparing the two most recent fiscal statements which is 2010 and 2011, it can be seen that the company is bettering through its assets acquisition and gross revenues. The most of import thing is the profitableness ratio. It shows that the company is acquiring better at pull offing its cost which will take to an addition of net income border for the company. If the company is spread outing and developing systematically, we as stockholders will be able to acquire more dividends in return. Furthermore, there are intelligence that Genting Berhad is spread outing to other states such as Bahamas which will supply the company with an international acknowledgment. This will increase the market value of its portions and stocks.

6.0 Appendix

7.0 Mention