Report on Old Chang Kee’s Financials as at 31st March 2014
1 ACKNOWLEDGEMENT
Our Project Team would like to take this opportunity to specially thank Mr. Tan Geok Kian, our Accounting and Finance Lecturer, for his guidance and patience throughout this Project.
Kudos to each and every member of the group for the invaluable contribution to this Project Work. May we always persevere!
Team Members: Elroy Chan (Team Leader), Nordian Ibrahim, Sharon Tan, Hazimah Ishak, Junainah A Latif and Kenneth Wong.
2 CONTENTS
Contents
1 Acknowledgement 1
3 Executive summary 3
4 Background information 4
5 Swot Analysis 4
6 Financial Ratio Analysis and Recommendations 6
6.1 Leverage Ratios 6
6.2 Liquidity Ratios 6
6.3 Efficiency Ratios 7
6.4 Profitability
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5 SWOT ANALYSIS
A SWOT Analysis was conducted to identify Old Chang Kee’s opportunities and threats.
Old Chang Kee’s natural attributes that can be identified as strengths are:
• The brand Old Chang Kee continued to be a popular household name that is synonymous with Singaporeans having been around for more than half a century. The company was able to maintain its quality having had won several Prestige Brand Awards.
• It was able to capture a wider market share when it went ‘Halal’ in 2005, thus making the local snacks available for every Singaporean ‘regardless of race and religion’.
• It has a strong management team that has continued to steer the company to sustain growth.
Despite its natural attributes, Old Chang Kee has its fair share of internal weaknesses:
• There were times that quality of food was found to be compromised.
• Lack of presence at locations where heavy human traffic could be easily found. Examples include Changi Airport and NUH.
• Prices of these snacks have been increasing every year since
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This is shown in the dividends that were paid out to Shareholders which increased from 17.9% in 2013 to 20.3% in 2014.
The high return on equity creates a positive impact to the business, making it lucrative for current investors to continue with their investments whilst making the business attractive to new investors. Nevertheless, the Management need to ask if the Group could sustain the increasing trends in dividends.
6.5 INVESTMENT RATIO
There is an increasing trend in the Group’s allocation of its profit to each outstanding share as measured through the Earnings per Share Ratio. Earnings per Share rose to 0.0497 times in 2014 compared to 0.496 times in the previous year.
However, the net assets value per share dropped slightly to 0.259 in 2014 from 0.393 in 2013. The decrease in net assets backing per share reflects a reduction in the net worth per share. Although the drop is insignificant, the Management may want to study its underlying signals to improve its investment ratio to attract more investors and confidence of its
According to Chairman and CEO, DDD OOO, there are a few things that will sustain the company and its financial pos...
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Return on sales is decreasing and is below the industry average, but the goods news is that sales and profits have been increasing each year. However, costs of goods are increasing and more inventory is left over each year causing the return on sales to decrease. For 1995, it was 1.7% which is less than the average of 2.44% but is a lot higher than the bottom 25% of companies as seen in exhibit 3, which actually have negative sales return of 0.7%. Return on equity is increasing each year and at a higher rate than industry average. In 1995, it was 20.7%, greater than the average of 18.25% and close to the highest companies in exhibit 3, of 22.1% showing that the return in investment in the company is increasing, which is good for the owner.
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