Choo Bee Metal Industries - Coursework Example

CHOO BEE METAL INDUSTRIES FINANCIAL ANALYSIS 3) Comment on the “Firm’s performance” like (how much does it profitetc…). You should use selected accounting ratios to support your answer.  Choo Bee Metal Industries earned revenues of RM221 million in 2010 compared to RM196 million in 2009, RM 275 million in 2008 and RM 220 million in 2007. While the company showed a notable increase in revenue for the year 2008 (RM275 million) as compared to the previous year (RM220 million in 2007), the rates stepped down in 2009, again followed by a rise in 2010.

The company registered a marginally lower profit before tax of RM5 million in 2010 compared to the figure of RM18 million in 2009. This decrease is attributed to the fall in steel prices and dampened business activities. Because of the slumping price situation, the Group also adjusted their inventory net realizable value by taking on a write down of RM10.2 million. The company earned revenues of RM221 million in 2010, which was 13% more than the prior year's results (RM196 million in 2009). The net income fell at from RM14 million in 2009 to RM5 million in 2010.

The dividends per share (Sen) remained fixed at 4.50 while the earnings per share (Sen) decreased from 18.49 (2009) to 14.80 (2010). Since most companies in the supplies and fixtures areas of construction do not pay a dividend, the positive trend Choo Bee Metal Industries has shown in dividend payments, deserves a special mention. For the financial year ended 31st December, 2010, the board recommended a final dividend of 6% less, 25% Malaysian tax. For the past four years, the gross profit margin of Choo Bee metal industries has been relatively stable except in the year 2008 during which time the strong demand for steel, and high steel prices, in the early part of 2008 were reversed by the global financial crisis from September 2008.

The company has recorded a gross profit margin of 19% (2010), 17% (2009), 31% (2008) and 17% (2007). Formulae used: 1) Revenue comparison Current year’s revenue – previous year’s revenue ------------------------------------------------------------ * 100 Previous year’s revenue Example: [(221-196)/ 196] * 100 = 13% Because the answer is positive, we call it a rise. If it was negative (for e.g., -13%), that is a fall in revenue) 2) Gross profit margin Revenue – Cost of goods sold ------------------------------------ Revenue Example: (220,984,827 - 194,863,111) / 220,984,827 = 0.

118 rounded to 0.19 and expressed as 19% NOTE: refer to the excel sheet for the cost of goods working