Financial Analysis Management

Order Description

Please follow the assignment instructions and marking scheme.
a) Financial report of FGV, IOI and KLK are per attached.
b) Format of Data of Financial Analysis (IOI) is per attached. Please do one for KLK as well for comparison.
c) Please analyse the FGV New Business Model as attached. Please critically evaluate financial performance and strategic of 2 mutually exclusive target acquisitions for FGV’s business model 2015-2020 i.e. IOI or KLK.

KEYWORDS of ASSIGNMENT
a) Financial Analyst
b) acquisition target
c) economic condition
d) financial performance
e) risk exposure
f) additional concern
g) investment appraisal techniques
h) Capital Investment Decision Making
i) You work as a FINANCIAL ANALYSIS for the CFO of FGV one of the largest plantation
companies in the world and listed on Bursa Malaysia (formerly the Kuala Lumpur Stock
Exchange)
Company FGV is considering the possible acquisition of a plantation group to further strengthen
the market dominance in this sector. The initial research has identify 2 potential acquisition targets,
Company IOI & Company KLK.
The CFO has asked you to write a brief internal management memo that summarises the current
business of each these two companies, together with a short assessment of the impact of the
recent economic conditions on them.
Requirement
– To critically examine the business profile of Company IOI & KLK to determine their strategic for
FGV Business Model.
– To determine the key economic drivers of change and their implications on current and future
performance of Company IOI & KLK.
b) Undertake the necessary research and write a report to your CFO which critically evaluates and
compares the financial performance and risk exposures of these , together with a REASONED
ARGUMENT as to your advice as to which company might be the preferred acquisition target.
Requirement
To critically evaluate financial performance and strategic of 2 mutually exclusive target acquisitions
for FGV’s business model 2015-2020 i.e. IOI or KLK.
There must be critical and comparison………
Substantial share holding.
Uncertainty of EURO Zone.
RATIO
a) Profitability
– GP margin—- expense margin = 2684/11910 X 100% = 22.5%
– OP margin——-expense margin = 1778/ 11910 X 100% = 14.9%
– expense margin = 22.5-14.9% = 7.6%
Cost structure changes
b) Liquidity
– current ratio
– quick ratio
When ratio is going up = long term finance. (PACKING ORDER THEORY dependent on the
availability)
c) Efficiency
– Debtor collection ; Example 40 days
– Creditor payment ; Example 30 days
d) Capital structure
– Gearing = Financial Risk up
– Interest cover = Interest cover down
– Financial risk is escalating
e) Investors
– EPS Given in Annual Report (BASIC EPS); look at income statement (Bottom)= Up= GOOD
– ROCE – Define Formula = Operating Profit/ Total Assets X 100%= ??????%
– = Return of Capital employed
c) Your CFO also ask you to write a short report regarding “Capital Investment Decision Making”
which outlines the main investment appraisal techniques and critically evaluate their individual
strengths and weakness. Include a REASONED RECOMMENDATION as to which approach might
be the best for a company such as Company FGV to use to evaluate investments in new
distribution warehouses and logistics companies.
Requirement:
– To Critically evaluate and analyse investment appraisals. The conclusion must be rationally
justified and integrated and identify area to be checked before final decision.
– Compare and contrast methods using suitable examples:NPV, IRR, PAYBACK and PI clearly
highlighting challenges, strengths, weakness and contemporary issues involved.
– In order to form critical arguments based on contemporary issues in business environment and
their implications in the selection criteria investment appraisal techniques.