This Financial Audit Report Finance Essay

The first subdivision of this fiscal audit study is to briefly explicate the company background of the companies of Bonia Corporation Berhad and Parkson Holdings Berhad.

Following by the first subdivision, the 2nd subdivision is to analyze the market portion monetary value motion of the companies from correlativity coefficient and arrested development line of the best tantrum, to mensurate that hazardous and anticipation when invests in market portion monetary values. Through the market portion monetary values motions, efficient market hypothesis and random walk theory have to explicate in this study.

Last, this study besides identifies the methods of security rating methods which are needed to advert when the writer wants to value the portion monetary values of the companies. Besides that, this study besides presents of import of capital budgeting in determination opinion when appraises investing in undertakings. With the model, writer has find the different of security rating and capital budgeting.

Bonia Corporation Berhad

Company Background

Bonia Corporation Berhad is chiefly focal points in manner retailing, selling and fabrication, which has provided high quality and manner of leather goods. There have 883 gross revenues mercantile establishments and 103 dress shops in around the universe.

The Bonia ‘s history was started in 1977 twelvemonth, which Mr. Chiang Sang Sem, the Bonia ‘s laminitis, and now was Executive Chairman in Bonia Group, had apply Bonia of trade name name because of divine from the graphics of Giambologna, Italy. In 1980, the Bonia Group had win became market leader in Malaysia and Singapore and was listed on the Bursa Malaysia, Kuala Lumpur Stock Exchange ( KLSE ) . Then Bonia Group had succeeded expanded and had its subordinates company.

Now the Bonia Group has win added more international trade names, which are Pierre Cardin, Braun Bruno, Magli, Buffel, and Renoma to its aggregation of trade names with the gaining of 70 % equity in Jeco ( Pte ) Limited.

Corporate Goal

The chief corporate end of Bonia Corporation Behad is to be the recognized international trade name with lists in the public listed companies in the part. Harmonizing to Bonia Group ‘s vision, Bonia Group will set up more 30 states and will concentrate in 5 states in 2015 twelvemonth. Furthermore, Bonia Group forecasts to hold 1billion net incomes and at least have 12 % before the revenue enhancement in annually.

Fiscal Reporting and Performance

Harmonizing to the one-year study 2011, Bonia Group ‘s net incomes have increased 28 % to RM461.4million with RM54.8 million from part of Jeco ( Pte ) Limited and RM24.0 million in consignment gross revenues Malaysia. Then Bonia Group has earned RM56.5 million before revenue enhancement with 24 % and RM14.8 million before revenue enhancement in Jeco ( Pte ) Limited ‘s part. However, there still have losingss of RM5.4 million from joint venture concern in Vietnam.

Future Prognosis

Apart on Bonia Group ‘s prediction, Renoma Caf & A ; eacute ; Gallery has chosen as the maestro Franchisee from Licensor, Renoma S.T.A.R. for Singapore, Indonesia and Malaysia and launchs 1st construct in 2012 twelvemonth. Besides, Bonia Group has rebuilt the retail in Vietnam because of reasoning with spouse. It forecasts will be the impermanent because of back uping by Vietnam ‘s departmental shops. Bonia Group forecasts to establish first dress shop at Grand Indonesia Shopping Town in Jakarta.

Parkson Retentions Berhad

Company Background

Parkson Holdings Berhad is a Malaysia investing keeping company which was under Companies Act in 1965 twelvemonth and has named as Amalgamated Cement Mills Sdn Bhd in 1982 twelvemonth. When 1992 twelvemonth, it had changed to a public company with Pakson name and had listed to Bursa Malaysia in 1993 twelvemonth. It had joint venture in Parkson Retail Group Limited and Parkson Retail Asia. It has 89 section shops in China, Indonesia, Vietnam, and Malaysia, which 7 shops in Indonesia are under the trade name name of a Kem Chicks Supermarket and Centro Lifestyle Department Store, and 8 shops in Vietnam, 37 shops in Malaysia are under trade name name of Parkson.

Corporate Goal

Parkson Group has the corporate end which offers more international trade names to fall in venture in cargo of section shops. Parkson Group is utilizing the scheme of consistent market placement, localisation and concentrating Fashion, Cosmetics, Household and Electrical to accomplish aims with mark of immature and modern-day market sections.

Fiscal Reporting and Performance

In 2011, Parkson Group has earned gross gross revenues of RM9.49 billion, which had increased 10 % and earned operating net income of RM971 million which had increased 11 % . Besides, Parkson Group besides had earned the net net income RM348 million, which had increased 22 % . Furthermore, Balance sheet of Parkson Group maintains healthy in 2011 with financess of more than RM2 billion to stockholders.

Future Prognosis

Parkson Group has planning to concentrate in expanded new retail markets to more states. Then it has to keep partnership with the Indonesia which has following the listing of portions of SGX-ST for future prognosis. Parkson Loyalty Card programme, which is emphasized, besides is the future prognosis of the company to derive more consumers.

Market Share Price Movement of PARKSON and BONIA

Share monetary value motion is determined to gauge the hereafter hard currency flows and portion monetary value in the company. This study has done to find the portion monetary values motion of Parkson and Bonia.

Market Share Price

Calendar month

PARKSON HOLDINGS BHD

Market Share Price

Bonia Corporation Berhad

Market Share Price

Jan

5.95

1.81

Feb

5.66

1.8

Mar

5.73

1.8

Apr

5.87

1.85

May

5.92

1.85

June

7.73

1.81

July

6.12

1.81

Aug

5.89

1.73

Sep

5.82

1.65

Oct

5.69

1.72

Nov

5.81

1.96

Dec

5.84

2.07

Scatter Diagram Graph

Scatter Diagram is a technique that uses to find relationship between two months and to find how the fiscal market plants and the hazard of company. Below is the tabular array of monthly portion monetary value Parkson, which uses to plot scatter diagram graph market portion monetary values.

PARKSON HOLDINGS BHD

Calendar month

ten

Y

Calendar month

January

5.95

5.66

February

February

5.66

5.73

March

March

5.73

5.87

April

April

5.87

5.93

MAY

MAY

5.92

7.73

JUN

JUN

7.73

6.12

JUL

JUL

6.12

5.89

August

August

5.89

5.82

September

September

5.82

5.69

October

October

5.69

5.81

November

November

5.81

5.84

December

December

5.84

2.2.1 Scatter Diagram Graph of PARKSON HOLDINGS BHD

The graph above has showed that the correlativity between 2 months of the portion monetary value of Parkson, which the highest is on June RM7.73 and the lowest, is on February RM5.66.

BONIA CORPORATION BHD

Calendar month

ten

Y

Calendar month

January

1.81

1.8

February

February

1.8

1.8

March

March

1.8

1.85

April

April

1.85

1.85

MAY

MAY

1.85

1.81

JUN

JUN

1.81

1.81

JUL

JUL

1.81

1.73

August

August

1.73

1.65

September

September

1.65

1.72

October

October

1.72

1.96

November

November

1.96

2.07

December

December

2.07

2.2.2 Scatter Diagram Graph of BONIA CORPORATION BHD

The graph above is scatter diagram of Bonia, which the highest is on December RM2.07, and the lowest, is on October RM5.66. Based on the spread diagram graph, it besides has showed Parkson ‘s correlativity between 2 months is strong than Bonia.

Calculation of Correlation Coefficient

However, it needs to utilize computation of correlativity coefficient to mensurate more accurately that weak and strong of correlativity between 2 months are construing. It takes on values runing between +1 and -1.

PARKSON

ten

Y

XY

x?

y?

5.95

5.66

33.68

35.40

32.04

5.66

5.73

32.43

32.04

32.83

5.73

5.87

33.64

32.83

34.46

5.87

5.92

34.75

34.46

35.05

5.92

7.73

45.76

35.05

59.75

7.73

6.12

47.31

59.75

37.45

6.12

5.89

36.05

37.45

34.69

5.89

5.82

34.28

34.69

33.87

5.82

5.69

33.12

33.87

32.38

5.69

5.81

33.06

32.38

33.76

5.81

5.84

33.93

33.76

34.11

5.84

5.95

34.75

34.11

35.40

72.03

72.03

432.74

435.78

435.78

The expression of Correlation Coefficient

The reply shows that the correlativity coefficient of Parkson following by the 2 months is 0.11. It means that the correlativity efficient of between 2 months of the portion monetary value are weak.

BONIA

ten

Y

XY

x?

y?

1.81

1.80

3.26

3.28

3.24

1.80

1.80

3.24

3.24

3.24

1.80

1.85

3.33

3.24

3.42

1.85

1.85

3.42

3.42

3.42

1.85

1.81

3.35

3.42

3.28

1.81

1.81

3.28

3.28

3.28

1.81

1.73

3.13

3.28

2.99

1.73

1.65

2.85

2.99

2.72

1.65

1.72

2.84

2.72

2.96

1.72

1.96

3.37

2.96

3.84

1.96

2.07

4.06

3.84

4.28

2.07

1.81

3.75

4.28

3.28

21.86

21.86

39.87

39.95

39.95

The reply shows that the correlativity coefficient of Bonia following by the 2 months is 0.38. It means that the correlativity efficient of between 2 months of the portion monetary value are weak. However, it still better if comparisons with Parkson.

Calculation Regression line of Best Fit

Harmonizing to Sir Francis Galton ( 1822-1911 ) , which had developed spread diagram and correlativity coefficient, besides had identified arrested development line that used to make anticipation.

Equation of x ( current portion monetary value ) and y ( predicted portion monetary values )

Formula Regression Line of Best Fit

PARKSON

Therefore,

2.2.2.1 Regression Line Best Fit of PARKSON HOLDINGS BHD

is the equation line of Parkson. Therefore, it can utilize to foretell the portion monetary values for future. For illustration, if this month the portion monetary value ( ten ) is RM6.0,

And the following month ‘s portion monetary value besides will be RM6. Based on the graph, it besides has showed Parkson ‘s portion monetary values are more stable.

BONIA

0.38

1.8217-0.692

Therefore,

2.2.2.2 Regression Line Best Fit of BONIA CORPORATION BHD

is the equation line of Bonia. There besides can utilize to foretell the portion monetary values for future. For illustration, if this month the portion monetary value ( ten ) is RM2.0,

And the following month ‘s portion monetary value besides will be RM2.64. Based on the graph, it besides has showed Parkson ‘s portion monetary values are more hazardous, if comparisons with Parkson ‘s arrested development line of best tantrum.

Time Series Graph

Time series is a aggregation of market portion monetary values so shows that which month is the highest and lowest, and the upward or down bend in the market.

PARKSON HOLDINGS BHD

2.3.1 Time Series Graph of PARKSON HOLDINGS BHD

Based on the graph above, the portion monetary values of Parkson has moved down on January to February and moved up once more on March. The most transubstantiation in Parkson is on May which moved up to June so moved down once more to July.

BONIA CORPORATION BHD

2.3.2 Time Series Graph of BONIA CORPORATION BHD

Based on the graph above, the portion monetary values of Bonia has moved moderate in early of the twelvemonth 2011. Then the portion monetary values start move down on August to September and travel up once more on October.

Calculation of Correlation Coefficient

Lapp with 2.2.1 computation for spread diagram, now is calculate correlativity coefficient of clip series of Parkson and Bonia to find the relation between month and portion monetary values.

PARKSON

ten

Y

XY

X?

Y?

1.00

5.95

5.95

1.00

35.40

2.00

5.66

11.32

4.00

32.04

3.00

5.73

17.19

9.00

32.83

4.00

5.87

23.48

16.00

34.46

5.00

5.92

29.60

25.00

35.05

6.00

7.73

46.38

36.00

59.75

7.00

6.12

42.84

49.00

37.45

8.00

5.89

47.12

64.00

34.69

9.00

5.82

52.38

81.00

33.87

10.00

5.69

56.90

100.00

32.38

11.00

5.81

63.91

121.00

33.76

12.00

5.84

70.08

144.00

34.11

78.00

72.03

467.15

650.00

400.38

0.0154

0.00024

The reply shows that the correlativity coefficient of Parkson following by the months and portion monetary value is 0.0154. It means that the correlativity efficient of between months and portion monetary value are really weak.

BONIA

ten

Y

XY

X?

Y?

1.00

1.81

1.81

1.00

3.28

2.00

1.80

3.60

4.00

3.24

3.00

1.80

5.40

9.00

3.24

4.00

1.85

7.40

16.00

3.42

5.00

1.85

9.25

25.00

3.42

6.00

1.81

10.86

36.00

3.28

7.00

1.81

12.67

49.00

3.28

8.00

1.73

13.84

64.00

2.99

9.00

1.65

14.85

81.00

2.72

10.00

1.72

17.20

100.00

2.96

11.00

1.96

21.56

121.00

3.84

12.00

2.07

24.84

144.00

4.28

78.00

21.86

143.28

650.00

39.95

On the other manus, coefficient of Bonia between months and portion monetary value is. Although the correlativities efficient are really weak, but it still better if comparisons with Parkson.

Calculation Regression line of Best Fit

Lapp with 2.2, arrested development line of best tantrum besides has used to find in clip series.

PARKSON

Therefore,

is the equation line of Parkson.

BONIA

0.002

1.8217-0.013

Therefore,

is the equation line of Bonia.

Market efficiency hypothesis

Efficient capital market, which security monetary values change quickly following by new information and, hence, the current monetary values of securities reflect all information about the security. It is of import to analyse capital markets efficiency and understand the efficient market hypothesis because its consequences of researches have important real-world deductions for investors and portfolio directors. An efficient market is requires a big figure of net income maximizing participants analyze and value securities.

Random Walk Theory

Random walk theory is defines by the fact that monetary value alterations are independent of each other ( Brealey et al, 2005 ) . Actually random walks is connected to efficient market hypothesis, which if more efficient the market, the more random of portion monetary values will alter. Investors can non accurately predict the portion monetary values no affair with the correlativity coefficient and arrested development line of best tantrum. Therefore, portion monetary values ever to the full reflect the information available and no net income can be made from information based trading ( Lo and MacKinley, 1999 ) .

Different Forms of Market Efficientcy

Harmonizing to FAMA, there have three bomber hypotheses in efficient market hypotheses which are weak efficiency, semi-strong efficiency and strong efficiency.

2.4.2.1 Weak Efficiency

The weak signifiers of the efficient market hypothesis states that portion monetary value to the full reflect all historical information. It means that past rates of return and other historical portion monetary values do non hold relationship with future rates of return, which is rates of return should be independent.

2.4.2.2 Semi-strong efficiency

The semi-strong signifier of the efficient market hypothesis states that portion monetary values will set instantly and in an indifferent mode to reflect new information, which is made publically available. This does non intend that everybody has to hold the same sentiments about the significance of the new information. Monetary values will reflect the position of the market, which will automatically be the best reading of the mechanism. The deduction of this is that a portion can ne’er be over or under monetary values harmonizing to the information, which is publically available.

2.4.2.3 Strong efficiency

The strong signifier of the efficient market hypothesis provinces portion monetary values reflect all information. This means that no investors have monopolistic entree to information related to the monetary values. The strong signifier efficient encompasses both weak signifier efficient and semi strong signifier efficient. Further, the strong signifier efficient will acquire more premise of efficient markets, to presume perfect markets, in which monetary values adjust to the release of new intelligence.

Technical and Cardinal Analysis

Based on the survey of past portion monetary values, many fiscal analysis seems to be position because of capital market are inefficient. A proficient analysis or Chartist has occurred to foretell future monetary value motions from monetary values. Besides, cardinal analysis is study publically available information such as published histories in order to seek to place the existent worth or intrinsic value of portions, which may be more or less than the portion monetary value.

Anomalies in the behaviour of portion monetary value

Many such anomalousnesss have been reported and investigated in the quest to understand the behaviour of portion monetary values ( Fama 1998 ) .

Calendar effects

There has some calendar effects have been examined, which trading at peculiar times of the twenty-four hours can take to negative or positive returns. One survey found a important monthly consequence wherein all the market ‘s cumulative progress occurred during the first half of trading months. An analysis of the weekend consequence found that the average return for Monday was significantly negative during 5 twelvemonth bomber periods and a entire period. In contrast, the mean return for the other 4 yearss was positive.

The size anomalousnesss

The returns from puting in smaller companies have been shown, in the long tally, to be greater than the mean return from all companies. One survey, for illustration, found that little houses outperformed big houses by 6 % per twelvemonth ( Dimson and Marsh 1986 ) . It has been suggested that above-average returns from little companies may counterbalance for the greater hazard associated with them, such as the hazard of fiscal hurt.

Concepts Security Valuation and Capital Budgeting

Security Evaluation

Security Valuation is the rating on the net assets of company which willing or able to allow investors put to the company. With the analysis of rating, investors can find which company ‘s portion monetary values are under or over valued, and do the determinations in investing.

3.1.1 Asset Evaluation

Net plus Backing is more suitably referred to as net touchable acquiescence backup because it excludes intangible acquiescences such as good will. And it is sometimes used as a step of the underlying value of a company ‘s portions in the evidences that it represents what stockholders are entitled to in the event that a company is wound up, it can so be compared with the current monetary value of a company ‘s portions.

Parkson

1. Net Assets Method Of Share Valuation

Entire Assetss

7,270,943,000

Intangible Assetss

1,235,534,000

Entire Liabilitiess

3,887,578,000

Net Assets Value of Equity

2,147,831,000

No. of Ordinary Shares

=

1,093,673,000

Value Per Share

=

Net Assets Value of Equity & A ; divide ; No. of Ordinary Shares

=

1.964

Income Based

Price Net incomes Ratio ( P/E )

Gaining Yield ( EY )

Bonia

Asset Evaluation

Net Assets Method Of Share Valuation

Entire Assetss

373,250,000

Intanglible Assetss

aˆ’

68,848,000

Entire Liabilitiess

aˆ’

126,263,000

Net Assets Value of Equity

178,139,000

No. of Ordinary Shares

=

201,572,000

Value Per Share

=

Net Assets Value of Equity & A ; divide ; No. of Ordinary Shares

=

0.88

Income Based

Price Net incomes Ratio ( P/E )

Gaining Yield ( EY )

Asset Evaluation

PARKSON

BONIA

Net Assetss

1.96

0.88

P/E

4.46

2.30

EY

8.77

2.38

Market Value

5.84

2.07

Market Value Capitalization

EY Capitalization

As a consequence, Parkson ‘s market value has over valued, which market capitalisation is RM, but had growing in. It means that Parkson has gained more net income. On the other manus, market capitalisation of Bonia besides has over valued which RM417, 254,040 but has growing the net income to 478,965,884. It means that the Bonia besides has earned more net income. If compared with Parkson, investors are able to put in Parkson because of Parkson has earned more net income than Bonia harmonizing to the rating above.

Capital Budgeting

A capital budgeting determination is one that involves the allotment of financess to undertakings that will hold a life of at least one twelvemonth and normally much longer. Basic capital budgeting determinations determine whether there is under or over capacity in a given house or within an industry. Whether the selling director gets a new merchandise approved for production and distribution may be a map of how good he or she provides informations into the capital budgeting procedure and understand the analysis.

3.2 Importance of Capital Budgeting

A proper doing determination on capital budgeting is of import in increasing a company ‘s value every bit good as maximize stockholders ‘ wealth. It besides has involved in long-run deduction for the company and might acquire hazard in skin color. If investing undertakings have failed in the hereafter, the company will hold to bear the load of fixed cost. Besides, capital budgeting is non easy to reversible because it is hard to seek market assets.