Analysis of ioi corporation berhad performance based

Background Information of IOI Corporation Berhad The group’s principal activity is manufacturing of oleo chemicals, palm oil refinery and palm kernel crushing. However, IOI divide their group activities into 5 segments; Plantation, Property Development, Property Investment, Resource-based Manufacturing, and Other operations segment. Plantation segments focus in cultivation of oil palm and rubber and processing of palm oil. Property Development is engaged in the development of residential and commercial properties. Investment in shopping mall, office complex, and others are part of Property Investment.

Resource-based manufacturing segment is engaged in manufacturing of oleo chemicals, specialty oils and fats, palm oil refinery and palm kernel crushing.

Other operation segments focus on management and operation of hotel and resort. The company’s vision is “ to be a leading corporation in our core business by providing products and service of superior values and by sustaining consistent long term growth in volume and profitability”. Today IOI Group comprises 2 listed entities on the main board of the “ Bursa Malaysia”: IOI Corporation Berhad and IOI Properties Berhad.

They also own 3 resort hotels under the name Marriot Putrajaya Hotel, Palm Garden Hotel and Casuarina Beach Resort. Among the company’s achievement and good works, it has won different awards and laurels from different well-recognized magazines and organizations around Asia such as; Finance Asia and Ministry of plantations and industry in the year 2007 and 2008. Not to forget, IOI one of the most prestigious magazine, Forbes magazine, Common-size Analysis of IOI Corporation Berhad Vertical analysis (*Common-size analysis*)

The comparative statement or so called common size statement displays the whole points extracted from financial statement in a form of percentages of common base figure.

It computes the change for every single item between years and it is quite straightforward in comparing the company’s performance with other companies in the same industry to determine its position. While common size analysis is a tool to evaluate financial statement of a company with a key aggregate as a base figure, which are revenue from income statement and total assets from balance sheet (Wild, 2005).

Below is the presentation of common size analysis of IOI Corporation Berhad for the year ended 2008 with further explanation. {draw: rect} Revenue generally is a fundamental benchmark in income statement for common-size analysis. It indicates the sales of goods and services the company made throughout the year by dividing it with all items in the income statement. The sales revenue that managed to collect by IOI Corp increased significantly 64% for the current year for RM 14.

67 billion compare with last year figure. However, the operating profits for both years exhibit a big gap around 54%.

Considering the big jump occurred in the revenue in 2008, it should be generated bigger operating profit as well. But, there’s an escalating cost of sales and expenses here that affected the outcome of profit for operation. The same thing happened in the net income for the final figure.

It showed the improvement around 46% than last year, where the company supposed to acquire larger profit. In fact, the rate of tax escalated considerably approximately RM 340 million in which depressed the profit for final year. This is implies that the management of IOI is less effective in controlling the costs than its last performance.

Nevertheless, it was such an excellent business performance in which IOI Corp has been gone through. Furthermore, total asset is the reference point in balance sheet for common-size analysis which means total assets plus total liabilities.

Similar with the revenue of income statement, it computes the comparative analysis for each item in balance sheet over the total assets. There are several points highlighted in 2008 balance sheet figures. In non-current assets area for instance, investment in associates and jointly controlled, and assets from jointly controlled entitles were reaping growth benefits this year.

Especially from joint venture, it showed superior changes over the years by went up 6 times higher than 2007, from RM 190 million to RM 1. 5 billion. It brought considerable contribution to the total assets of the company.

In spite of the soaring of several items in non-current assets, there were numbers of tangible assets deteriorated compare to last year statement, such as property, land, and equipment, and land held property and development that caused a few impact on the total assets.

In current assets, the closing stock from last year brought forward to current year assets toted up the increment of inventories closed to 83% higher than last year. IOI Corp’s engagement with numerous debtors has expanded year by year also. Nevertheless, the short term funds for this recent year didn’t progress well due to the shrinking as much as RM 300 million than last time. Furthermore, in terms of current and non-current liabilities there were two mainstreams area that need to emphasize. In long-term liabilities, IOI Corp conducted borrowing more intense in the very latest report, recognizing more than RM 1 billion.

Whereas, taxation rate climbed up this year for more than 100% imposed to IOI Corp. Both these outlines pouring in valuable escalation in liabilities net figure. {text: list-item} {text: list-item} These ratios are sometimes called “ liquidity measures”, the primary concern is the firm’s ability to pay its bills over the short run without undue stress (Ross et al, 2008). Consequently theses ratios focus on current assets and current liabilities. Some of the liquidity ratios are; current ratio and quick ratio respectively. Liquidity is characterized by a high level of trading activity.