...Question 1 Determine the economic earnings of MarineCorp Sdn Bhd, Green Port Sdn Bhd and Sungai Emas Port Sdn Bhd. Economic earnings is used to calculate the profit earned by the company in excess of investors’ expected returns. Positive economic earnings represent that the value was created for the company. Unlike, negative economic earnings represent that the company’s value was destroyed. The calculation for economic earnings is as follow; ECONOMIC EARNINGS = *NOPAT – (ᵝWACC X Average Invested Capital) or NOPAT – Capital Charge ECONOMIC EARNINGS = *NOPAT – (ᵝWACC X Average Invested Capital) or NOPAT – Capital Charge *Net Operating Profit after Tax ᵝ Weighted Average Cost of Capital | Green Port S/B (RM) | Sungai Emas Port S/B (RM) | MarineCorp S/B (RM) | NOPAT | 31,381,168 | 5,218,664 | 15,128,917 | Capital Charge | 45,969,400 | 187,801 | 854,306 | Economic Earnings | 31,381,168 – 45,969,400= (14,588,232) | 5,218,664 - 187,801= 5,030,563 | 15,128,917 – 854,306= 14,274,611 | Table 1 Table 1 showed that, Sungai Emas Port and MarineCorp had positive economic earnings which indicate that the value was created for the both companies. However, Green Port’s value was destroyed because of its negative economic earnings as shown in table 1. Question 2 Rank the companies in terms of their financial performance. All the companies are ranked based on three main areas in relation to their financial performance. The areas include...
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...Summary MarineCorp was the maritime solution provider for the SURIA group of companies. It had two subsidiaries which are Green Port Sdn Bhd and Sungai Emas Port Sdn Bhd. Hafiz Hasyim is the person who is responsible to report financial performance in the company. He is one of the Boards which is CFO in organizational structure for the three companies. Besides, Vessel inspection and vetting was a major business of MarineCorp. MarineCorp also provide consulting services to SURIA and its related contractors that included those for newly built vessel for upstream and downstream oil and gas operations. For Green Port, it major activities included pilotage and marine support, emergency response, port management and operations, navigational safety, and marine services to the Single Buoy Mooring facilities. Last but not least, Sungai Emas major activities included pilotage and marine support, emergency response, port management and operations, and navigational safety. Protagonist/Decision maker Hafiz Hashim, the Chief Financial Officer of Marine Corp Sdn Bhd and responsible for the financial management of MarineCorp and its wholly-owned subsidiaries which are Green Port Sdn Bhd and Sungai Emas Port Sdn Bhd. Problem There are some problems that Hafiz face during this financial performance which is he in dilemma situation whether to approach economic earnings that has required by SURIA group, Value Based Management (VBM) or use profits as practised by the company(Marine Corp Sdn...
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...Group 4 | Synopsis In December 2009, Hafiz Hashim is facing a dilemma. As the Chief Financial Officer (CFO) of MarineCorp Sdn Bhd and its two wholly-owned subsidiaries, he is in charge of reporting their financial performance to the Board of Directors. The three companies traditionally measured their performance using the Profit figure, but MarineCorp’s parent company, the SURIA Group, recently adopted Value Based Management (VBM) and requires the use of Economic Earnings as a performance measure. This becomes a source of anxiety for the senior management of the three companies as their performance evaluation directly hinges on the measure to be adopted. Protagonist/Decision-maker The protagonist of this case is Hafiz Hashim, the Chief Financial Officer (CFO) of MarineCorp Sdn Bhd and its subsidiaries, Green Port Sdn Bhd and Sungai Emas Port Sdn Bhd. MarineCorp, and by extension its two subsidiaries, are all members of the SURIA Group of Companies. Hafiz strongly believes in measuring a company’s financial performance through the value it creates rather than merely reporting on the profit. The case takes place at the end of 2009. Performance Measurement Metrics Comparison NET PROFIT | ECONOMIC EARNINGS (EVA) | Suitable for companies with more intangible assets | Suitable for capital-intensive companies | Benefits the senior officers in MarineCorp and its subsidiaries due to profit-based performance evaluations | Benefits SURIA Group’s BoD (and shareholders in general)...
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...LIVING BY NUMBERS Question 1 Determine the economic earnings of MarineCorp Sdn. Bhd., Green Port Sdn. Bhd and Sungai Emas Port Sdn. Bhd. | Economic Earnings | MarineCorp Sdn Bhd | RM 14,274,611 | Green Port Sdn Bhd | RM (14,588,232) | Sungai Emas Port Sdn Bhd | RM 5,030,563 | Green Port will have negative economic earnings and the other two will have positive economic earnings. Positive Earnings = provides higher return than the cost of capital Negative Earnings = the value of the company was destroyed and investment should be avoided from this company because it indicates that the company failure to provide higher returns than the cost of capital. Question 2 Rank the companies in terms of their performance. We divided the companies’ performances into two categories which are based on Value Based Management (VBM) and based on profits. | VBM | Profit | MarineCorp Sdn Bhd | 1st | 2nd | Green Port Sdn Bhd | 3rd | 1st | Sungai Emas Port Sdn Bhd | 2nd | 3rd | VBM MarineCorp ranked 1st because Economic Eearnings = RM 15,128,910 – RM 854,306 = RM 14,274,611 Sungai Emas ranked 2nd because economic earnings = RM 5,218,364 – RM 187,801 = RM 5,030,563 Green Port ranked 3rd because economic earnings = RM 31,381,168 – RM 45,969,400 = RM (14,588,232) PROFIT Green Port ranked 1st because profit = RM 27,370,609 MarineCorp ranked 2nd because profit = RM 15,348,792 Sungai Emas ranked 3rd because profit = RM 5,841, 524 ...
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...[pic] SCHOOL OF ACCOUNTANCY UNIVERSITI UTARA MALAYSIA FIRST SEMESTER 2014/2015 (A141) COURSE CODE : BKAL3063 COURSE : INTEGRATED CASE STUDY PRE-REQUISITE : BKAF3073 FINANCIAL ACCOUNTING & REPORTING IV 1. SYNOPSIS This is a capstone course for the accountancy programs, which integrates knowledge from financial accounting & reporting, management accounting, taxation, audit, finance, management and business–related, information technology and other social sciences courses. Experiential exercises are embedded in this course to support learners’ effort in independent learning. 2. OBJECTIVES This course is designed to enable learners to integrate knowledge from the various related disciplines and to enhance their technical core competencies and their problem solving skills in the unstructured business environment. 3. LEARNING OUTCOMES Upon completion of the course, students are able to: i) interprete various accounting and business related issues in an organisational context. ii) undertake independent research. iii) develop alternative solutions to issues, devise action plans, and resolve implementation issues. iv) communicate ideas, views and recommendations effectively both verbally and in writing. v) demonstrate awareness of ethical considerations as part of the decision making process. vi) demonstrate leadership and teamwork in issues...
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