It became one of top 5 chicken suppliers within mid-tier producers in the country due to increasing demand in year from superstores and fast-food chains, high chicken consumption by Malaysian, and expansion of chicken industry. However, incost of poultry production increased. Other problems were also identified.
First, this report provides an analysis and evaluation of the current and prospective profitability, liquidity and financial stability of EPM. Methods of analysis include horizontal and vertical analyses as well as ratios such as profit margin, inventory turnover ratio, account receivable turnover ratio and days to collect account receivable.
Results of data analysed show that all ratios are below industry averages. In particular, comparative performance is poor in the areas of profit margins, credit control and inventory management.
Other than that, there are analysis on the issue of short term borrowings by performed the comparative analysis on short term borrowing to long term borrowing.
An ethical analysis to the action that perform by En Selamat which show the intention not to fulfill his responsibily and duty of care which lead to the problem of conflict of interest.
This report finds that the prospects of the company in its current position are not positive. The major areas of weakness require further investigation and remedial action by management.
The company had to resort to significant increase in the short-term borrowing in order to meet its operating obligations thus increase the interest payments. The credit limit of its major customer, Cold Gold Sdn Bhd also had gone into its level and yet the marketing department continued to supply products to the company.
Another problem faced by this company is Mr Siva, its retail customer complaining that the figures on the statement of accounts sent to him were incorrect. He had no outstanding balance in his account as cash payments had been made to Encik Munir, a former staff at finance department. All of these problems interrelated to each other and became the main issue in this company which is low liquidity of cash flow.
This report is prepared to analyze the issues in EPM that put it in this kind of situation. It provides information obtained through ratio analysis, regarding the profitability, liquidity and financial stability of EPM. This report pay particular attention to the earning power, liquidity and credit management, inventory management and debt management, and will highlight major strengths and weaknesses while offering some explanation for observed changes.
These observations do have limitations which will be noted. The problem arises from several other issues. Sincethe company has been facing the problem of increased chicken feed cost which has risen to RM88 from RM Even though EPM had growing in revenue, it still cannot improve its operating profit.
It was mainly pertaining to less significant difference between cost of sales and revenue. In that event, the company resorted to borrowing short-term loans from the bank in order to meet these operating obligations.
This in turn increased its financial obligations in terms of interest payments and caused more losses to the company.
In addition, the financial position becomes worse as EPM continues to supply products to Cold Gold Sdn Bhd even though their credit limit had already exceeded. It also cannot pay its own debt. The receivable collection in this company is out of control.
Siva a retailer complained that the figures on the statement of accounts sent to him were incorrect. He had no outstanding balance in his accounts as cash payments had been made to Encik Munir one of the former personnel in finance department.
This relationship has enabled Cold Gold to extend its credit limit with authorisation from Encik Selamat. This situation may create conflict of interest as Encik Selamat did not disclose it to the Board.
From the abstract of account above, we found that the cost of sales was increasing from to and it is too close to the revenue amount. However, inthe cost of sales increased while the revenue did not increase much and operating loss was recorded in as the retail price of chicken was increased from RM 3.
Thus, the increment of revenue in by On the other hand, inthe cost of feeding was increased by RM Hence, the production cost was also increase from RM 3. In short, the exorbitant cost of chicken feed resulting the operating loss faced by the company. The higher the profit margin indicates more profitable company that has better control over the costs compared the years.
In this case, EPM have the highest profit margin which is 5. This is because the increment of cost of sales, EPM is profiting only 1. Besides that, the inventory turnover ratio is used to measure the inventory management efficiency of a business.
In general, a higher value indicates better performance and lower value means inefficiency in controlling inventory levels.Benefits of Dorner’s Meat & Poultry Conveyors. Dorner Ultimate line of conveyors are designed to meet USDA regulations for red meat & poultry; By eliminating horizontal surfaces, blind spots and harbor points, food and water won’t accumulate, preventing the growth of leslutinsduphoenix.comon: Cottonwood Ave, Hartland, , WI.
The broiler poultry farming business plan ought to include a proper marketing plan to use in your poultry farming business. The export market is also very huge! As you grow your broiler production business you will be able to export the meat to other countries.
2 Main issue The main issue in this case is the low liquidity of cash flow in Excel Poultry & Meat (EPM). The problem arises from several other issues. Since , the company has been facing the problem of increased chicken feed cost which has risen to .
Dindings Poultry Processing Sdn Bhd(DPP)is a member of the Malayan Flour Mills Group. The processing plant is situated on acres land at northern part Malaysia.
DPP, one largest in Malaysia, designed according to USDA standards. For example, EPM leslutinsduphoenix.com should stopped continue supply to the Cold Gold leslutinsduphoenix.com since the company are the major customer has the large amount of outstanding balance towards EPM Sdn.
Bhd. Interpretation of the Projected of Cash Flow Statement for Excel Poultry & Meat leslutinsduphoenix.com on 4 . 6. days or days) in collecting the debt. The customer will not have long outstanding which could affect on the company cash flow. Therefore.
the financial health of Excel Poultry & Meat Sdn Bhd (EPM) is getting worse year by year. the company should screening the customer credit and relationship.