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Analyze the Company Performance and Financial Position

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The statement of comprehensive income illustrates the financial performance and results of operations of a particular company or entity for a period of time. Referring to the company’s Statement of Comprehensive Income, as known as Profit and Loss statement, we can conclude that Amway (M) Sdn.

Bhd had increased the total net profit amounted of RM 11,687,000 from the year 2010 (Amounted at RM 78,272,000) to year 2011 (Amounted at RM 89,959,000), this is because of Amway’s new strategy as throwing further weight behind aggressive sales and marketing programmes, to fully stimulate demand in support of Amway Distributors retailing and sponsoring activities.

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From the Statement of Comprehensive Income, the company’s sales revenue for the year under review grew a modest 2. % to RM 735,818,000 from the amount of RM 719,409,000 in 2010, a significant amount totalled RM 16,409,000 was increased from the revenue, and for the cost of sales of goods, it is slightly reduced by an amount of RM 4,655,000, the result shows that Amway’s business strategy comes to an improvement, by purchasing the goods in lower prices and sells them in reasonable prices.

Lastly from the statement, we also find out that Amway (M) Sdn. Bhd’s other income that consist of RM 4,815,000 in the current year, had a total grew of 11. % based on the previous year. Furthermore, from the data provided by the company, we can conclude the extra income for the company is mainly come from the interest income on deposit with licenced bank and licenced financial institutions. Thus, these result secured Amway’s record of having attained net profit growth in 32 years out of 35 years. Statement of Financial Position, also referred to as a balance sheet, reports on a company’s assets, liabilities, and ownership equity at a given point in time.

From the data, the total assets for Amway for the current year had reduced a total value of RM 15,322,000 compared to the previous year. As for the company’s total equity and total liabilities, there is also a slight reduction on both final value, for the company’s total equity, it is reduced from a previous value from RM 210,827,000 to RM 192,322,000 for the current year, and for the company’s total liabilities a increment from RM 110,455,000 to RM 113,638.

From the data provided, there are several reasons for the total assets to be reduced in the current year is founded in both of fixed assets and current assets, based on the figure for Property, plant and equipment, we can consider the company a lot of addition and disposals, and most importantly, the amount reduced is due to the annual depreciation, amounted to a value of RM 9,769,000 on the year 2011. Trade receivables (Debtors) are non-interest bearing and a significant amount of the outstanding balance is repayable by way of monthly instalment plans within 120 (2010:120) days.

The Group has no significant concentration of credit risk that may arise from exposures to a single debtor or to groups of debtors. The Group maintains its ageing within 30 days by monitoring the instalments payments from distributors and any amounts which are due and not settled will be offset against the distributors’ bonuses. , and the total amount of the trade and receivables is reduced by value of RM 3,422,000.

Based on the data, we can find out that the current year’s trade receivables on third company is valued at the amount of RM2,258,000, a great reduction from the previous year amount of RM 4,839,000, this amount is occurred by the due of related company. As for the cash and cash equivalents, there are increment on cash on hand and bank, amounted to an increase of RM 4,123,000. But in the other hand, deposits on the licenced banks has been reduced to the value of RM 98,944,000, this is due to the company’s redraw of deposits on the use for the company.

Company’s equity, the residual claim that at the start of a business, owners put some funding into the business to finance operations, equity includes share capital and share premium. For share capital, the holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All ordinary shares rank equally with regard to the Company’s residual assets.

In the data, the share capital for the company remain unchanged, this conclude that the company did not produce new shares to the society, and it is shown that the dividend paid to the shareholder’s is in a great value (Amount of RM 108,495,000), and so this significantly reduced the amount of retained earnings for the current year. Liabilities, a company’s legal debts or obligations that arise during the course of business operations. Liabilities are settled over time through the transfer of economic benefits including money, goods or services.

From the Statement of Financial Position for Amway, it is known that there is a reduction is both trade and other payments (Creditors), and income tax payable. For Amway, Trade payables Amount due to third parties are non-interest bearing and the normal credit term granted to the Group range from 30 to 90 days. From the data, accruals amounting to RM 49,523,000 (2010: RM 47,124,000) are in respect of distributors’ bonuses, seminars and other expenses. It also includes accruals for support charges of RM 6,038,000 (2010: RM309,000).

Cite this Analyze the Company Performance and Financial Position

Analyze the Company Performance and Financial Position. (2016, Oct 11). Retrieved from https://graduateway.com/analyze-the-company-performance-and-financial-position/

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