Managerial Finance of GCE Assignment

Added on - 21 Jul 2020

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MANAGERIALFINANCE
Table of ContentsINTRODUCTION...........................................................................................................................1PART 1............................................................................................................................................1PART 2............................................................................................................................................6A. Stock valuation regardless dividend pattern...........................................................................6B. Calculation of required rate of return......................................................................................6C. (i) Calculation of expected dividend stream............................................................................7C. (ii) Calculation of firm’s current stock price...........................................................................8C. (iii) Calculation of stock’s expected value 1 year from now..................................................8D. Expected rate of return of stock..............................................................................................9E. Calculation of stock’s current value........................................................................................9F. Selling price at a 5% constant decline in earnings.................................................................10G. Possible issues in dividend discounted method in stock valuation and suggesting analternative...................................................................................................................................10CONCLUSION..............................................................................................................................11REFERENCES..............................................................................................................................12List of FiguresFigure 1 Revenue of Grand Central Enterprise Bhd for FY 2015...................................................2Figure 2Revenue of Grand Central Enterprise Bhd for FY 2016....................................................3Figure 3 Revenue of GCE Enterprise and Land mark for FY 2015 and 2016................................3Figure 4 Revenue of GCE Enterprise and Land mark for FY 2015 and 2016................................4
INTRODUCTIONFinancial management is a specific branch of finance that specializes in acquisition,collection, utilization, management and control of funds or capital with the aim to attain financialgoals. Grand Central Enterprise Berhad (GCE) is engaged in hotel business, limousine and hotelmanagement facilities. Landmark Berhad was established with the key intention to deliver andintegrate multiple of activities to provide the best consumer experience. This paper willinvestigate and compare both hoteliers financial performance for the two latest fiscal years, 2015and 2016 by different ratios. Second part of the report will present stock valuation approacheswith necessary computations.PART 1Calculations of ratiosItemsGrand Central Enterprise (GCE) InRMExcept EPSLandMark Berhad (InRM000)except EPS2015201620152016Revenue29837039275892476192083158Operatingprofit/loss-1,599,660-3,203,846-19,501-37403Net profit/loss-1,896,482-5,758,114-12058-27944Operating margin-5.36%-11.61%-31.49%-44.98%Net margin-6.36%-20.87%-19.47%-33.60%Liquidity ratioCurrent assets77,090,90073,474,501145,287123103Current liabilities5,293,4695,563,39432,84847928Current ratio14.5613.214.422.57Inventory466,329368,741451640Quick ratio14.4813.144.412.56Solvency ratioLong-term debts007018357430Shareholders’equity17,856,91917,196,08117741621747212Financial leverage0.000.000.040.03Finance costs706460751874080EBIT-1,599,660-3,203,846-19,501-37,403Interest bearingratio-2265.807365-695.4299978-3.759591286-9.167401961Activity/efficiency1
ratioDebtors2,160,1382,379,272845710495Inventory466,329368,741451640Debtors days26.4331.4849.8546.07Inventory days5.704.882.662.81Investmentperformance ratioNet profitattributable toequity shareholder-1,974,367-5,802,424-12058-27944Number of shares197,002,000197,002,000480,810480810Earnings per share(sen)-1.00-2.95-2.51-5.81Profitability analysisGCE Bhd20152016%%Hotel rooms and services17,865,66317,371,60159.88%62.97%Food and beverages9,976,3438,353,20533.44%30.28%Rental income1,564,1381,410,7985.24%5.11%Others430,895453,6431.44%1.64%Total29,837,03927,589,247100.00%100.00%Hotel rooms and services30%Food and beverages17%Rental income3%Others1%Total50%Figure1Revenue of Grand Central Enterprise Bhd for FY 20152
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