Areas For Improvement And Make Recommendation Finance Essay - Free Essay Example

First, Return on Equity used to measure for a company and is very important because it compares it against its industry peers. In addition, return on equity measures companies performances and the higher the better. Thus, the higher the ROE, the more easily, the company will be able to raise money for growth. There are some analysis of Net assets profit margins that the net assets profit margin indicated the profitability of investment by the owners, the higher the ratio, the higher investment gains. Net assets profit margin is to examine the level of corporate earnings, the total return on assets are not from the owners and creditors both sides to jointly examine the level of profitability of the entire enterprise. Besides that, we found that UMW Holdings Bhd is getting lower ratio in ROE. Therefore, its having the adjusted reasons that the listed companies have the motivation and behavior of profit manipulation. There are some ways to improve UMW Holdings Bhd, to raise the issue price, the issue of price-earnings ratio is restricted profit manipulation and manipulate the profits qualified for rationing. Earnings per share, Net assets per share and ROE truly reflect the profitability of listed companies, the key lies in whether the listed companies profit manipulation. Secondly, UM V Holdings may have to improve their current ratio by paying some debts, increasing their current assets from loans or other borrowings with a maturity of more than one year. Converting non-current assets into current assets and increasing their current assets from new equity contributions. Besides that, UMW Holdings Bhd also can putting profits back into their businesses. In addition, we found that Tan Chong Motor Holdings Bhd is getting lower ratio value in the measurement of Cash flow margin and acid test ratio. There are some ways to improve it by organize their billing schedule, stretch out their payables, take advantage of early payment incentives, balance their client base, check their pricing, dont buy all in one place, form a buying cooperative, renegotiate their insurance and supplier policies, tighten their inventory and consider leasing instead of buying. To improve the company function liquidity, Sweep accounts:ÂÂ  Use sweep accounts through financial inst itution. This will allow companies to earn interest on any excess cash balances by sweeping or transferring the funds into an interest-bearing account when the funds arent needed and sweeping them back to your operating account when the companies need them. Based on the analysis, UMW Holdings Bhd and Tan Chong Motor Holdings Bhd can implement this sweep accounts in their financial institution to increase their money liquidity. Overhead:ÂÂ  Overhead costs in a companys financial statement, thus lowering down overhead costs is crucial. Lowering overhead has a direct and huge impact on profitability. Indirect expenses such as Overhead expenses, including rent, advertising, indirect labor and professional fees, incur to operate the business outside of direct material and direct labor. Both companies UMW holdings Bhd and Tan chong Motor Holdings Bhd have to cutting out the overhead costs in order for them to increase the function liquidity. Unproductive assets:ÂÂ  Its tim e for UMW holdings Bhd and Tan chong Motor Holdings Bhd to get rid of unproductive assets thar the business is just storing. The only reason is money should spend on assets such as buildings, equipment and vehicles is to generate revenues. Accounts receivable:UMW holdings Bhd and Tan chong Motor Holdings Bhd have toÂÂ  monitor accounts receivables effectively to ensure clients were properly billed and receive prompt payments. Accounts payable:Tan chong Motor Holdings Bhd has the lower cash flow margin, thus they have toÂÂ  negotiate longer payment terms with their vendors whenever possible to keep money longer. Revenue Enhancement: Time to Market for Higher Value Product Expense Reduction: Enhanced Continuous Improvement Expense Reduction: Better Inventory Management Increase company income As a businessman, there is plenty of way to increase our income. Meanwhile, some ways take time while others are fast. One of the quickest ways to increase the profits is by branding your business. Creating a brand for a business can result in amazing growth. Consumers have more confident in buying products when the brand is known. Here are three techniques to help Tan Chong Motor Holdings Bhd and UMW Holdings Bhd. Make It Personal A company personality helps customers connect with you. But if a company do not have the personality on them, they will fail in conducting a business even they have the best product in the world. Consumers will give their trust much faster on a company when they can resonate with on a personal level. Plan Ahead In any aspect of business, have a long-term planning is very important whereby a company able to target their goals to achieve. Tan Chong Motor Holdings Bhd and UMW Holdings Bhd have their own goals setting throughout the three years. Watch the Competition Throughout the analysis, both financial statement of Tan Chong Motor Holdings Bhd and UMW Holdings Bhd are closely compare to each other. They have ti watch what their competitors are doing in order to surpass one another. The most important is keep an eye on how their opponents is approaching things because it is a big key towards success. Keep Your Focus When you make any decision in your business, keep your branding efforts in mind. If something you do does not fit well with the image you hope to portray it can do more harm than good. Staying focused will help to eliminate problems like these. These are just a few of the many simple steps you can take to increase your business income through the use of a brand. Branding a business really is easier than most realize and the profits from this one activity alone can mean the difference between a business that makes decent money and a business that generates profit even you never thought possible. Reduce the company debt/liabilities Business debt can be a good thing. It helps companies to establish their businesses, fund growth or invest for the future. However, if the level of borrowing becomes excessive it can lead to many problems, such as Insufficient of cash, Not having contingency to deal with unexpected costs, reducing the value of the business, reducing the value of the business, losing the confidence of stakeholders, inability to invest, reduced service/product quality. Furthermore, there are four basic strategies that can help companies out of excessive debt. First, reducing costs playing a crucial role in reducing dept. Secondly, companies have to increase their income in order to lighten up their financial dept. Besides, through the balance sheets it clearly prove that UMW Holdings have more debts compare to Tan Chong Motor Holdings Bhd, whereby there is a way to reduce the debt is by restructure liabilities. Lastly, raise more capitals in company financial.