Finance Strategy - Pensonic and Khind

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Quick Ratio

[pic 8][pic 9](Table 2.5)

From Table 2.5, we can see the quick ratio between KHIND and PENSONIC. Firstly, KHIND’s quick ratio is highest in 2014,i commit KHIND has good quick ratio to pay out its liability at short term in 2014.However,KHIND’s quick ratio is lowest in 2011,i commit KHIND would not able to repay all debts by using its most liquid assets in 2011.Secondly,Pensonic’s quick ratio is highest in 2011,i commit it is better for PENSONIC to meet obligations using liquid asset in 2011.However，PENSONIC ’s quick ratio is lowest in 2014, i commit PENSONIC cannot currently fully pay back its current liability in 2014..In conclusion ,if we analysis whole trend of quick ratio between them .KHIND ’s quick ratio is higher than PENSONIC ,it means KHIND has more efficiency to use its near cash or quick assets to extinguish or retire its current liability immediately than PENSONIC.

Debit Ratio

[pic 10][pic 11] (Table 2.6)

From Table 2.7 we can get Debit Ratio between KHIND and PENSONIC. Firstly, KHIND’s debit Ratio has strongly increased by 2.61% compare with 2011. I commit according to XINGZHOU newspaper on the 2012 March 21th it showed that KHIND expand global market and they create more new products ,so they borrow more money from bank loan and bound ,it make their debit ratio is increasing strongly in 2012.Secondly,Pensonic’s appeared heavily increased by 8.61% in 2012.I commit PENSONIC has low sales in 2012 they want to borrow more money from bank in order to cover their liability ,and PENSONIC also expand global market ,it needs a lot of money ,so PENSONIC’s debit ratio has strongly increasing in 2012.In conclusion, if we compare whole debit ratio trend between KHIND and PENSONIC, the KHIND ‘s debit ratio less than PENSONIC ,it is better for KHIND to implies a more stable business ,because it has less risky and less dependent on leverage. However PENSONIC has more debit ratio ,it means PENSONIC has high levels of liabilities compare with its assets are considered highly leveraged and more risky for its lenders .

Time Interest Earned Ratio

From Table 2.8 ,we can get Time Interest earned ratio between KHIND and PENSONIC .Firstly, KHIND has highest Time interest earned in 2014,i commit it is favorable that KHIND has sufficient earnings to pay off interest expense in 2014.However,KHIND has the lowest time interest earned in 2011,i commit KHIND may not be in a position to meet its debt obligation in 2011.Secondly,We can see PENSONIC’s Time Interest has highest Time interest earned in 2011,i commit, PENSONIC ’s interest expenses may low relative to its earnings before interest and taxes which indicates better long term financial strength in 2011.However,Pensonic appeared negative in 2012, I commit PENSONIC likely to have serious problems in paying interest on its borrowings.in 2012In conclusion, KHIND’s time interest earned ratio is more stable and higher than PENSONIC, so KHIND has more efficiency to pay off its interest expenses with available earning than PENSONIC.[pic 12]

Fixed asset turnover

[pic 13]From Table 2.9 ,we can get Fixed asset turnover between KHIND and PENSONIC. Firstly, KHIND has the highest fixed asset turnover in 2012,i commit KHIND has more effective in using the investment in fixed assets to generate revenue in 2012.However,KHIND has the lowest fixed asset turnover in 2011,i commit KHIND may over invested in plant ,equipment, or other fixed assets in 2011.Secondly,Pensonic has highest fixed asset turnover in 2011,i commit , PENSONIC may has less money tied up in fixed assets for each unit of currency of sales revenue in 2011.However , PENSONIC has lowest fixed asset turnover in 2014,i commit PENSONIC may has ineffective in using the investment in fixed asset to generate revenue in 2014.In conclusion, The whole trend of fixed asset turnover ,we can see KHIND is higher than PENSONIC, it means KHIND use its fixed assets to generate sales better than PENSONIC.

Total asset turnover

[pic 14]From Table 2.10 ,we can get Total asset turnover between KHIND and PENSONIC. Firstly, KHIND has the highest total asset turnover is in 2013,i commit KHIND is using its assets more efficiently in 2013.However,KHIND has lowest total asset turnover in 2014,i commit ,KHIND isn’t using is assets efficiently in 2014.Secondly, PENSONIC had the highest total asset turnover in 2013,i commit PENSONIC utilize its asset well in 2013.However,Pensonic has lowest total asset turnover in 2011,i commit PENSONIC hasn’t use its assets well and most likely have management or production problems in 2011.In conclusion ,the whole trend of total asset turnover , PENSONIC is higher than KHIND ,i commit PENSONIC has more successful to utilize its fixed asset in generating revenue than KHIND.

2.2 Financing ,investment, decision

PENSONIC

For financing part, I think PENSONIC should not borrow money any more. First reason is PENSONIC get high debit ratio ,it means PENSONIC has highly leveraged and high risky for its lenders. PENSONIC borrows more money from bank ,but PENSONIC has to payback high interest rate to bank at the same time. Second reason is PENSONIC has less liquidity ratio ,it means PENSONIC cannot use its near cash or quick assets to extinguish or retire its current liability immediately. Third is PENSONIC’s net profit margin is very low ,it means PENSONIC cannot earn more money to cover its liability in the short-term .So i suggest PENSONIC should focus on equity financing. Firstly, equity financing is less risky than loan, PENSONIC don’t have to pay it back and it is a good option if PENSONIC can’t afford to take on debt. Secondly ,investor’s take a long-term view, and most don’t expect a return on their investment immediately, it make PENSONIC has a lot of time to use this money expand their market.

For investment part, from PENSONIC’s balance sheet we can get, the first, we can see the PENSONIC’s cash is change unstable, especially in 2014 PENSONIC’s cash appear decrease, it means used cash on investment or they use cash to cover liability. The second, PENSONIC’s inventory has strongly increase in 2014,it means PENSONIC may know Malaysia government will increase taxes or raw materials will become expensive in 2015,so they buy a lots of raw materials in 2014.The third, from Property ,Plant ,equipment(PPE),we can see it is increasing from 2011 to 2015,it means PENSONIC may expand their factory or market as the