Case Analysis Kuok 5-2.pptx

7/23/2019 Case Analysis Kuok 5-2.pptx

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Case AnalysisKuok Philippine Properties, Inc.

Carmel De la Paz, Vice-president of the account

management department of riental !ank, "as at

her desk re#ie"ing an account. $he "as to present

a strategic marketing to the %&ecuti#e Committee

of riental !ank "hich told her to study the

financial performance of top ne" corporations in

real estate industry. 'he (ank "as planning to

aggressi#ely penetrate this market "ith its credit

products. De la Paz selected for her analysis KuokPhilippine Properties, Inc. )KPPI*, a ne" company

that had gained prominence in the industry.


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!y analyzing KPPI+s financial ratios, De la Paz

sought to e&amine the financial characteristics

of companies at the higher end of the real estate

de#elopment industry. $ince riental !ank "as a

ne"comer to the industry, it "as concerned

a(out losing the ground to its competitors "hen

the Philippines economy gro"s in the second half

of the +s. 'op management thus "anted an

assessment of the credit opportunities and risksin the industry, and De la Paz "as to come up

"ith this e#aluation.


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KPPI, Key /inancial data

In millions

0 1

Key 2esults data

2e#enue 04.5 14.0

%&penses 46. 11.

Income (efore income ta& 57.5 00.0

8et income 57.1 04.4

Key !alance sheet data

9uick asset 07. 0.4

Current asset 10.1 1:.:

'otal asset 0,401.0 0,6.6

Current lia(ilities 1.4 50.1

;ong term lia(ilities 1.6 .

$tockholder


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>uide 9uestions 8o. .

Calculate the /inancial ratios of KPPI for0 and 1?


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;i=uidity 2atios

Current 2atio @Current assets

1:.:

0.5

Current lia(ilities 50.1

In 0, the firm+s a(ility to co#er its current lia(ilities "ith its current assets"as .. In 1, the ratio goes up to 0.5 as compared to 0, "hichmeans that the company has the a(ility to pay its lia(ilities, as the definitionsays that higher the ratio, greater the a(ility of the firm to pay its (ills. 'histells that KPPI is impro#ing their li=uidity and efficiency, (ecause their currentratio is impro#ing.

Bears 0 1

Current 2atio . 0.5


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Case Analysis

Kuok Philippine Properties, Inc.

Liquidity Ratios

9uick 2atio @9uick Assets

0.4

.7Current lia(ilities 50.1

According to the defnition o Acid Test Ratio, the companyshould have the ability to pay its liabilities through its mostliquid assets. The table shows that in 1!, the frm has the

ratio ". cents compare to 1# has the ratio o 1.$1. %&&' isvery high liquid company to pay its current maturingobligation.

Bears 0 1

9ucik 2atio . .7


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Current Assets 'urno#er 2atio

CA 'urno#er 2atio 8et 2e#enue 14.0 0.:

CA Assets 1:.:

Current Assets 'urno#er 2atio indicates that the current assets are

turned o#er in the form of sales more num(er of times. KPPI CA ratioalthough impro#ing (ut not enough to tell the company capacity toachie#e ma&imum sale "ith minimum in#estment in currents assets

Bears 0 1

CA 'urno#er 2atio .4 0.:


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Asset 'urno#er 2atio

Asset 'urno#er 2atio 8et 2e#enue 14.0 .4'otal Assets 06.6

This ratio measures how e(ciently a frm uses its assetsto generate sales, so a higher ratio is always more

avorable. %&&' has ratio in 1! o .") cents dollar osales or every 1 invested asset compare to 1# ratioo .1) cents. This means the company isn*t using itsassets e(ciently.

Bears 0 1

Asset 'urno#er 2atio .4 .4


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/inancial ;e#erage 2atio

De(t to %=uity ratio 'otal lia(ilities 51.: .0'otal %=uity 05:7.1

'he de(t to e=uity ratio sho"s the percentage of company financing

that comes from creditors and in#estors. KPPI De(t to e=uity ratioimplies the company are more financially sta(le organization.

Bears 0 1

De(t to %=uity 2atio .6 .0


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De(t 2atio 'otal lia(ilities 51.: .0

'otal Assets 06.6

De(t ratio is a sol#ency ratio that measures a firm


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%=uity 2atio 'otal %=uity

05:7.1

.7'otal Assets 06.6

'his ratio measures the amount of assets that are financed (yo"ners< in#estments (y comparing the total e=uity in thecompany to the total assets. KPPI sho"s potential creditorsthat the company is more sustaina(le and less risky to lendfuture loan.

Bears 0 1

%=uity 2atio .: .7


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Profita(ility 2atios

2eturn on $ales

8et Income

04.4 54.55

8et $ales 14.0

easures profit percentage per pesos sales. KPPI is ahigh profita(le Company.

Bears 0 1

2eturn on $ales 4:.17 54.55


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2I 8et Income

04.4

.46'otal Asset 06.6

Calculates the profits of an in#estment as apercentage of the In#estmentE'otal asset cost. KPPIhas a lo"er rate of return although "ith greatimpro#ement for the t"o years comparati#e.

Bears 0 1

2eturn on In#estment 0.6 .46


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2eturn on %=uity 8et Income

04.4

.7'otal %=uity 05:7.1

easures the a(ility of a firm to generate profits fromthe shareholders in#estment.

Bears 0 1

2eturn on %=uity 0.7 .7


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2atio Analysis $ummary

2A'I A8A;B$I$

;i=uidity ratios 0 1

Current ratio . 0.5

Acid test ratio . .7

Asset turno#er .4 .4

Current asset turn o#er .4 0.:

/inancial le#erage ratiosDe(t to e=uity ratio .6 .0

De(t ratio .5 .0

%=uity to asset ratio .: .7

'imes interest earned :.05 0.:

Asset to ;ia(ilities ratio 4.5: :0.66

Profita(ility ratios

2eturn on sales 4:.17 54.55

2eturn on in#estment 0.6 .46

2eturn on e=uity 0.7 .7


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>FID% 9F%$'I8 8F!%2 0.

Ghat strengths and "eakness of KPPI "ere re#ealed (y thefinancial ratios? Did the ratios ade=uately ans"er the=uestions raised (y VP De la Paz?

$trengths KPPI high li=uid company can pay immediately their

maturing o(ligation and high financially sta(le company as"ell profita(le.

Geakness

KPPI has lo" return of In#estment and return on e=uity.


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>uide =uestions 8o. 1

Ghat conclusions can (e dra"n the real estate

de#elopment industry (ased only on the performance

of KPPI?

After applying all the ratios "e got an idea that theKPPI Company is a profita(le firm. !ecause throughout

the analysis of t"o years, "e found that the company is

getting profita(le return on sales e#en not "ell on

In#estment and e=uity rate of return, their profit

margin has (een increased as "ell and they are in the

position to pay their de(ts "ith in their resources.


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I. 'ime Conte&t

.'he case Happened on the year:.


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II. Vie" Point

'op anagement, %&ecuti#eCommittee of the riental

!ank.


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III. Central Pro(lem

Ho" "ill riental !ank a(le to present aneffecti#e marketing strategy to aggressi#ely

penetrate the industry and achie#e high

competiti#eness in the market?


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IV. (ecti#es

ust (ecti#e 'o create a plan (y differentiating from the

competitors.

Gant (ecti#e

'o (uild (etter community relationships (yattracting consistent stream high-end clients in

!anking industry.


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V. Areas of considerationInternal %n#ironment

$trength

Ha#ing a#aila(le strategic marketing plan to

present to clients, they are a(le to con#ince and

penetrates the market.

Geakness

!anking preferences among clients for already

esta(lished names and clients loyalty.

8e" player in (anking industry.


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V. Areas of consideration%&ternal %n#ironment

pportunity

It may create good"ill among the ne" clients

that a#ail the credit products facilities. 'his may

create customer referrals.

arket penetration strategy.

'reats

'heir competitors are already esta(lished and

kno"n to the market.


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VI. Alternati#e Courses of ActionACA 8o. I- Create ne" arketing plan (ased

on the specifications and needs of theircredit products clients.

Ad#antages

'he company "ill (e a(le to meet the e&pectation

and needs of their clients. 'ailored made marketing plan to attract more

clients in the market.

Disad#antages

It "ill take longer time to achie#e the rightmarketing strategy.


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VI. Alternati#e Courses of ActionACA 8o. II- riental !ank must (e more

committed in gi#ing clients ser#ice (efore,during and after the credits products.

Ad#antages

Clients loyalty to riental (ank "ill (e much

stronger

'he num(er of clients a#ail the credits product

"ill increase

Disad#antages

'here "ill (e added cost to the company


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VI. Alternati#e Courses of ActionACA 8o. III- De#eloping 2esearch and

De#elopment Programs

Ad#antages

In#estment in research "ill gi#e riental (ank

(etter ideas and guidelines in the current trends.

arket positioning.

Disad#antages

2 and D programs are too e&pensi#e.


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VII. 2ecommendation

Considering that the target market are the high

end real estate de#elopment industry, it is

recommended the adoption of alternati#e

Course 8o. I )ACA 8o. I* - Create ne" arketing

plan (ased on the specifications and needs of

their credit products clients. riental !ank"ould (e a(le to meet the e&pectation of their

clients since the marketing strategy is (ased on

their specific re=uirements. Gith satisfied

clients, the customer #alue of the company "ill

surely increase through referrals and othermeans.


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VIII- Action Plan

Nature of Activity Responsible Person Duration

Garmed list Clients /inancialstatements analysis.

$taff analysts 1 Hours

arketing plan presentationto the 'op management.

Carmel De la Paz -0 Hours

arketing plan appro#al C%EPresident Immediately

Present the arketing plan to the

high end real estate clients.

Carmel De la PazEarketing

fficer

After the appro#al of

the 'op anagement

Documents

Case Analysis Kuok 5-2.pptx