PDAF

Topics: Balance sheet, Generally Accepted Accounting Principles, Inventory Pages: 9 (1467 words) Published: March 24, 2014
Table of Contents

1. Introduction4

2. Background of the Company4
2.1 What is the significant historical development over 3 years?5

3. Analysis6
3.1 Profitability6
3.2 Solvency / Liquidity9
3.3 Gearing11

4. Conclusion and Recommendation12

5. Appendix13
Summarised of 3 Years Statements13
Consolidated Income and Comprehensive Income Statements14
Balance Sheets15
Consolidated Statement of Cash Flows16

6. List of References17

1. Introduction

Objective of this report is to measure the Group’s Financial Statement from 2010 to 2012 whether it is healthy by using the selected accounting ratios.

The following key points are used when analyzing Company ;

Group’s Management Performance
Any liquidity problem?
Is the Group highly geared?

2. Background of the Company

Singapore Technologies Aerospace was incorporate in 1997. ST Engineer is the largest company listed on the Singapore Exchange. (ST Engineering, 2013) A global network of over 100 subsidiaries and associated companies in 23 countries in US, Europe, Asia and Oceania.(ST Engineering, 2012)

ST Aerospace is a subsidiary of Singapore Technologies Engineering which is based in Singapore. ST Group is also specialized in innovative solutions and services in the Electronics, Land Systems and Marine sectors. Currently it is Asia’s largest defence and engineering company. (Wikipedia, 2013)

2.1 What is the significant historical development over 3 years?

It reviewed the estimated useful lifes of property, plant and equipment periodically During the year, independent consultants were engaged to perform industry and benchmarking study of the depreciation rates of its PPE. The industry practices of the four sectors and the economic useful lifes of its PPE were considered to align them to industry practices with effect from financial year ended 2010. (ST Engineering, 2011) The revised estimated useful lifes are as follows :

Secondly, ST acquired EcoServices, LLC on 22nd December 2011 regarding the investment of 50.1% equity interest of US$33.3m (approx.S$43m). Visiona Technologies Aerospace had also entered into an agreement with Pratt & Whitney to restructure the investment terms with new ones. This would help to achieve greater efficiency in the business as it expands internationally. (Jackie Yu, 2012)

3. Analysis

Evaluating Group’s financial performance

This section involves the calculation of key financial ratios by comparing 3 years of records in order to measure the Group’s financial position.

The key financial ratios can be categorized as below mentioned:

Profitability Ratios
Solvency / Liquidity Ratios
Investor’s Ratios
Gearing Ratio

3.1 Profitability

Profitability Ratio201220112010

Gross Profit Margin %22.8321.7821.11

Source : The author

Gross Profit Margin % = Revenue - COGS * 100% (Investopedia, 2013) Revenue

It shows the profit relative to sales after deducting cost of goods sold. It measures the efficiency of operations and price of the product.

GP margin increases in each year. In 2012, 22.83 % indicates cost of sales are 77.17% of total sales. So for every S$1 of sales, GP of S$0.23 will be generated. Both in 2011 and 2010, it represent GP margin are 21.78 % and 21.11%. For every S$1 of sales, GP of S$0.22 in 2011 and S$0.21 in 2010 will be generated.

Profitability Ratio201220112010

Net Profit Margin %11.3310.9410.49

Source : The author

Net Profit Margin % = Net...
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