Analysis of Financial Performance of Construction Companies Essay

Chapter 5

Decisions

5.1Introduction

This chapter provides the decisions with the overall survey this research. Most of the findings are consistent with the aims and can be stated out. However, there are besides some restrictions for the findings which are stated in subdivision ( ) . Besides, there are several recommendations are suggested for farther survey.

5.2Discussion

The present research has produced a significant part to the literature of the local building companies. By supplying recent epoch empirical information on the public presentation of the building environment, this presents analyze with its restrictions make an of import add-on to the empirical literature on this of import section of the Malaysia building industry. As such, the information may be practiced to supply Malaysia building industry with important information and will enable to measure and supervise the fiscal hurt over the accounting ratios and hurt marking.

The purpose of this field of survey is to beef up the building companies to reexamine, understand and beware from their past fiscal public presentation. In order to extinguish any incompatibilities happened in the hereafter, hence besides to guarantee the company can accomplish best value by set uping or explicate a series of new schemes severally.

Overall, the gross of the building companies has growing really fast from twelvemonth 2004 to 2009. Although the gross drops in 2010 and 2011, as the figure 4.4 shows in chapter 4, the entire assets of building companies perform a steady growing throughout the survey period as consequence the bulk of the building companies have good utilized their plus. There is no large impact of fiscal crisis on entire plus in the building industry. The high growing rate of gross in 2009 and 2012 may be contributed from the building company’s high plus turnover. The high plus turnover indicates the buildings companies have been pull offing its plus expeditiously to bring forth high sum of concern activity in that peculiar twelvemonth. After economic crisis, the net net income addition well from 2010 to 2012 as the building companies was subjected to high adoption cost and this may be that do the net net income to turn non every bit fast as the gross.

In 2006, the profitableness show anomalous form which was bead in net income of the building companies affected the net net income border ; return on mean equity and return on mean plus suffer vastly prodigious bead. The planetary fiscal crisis has impact on the profitableness in the building industry. The profitableness ratio of the building companies suffer immense bead. The building companies did non using the assets good in bring forthing income to run its concern with a minimal net income border and hapless fiscal direction in that peculiar twelvemonth.

However, the immense bead of efficiency ratios in twelvemonth 2010 are affected by the bead of the gross. This related to the entire figure of dealing and the latter related to the concern environment caused by planetary fiscal crisis. The building companies should accomplish more high efficiency in using its assets. By good pull off its plus can bring forth high sum of concern activity in order to increasing the gross of the building company for the hereafter. The current ratio and speedy ratio of the building companies confronting immense bead in 2008 and 2012. The chief ground because of the alterations of the current liabilities and these include the sum due from clients and short term adoption. In twelvemonth 2008 and 2012, current liabilities were recorded as higher value.

In the overall tendency, the purchase ratio shows that the building companies no any impact from the planetary fiscal crisis towards the debt ratio of building companies pre-crisis and station crisis and the building companies have less hazardous capital construction and still able to turning the concern.

In twelvemonth 2008, net incomes per portion of the building companies were drop because of the portion monetary value market was affected by planetary fiscal crisis. During twelvemonth 2007, the investor willing to pay every bit much as RM 15.76 for RM 1 net incomes. The P/E ratio bead in twelvemonth 2008 and it means the stock does non worth at that peculiar twelvemonth. This can be explicating with the fact that the market is non promoting the building companies for investing during planetary fiscal crisis. Cash flow ratio of the building companies hard in generate more hard currency to pay off its short-run liabilities which consider serious state of affairs and chiefly because of planetary fiscal crisis.

The overall Z-score for the building companies in the industry stay about 1.7 from twelvemonth 2004 to 2006 and better to 2.9 in twelvemonth 2007. Following by a bead to 1.7 in twelvemonth 2008 and 2009, the mark so increase to 1.9 in 2011. The mark in twelvemonth 2012 is 1.7 which falls in the hurt zone. The bead in twelvemonth 2012 is due to the addition of entire assets is greater than the addition in maintained net incomes and working capital. The building companies were cut downing the liquidness. Hence, to increase their purchase potentially due to more high profile investing programs.

5.3Consequences

This survey demo the public presentation of the 35 selected building companies in the complete nine old ages period in some of the fiscal country as shown in the analysis in chapter 4. The consequences of the over perform of the building companies are as shown below,

1. Overall of the 35 selected building companies has the highest growing rate in gross.
2. Net net income of the building companies bead every 2 old ages because of slowdown consequence.
3. Construction companies have grown its entire assets the most over the nine old ages period.
4. Construction companies have the lowest and falling return on mean equity because of the impact of planetary fiscal crisis.
5. Construction companies confronting immense bead in current ratio and non stable in fiscal chiefly because big sum due from client and hard finance loan from bank during planetary fiscal crisis.
6. Construction companies have the good stableness with highest entire assets turnover.
7. Construction companies still able to do net income and non affected during planetary fiscal crisis.
8. The economic sciences of building industry started to deteriorate after planetary fiscal crisis.

5.4Findingss

There are some findings were discover from this survey as stated below,

1. The fiscal public presentation of the companies can be evaluate and done by comparing the consequences with the equals.
2. The analysis of the fiscal public presentation is a executable public presentation measuring method which is economical to execute and can supply quantifiable and dependable consequence for this survey.
3. All the fiscal informations derived from the building companies can be used to analyse the information about the company’s capital efficiency and growing rate.

5.5Restrictions

The concluding consequences obtain from this survey has some restrictions that need to be taken into consideration in researching the consequence. First, the methodological analysis applies in this paper merely concentrate on the analyzing and measuring the past public presentation of the building companies. Although the past growing tendency of the building companies can be identified and projected for the future fiscal public presentation, nevertheless the consequences from projection are non precise and capable to instabilities. However, the analysis does non supply a better model for calculating the future fiscal public presentation of the building companies. Second, these surveies merely analyze all the building companies listed in Bursa Malaysia. This survey does non cover the other unlisted building companies that are non listed in Bursa Malaysia. Third, the fiscal public presentation of the building companies stated in this paper are merely limited to a nine old ages period which is from 2004 to 2012. Although the consequence obtain from over nine old ages period are sufficient to demo the long term public presentation of the building companies, but some of the company’s one-year study stop up in their fiscal balance sheet in different months. ( Therefore, afadfbdsfbmsdbfdsfnmsdgmmsdgsd. ) Last, there are more plants to guarantee to analyze the consequence of all the fiscal ratios, together with the predominating circumstance of over competition, inelasticity of the building cost and lessening full local demand of all the public listed building companies in Malaysia, for a longer period.