LIVING BY NUMBERS
Question 1
Determine the economic earnings of MarineCorp Sdn. Bhd., Green Port Sdn. Bhd and Sungai Emas Port Sdn. Bhd.
Economic Earnings
MarineCorp Sdn Bhd
RM 14,274,611
Green Port Sdn Bhd
RM (14,588,232)
Sungai Emas Port Sdn Bhd
RM 5,030,563
Green Port will have negative economic earnings and the other two will have positive economic earnings.
Positive Earnings = provides higher return than the cost of capital
Negative Earnings = the value of the company was destroyed and investment should be avoided from this company because it indicates that the company failure to provide higher returns than the cost of capital.
Question 2
Rank the companies in terms of their performance.
We divided the companies’ performances into two categories which are based on Value Based Management (VBM) and based on profits.
VBM
Profit
MarineCorp Sdn Bhd
1st
2nd
Green Port Sdn Bhd
3rd
1st
Sungai Emas Port Sdn Bhd
2nd
3rd
VBM
MarineCorp ranked 1st because Economic Eearnings = RM 15,128,910 – RM 854,306
= RM 14,274,611
Sungai Emas ranked 2nd because economic earnings = RM 5,218,364 – RM 187,801
= RM 5,030,563
Green Port ranked 3rd because economic earnings = RM 31,381,168 – RM 45,969,400
= RM (14,588,232)
PROFIT
Green Port ranked 1st because profit = RM 27,370,609
MarineCorp ranked 2nd because profit = RM 15,348,792
Sungai Emas ranked 3rd because profit = RM 5,841, 524
Question 3
In your opinion, why are the GMs of Green Port Sdn. Bhd and MarineCorp Sdn. Bhd. behaving in such a manner? Should Hafiz follow their suggestions?
The GMs of Green Port and MarineCorp behaving such a manner because they want to improve the profit of the companies. As for general manager of Green Port, Anita, she wanted that the dredging cost should be amortized and Hafiz did not agree with that. Hafiz should follow Anita suggestion to amortize the dredging cost. First of all, the dredging cost can be amortized...