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This is because, those past due receivables are deemed to have a higher credit risk towards the company. The risk management department, had takensteps to analyze these receivables in order to calculate their realized value.8_____________________7 “Credit Risk” Investopedia, assessed 28 Aug 2016,8“Annual Report 2016” Berjaya Auto Berhad, assessed 28 Aug 2016,, 75
2.1.3Interest Rate RiskInterest rate risk is a kind of market risk, which it affects the fix-incomed securities in the market. The interest rate will change from time to time, therefore sometimes it may be favorable to investors, sometimes it is not. For a company, the interest rate risk is the value of its future cash flows and the other financial instrument of that company. Berjaya Auto Berhad interest rate risk is the future cash flows and other interest bearing assets. Berjaya Auto Berhad manage this risk by deposits with the licensed financial institutions for the most favorable interest rate which will yield better returns than deposits in the bank. As time goes by, Berjaya Auto Berhad make deposits in short and long term. Besides that Berjaya Auto Berhad review its investment portfolio in order to capitalize cheaper funding in the low interest rate period and in the result, this strategy allows the company to achieve protection against interest rate hikes in the future. Berjaya Auto Berhad uses swap contract as well as other derivative instrument for speculation.9_____________________9 “Annual Report 2016” Berjaya Auto Berhad, assessed 31 Aug 2016,, 73
2.2 The Return for the financial year 2015/2016Berjaya Auto Berhad’s total stock return for the year financial year 2016 can be calculated using the following formula:Total Return=Dividen Payment−(Final SharePrice−Initial Share Price)Innitial SharePriceAppendix B indicates the share price of Berjaya Auto Berhad weekly closing price for the financial year 2015. Base on Appendix B the initial price of Berjaya Auto Berhad is RM 3.28 (1 January 2015), and the final closing price is RM 2.14 (28 December 2015).The capital gain of Berjaya Auto Berhad can be calculated with the following formula.CapitalGain=Final SharePrice−InitialShare PriceInnitialShare Price¿RM2.14−RM3.28RM3.28¿−34.76There was a capital loss of 34.76% for the financial year 2015 due to the stock price has decline throughout the year 2015. In the 2016 Annual Report, stated that there were dividends payout throughout 2016, the first interim dividend was paid at 21 October 2015 for 2.25 sen per share, second interim dividend was paid at 15 January 2016 for 2.50 sen per share and the third interim dividend was paid at 13 April 2016 for 2.15 sen per share. The dividend yield can be calculated as following:DividenYeild=First Dividend+Second Dividend+Third DividendInitialShare Price¿RM0.129RM3.28¿3.93
The dividend yield for the period is 21.03%The total return provided by Berjaya Auto Berhad is calculated as following:Total Return=