Optimistic about bonias future performance in both

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optimistic about Bonia’s future performance in both 2014 and 2015 as they are willing to pay more for each dollar of earnings, compared to Padini. This could mean that compared to Padini, the investors are more confident that Bonia’s stocks will further appreciate due to better growth opportunities. In regards of the market/book ratio, it could be said that both Padini and Bonia’s stocks in 2015 are both undervalued, since both of their values are below 1. This indicates that the investors have a less optimistic view on the companies’ performance and hence, do not expect the firms to generate high returns. Padini seemed to have outperformed Bonia in its efficiency ratios. The stock turnover of Padini has increased from 2014 to 2015 while Bonia experienced a decrease. This indicates that Padini products are more highly demanded compared to Bonia’s products. This could be explained by Padini’s good marketing skills such as giving discounts, promotions and so on that increases the demand for its products. Both 2014 and 2015 show Padini have a better average collection period compared to Bonia. Padini is able to collect its receivables from customers within 22 days and 20 days whereas Bonia takes up to 41 days and 65 days in 2014 and 2015 respectively to collect their debts. This has proven that Padini is more efficient in turning its account receivables into cash. The faster collection period could be due the cash discounts given by Padini to stimulate the debtors to clear off their debts faster. Since Padini can collect cash from its customers in a short period of time, it is able to use those cash collected to pay bills and other obligations and thus has a lesser amount of total liabilities in contrast with Bonia. D) Recommendation to improve overall performance Padini 19
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Padini has a high ratio in inventory turnover which clearly shows that Padini has a strong sale, able to use liquid asset cover current liability easily and control in debt collection very well. Oppositely, Padini also consists of some weak performance such as having higher percentage of current liability than current asset, over operation of Padini reliance on debt which means that it has an extreme risk, low profit margin and earnings per share in 2015.The following come out with the recommendations can be used to improve the overall performance of Padini. From current ratio and debt to equity ratio, it shows that Padini is poor in manage liability obviously. Hence, Padini is encouraged to impose their obligation management by making it possible to the lowest liabilities. By thinking over those accruals account which included rent accruals, sundry expenses and interest, reevaluate it if there are some unnecessary expenses could be decreased. Moreover, filter company asset that do not bring profit or rarely use thus we can invest the money on assets like building and office equipment which can generate more income and goods. Furthermore, negotiate with suppliers whether they are able to offer some discounts if we purchase more goods from them. After that,
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  • Summer '17
  • ms lau
  • Financial Ratio, Generally Accepted Accounting Principles, Padini Holdings Berhad, Padini, Bonia Corporation Berhad

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