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and future forecasted transactions such as purchasing equipment activities, forecasted futureexport sales and other expenses19.17Acharya, Viral V., and Schaefer, Stephen. 2006. “Liquidity Risk and Correlation Risk: Implication for Risk Management”18Panasonic Manufacturing Malaysia Berhad. 2015.Annual Report 2015. 19Panasonic Manufacturing Malaysia Berhad. 2015.Annual Report 2015.
Besides that, a higher level of credit risk resulted from lower standard creditmanagement may affect the turnover and increase the bad debt of Panasonic Company. Inaddition, investor will become more risk adverse if the company’s reputation is under badcondition.For example, it will be more tough for the company to get a loans or bonds onaccount of the banks generally will check the historical date to assess risk20. Moreover, currency powerless contributing more risk to business in Malaysia21. Thus,liquidity risk management has become more essential in this sensitive period. Company needsto ensure that their capital resources are strength and flexible enough to fund as well as meetsthe repay requirement. Liquidity risk is dangerous as it may leads the business to becomeinsolvent22. Thus, investor should have to pay more attention to this risk of PanasonicCompany.Here, several calculations have been done. The purpose is to predict and analyzethatPanasonic performance on total return under the influence of risks.The correlationbetween risk and asset’s expected return is described by the capital pricing model formula(CAPM), which connects expected return to a single source of beta,and then, uses securitymarket line (SML) to observe and interpret returns.The aim of approaching to capital pricing model (CAPM) is to identify the market riskpremium, observe the entity’s financial performance and spot the investment opportunities. Itindicates the expected retrun of project by giving risk characteristics23. By refering to(Calculation 1), Panasonic’s cost of equity is equal to 3.58%, which made from the inputs ofrisk free rate, beta, market return and the equity market risk premium. 20Hampton, John J. 2014. Fundamentals of Enterprise Risk Management: How Top Companies Assess Risk, Manage Exposure, and Seize Opportunity. 2th ed, Business & Economics. ?id=yr7GAwAAQBAJ&dq=risk+management+Panasonic&source=gbs_navlinks_s21Riley, Charles.2015. Ghosts of 1997 Financial Crisis Return to Haunt Asia. 22Liquidity Risk Management Guideline. 2009.-liquidite-en.pdf23CAPM: Theory, Advantages, and Disadvantages. ACCA. 2015.