ftv financial analysis1
TRANSCRIPT
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Fiji One Online
Group Members
Huddie Namo
Michael HaapioWilson Maeriua
Sera Vosaroqo
George Tasra
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Background of Fiji Television Limited
Methodology of Research
Discussion of Selected Analysis
Liquidity Ratio AnalysisAsset Efficiency Ratio Analysis
Capital Structure Ratio Analysis
Profitability Ratio Analysis
Market Performances
Recommendations/Conclusions
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Formed in 1994 as the first permanent broadcastingtelevision company in the Fiji
Fiji TV owns Fiji's channel Fiji One, and the pay TV
services Sky Fiji and Sky Pacific
Fiji TV also owns two subsidiary companies, MediaNiugini Ltd and Communications Pacific Limitedwho
operates the Papua New Guinea's EM TV network
Fiji TV was listed as a public company in 1996 on theSuva Stock Exchange, now known as the South PacificStock Exchange
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The Group has searched the South PacificStock Exchange registry (site) for information onthe Fiji Television Limited
The Group also collected secondary informationabout the Company through the internet andannual reports
Review the Annual Reports selected criticalissues and compute the relevant FinancialRatios
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The Group has convinced that the following ratios arecritical to any effective and meaningful analysis of theperformance of Fiji TV Limited : Liquidity Ratio Analysis
Asset Efficiency Ratio Analysis
Capital Structure Ratio Analysis
Profitability Ratio Analysis
Market Performances
We therefore shall discus them in turn
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Liquidity Ratio Analysis
2006 2007 2008 2009 2010
Current ratio 2.12 1.68 2.11 2.05 2.96
Quick ratio 1.99 1.43 1.88 1.92 2.88
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
Ratio
Years
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Within the past 5 years, Fiji TV has generally recorded currentand quick ratios above the generally accepted benchmark of1.5 and 1respectively which is very good.
Its current ratio stands on average of 2.1, while its quick ratioat 2.0.
The above analysis shows that Fiji TV is able to repay itsimmediate/short term liquidity commitments should is
necessary.
Compared to TVNZ, Fiji TV liquidity ratio is more or lesssimilar, which we believe Fiji TV is performing well in the TVindustry within the region. NZTV has an average Liquidity ratioof 2.2 also within the given period
Years 2006 2007 2008 2009 2010
Current ratio 2.12 1.68 2.11 2.05 2.96
Quick ratio 1.99 1.43 1.88 1.92 2.88
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2006 2007 2008 2009 2010
Accounts receivablesturnover( days)
67.66 75.52 80.18 97.90 68.38
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20.00
40.00
60.00
80.00
100.00
120.00
Da
ys
Years
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From the accounts receivable ratio analysis, we found that theturn over ratio in number of days is on average 77( 2.6months) which is very poor for this business type
This is relatively high for this business type. As a rule of thumbaccounts receivable should be realized within one month orlesser if no stiff competition
This demonstrates that there is poor management in terms ofdebt recovery. This also means that a lot of current assets arenot being recovered in a timely manner to be utilized in thefinancial operations of the company
Years 2006 2007 2008 2009 2010Accounts
Receivables
Turnover
(Days) 67.66 75.52 80.18 97.90 68.38
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2006 2007 2008 2009 2010
Total assets turnover (times) 0.93 1.02 1.02 0.95 1.12
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0.20
0.40
0.60
0.80
1.00
1.20
Ratio
Total assets turnover (times)
Years
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The graph for the asset turnover fluctuates from 0.93 in2006 to 1.02 in 2007 and 2008 respectively. It declines in2009 to .95 and increases to 1.12 in 2010
This indicates that the Asset Turn over within a givenperiod is estimated at 1:1.
Although this is generally Good it would better if the turnasset turn over is greater, meaning the management isable to utilize every 1 $ in asset to generate $1 in profit.
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10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
90.00
2006 2007 2008 2009 2010
Total debt to equity ratio (%) Total debt ratio (%) Total equity ratio (%)
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The debt ratio on average is 25% which is less than 50%therefore most of the companys assets is being funded
by equity
The total asset to equity fluctuates between 77.40 in2006 to 79.24 in 2010. This means that a lot of assetsbeing funded from share holders equity
The generally accepted benchmark for this is 50% thuswe are of the opinion that the Fiji TV limited is performingvery good in funding its assets.
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2006 2007 2008 2009 2010
Net profit margin (%) [before tax] 10.12 6.04 12.67 9.06 18.89
Return on assets (%) [before tax] 9.46 6.19 12.91 8.65 21.21
Return on equity (%) [before tax] 19.98 5.00 13.99 3.49 15.59
0.00
5.00
10.00
15.00
20.00
25.00
Percentage
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The profitability ratio trend of Fiji TV shows a fluctuatingpattern. This demonstrates inconsistency in the ability ofFiji TV to maximize profit from the use of its assets. Insome years 2007 and 2009 the profitability ratio was on a
downward phase as opposed to 2006, 2008 and 2010where it was on an inclining phase. This demonstratesthat although the company has the ability to generateprofit from the use of its assets as shown by theincreasing revenue, there is no control over expenditure.
No adequate control over expenditure is shown by therising expenditure trend affecting the profitability.
We have the opinion that the company is performing wellbut needs to improve to control its expenses to improveits profitability.
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0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
2006 2007 2008 2009 2010
Earnings per share (EPS) Dividend per share (DPS)
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The dividend per share remained constant at 0.18 from2006 to 2009, it then decline to 0.10 in 2010
The earnings per share fluctuated through out the fiveyear period, in 2006 recorded 0.35 EPS, in 2007 it wentfurther down to 0.08, 0.26 in 2008, dropped to 0.06 in2009 and recorded 0.31in 2010
This implies there was volatility in the TV industry thusimpacted on the inconsistent trend with its market
performance analysis
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Although Fiji TV is performing well with its revenue it needs tobetter manage its expenses and liabilities to ensure its assetsyield the maximum profit.
It is recommended that Fiji TV should ensure that there isbetter accounts receivable systems in place. The accountsreceivable turnover should be reduced to from current 2.6months to least one month.