Risks Profile And Hedging Example For Free - Free Essay Example

F J Benjamin Holdings Ltd listed on the Singapore Exchange on 14 November 1996, founded in 1959 headquarters in Singapore and it has offices in nine cities with more than 2000 employees. This Company is one of the leaders in building and management, and development system of retail and distribution networks for international luxury and lifestyle brands across Asia. The company participates in importing, exporting, licensing, distribution and retailing of consumer fashion wear and accessories household furnishing, timepieces, eyewear and multimedia storage product and operation of cafes and entertainment outlets. Especially, FJ Benjamin has four main segments is Luxury and Lifestyle Fashion Retailing and Distribution such as: Banana Republic, Gap and Givenchy..Timepiece Distribution such as: Bell Ross, Chronotech and DeWitt. Creative and Design such as Raoul and Investing in Lifestyle Concepts. Companys information analysis 2.1 Scenario of FJ Benjamin In FJ Benjamin Holdings Ltds wants to growth its portfolio by expanding business on Europe and the United States. In first of 2013, the company has some investment project to opened store located in Malaysia with required amount of SGD$ 15 million initial capital. FJ Benjamin needs more capital to implement these projects by borrowing SGD$ 10 million from bank for long-term loan for 5 year. To running and remaining new store in Singapore, in first of February 2013 FJ Benjamin need to imports 10milion luxury fashion wear of Cà ©line brand from French with due date at first of March . When order is accepted the company submit Trust Receipt to bank as a short term loan. At the due date, Bank on behalf of FJ Benjamin payoff 10 million for exporter. 2.2 Financial information analysis About general financial situation of FJ Benjamin, based on annual reported for 2011/2012, FJ Benjamin Holdings Ltd. reached $ 393,237,000 turnover in 2012. In 2011, turnover increased 22 % to $353.9 million from $289.4 million. In 2012, companys operating profit was $ 22,046,000 and in 2011 reached $ 18,102,000 increase $3,944,000. Profit before tax was $19,670,000 compared to $17,042,000 a year ago. Net profit after tax rose 55% to $12.8 million from $8.3 million last year. Operating profit strengthened to $18.3 million from $5.1 million in FY 2010. Gross margins rose to 43 % from 41% in the previous financial year. Cost-to-revenue ratio improved to 39% from 42%. Based on all financial information mention above, it reflects that the quality of the business has improved and become more stable in 3 years ago. In Financial ratio analysis: Return On Equity (ROE) (%) of FJ Benjamin in 2012 was 10.13% increase 0.3% compared 2011 was 9.71%. The return on equity evaluated a FJ Benja mins profitability by showing how much profit it generates with the amount shareholders have invested. Debt Ratio of this company in last 3 year was approximately 80% in 2012, 72 % in 2011 and 2010. Debt ratio increase 8% from 2010 to 2012 mean that FJ Benjamin has very high debt ratio. Current Ratio is used to measure the ability to pay short-term debts of the FJ Benjamin. Generally acceptable current ratio is from 1 to 2. During last 3 year, FJ Benjamins current ratio was above 1.5. However, from 2010 to 2012 this ratio was decrease significantly. Net profit Ratio Companys Risks Profile and Hedging 3.1 Internal risk In fashion industry, business risk is a risk totally can occur with any group if they do not have a risk management strategy correctly. Business risk is a risk that FJ Benjamin might have to face. The FJ Benjamin is belonging to fashion industry. Therefore, Benjamins revenues are affected directly by consumer sentiment and purchasing power as well as changing on trend of fashion and lifestyle trends. Especially, competitors also is a risk might affect to Benjamin because a lot of new brands are opened and growth quickly today. In the other words, customer satisfaction is most importance to increase profit and ability to meet customers need is a first mission of this company to against with this risk as well as increasing competitor opportunities. 3.2 External risk The Company has to face with a lot of risks arising from its operations from that Fj Benjamin uses of financial instruments to against all these risk. The main External risks include credit risk, currency exchange risk, interest rate risk and liquidity risk. Credit Risk: Credit risk is the risk of loss that can occur on financial instruments should a partners default or non-performance on its obligations. Especially, The Companys credit risk arises directly from trade and other debtors. Based on annual report, the trade and other receivables of FJ Benjamin shows that all its not past due, unimpaired and creditworthy debtors with very well payment record. Generally, amount of cash and fixed deposits are put in banks and financial institutions with good credit rating. In addition, FJ Benjamin use the ways to manages its credit risk by application of credit approvals, credit limits and monitoring procedures. However high debt ratio is a disadvantage of FJ Benjamin, it reflects that this company has many debts and possible to non performance or default. Foreign Exchange risk: FJ Benjamin is an import and export company so that it has a lot of transactional using foreign currency .The company import, export between Asias countries, US and EU and most of the groups overseas purchases by in Swiss Franc, US Dollar and the Euro. Therefore, FJ Benjamin maybe face with foreign exchange risk when exchange rate movement. The FJ Benjamin always find out the ways to maintain a natural hedge by keeping the balance of liabilities against assets in the same currency or against the entitys functional currency. In order to reduce the companys exposure to foreign currency fluctuations, FJ Benjamin used foreign currency forward contracts based on purchase commitments for periods ranging from three to six months forward to minimize this risk. Liquidity Risk: Liquidity risk is the risk that the Company will not meet financial obligations at maturity date because of not enou gh of funds. Although in 3 years ago the company has enough current assets to meet the payment schedule of current liabilities with a margin of safety. However, current ratio in 2012 fall meaning is amount of liabilities increase more than 2 years ago and current assets decrease in 2012 lead to level of liquidity risk may be increase in the near future. But FJ Benjamin manages its liquidity risk by maintaining a healthy balance of cash and cash equivalents and an sufficient amount of committed credit facilities. Moreover, follow annual report of 2012, the Company assessed the level of risk with respects to refinancing its debt and concluded it to be low. Approaching to sources of funding is enough and available and debt maturing within 12 months can be rolled over with existing lenders. Interest Rate Risk Interest rate risk is the risk that the value of cash flows of the company in the future and all companys financial instruments will go up or go down without predictable beca use of changes in market interest rates. With the FJ Benjamin also may face with this risk and relates to amount of borrowing which is subject to floating interest rates and are re-priced at intervals of less than 1 year. Recommendation FJ Benjamins earnings remained resilient despite the European debt crisis; this company still is leader by strong brand portfolio and growing in the ASEAN economies. Looking at business result in last 3 year, almost signal are good. However, FJ Benjamins financial still exists some problems and risk can be occurring with this business. With high ROE indicates that all investment project of this company can recover capital and gain profit in the future With debt ratio too high that reflects that the company has much debt and bank borrowing than their equity. Bank has to consider very carefully before lending to this company and high interest rate to cover credit risk. Then company needs to provide more collateral and margin account to ensure that can pay off the loans. However,. Conclusion In sum up, FJ Benjamin is a good company in Fashion Industry in around the world. This Company is more and more developed with stable and solid business. Company is assessed that which will become a most successful and has new prospect in the future. Although, looking at business result in last 3 year, almost signal are good. Besides that, FJ Benjamin Appendix Current ratio: Current Assets /  Current Liabilities Year 2010 2011 2012 Current Assets 192,846 212,857 209,940 Current Liabilities 95,264 121,998 127,998 Current ratio 2.024332 1.744758 1.640182 Return on Equity (ROE ): (Net Income/Shareholders Equity) x 100 Year 2010 2011 2012 Net Income 8,260 12,770 13,541 Shareholders Equity 137,209 131,458 133,607 Return on Equity (ROE ) % 6.02% 9.71% 10.13% Debt Ratio: (Total Liabilities /  Shareholders Equity) x 100 Year 2010 2011 2012 Total Liabilities 76,385 80,752 85,907 Shareholders Equity 105,684 111,667 106,819 Debt Ratio (%) 80% 72.3 % 72.2% Net profit Ratio: (Net Profit / Net Sales  ) x 100 Year 2010 2011 2012 Net Profit 8,260 12,770 13,541 Net Sales 295,386 360,003 403,281 Net profit Margin 2.8 % 3.56% 3.36%

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Bill Nye Vs Ken Ham - 1661 Words

Bill Nye VS. Ken Ham Rain Shi Ken Ham is a Christian who established a creationist museum, he insisted the Earth still young. Ken Ham said: Today, there is too much influence of the theory of evolution on children, we need to take the child back to the correct view of the world in this debate, and it is a good opportunity to let people know more about God, and the spread of the Gospel. Ken Ham s position is creationism. He believes that people are not evolved, because God created human, and then human evolution. That is, if there is no God, humans would not have evolved. From the content point of view, creationism is opposed to idealistic theory of biological evolution; According to some biblical scholars and philosophers to define the word - creationism, which refers to a political doctrine, this doctrine is a basis for a the origin of a particular religious belief, effective and superior to other belief systems. According to this definition, creationism cannot be attributed to a theory, but it should be regarded as religion-based political doctrine. Ken Ham believes that since God created all life on Earth, and nothing has changed. Most believers believe that the world is God specially designed and created by the law of God dominated enacted, it is orderly coordination, arrangement is reasonable, wonderful sound and eternal. It completely ignoring the reality of changes in Earth s orbit data. And that s all the famous Christian scholars have no doubt believed theShow MoreRelated`` Undeniable : Evolution And Science Of Creation, By Bill Nye1410 Words   |  6 Pagessince the beginning of time. In his new book â€Å"Undeniable: Evolution and the Science of Creation,† Bill Nye tries to prove evolution and debunk the ideas of creationism. His idea to write the book started from a controversial debate between himself and Ken Ham, creation against evolution. 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The Economy of Saudi Arabia

Question: What should Saudi Arabia, a country that receives 90% of its GDP from the oil sector, do in the long run. What are the determinants of economic growth in oil-producing countries such as Saudi Arabia. In the presence of highly volatile financial markets and crises, can non-oil sectors play a fundamental substitute to oil energy in Saudi Arabia. How would diversification in non-oil sectors aid Saudi Arabia in bringing about stability to their gross domestic product (GDP). What is your perception of the future of the oil market over the next 20 years?. Do you think the global trend toward sustainability and energy efficiency will have a real impact in the oil market? Why or why not? Answer: The economy of Saudi Arabia is completely based on the production of oil along with a strong control on the part of the government on the major economic activities. 16% of the proven total oil reserves around the world is possessed by the country. It plays a crucial role in OPEC and ranks first among the largest oil exporters across the world. The petroleum sector of Saudi Arabia accounts for 80% of the budget revenues and 45% of total GDP along with 90% of the earnings from export (Belloumi Alshehry, 2015). Currently the country is putting effort in accumulating its private sector in order to diversify its economy so as to employ more Saudi nationals. The efforts put on diversifying the economy mainly focuses on the generation of power, telecommunication, and exploration of natural gas and also on the petrochemical sector as well. The economy of Saudi Arabia is controlled by moreover 6 Million foreign workers who are employed, mainly in the oil and service sector of the country. At the same time Riyadh is struggling to eradicate unemployment among its own nationals. The organizations based on Saudi Arabia generally try to employ dynamic and efficient people but the youth of the country lacks in the proper education and skills that the private sector of the country requires (Alshehry Belloumi, 2015). Being major oil producing the country in the world, Saudi Arabia has also faced certain problems. In the year 2015 the country has experienced a budget deficit of 13% of the total Gross Domestic Product (GDP) and in the year 2016 the budget deficit is nearly equal to $87 billion. This budget deficit is planned to be financed by the revenue from bond sales along with reducing the reserves of the economy (Asif, 2016). Although the country is capable to finance its wide budget deficits by reducing its foreign reserves or by borrowing, it has planned to implement certain policy to avoid this deficit and has also planned to reduce its capital spending in the year 2016. Some components of this plan of reducing the spending include the imposition of Value Added Tax (VAT) along with withdrawing subsidies on the electricity, petroleum and water. The government of Saudi Arabia has also planned to privatize and diversify its economy more intricately in order to rejuvenate the oil market of the country (Anderson Jr, 2014). From the available resources it can be seen that the country primarily focused on the diversification of petrochemical, telecommunication, power generation and in the exploration of natural gas. However, in the present time the government of Saudi Arabia has strictly focused on their aims and objectives in the more long run the government may implement more drastic changes in the economic framework of the country for the low price of oil. These are the plans and actions of the government of Saudi Arabia which is adopted for maintaining the sustainability of the country. However, as the country is mainly based on the oil production sector it should also focus on extracting the oil reserves sustainably (Alshahrani Alsadiq, 2014). Natural oil is considered as the exhaustible resource, exhaustible resources are found deep under the earths crust and once it is depleted it takes millions of years to generate the resource again. Therefore, to establish long ru n sustainability in the oil and service sector of the economy of Saudi Arabia, the country must adopt a method that will sustain the oil reserves for years. This involves managing the sustainable resources for the generations to come and helping them to capture more of their values. Hence there should be a commitment to establish a sustainable economy that will definitely turn out to be prosperous in future (Alshahrani Alsadiq, 2014). Establishing sustainability involves optimization of all the processes and practices involved such as exploration, discovery, recovery and processing in the production of oil. It also requires shifting the technologies used in these processes to an energy efficient one. The main principle of establishing sustainability that should be followed all over the country is, Reducing the use of energy for the facilities of the organizations by 2% Redesigning the facilities which will again be energy efficient Increasing awareness about the efficiency of energy Promoting and influencing the efficiency of energy at the national level. Energy intensity can also be a measure of success of this initiative, the total energy spend to produce a barrel of oil is equivalent to a thousand of Btu. In the year 2015 the energy intensity was measured to be 108000 Btu which lower by 8% when compared to that of in the year 2014 and further lower by 23% when compared with the energy intensity in the year 2013 (Belloumi Alshehry, 2016). Reference List: Alshahrani, M. S. A., Alsadiq, M. A. J. (2014).Economic growth and government spending in Saudi Arabia: An empirical investigation. International Monetary Fund. Alshehry, A. S., Belloumi, M. (2015). Energy consumption, carbon dioxide emissions and economic growth: The case of Saudi Arabia.Renewable and Sustainable Energy Reviews,41, 237-247. Anderson Jr, I. H. (2014).Aramco, the United States, and Saudi Arabia: A study of the dynamics of foreign oil policy, 1933-1950. Princeton University Press. Asif, M. (2016). Growth and sustainability trends in the buildings sector in the GCC region with particular reference to the KSA and UAE.Renewable and Sustainable Energy Reviews,55, 1267-1273. Belloumi, M., Alshehry, A. S. (2015). Sustainable energy development in Saudi Arabia.Sustainability,7(5), 5153-5170. Belloumi, M., Alshehry, A. S. (2016). The Impact of Urbanization on Energy Intensity in Saudi Arabia.Sustainability,8(4), 375.