Chicken Run Essay

The implications if a major customers had gone into is level, it pass on affect the association cash work because every hire authentic the telephoner whitethorn take aim to use it to cover its operating(a) expenses unconnected from getting profit. Accumulated debtors testament show the collection department performance. pathetic cash flow will affect many areas in an organization. The association may subscribe to make a nonher loan to run it business. different than that it may have problem to run the business if the cash flow is low. For specimen, if the c completelyer unable to cook up the suppliers on time. The supplier may split to ply product to the company. If the suppliers really stop provideing product, the company may face problem to produce product. This will directly affect the company sales because its fail to produce product to its customers. If the company do not work hard to reduce this important area they may be looking at legal remedies, or even wr ite make debts and that means spending money to get money.The other implication is that, the company will have a very unhealthy debtors aging. Where it is supposed to be a guidelines to the company. For example when a debtor allude it specialise, the company should be alerted to practise payment based on the debtors aging. solely in this case, Encik Selamat has been giving authority to the marketing department to continue supply products to Cold Gold Sdn Bhd because of the closed relationship. Indirectly, it showsthat Encik Selamat does not performing his duty rationally. Which fix his image as a manager. He is supposed to show his leading by having a very good judgement. For example to stop supply products to Cold Gold Sdn Bhd until they settle their debts.Refer to the case Chicken conki) How would you assess the mo webary health of the company?I would assess the monetary health of the company based on the gross profit of the company. The high the gross profit the healthi er it is. Of assembly line we have to consider the operating expenses of the company but operating expenses are still under the company control and discretion before we place get the net profit. other than that, I would assess the financial health of the company by obtaining a history of your companys financial statements. Five years worthy is usually a good base. Next, convert the financial statements to commonalty sizing. putting green size financial statements are simply a companys financials expressed in the form of percentages rather than dollars. A common size format readily identifies trends and growth patterns. Additionally, since industry benchmark data is ofttimes produced in this format, it makes it easier to compare the results with the competition. Industry benchmark culture can be obtained from a commercial vendor, accountant, or depending upon the industry, from trade associations.Next, financial ratios are calculated. on that point are a number of ratios to ch oose from. Some of the more common measure liquidity, debt coverage, leverage, and operating and profit performance. Their relevance is dependent upon your company, its operating characteristics and the industry. Bankers and accountants can be especially useful in come ining the more pertinent ratios.The information gathered thus far is analyzed and compiled on a trended, conglomerate and industry basis. The results of this analysis, when performedregularly, help you to monitor and recognize the vital statistics necessary for the achievement and growth of your business. The benefits of this assessment include Competitive Advantages & DisadvantagesAn industry assessment enables you to identify your companys strengths and weaknesses and acquire valuable information on the competition.Budgeting & foretellStudying trends and growth patterns is a very effective preliminary grade in preparing familiar budgets and forecasts.Strategic PlanningRecognizing specific performance measureme nts (company and industry) will help to set goals and objectives for the future (e.g., increasing sales, gross profit margins, and net income).Acquisition OpportunitiesKnowledge of key performance measurements assists in the evaluation of a proposed sale, merger or acquisition.FocusGreater sensation of the interrelationship of the financial statements and a complete understanding of financial operations allows you to focus on the areas important to the growth and success of your business.ii) What would you suggest as appropriate course of actions?As an appropriate course of actions, I would suggest the directors to refer the Malayan Code on Corporate Governance 2012 as a guidelines to scoop up action against Encik Selamat which involves in unethical activities such as conflict of interestingness and lack of integrity.Other than that, the internal control of the company should be revised. For example the debtor collection procedures. It has to pursue proper standard operating p rocedures such as when invoices issue to a customers, the payment terms must follow the credit period. whatsoever payment overdue must be chase every month. If it reach the 120 days amount overdue, warning letter should beissue to the debtors, then stop supplying product to the debtors until payment made.Besides that, Internal Audit must be done regularly. This is to audited account the operation run based on the standard operating procedures. Any discrepancy found must be rectify immediately to repress any unwanted issue to happen. For example, Ms Choy has discovered that the credit limit of Cold Gold Sdn Bhd, one of its major customers had gone into its level and to that degree the marketing department continued to supply products to the company. If the company do internal audit regularly, this issue may not happen because the internal attendee will detect the problem while it is still under proterozoic stage. Other than that, this will avoid Encik Selamat from making unethic al activities due to his awareness from the internal auditor.Monthly meeting also can help in this case. Where, Encik Selamat required to report the company performance monthly. In this case, the company should have monthly credit meeting. The purpose of this meeting is to make sure all debtors are monitored closely. Any amount hanging in the debtors aging should have remarks or the status should have been identified. For example, if the debts is not paid within the 30 days period, it should state the reason why? At least we do it that chasing of debts run actively by the collection department. If the debtors do not pay according to their credit period, the management at least can gift suggestion and acknowledge about that issue.