ftv financial analysis1

7/28/2019 FTV Financial Analysis1

1/18

Fiji One Online

Group Members

Huddie Namo

Michael HaapioWilson Maeriua

Sera Vosaroqo

George Tasra


2/18

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


3/18

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


4/18

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


5/18

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


6/18

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


7/18

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


8/18

2006 2007 2008 2009 2010

Accounts receivablesturnover( days)

67.66 75.52 80.18 97.90 68.38

-

20.00

40.00

60.00

80.00

100.00

120.00

Da

ys

Years


9/18

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


10/18

2006 2007 2008 2009 2010

Total assets turnover (times) 0.93 1.02 1.02 0.95 1.12

-

0.20

0.40

0.60

0.80

1.00

1.20

Ratio

Total assets turnover (times)

Years


11/18

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.


12/18

-

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 (%)


13/18

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.


14/18

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


15/18

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.


16/18

-

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)


17/18

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


18/18

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.

ftv financial analysis1

Documents