project credit management

8/10/2019 Project Credit Management

1/22

BF4742 CREDIT MANAGEMENT

Malee Sampran Public Company imi!e"

T#$ A% &a!'a(om T)ep!)im

Submi!!e" by


2/22

produced for both local and foreign customers under their trademars.

Malee products are mared internationally either through agents, or

directly to customers. This has created worldwide acceptance of Malee brand

products.

Analy'i'

Suppliers credit

%ccording to "ori&ontal common'si&e income statement (let year )**+ be

base year we see that, Total -evenue increases $.)$/ in )**0. 1t2s because of

the increases of 3other income4 and -eversal of allowance for impairment loss.

#esides, Total e5penses increase $$.$0/ because of the increases in Cost of

good sold and 6irector7s remuneration. 8et earning increases +.09/. The main

reason is $+.:0/ decreases in the interest e5penses. Moreover, the total sales

# ht + :;0 9 illi i i i # ht $: : illi $)


3/22

Liquidity Ratio:

The Company has cash flow from operating activities of #aht )+;.*

million significantly higher than the previous year as a result of a decreased in

inventories and account receivables. The Current ratio was *.0; slightly lower

than the previous year due to inventories and account receivables decreased.

=uic ratio was *.)+ in )**0 and *.) in )**. This ratio decreases slightly in

)**0 because inventory and total liabilities decreases slightly. "owever, we see

that both current ratio and >uic ratio are too low for both years )** and )**0

(which is less than $. So, the fact is that the company has li>uidity problem. 1t

will be difficult for the company to pay its short'term obligations.

%ccount receivable turnover increases from 9.$ times in )** to $*.+

times in )**0. 1t means that the company has more efficiency in using

receivables to generate sales. Moreover, %verage Collection Period decreases

from +9.: days in )** to +0 days in )**0. 1t shows that ability to collect

i bl f i tti b tt S h iti l f th


4/22

Banks credit

The Company2s total revenue was eeping increase in the recent three

years. Arom )**+ to )**0, there is $.)$percent increase in revenue, which is

mainly from sales. Sales increased $ percent in three years, from +,))

million baht to +,:;: million baht. "owever, the net earnings fell down. 1n

)**, the earnings improved a lot from the big loss situation of 9;.0 million

baht to )) million baht profit, but in )**0, it dropped to .0 million baht. The

profitability ratio reflected the same problem. The gross profit ratio had small

fluctuation, however, the net profit ratio moved in big wave. 1n )**+, the net

loss is + percent of sales, but it became *.; percent profit of sales in year )**.

The good trend did not insist that it dropped into *.$ percent. Such big different

in gross profit ratio and net profit ratio reflects the efficiency problems.

@hether can the company control operating e5pensesB perating e5penses

include 3selling and administrative e5penses4 and 3director7s remuneration4.


5/22

the Company tried to decrease debt financing and they really decreased more

than half debt until )**0, the debt to e>uity ratio was still high in )**+ at $0.


6/22

(;),uid problems. The current ratio

was only *.: though it improved a little. Current assets can not even cover

current liabilities. The vertical common si&e balance sheet shows that the main

current asset is inventory, the secondly one is unrelated parties and the third

one is trade and notes receivables. Cash and cash e>uivalents was only about

*.+ percent. The composition of current assets reflected the problem of li>uidity

t 1 t i th l t li id t 1f d d t th i t f t


7/22

The total net account receivable at the year end were baht +9.) million,

of which baht $);.) million were overdue, which was baht ):. million lower

than the overdue amount of baht $0+.: million at the end of )**. The

Company has debt owed by a related company at baht +0 million. The

Company was still pursuing debt repayment. "owever, the Company set aside

allowance of baht +0 million for doubtful debts.%s at 6ecember +$, )**0, the Company pledged its fi5ed deposits totaling

appro5imately baht :9 million ()**F baht + million to secure credit facilities

granted by bans.

The Company heavily relied on short'term financing. "owever, from

)**, the Company began to reclassify short'term loans from financial

institutions. %nd this process is continuing.

Malee Sampran Public Company is very famous either in Thailand or

internationally. "owever, the profits in recent years were not very desirable.

P fit i th i f l t if th C t t bt i


8/22

investment. The Company can use this amount of loan to improve its efficiency

and reduce costs, and increase its profit by this way. Though the present profit

is not good, we believe that the Company could improve this situation soon.

Moreover, because the Company always has a good relationship with our ban

and the historical record of repayment is good, we are willing to offer long'

term loans totaling :* million and with repayment within $0 years. The loanneeds collateral and subordination agreement has to be provided.

Deci'ion

%s credit officers of the supplier2s company, we will grant to Malee up to

a certain amount to reduce the default ris for our company. @e will give credit

to Malee up to +*/ of its total amount of purchase.

Aor the ban loan, we are willing to offer long'term loans totaling :*

million and with repayment within $0 years. The loan needs collateral and


9/22


10/22

Balance S)ee!

Malee Sampran Public Company Limited and Its Subsidiaries

2**+ 2**4 2**,

-BA.T/ -BA.T/ -BA.T/

A''e!'

Curren! A''e!'

Cash and cash e>uivalents 0,9),* :,))+,*+ $;,0


11/22

Trade accounts payable $,*0$,;:$,)+0 $,**;,;+0,0*


12/22

TOTAL LIABILITIES AND SHAREHOLDERS'

EUIT!

$,9


13/22

C1RRENT IABIITIES

#an overdrafts and short'term loans

from financial institutions

)).:/ );.99/ +:.*+/

Trust receipts ).:/ ).9:/ ).;;/

Trade accounts payable 0+.*


14/22

0*,***,*** ordinary shares of #aht

$* each

)0.)+/ )0.$


15/22

N#N0C1RRENT ASSETS

-estricted ban deposits $;).9+/ $*9.))/ $**.**/1nvestments accounted for under e>uity

method'associated company

99.uipment, net 99.;/ 99.0;/ $**.**/

ther non'current assets6eposits 0


16/22

TOTAL NON-CURRENT LIABILITIES ;0.;9/ +:9.$/ $**.**/

TOTAL LIABILITIES $*0.*


17/22

(baht (baht (baht

RE6EN1E

Sales !'675'8)6'8)6 !'25)'27!'6!) !'224'4)8'74!

-eversal of allowance for impairment loss 1'000'000 20')64'175

*

Share of profit from investments

accounted for under e>uity method 7'2)0

* *

other income 5!'!14'575 56')6!'640 41'642'4!2

Total -evenues !'7!0'218'761 !'!!7'201'454 !'266'141'175

DGPD8SDS

Cost of sales !'042')2)'75! 2'6!0'442'068 2'641')05'782

Selling and administrative e5penses 6!2'7!4'524 640'!70'020 665'!0)'208

6irector7s remuneration 4'160'000 !'1!0'000 !'!!0'000

Share of loss from investments

accounted for under e>uity method

*

1!'601 !0')07

Total D5penses !'67)'824'277 !'27!')55'68) !'!10'575'8)7


18/22

2**+ 2**4 2**,

RE6EN1E

Sales 100.00- 100.00- 100.00-

-eversal of allowance for impairment loss 0.0!- 0.64- 0.00-


accounted for under e>uity method 0.0002- 0.00- 0.00-

other income 1.45- 1.75- 1.2)-

Total -evenues 101.48- 102.!)- 101.2)-

DGPD8SDS

Cost of sales 82.78- 80.71- 81.)!-

Selling and administrative e5penses 17.21- 1).65- 20.6!-

6irector7s remuneration 0.11- 0.10- 0.10-



Total D5penses 100.11- 100.45- 102.67-

D i # f 1 D


19/22

2**+ 2**4 2**,

RE6EN1E

Sales 114.00- 101.08- 100.00-

-eversal of allowance for impairment loss * * *


accounted for under e>uity method * * *

other income 128.0!- 1!6.7)- 100.00-

Total -evenues 114.21- 102.18- 100.00-

DGPD8SDS

Cost of sales 115.18- )).57- 100.00-

Selling and administrative e5penses )5.10- )6.25- 100.00-

6irector7s remuneration 124.)2- )!.))- 100.00-



Total D5penses 111.15- )8.8)- 100.00-

D i # f 1 D


20/22

MALEE SAMPRA P!"LIC C#MPA$ LMI%E& A& S!"SI&IARIES

S%A%EME% #' CAS 'L#

'#R %E $EAR E&E& *+ &ECEM"ER ,--. A&,--*

2005 2004 2003

Cash /lo0 /rom (used in) operatin1 activities

Net earnings (lose) 4,567,784 21,842,227 -97,504,643

Adjustment to reonile net earnings (loss) to as! "ro#ided $%

("aid &rom) o"erating ati#ities'-

!are o& ("ro&it) loss &rom in#estments aounted

&or under euit% met!od -7,290 13,601 30,907 *ro#ision &or o$solete in#entories 12,683,357 22,048,414 5,369,565

+oss on o$solete in#entories 9,940,186 16,533,840 17,012,935

Alloane &or dou$t&ul aounts 2,921,604 3,356,335 412,536

t!er reser#e 115,059,758 - 2,000,000

.e"reiation 9,369,924 114,907,547 123,308,722

Amortisation 1,207,536 6,377,684 11,999,056

/ain on sale o& &ied assets 541,759 -4,903,366 -9,427,799

nrealised loss (gain) on e!ange -4,860,384 -2,057,633 1,514,914

re#ersal o& arued e"ense -1,000,000 -6,437,158 -

e#ersal o& alloane &or im"airment loss 2,269,445 -20,964,175 -

Alloane &or im"airment loss 2,042,790 3,379,284 -

ritten-o&& &ied assets 8,000,000 558,770 -

)*


21/22

160,324,397 154,655,370 54,725,193

"erating assets (inrease) derease

rade aounts and notes reei#a$le 15,022,292 -16,406,143 46,409,106 n#entories 1,370,257 -180,122,413 22,129,250

t!er urrent assets 7,944,956 -20,083,153 24,684,163

t!er assets -11,422,402 -7,161,868 -1,437,198

"erating lia$ilities (inrease) derease

rade aounts "a%a$le 51,679,112 128,092,326 -1,529,759

Ad#ane reei#e &rom ustomer 32,425,793 563,503 -

t!er urrent lia$ilities -20,335,495 14,494,359 -44,957,985

Net as! &los &rom o"erating ati#ities 237,005,910 72,843,219 100,022,770

Cash /lo0 /rom ( used In ) investin1 activities

(nrease) derease in resrited $an de"osits -25,241,231 -3,651,614 29,010,288

ranslation adjustment -152,162 -110,061 881,018

Auisition o& "ro"ert%, "lant and eui"ment -126,622,835 -56,480,525 -54,516,163

*roeeds &rom sales o& &ied assets 1,231,759 20,828,315 12,766,839

Net as! &lo used in in#esting ati#ities -150,784,469 -39,413,885 -11,858,018

Cash /lo0 /rom (used in) /inancin1 activities

(nrease) derease in o#erdra&ts and s!ort-term loans &rom

&inanial institutions and trust reei"ts -4,994,703 4,680,509 -5,558,813

as! "aid to &atoring "a%a$le -27,589,022 -7,581,363 -416,918

)$


22/22

.erease in !ire "ur!ase reditors -9,143,706 -1,092,706 -

as! "aid to long-term loans -44,775,000 -41,895,170 -23,400,000

Net as! &lo used in &inaning ati#ities -86,502,431 -45,888,730 -79,375,731

Net (inrease) and derese in as! and as! eui#alents -280,990 -11,366,690 8,789,021as! and as! eui#alents at $eginning o& %ear 6,223,034 17,589,724 8,800,703

as! and as! eui#alents at end o& %ear 5,942,044 6,223,034 17,589,724

u""lememental as! &los in&ormation'

as! "aid during t!e %ear &or

ntrest 45,787,231 41,773,505 63,419,128

or"orate inome ta 90,995 61,592 146,502

Non-as! transation

e#aluation sur"lus on land inrease as a re#aluation during t!e %ear - 44,402,879 -

.e$t settlement $% land - - 26,424,969

))

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