 INTRODUCTION OF PANASONIC

The late Tan Sri Konosuke Matsushita founded the Matsushita companies. The
Matsushita miracle began with his vision to contribute to the well-being of mankind by
providing reasonably-priced products and services in sufficient quantities.Today that
vision has turned into a giant global business in more than 130 countries around the
world.
The famous brand name ‘Panasonic‘ is easily recognised. But behind this popular
household name and the extensive range of consumer durables that carry its label
stands its manufacturer, the foundation of the brand’s success, Panasonic
Manufacturing Malaysia Berhad – PMMA.The PMMA story in Malaysia is an
inspirational one made remarkable and reflected in its string of proud achievements that
have successfully spanned two decades. Being the first plant to manufacture household
electrical appliances in Malaysia, the Company confidently took on its parent company
in Japan.
Throughout the years, the corporation has observed a swift progress from its humble
start as producer of dry-cell batteries to Malaysia’s leading manufacturer of
sophisticated electrical appliances.Today, the Panasonic brand name has emerged as
one of the most welcome and trusted brand names for electrical home appliances
chosen by most Malaysian households. At Panasonic, we manufacture, operate,
deliver, and maintain a series of product range with globally competitive models under
the Panasonic brand name to the market, incorporating new features, enhanced
capability and improved quality, and equally important, with our excellent after-sales-
services.
The Panasonic brand name was created in 1955 and was first used as a brand for
audio speakers. It is a combination of the words, "Pan", and "Sonic", sound and has a
meaning of bringing sound our Company creates to the world. Many distributors,
sensing future potential in the company, expressed the desire to deal primarily in
National brand products. The company's responsibility to provide security to its
distributors was now greater than ever before. Matsushita, who had considered the
company primarily a private endeavor, now needed to view it in terms of its relation to
the society at large. They are therefore duty-bound to manage and develop the
company in an upstanding manner, contributing to the development of society and to
the improvement of people's lives. The profits of their business are a reward for
contributing to society."

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  INTRODUCTION OF PENSONIC

Company Pensonic is one of the most successful trading companies in Penang,

Malaysia that sells a wide variety of electrical appliances. In addition to its own brand
“Pensonic”, the company also owns the German brand “ ebensstil !olle"tion” and owns
the sole#distribution rights for the $utch brand “Princess” in Malaysia.
Pensonic also established a mass production hub and international distribution networ"
of electrical home mechanism and an international distribution networ". %he trademar"
“Pensonic” is registered in Malaysia and is targeted for eventual registration in over &'
countries. (s an e)tension to the company*s structure, Pensonic has two
subsidiarycompanies that respectively own “Cornell”, a brand from the + ( and obtained
the sole#distributorship in Malaysia for internationally renowned brands such as G-
(ppliances of the + ( and Morphy ichards of the +!.
Pensonic*s success had been reflected by the many awards achieved in its industry,
such as the highly regarded brand and industry e)cellent awards. It is one of the few
companies that won three Prestigious (wards in the first /uarter of the year &'00. %he
product and service e)cellence is seen in the company*s hard wor" that continuously
strengthens their /uality control and ensures all the aspects of products1 technology and
service standards are high by "eeping up with the improving technology in design,
planning and etc. %his is made possible by the company*s highly accomplished team of
dedicated engineers and technicians

 Ratio Analysis
Ratio analysis is a very important tool of financial analysis. It is the process of
establishing a significant relationship between the items of financial statements (profit
and loss a/c and balance sheet) to provide a meaningful understanding of the
performance and financial position of the firm.

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  FINANCIAL RATIO

a) Current Ratio (Current Asset / Current Liability)

COMPANY 2015 2016 2017

YEAR
PENSONIC 𝑅𝑀165,043,493 𝑅𝑀169,900,388 𝑅𝑀161,222,411
𝑅𝑀128,198,185 𝑅𝑀132,284,776 𝑅𝑀121,664,568
= 1.29: 1 = 1.28: 1 = 1.33: 1

PANASONIC 𝑅𝑀688,401 𝑅𝑀761,461 𝑅𝑀769,849

𝑅𝑀184,562 𝑅𝑀206,797 𝑅𝑀183,428
= 3.73: 1 = 3.68: 1 = 4.02: 1

Current Ratio measures the ability of the firm to meet its short-term financial obligations.
Ratio that greater than 1 is able to meet their current liabilities.The higher the current
ratio, the more capable the company is to pay its liabilities.
Pensonic is facing an increase in liquidity problems at 2016, which the ratio decrease
from 1.29 to 1.28 compared to 2015. In 2016, current liabilities is higher than 2015, it
indicates that Pensonic needs to raise their sales/revenue or extend the time to pay
creditors. In 2017, the ratio increases to 1.33 compared to 2016.Traditionally a current
ratio of 1:1 is considered to be a satisfactory ratio.
Panasonic is facing an increase in liquidity problems at 2016, which the ratio decrease
from 3.73 to 3.68 compared to 2015. In 2016, current liabilities is higher than 2015, it
indicates that Panasonic needs to raise their sales/revenue or extend the time to pay
creditors. in 2017, the ratio increases to 4.02 compared to 2016. Traditionally a current
ratio of 4:1 is considered to be a satisfactory ratio.

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 b) Acid Test Ratio ( CurrentAsset – Inventory – Prepayment / Current Liabilities )

COMPANY 2015 2016 2017

YEAR
PENSONIC 𝑅𝑀165,043,493 − 𝑅𝑀169,900,388 − 𝑅𝑀161,222,411 −
𝑅𝑀61,171,531 𝑅𝑀70,705,494 − 𝑅𝑀72,370,204 −
−𝑅𝑀0 𝑅𝑀0 𝑅𝑀0
𝑅𝑀128,198,185 𝑅𝑀132,284,776 𝑅𝑀121,664,568
= 0.81: 1 = 0.75: 1 = 0.73: 1
PANASONIC 𝑅𝑀688,401 − 𝑅𝑀761,461 − 𝑅𝑀769,849 −
𝑅𝑀47,901 𝑅𝑀43,844 − 𝑅𝑀50,284 −
−𝑅𝑀0 𝑅𝑀0 𝑅𝑀0
𝑅𝑀184,562 𝑅𝑀206,797 𝑅𝑀183,428
= 3.47: 1 = 3.47: 1 = 3.92: 1

Acid Test Ratio measure the firm’s ability to repay current liabilities after the leastliquid
of the current assets (inventory) is deducted. The higher the ratio, the morefinancially
secure a company in the short term.
The Acid Test Ratio of Pensonic for the year 2015 is 0.81 but it has decreased to 0.75
in year 2016 and decreased to 0.73 in year 2017 which show that the company’s ability
to meet its current liabilities with current assets other than stocks is not favorable.
The Acid Test Ratio of Panasonic for the year 2015 is 3.47 but it has the same value as
per year 2016 and increased to 3.92 in year 2017 which show that the company’s ability
to meet its current liabilities with current assets other than stocks is favorable.

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 c) Gross Profit Margin (Gross Profit / Net Sales * 100 )

COMPANY 2015 2016 2017

YEAR
PENSONIC 𝑅𝑀72,712,644 𝑅𝑀77,138,633 𝑅𝑀73,574,988
∗ 100 ∗ 100 ∗ 100
𝑅𝑀385,503,122 𝑅𝑀386,258,254 𝑅𝑀341,141,542
= 18.86% = 19.97% = 21.57%

PANASONIC 𝑅𝑀180,655 𝑅𝑀245,355 𝑅𝑀223,859

∗ 100 ∗ 100 ∗ 100
𝑅𝑀931,020 𝑅𝑀1,086,735 𝑅𝑀1,122,964
= 19.40% = 22.58% = 19.94%

Gross Profit Margin is to find out the efficiency with which production or purchase
operations are carried on.
The gross profit margin of Pensonic for the year 2015 ratio is 18.86% it shows higher
profitability of the company. In the year 2016, the ratio is 19.97% it shows profitability is
increased. In the year 2017, the ratio is 21.57% it shows profitability is increased in this
three years.
The gross profit margin of Panasonic for the year 2015 ratio is 19.40% it shows higher
profitability of the company. In the year 2016, the ratio is 22.58% it shows profitability is
increased. In the year 2017, the ratio is 19.94% which shows the profitability is increase
and decrease in this three year.

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 d) Net Profit Margin ( Net Profit / Net Sales * 100 )

COMPANY 2015 2016 2017

YEAR
PENSONIC 𝑅𝑀17,430,255 𝑅𝑀11,230,009 𝑅𝑀6,387,582
∗ 100 ∗ 100 ∗ 100
𝑅𝑀385,503,122 𝑅𝑀386,258,254 𝑅𝑀341,141,542
= 4.52% = 2.91% = 18.72%

PANASONIC 𝑅𝑀99,538 𝑅𝑀146,900 𝑅𝑀127,118

∗ 100 ∗ 100 ∗ 100
𝑅𝑀931,020 𝑅𝑀1,086,735 𝑅𝑀1,122,964
= 10.69% = 13.52% = 11.32%

Net profit margin is to determine the overall profitability due to various factors such as
operational efficiency, trading on equity. Higher the ratios, hire the efficiency of firm face
adversecondition and vice-versa.
The net profit margin of Pensonic for the year 2015, company’s net profit was 4.52%,
the next year 2016 company’s profit was decrease to 2.91% and in the year 2017
company’s profit was increased to 18.72%.
The net profit margin of Panasonic for the year 205, company’s net profit was
10.69%,the next year 2016 company’s profit was increase to 13.52% and in the year
2017 company’s profit was decrease to 11.32%.

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 e) Return on Capital Employed ( Net Profit / Capital Employed * 100 )

COMPANY 2015 2016 2017

YEAR
PENSONIC 𝑅𝑀17,850,644 𝑅𝑀11,754,500 𝑅𝑀6,579,852
∗ 100 ∗ 100 ∗ 100
(𝑅𝑀28,622,339 + (𝑅𝑀18,804,360 + (𝑅𝑀11,987,696 +
𝑅𝑀108,316,536) 𝑅𝑀115,843,705)) 𝑅𝑀119,572,531)
= 13.04% = 8.73% = 5.00%
PANASONIC 𝑅𝑀120,498 𝑅𝑀176,121 𝑅𝑀145,087
∗ 100 ∗ 100 ∗ 100
(𝑅𝑀718,462 + (𝑅𝑀779,103 + (𝑅𝑀821,78 +
𝑅𝑀205) 𝑅𝑀193) 𝑅𝑀232)
= 16.77% = 22.60% = 17.65%

Return on capital employed ratio is to find out how efficiently the long term funds
supplied by the creditors and shareholders have been used.
Pensonic company has low return in 2016 and 2017, high return in 2015. Low return on
capital employed is not good for the company. This ratio indicates the ability of the firm
to generate profit per ringgit on capital employed. Higher the ratio the more efficient the
management and utilization of capital employed.
Panasonic company has high return in 2016, low return in 2015 and low return in 2017
as well. Low return on capital employed is not good for the company. This ratio
indicates the ability of the firm to generate profit per ringgit on capital employed. Higher
the ratio the more efficient the management and utilization of capital employed.

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 f) Inventory Turnover Ratio (Cost of Sales / Average Inventory(1/2 opening stock
+closing stock) )

COMPANY 2015 2016 2017

YEAR

PENSONIC 𝑅𝑀312,790,478 𝑅𝑀309,119,621 𝑅𝑀267,566,554

1/2(𝑅𝑀81,072,651 + 1/2(𝑅𝑀61,171,531 + 1/2(𝑅𝑀70,705,494 +
𝑅𝑀61,171,531) 𝑅𝑀70,705,494) 𝑅𝑀72,370,204)
= 4.40𝑇𝐼𝑀𝐸𝑆 = 4.69 𝑇𝐼𝑀𝐸𝑆 = 3.74 𝑇𝐼𝑀𝐸𝑆

PANASONIC 𝑅𝑀750,365 𝑅𝑀841,380 𝑅𝑀899,105

1/2(𝑅𝑀26,292 + 1/2(𝑅𝑀47,901 + 1/2(𝑅𝑀43,844 +
𝑅𝑀47,901) 𝑅𝑀43,844) 𝑅𝑀50,284)
= 20.23𝑇𝐼𝑀𝐸𝑆 = 18.34 𝑇𝐼𝑀𝐸𝑆 = 19.10 𝑇𝐼𝑀𝐸𝑆

Inventory turnover ratio is to find out the efficiency with which the inventory is utilized.
Pensonic company for the year 2015, stock turnover ratio is 4.40 times. In the year
2016 the ratio is 4.69 times and in the year 2017 the ratio is 3.74 times. It shows that
ratio is increased and decrased in this three years.
Panasonic company for the year 2015, stock turnover ratio is 20.23 times. In the year
2016, the ratio is 18.34 times and in the year 2017 the ratio is 19.10 times. It shows that
ratio is decreased and increased in this three years. So higher the ratio indicates
efficient performance.

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 g) Average Collection Period ( Account Receivable * 365 days / Net Sales )

COMPANY 2015 2016 2017

YEAR

PENSONIC 𝑅𝑀62,594,191 𝑅𝑀65,093,813 𝑅𝑀72,370,204

∗ 365𝑑𝑎𝑦𝑠 ∗ 365𝑑𝑎𝑦𝑠 ∗ 365𝑑
𝑅𝑀385,503,122 𝑅𝑀386,258,254 𝑅𝑀341,141,542
= 59𝑑𝑎𝑦𝑠 = 62𝑑𝑎𝑦𝑠 = 77𝑑𝑎𝑦𝑠

PANASONIC 𝑅𝑀64,244 𝑅𝑀110,952 𝑅𝑀16,863

∗ 365𝑑𝑎𝑦𝑠 ∗ 365𝑑𝑎𝑦𝑠 ∗ 365𝑑
𝑅𝑀931,020 𝑅𝑀1,086,735 𝑅𝑀1,122,964
= 25𝑑𝑎𝑦𝑠 = 37𝑑𝑎𝑦𝑠 = 38𝑑𝑎𝑦𝑠

Trade debtor collection period is the period (days) that the firm needs to take in
collection its credit sales from customers.
Based on the calculation above, the debtor days of the Pensonic Company are 59 days
in the year 2015,62 days in the year 2016 and 77 days in the year 2017. It shows that,
the less effectiveness of their inventory management in the year 2017 compared with
previous year 2015 and 2016. This is because the ratio of the trade debtor collection
period was increased by 3 days from 59 days to 62 days and increased by 15 days from
62 days to 77 days. It also can be said as accounts receivable days which show the
length of times debtors takes to pay.
Based on the calculation above, the debtor days of the Panasonic Company are 25
days in the year 2015,37 days in the year 2016 and 38 days in the year 2017. It shows
that, the less effectiveness of their inventory management in the year 2017 compared
with previous year 2015 and 2016. This is because the ratio of the trade debtor
collection period was increased by 12 days from 25 days to 37 days and increased by a
day from 37 day to 38 days.It also can be said as accounts receivable days which show
the length of times debtors takes to pay.

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  CONCLUSION
I have analyzed the annual reports of Panasonic and Pensonic Company of the year
2015 till 2017. It was a great experience by knowing the details of company. I make an
honest statement to put my efforts towards the completion of this financial project
report. Analysis of this financial report has helped me to get many ideas regarding the
financial condition of the company.
Net profit ratio measures the percentage of each sales remaining after all costs and
exepnses including interest and taxes. Net profit ratios of the last three years of
Panasonic and Pensonic are as follows:
Year Pensonic Panasonic
2015 4.52% 10.69%
2016 2.91% 13.52%
2017 18.72% 11.32%

Then, the profitability of the return on capital employed of Pensonic continuously

decrease during all the three years. So it is not good indication of financial position. The
return on capital employed of Panasonic company increase and decrease during all the
three years.
From above comparison of ratios, I can conclude that Panasonic company’s profit,
turnover, return are all in good position compared to Pensonic company. This indicates
continuously progressive and profitable company because year after year I can see
there are increased in the ratio of Paansonic company than Pensonic company.

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