Living By number free essay sample

The summary This case basically explains about the dilemma that faced by Hafiz Hashim who is the CFO of MarineCorp Sdn Bhd (MarineCorp). This company was incorporated in 1992 and was a subsidiary of SURIA. MarineCorp has two wholly subsidiaries which are Green Port Sdn Bhd (GreenPort) and Sungai Emas Port Sdn Bhd. Its main operation was the maritime solutions providers for the SURIA group of companies like provide marine consulting services to SURIA and its related contractors that included those for newly vessels for upstream and downstream oil and gas operations. There are some problems occurred which are the chairman who is president of SURIA want Hafiz to use value based management (VBM) method to evaluate performance evaluation and appraisal of the employees based on economic earnings. Nevertheless, hafiz has different opinion with the chairman. He thought that value company performance should be measured based on investment make by equity and debts holders. We will write a custom essay sample on Living By number or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page It means that they need to see investment based on expected return and cost of capital incurred by company. The protagonist The protagonist or decision maker for this case is Hafiz Hashim. He is the CFO of MarineCorp and responsible to report the financial performance of MarineCorp and its two subsidiaries which are Green Port Sdn Bhd and Sungai Emas Port Sdn Bhd to the company’s board. The major issues There are two main issues faced by CFO of MarineCorp, Hafiz Hashim. First issue was when President of Suria had wanted Value Based Management (VBM) to be used for the Suria Group, its subsidiaries and associated companies. Second, Hafiz was in a dilemma whether to use economic earnings as required by the Group or profits as practiced by MarineCorp to report the financial performance of MarineCorp and its subsidiaries. The problem There are several problems that have been detected happen in the organization. First, CFO faced pressured from GM of Green Port and MarineCorp regarding accounting issues and they urge to improve company’s performance so that both of them could achieved their performance indicator. With regard to GM of Green Port, Anita Osman, she had requested to the CFO to amortize the dredging costs in order to improve the company’s profit for the best interests of the company as well as to achieve her KPI target. However, CFO argued that cost of dredging have to be charged in the financial year they were incurred. Similarly, GM of MarineCorp, Lee Chong Way, he disagreed with the recommendation proposed by CFO to pay dividends to its shareholder because the cash resources are used to generate interest income on fund investments. Besides, the company should focus on improving profit as it is the main evaluation in company’s ranking. However, it is actually his performance target that must be achieved. Second, Chairman also requested him to rank the three companies in terms of their financial performance. But, the questions arise on how it should get measured. For example, use profitability as the sole measurement, identify better performance indicator to ensure fair evaluation or determine specific action to improve performance. Despite to that, the chairman emphasized on the importance of holding onto the group value drivers to ensure survival and success. Third, the Chairman had questioned about the conflict of the registered net profit after tax for the period 2009. Through the CFO analysis, he said that company’s actually destroying its value. Thus, chairman urges him to suggest on how to improve the performance of the company because this contradiction may affect the performance evaluation of the GMs and CEO. The brief description of the case exhibits Based on the Appendix G, the company performance has been measured by Net Operating Profit after Tax (NOPAT), Average Invested Capital, Weighted Average Cost of Capital (WACC) and Capital Charged. Green Port has showing the highest profit, followed by MarineCorp and Sungai Emas Port. Under Value Based Management (VBM), Green Port has showing a negative figure which is -14,588,232, where by Sungai Emas Port and MarineCorp are 5,030,563 and 14,274,611 respectively. This is indicated value has destroyed for Green Port and Sungai Emas Port and MarineCorp are creating value for the company.