Accounting Advanced Packaging Technology (M) Bhd., Free Essay Example

Advanced Packaging Technology (M) Bhd., previously known as Goyo Corporation (M) Sdn. Bhd. was incorporated in 1982 and is based in Bandar Baru Bangi, Malaysia. It manufactures and distributes high-quality flexible packaging materials to both local and overseas markets but focuses mainly in Malaysia. The current main Board of Directors consist of Datuk Ismail bin Ahmad (Chairman), Tjin Kiat at Tan Cheng Keat (Managing Director) and Yeo Tek Ling (Finance Director).

To keep up with this ever-changing world, Advanced Packaging Technologies (M) Bhd.

have been looking for ways to produce packaging with greater and better quality. It is currently developing and producing Linear Low Density Polyethylene (LLDPE) film for its internal consumption, external sales as well as for products which makes contact with food. According to the financial statement ratio analysis conducted based on the Annual Report of Advanced Packaging Technologies (M) Bhd. 2017, the analysis can be segregated into three components, namely profitability, solvency and liquidity of the company. It was found that Advanced Packaging Technologies (M) Bhd. is a not as profitable in the year 2017 as compared to 2016. This can be seen with the profit margin of 10.61% in 2016 and only 4.73% in 2017. Looking at the company’s liquidity aspect, Advanced Packaging Technologies (M) Bhd. has a 4.82 current ratio. It means that the company is 4.82 times able to meet its short term obligations. Not only that, Advanced Packaging Technologies (M) Bhd. is said to be a more financially secured company in short term with the high acid-test ratio of 3.83. It is also consider to have a high efficiency based on the accounts receivable turnover of 4.

35 times. Several comparison of current (2017) to past (2016) performances such as for accounts receivables, accounts payables,assets, liabilities and shareholders’ equity were conducted.

There was a decrease in accounts receivables by 12.3% from the year 2016 to 2017. Moreover, accounts payables have also decreased by 35.5%. Not only that, the assets, liabilities and shareholders’ equity compared to past performance have also decreased by 4.54%, 7.94% and 3.71% each. After analysing Advanced Packaging Technologies (M) Bhd., it can be seen that they have several strengths and weaknesses that makes them who they are today. Some of their strengths consist of their flexible and multilayer packaging material, strategic location, strict quality control and so on; whereas, some of their weaknesses are small factory size and they rely heavily on their major customer for revenue. Not to mention, every company will definitely face some threats from their peer competition, and theirs includes sluggish economy, high raw material prices, like crude oil as well as currency fluctuation.

Despite facing threats, Advanced Packaging Technologies (M) Bhd. also have their own opportunities in expanding, improving and advancing their company. The opportunities involves making use of empty lands to expand their factories and offices. Advanced Packaging Technology (M) Bhd was founded and incorporated in 1982 by Kiat Tjin, Hock Seng Eu, Sah Lim Law and Sam Fatt Chee. Advanced Packaging Technology (M) Bhd started their business on 31st March 1982 in Malaysia. It is based at Lot 2, Jalan P/2A Kawasan MIEL Bangi Industrial Estate Bandar Baru Bangi, 43650, Malaysia. The warehouse, factory and office is on a 8,903 square metre 99 year leasehold land.

The company first incorporated as a private limited company under the name of Goyo Corporation (M) Bhd on 31 March 1982. On 9th June 1982, the company changed its name to Advanced Packaging Technology (M) Bhd and became a public company on 27th May 1993. They were then listed on the Main Market of Bursa Malaysia Securities Berhad on 27th May 1994. Advanced Packaging Technology (M) Bhd produces high quality flexible packaging materials for both local and overseas markets. Based on Flexible Packaging Association, flexible packaging materials is known as any package or any single part of a package whose shape, size and color can be readily changed. It offers single and multi-layers of flexible packaging materials in either roll or pouch/bag forms to various industries for instance, foods, beverages, spices, liquids, medical and surgical products and many more. The company focuses on providing efficient packaging as it is a must for each.

The board of directors of Advanced Packaging Technology (M) Bhd. consists of their chairman Datuk Ismail bin Ahmad, their managing director, Tan Cheng Keat, finance Director Yeo Tek Ling, Senior Independent Non-Executive Director Mah Siew Seng and Senior Independent Non-Executive Director Ng Choo Tim, Law Mong Yong and Chee Chin Hung. Advanced Packaging Technology (M) Bhd manufactures and distributes flexible packaging materials. Flexible packaging materials are usually made with a composite of various base films, foil or paper which are laminated. The end product would have more enhanced properties compared to its original substances. The basic materials used includes oriented polypropylene (OPP) film, polyester film, polypropylene resin, cellulosic film, nylon film, specialty films, linear low density polyethylene (LLDPE) film, metallised films, aluminium foil, poster paper and polyethylene.

Advanced Packaging Technology (M) Bhd. manufactures many types of packaging materials for a wide selection of products that suit both local and overseas markets. The products include snack foods, sweets and confectionery, frozen food, instant noodles, spices, liquid condiments, beverages, medical and surgical products and pharmaceuticals and so on. Advanced Packaging Technology (M) Bhd. work with clients to customize the designs to suit each packaging. The flexible packaging material used could take on the shape of the product, change its color and size easily when needed. The material is comprised of both single and multi-layers in roll or pouch/bag forms. To ensure the best is provided to their customers, Advanced Packaging Technology (M) Bhd’s quality management system was analysed by Zurich Certification Limited, United Kingdom. ISO 9002 is an industry standard created by the International Organization for Standardization. It requires businesses to a practice of creating a system to track and ensure documents are documented properly and audit by an independent third party. The company was certified to have comply with the BS EN ISO 9002:1994, standard on December 2000. Then, they were also certified ISO 9001:2000 on December 2003. It was later recertified BS EN ISO 9001:2008 and ISO 9001:2008 in 2010 and 2012 respectively. The certification scope covers Design, Manufacturing and Supply of Flexible Packaging Materials and Blown Film.

To keep up with this ever-changing modern world, Advanced Packaging Technologies (M) Bhd. have been constantly using specialised knowledge and skills, along with specific machinery and facilities to deliver excellence in quality and service to their clients. Eventually, looking for ways to efficiently produce packaging with greater and better quality. It is currently developing and producing Linear Low Density Polyethylene (LLDPE) film for its internal consumption, external sales as well as for products which makes contact with food. This is because LLDPE has higher tensile strength, higher impact resistance, high flexibility and elongates under stress. LLDPE has a higher softening point compared to others which makes it possible to use for pre-packaging of hot foods. It has better performance characteristics at both high and low temperatures.It was also a material that was approved by FDA as food safe back in 2013. LLDPE has good chemical resistance, water and vapor barrier and resistance which makes it suitable for packaging products. LLDPE is also the most flexible of plastic sheeting films. It allows manufacturers to make thinner films without sacrificing strength, reducing cost and saving material.Therefore, making it a better option for packaging products. These efforts in continuous advancement to produce better materials for packaging is to ensure safe delivery of the product especially consumable goods to the end-user in good condition at an reasonable and economical cost. With LLDPE, Advanced Packaging Technologies (M) Bhd. can continue to expand their packaging services not only to their current clients but also to a wider selection.

Advanced Packaging Technology (M) Bhd is a company with many strong features. They are famously known for their flexible and multilayer packaging of products. Due to that , it has a very low risk of damaging products that are packaged by this company. When products are in good condition , customers will be satisfied and will have a good impression of both the company that manufactured the product and packed the product. Thus , it will enhance the reputation of both the company and may lead to more business with other market produces who need help with packaging their products. Furthermore , the factory of Advanced Packaging Technologies (M) Bhd is located in an ideal and strategic location where businesses who wants to package their product can easily find the factory and office of Advanced Packaging Technologies (M) Bhd. Since the office and factory are located in an urban area , customers will have easier access to their location rather than it being in the outskirts. This will also easily reduce the transportation fees while transporting the products to and from the factory. Moreover , the basic materials that are used to manufacture the packages are oriented polypropylene (OPP) film , cellulosic film , polyester , nylon, aluminium foil, metallised films , specialty films , linear low density polyethylene film , polyethylene and polypropylene resin. These basic materials are very easily found , hence, they can manufacture their packages constantly.

Other than that , this company is very particular on their quality assurance and quality control. They ensure to produce the highest quality packaging consistently as they particularly have quality assurance and quality control procedures throughout the manufacturing process. Overseeing these processes are experienced personnel who have sophisticated laboratory equipment at their disposal. In addition, Advanced Packaging Technologies (M) Bhd. manufactures and sells high quality flexible packaging materials primarily to reliable and reputable companies and niche market rather than competing for business on mass volume at low pricing. This shows that they are highly loyal to their existing clients, not trying to take advantage in every possible way. Not only that, Advanced Packaging Technologies (M) Bhd. has been financing its operations during the year completely through internally generated funds as it has no bank borrowings. This is one of the reasons why its liquidity has been very good.Advanced Packaging Technologies (M) Bhd is not a perfect company , it does have some flaws and weaknesses. Few of the weaknesses of this company is that the size of their factory and office is small ; to be specific , 8903 square meters only. This will cause them to have less space for more machineries and equipments and factory workers , hence , their factory can’t produce the packaging for many products at once. Besides, since Advanced Packaging Technologies (M) Bhd. manufactures and sells high quality flexible packaging materials mainly to reliable and reputable companies and niche market, their revenue is heavily relying on their major customers.

To illustrate, in the year 2017, there were lower sales orders of RM24.91 million from their major customers compared to 2016 of RM27.15 million. There was a decrease in revenue by RM2.24 million or 8.25%; however, the Advanced Packaging Technology material packaging are mostly made out of plastic. People are getting concerned about the environment due to pollution from plastic waste. It is known that plastics take centuries to decompose and breakdown in a landfill and ocean. Therefore, harming marine life since many people still do not practice recycling, reusing and reducing. A good example Advanced Packaging Technologies (M) Bhd can follow and copy is that in Bangkok , Thailand , suppliers have started to practice the usage of banana leaves in replacement of plastics. This will also benefit the environment and reputation of company if Advanced Packaging Material (M) Bhd can reduce or stop their use of plastic to manufacture their packaging product.Sluggish economy of the euro zero as well as slowdown in certain large developing countries like China also became a threat to Advanced Packaging Technologies (M) Bhd. as they do manufactures and sells to overseas too. When the global economy is slowing down, it’s most likely companies like Advanced Packaging Technologies (M) Bhd will be negatively affected. To add on, recent high crude oil price and currency fluctuation have also added more pressure and threatening the operation of the company. This is because higher crude oil price will have an impact on the resin prices and imported goods and services which will then affect the plastic packaging industry.

Conclusion

To sum up, the financial statement analysis of Advanced Packaging Technology can be segregated into three main components which are profitability, liquidity and solvency. It was found that Advanced Packaging Technology is a not as profitable in the year 2017 as compared to 2016. This can be seen with the profit margin of 10.61% in 2016 and only 4.73% in 2017. Looking at the company’s liquidity aspect, an ideal current ratio is usually between 1.5 to 2.0; however, Advanced Packaging Technology has a 4.82 current ratio. It means that the company is 4.82 times able to meet its short term obligations. When the current ratio is too high, the company may have not been using its current assets or its short-term financing facilities efficiently. This could also indicate the presence of problems in capital management. Advanced Packaging Technology’s liquidity has been very good and it has no bank borrowings. Not only that, Advanced Packaging Technology is said to be a more financially secured company in short term with the high acid-test ratio of 3.83. The higher the acid-test ratio, the more financially secure a company is in the short term, it provides a more rigorous assessment of a company’s ability to pay off its current liabilities. Advance Packaging Technology is also considered to have a high efficiency based on the accounts receivable turnover of 4.35 times. This indicated that Advance Packaging Technology is not facing any difficulties in collecting from their customers

Several comparison of current (2017) to past (2016) performances such as for accounts receivables, accounts payables, total assets, total liabilities and shareholders’ equity were conducted. There was a decrease in accounts receivables by 12.3%. This shows that Advanced Packaging Technology is having more collections from their customers than credit sales. Moreover, accounts payables have also decreased by 35.5%. This means that Advanced Packaging Technology has paid off more of its credit purchases than the purchases made throughout the fiscal period. This reduces the operating cash flow. Not only that, the total assets, total liabilities and total shareholders’ equity compared to past performance have also decreased by 4.54%, 7.94% and 3.71% each. Every company including Advanced Packaging Technologies (M) Bhd. will definitely have their strengths, weaknesses, opportunities and threats. Advanced Packaging Technologies (M) Bhd. strengths includes flexible and multilayer packaging material, strategic location, strict quality control and so on; whereas, some of their weaknesses are small factory size and they rely heavily on their major customer for revenue. Some of the opportunities they can make use of to expand, improve and advance their company are ( ). Lastly, some of the significant threats faced by Advanced Packaging Technologies (M) Bhd. includes sluggish economy, high raw material prices, like crude oil as well as currency fluctuation.