PDF Article: ezra-warns-it-may-take-240m-write-down-companies-markets-news-top-stories-the-straits-times
Author: Marissa Lee
Date: 4 February 2017
Caption: Ezra is experiencing problems which leads them to reviewing their business operations and balance sheet.
This article talks about the loss Ezra is experiencing due to the oil sector downturn. Ezra is reviewing all its business operations and balance sheet as they consider writing down US$170 million. According to Investopedia, “write-down is the reducing of the book value of an asset because it is overvalued compared to the market value”. In Ezra’s case, necessary adjustments are necessary to their financial statements as it might lead to more further losses being made. Ezra already made about US$181.3 million loss relating to the joint venture last year.
This article can be linked to the second topic in the Module Document which is ‘working with financial statements’. Under this topic, there are two subtopics which are ratio analysis as well as using financial statement information. There are mentions of the company’s liquidity as well as financial statement information in this article.
In one of the sentence, they mentioned that “DBS Bank would be the “hardest hit” in the event that the Ezra group goes into liquidation. Liquidation means the process of bringing a business to an end and distributing its assets to claimants. This means that Ezra’s business is at the risk of liquidation which further shows the need for the company to write down their assets. The process of writing down is usually reflected at the company’s income statement. This usually reduces net income but it also reduces the firm’s tax burden and this might help Ezra in recovering their losses. Based on this article, it is possible to use Ezra’s financial statement information to know the plight of their business now. Seeing Ezra major losses since May, in the previous year, it is only right that they write-down their assets to further save their company from making more losses and incurring more debts.
PDF Article: large-corporates-raise-the-game-companies-markets-news-top-stories-the-straits-times
Caption: Sustainability and Profitability of a Start-up.
Author: Chia Yan Min
Date: 27 December 2016
This article states a few problems that start-ups typically face. Some of the problems include having a loss in the first 9 months of the business, or even difficulty getting the fund that the business needs. As a start-up to get funding from various investors, venture capitalists or etc., a start-up has to first complete their financial projections, like their sales forecast, sales budget, profit & loss statement, etc. to convince the investors that it would be worth for them to invest in their start-up. Potential investors usually take in consideration about the scalability, sustainability and profitability of a business before they decide to invest in it. If they feel that the business has no potential to do well, they will not invest in it.
Relating it to what we learnt in this semester in this Financial Management module, we were required to show our 3 year financial projections and we had to show our sales forecast, sales budget, purchases budget, expenses, profit & loss statement, and a few others. For our sales forecast, we had to take into account about the business’s start-up and growth period & also seasonality to predict our future sales. This is so that it can clearly be seen by investors deciding whether to invest, that the company is well prepared and organized about their business. That being said, it is perfectly normal for a start-up to not make any profit in their early stages of the business as they have to cover their initial costs and break even.
Also, relating to what we did, after all the financial projections we did, we also had to fill in the raiSE template as if we were really applying for raiSE. Doing that exercise, it made me realize that different businesses have different types of fundings that they can get and a start-up has to really find the perfect one for their company. Also, while doing up the financial projections, I also noticed that a business has to know all of their costs and expenses properly from the very start of business. It is a vital process to help forecast the sales and to attract potential investors. So, start-ups have to get all their costs and stuffs clearly listed out to have an idea how their business’s finances would be for the first few months or years.
PDF Article: sign-of-hard-times-for-singapore-retailers_-many-creditors-now-demanding-prompt-payment-economy-news-top-stories-the-straits-times
Caption: While businesses are struggling to survive in the declining economy, creditors are demanding prompt payment.
Author: Ann Williams
Date: 9 May 2016
This article shows how Singapore retail companies are now facing some tight cash problems now that their creditors are demanding for prompt payment. This has definitely got to do with the way they handle their cash inflow and outflow. Businesses usually only pay a part of what they have to to creditors, or sometimes even hold back their payment for as long as they can due to the ‘time value of money’ concept. This is how they keep their business cash flow going. However, now that they are expected to pay their creditors promptly, their cash flow might be on the negative side due to that.
Now, moving on to relating this article to what I’ve learnt in this semester which the main topic is the time value of money. Under this main topic exists a sub topic which might be related to this article which is ‘present and future values of cash flows’.
Firstly, based on my understanding, time value of money means the money that we hold in the present would be worth more than the same amount of money in the future. Usually for the debtors(?) side, it would be better for them to make their payment as late as possible, and for the creditor’s side, it is better for them to collect their payment as soon as possible. As much as I want to apply this concept for Surprise, it is not possible for us because in our case, we have to pay before we get our things.
The time value of money has a formula and the formula consists of the Future Value of Money (FV), Present Value of Money (PV), interest rate, number of compounding periods per year & the number of years. Though I don’t think this formula has that much relation to the article, I think it is an important part in the topic of Time Value of Money. Thus all in all, this article was mainly talking about how companies tend to stall their payment, but now with more creditors demanding prompt payment, it might take a toll on their cash flow, resulting in the negative effect of it.
PDF Article: startsg_-fintech-start-up-scheme_-applications-open-companies-markets-news-top-stories-the-straits-times
Caption: A company looking for start-ups to fund for.
Date: 3 November 2016
This article basically talks about a company, Startupbootcamp FinTech Singapore, who recently opened applications for fintech related companies to sign up for, so that they can help them in their fundings, or just help them as a start-up in general. There is also this “BigFund” which is a start-up laboratory by the Entrepreneur’s Resource Centre (ERC), which helps the start-up to commercialize across South-East Asia. This can be interpreted or seen as a ‘kick-starter’ thing.
Relating to this start-up matters in the things we learnt, in one of the e-learning weeks, we learnt about the different ways a start-up can get funding.
- Friends & Family
- Angel Investors/Bank/Venture Capital
These are the few ways that one can get their funding as a start-up. Of course, the most common one would always be self-funding or friends & family. However, these two options can also be the more riskier ones because if your start-up fails, there will be an impact on you directly. These two options can also come under the term ‘debt financing’ which means that you borrow the money from them, thus being in debt to them. The more ideal way to get funding might be through the last option. Similar to the article above, start-ups can get their fundings through firms offering it. This comes under ‘equity financing’ which means other external people actually investing in the company.
Besides these two; debt financing and equity financing, a start-up can also get their fundings through crowdfunding. Crowdfunding is a trending way that start-ups usually gain their funds from now. However, the thing about crowdfunding is that, the idea of the business has to be new and unique so that people are attracted or can relate. Only then, people would support the project. If the business is common and not relatable, it will not be easy for one to gain funds from the crowdfunding method.
Thus, for this blog post, i have related the article to what we learnt which is the different ways a start-up can get their funding from.