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The overall liquidity of the IOI Corporation does not seem to exhibit a stable trend. It did not maintain at a level that is consistence. A firm is considered to be more liquid when the current ratio is high. The ratio calculated earlier indicates that IOI liquidity is not very stable as it dropped in 2016 which have some problem in meeting short term obligation.
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Inventory of IOI Corporation is also not very stable. It does not face any receivable and payment problem as the receiving and payment period drop. Reputation of the company is quite stable as it does not extend the payment period. IOI Corporation's asset turnover is increasing that shows that the firm is quite efficient at using its assets to generate sales. IOI Corporation indebtness increased all the way from 2014-2016. This indicates that the company's ability in meeting fixed-payment obligations is poor.
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The profitability for IOI Corporation did not match with the firm's performance for 20015 as the gross profit declined. In other words, level of relative cost of merchandise sold affect the level of gross profit margin. Profit margin tends to fall when operating expenses increases. Operating profit margin for IOI Corporation is not quite favorable as it is not stable and decline in year 2015. Net profit margin of IOI Corporation improves all the way from 2016. This is a very good sign for the company as the risk free rate of interest is improving.
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My Opinion
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Improve the business performance
Under the changing circumstance of both economic and rival from time to time, it is necessary to find ways to improve the performance of their company. The firm should find ways to increase more of its sales. Chin Teck Berhad should have further analysis about the firm's level of liquidity as it may have difficulty to meet short term obligations if the ratio keeps falling. Further analysis on the activity ratio for Chin Teck is also needed. Collection and payment period should be adjusted as it may affect the level of cash in the firm and may ruin the reputation of the firm. The management should tighten the credit policy to improve the receivable ratios and not to lengthen the payment period in order to keep the reputation or the firm. Management of Chin Teck should increase the production or may cooperate with other stable firms in order to increase the confidence level of investors towards the firm's future performance.
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​ 2. Research and Development (R&D)
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As in all industries, research and development (R&D) is critical, particularly since palm oil competes with 16 other oils and fats on the world market. There is a need to generate information, increase production and processing efficiency and expand uses of palm oil through R&D. The palm oil industry has been able to do this through the establishment of the Palm Oil Research Institute of Malaysia (PORIM).