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분야
docxB. Performance Evaluation
C. Liquidity Evaluation
D. Main Accounting Policies
E. Valuation:
The company concludes contracts on currency forward and currency swap in order to avoid risks from fluctuations in exchange rate and interest rate. Profits and losses from derivative transactions are recognized on the current term. Fair value of derivatives is set by the company's bank.
R&D
The company uses Moorim Paper's research institute and does not recognize any expense in R&D.
B. Performance Evaluation
In 2009, Moorim SP reported total sales of KRW 138 billion and net income of KRW 16.7 billion. Overall, the company’s income statement improved with sales increasing 2.79 percent and a turnover profit from net loss of KRW 7.3 billion in the previous year. One of the notable changes in Moorim SP’s balance sheet is its decrease in asset to equity ratio. From 2004 to 2009, while Total liability decreased from KRW 82.5 billion to KRW 70.3 billion while equity increased 67 percent from KRW 80.4 billion to KRW 134 billion. As a result asset to equity ratio decreased 50.2 percentage points from 203 percent to 152 percent; this is also reflected in the income statement where interest expense decreased KRW 1.76 billion accounting for 10.5 percent of 2009’s net income.
To measure the company’s profitability, we will look at its operating margin and return on equity and compare the values across three similar companies in the industry. This is because net profit margin will also include gain using equity method of accounting (지분법이익) which reflects net profit from Moorim SP’s affiliated company, Moorim Paper. In 2009, this account amounted for 60 percent of net income. On the other hand, Hansol Paper’s net income would have increased 120 percent had it not been for its affiliated companies’ losses. By comparing it across the industry, Moorim SP lags its operating margin compared to the two listed companies while merely beats its only competitor in C.C.P. business, Samwha Paper Ltd.
To get a more in depth view of Moorim SP’s profitability, as well as to compare it with other companies in its industry, we will conduct a Du Pont
