Finance

Finance

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University

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The CEO attributes the success of the company in shareholders wealth creation to the high revenue growth coupled with the high levels of return on invested capital (ROIC ) which were achieved by rapid expansion to new market , acquiring other companies , enhancing the core business and continued development of the international business . All these have ensured tremendous growth in revenue and the increased shareholders wealth which is important to any company

The sales and operating income of each of the company 's

six business segments is as follows

Safety , security and protection service business

2006 m ) 2005 m

Net sales 2 ,621 2 ,292

Operating income 575 537

The nets sales improved from the 2005 figures and also the operating profit increased . The operating income in 2006 of 575million includes 10million from restructuring expenses which reduced its operating income

Industrial and transportation business

2006 m ) 2005 m

Net sales 6754 6 ,144

Operating income 1343 1 ,211

All the 2006 figures were an improvement from 2005 figures as seen above . The operating income for 2006 was reduced by a restructuring expense of 15 million

Health care business

2006 m ) 2005 m

Net sales 4 ,011 3 ,760

Operating income 1 ,845 1 ,114

The operating income of 1845 million in 2006 includes a capital gain of 673 million related to a sale of pharmaceutical business

Electro and communication business

2006 m ) 2005 m

Net sales 2 ,483 2333

Operating income 438 447

The 2006 operating income was reduced by a restructuring expense of 46 million . Other wise there was an improvement from 2005

Display and graphics

2006 m ) 2005 m

Net sales 3 ,765 3511

Operating income 1062 1162

The operating income of 2006 was also reduced by a restructuring expense of 39 million

Consumer office business

2006 m ) 2005 m

Net sales 3 ,238 3 ,033

Operating income 579 561

It is this segment only that the restructuring cost was not allocated but the figures (2006 ) shows improved performance

The above segment information shows clearly that the operating income would have been higher save for the restructuring cost that reduced it

It also indicates that the operating income is a big part of the cash flow of the company of 3839 million as compared to cash flows from financing and investing operation which were 2061m ) and 1460m respectively

Therefore the cash from operating activities shows a direct relationship with the cash flows of the company

d ) The company 's net sales and research and development cost for the last 3 financial years are as follows

2006 m ) 2005 m ) 2004 m0

Net sales 22 ,923 21 ,167 20 ,011

R D related Expense 1522 1274 1246

The sales of the company have been growing at the same pace in 2005 and 2004 but with the increased investment in R D in 2006 from 1274 million in 2005 to 1522 million in 2006 , it is generally expected that the sales would have increased . This indicated...