Wednesday, September 12, 2007

SBS and SMRT - Money Not Enough?

Read the Straits Times and you'll know that the time of the year has come - Transport Hike. Or may be you would prefer to have a nicer sounding name -Transport Adjustments. You might agree with their justifications like the rising cost of petrol and how much they have invested in providing us with a better service but before you decide to believe their side of the story, check out the financial statements on SMRT's website and SBS Transit's website and you will be appalled to see huge, ever-increasing profits made over the last few years. Let me just make some basic analysis on the summarised financial statements on (

It takes no effort to see that their PATMI have been increasing steadily over recent years to such extent that FY 2007's figure is now almost twice that of the figure 5 years ago.

And looking at their financial ratios - you have good profitability ratios, good rates of return and a falling gearing ratio which would suggest the business much prefers equity funding to debt funding. This minimises the interest payment problems and the control problems of having a dangerously high level of long-term debt on the balance sheet. Good interest cover ratio also suggests the business is easily able to meet its interest obligations from profits.

So are they in a situation where they are facing falling profits, increased business risks, liquidation etc and they have to increase the transport fare in order to stay profitable? Why then do they want more transport hike, oops I mean transport adjustments?

1 comment:

Anonymous said...

Just what the gov will like to tell you about.
It is not about 'money', it is about moral authority. Money buy moral authority.

Look like these transportation company which belong to the cronies's asset need to have more moral authority to provide better service !