Answer to question no-a a(1). It seems that Track Software LTD. is focusing on mainly in profit maximization rahter than the overall shareholder value maximiaztion. In every year except first two years firm’s pofit has been increased but per share value of the firm dit not increase that much. This is not a right goal for the company. A firms main purpose is to maximize the shareholder wealth not to increase profit. a(2). There is some potential problem exist in the firm. The firm is now mostly managed by the original founder of the firm rather than an independent agent. Though, Stanley believes that if he hires a software developer, firm’s longterm situation will be much better. In the fear of firm’s probable decrease in EPS, …show more content…
d(2) activity ratio
Acitivity ratio also known as asset utilization ratios or operating efficiency ratios. These ratios shows how efficiently firm manages its various assets.
Ratio Name | Firm 2005 | Firm2006 | Industry 2006 | Inventory Turn Over Ratio | 10.40 | 8.12 | 12.45 |
Firm’s Inventory Turn over Ratio has decreased from 2005 to 2006 which is a very bad sign for the firm. In 2006 it was lower than the industry average. A lower inventory turnover ratio than industry average indicates that firm’s product are slow moving than the industries other firms. Technological obsolences or preference of cost estimation package which Track Software Ltd. does not have might be the reason.
Ratio Name | Firm 2005 | Firm 2006 | Industry 2006 | Average Collection Period | 29.6 Days | 35.79 Days | 20.2 Days |
In 2005, Track Software Ltd. took on an average 30 days to convert its credit sales into cash. In the year 2006 it has increasesd to 36 days. Compare to industry average, it has taken 16 days more than other firm in the industry which made its cash difficulties even worse.
Ratio Name | Firm 2005 | Firm 2006 | Industry 2006 | Total Asset Turn Over Ratio | 2.66 | 2.80 | 3.92 |
In the year 2005 for Rs.1 worth of asset firm generated Rs.2.66 worth of sales. In the year 2006 firm’s it has been Rs.2.80. Compare to 2005, it has slightly improved in 2006. In comparison to industry, firm has generated lower sale for each
Return on assets is an efficiency ratio. It compares the profits generated with the asset base required. It answers the question, how hard
To consider this we need cost of goods sold; beginning and ending inventory. The higher the ratio or lower average days in inventory suggest that management is reducing the amount of inventory on relative to sales.
Given the net sales in 2011 is still higher than 2010, we can assume the problem is most likely with its operating cost management. On the other hand, HH’s assets turnover rate dropping 0.30 from 2010 suggests an inefficiency of generating more sales with its increased assets in 2011.
From the industry benchmark report for 2014, (appendix) between the year 2013 and 2014 our share value increased from 15.80 to 27.04 placing us ahead of everyone in our world. That is an increase of 172%. From out firm reports (appendix), our net income of 2,764,446 unfortunately fell short of our profit forecast. of 3,501,014. Even though our share holder’s value was the highest amongst our competitors, our profit before taxes was second to Bikes ‘R’Us by a total of $450,000. They had a profit of 4,339,987 while we only had a profit of 3,949,209. A part of the reason why our net income didn’t meet our forecasts and profit before taxes fell short of Bikes’R’Us is due to
The decline of inventory turnover presents the incresed possibility of inventory obsolescence which is likely to be assessed as higher business risk. In debts to equity part, the ratio in current year is much higher than that of preceeding year, which means the extent of use of debt in financing company is much higher than before. Pinnacle has used most of its borrowing capacity and has little cushion for addional debt.This action brought high business risk to Pinnacle. In addition, Pinnacle puchase more inventory in current year that that of preceeding year, and net sales are increasing also compared previous year. However, the net income is decreased significantly. These changes show expenses (maybe direct or indirect) have increased dramaticly. The company uses more expensive materials and labors to manufacure and sell products.
Referring to Vice President of Finance, he want to pursue the current approach because they are in profitable based on contribution margin by 35 percent. The company just needs to monitor their margin in control their cost well.
Introduction The following is an approach to career counseling using Social Cognitive Career Theory (SCCT) as a foundation. Using a hypothetical case study, this paper demonstrates some examples of interest assessments, art directives and experiential assignments that can be incorporated into a SCCT framework. The framework begins with information gathering of environmental influences, is then followed by assessment of barriers and self-efficacy, and is concluded with intervention strategies. In each stage, both the case study and summaries of research pertaining to SCCT are used to create an example of an integrative approach to career counseling.
With this company the inventory management ratios further indicate that there may be an issue with inventory and inventory controls. The inventory turnover ratio is lower than the industry average and the days’ sales in inventory are high. A company wants to turn inventory quickly to reduce storage costs, and
During this period, the Return on Assets increased from 5.7% in 2012 to 34.6% in 2013. This implies the number of cents earned on each dollar of assets increased from 2012 to 2013. This shows that the business has become more profitable. Equally, the Return on Equity also increased from 12.0% in 2012 to 46.5% in 2013. This similarly implies that the company in 2013 was more efficient in generating income from new investment. This, also can be attributed to the sale of the Digital Business Brand which enabled the company appraise its strategic plan.
Asset utilization ratios measure how quickly a company is able to turn over their receivables, inventory, and other assets. The faster the company is able to turn over their assets, the more efficiently the company is running because they
This makes the company look good and they can afford to do this from good financial skills. Decisions like this make a good profit in the long run and all in all this is why it is so important to have a good management team.
The financial data of company does not tell us the entire position of an organisation and its performance over the year or certain period of time for comparative purposes. Therefore, the use of ratios
Our choices led to a constant increase in net income over the three years. Short term debt increase by approximately 100% percent but steadily reduced over the next three years. We were happy with the positive growth of the company and the fact that we were able to pay off most of the initial short term funding required by the increase in working capital requirement. Overall the current situation of the company in 2018 is good, although the total value created is less than 20% of that created in phase 1. From this we learned that the value of the firm can be significantly increased more through a reduction in working capital requirement than through increasing the firm’s sales and net income.
Revenue has increased by 5.7% but profit has balloon up to 208.1% since 2010. This may because of major business process re-engineering. The question may arise that the quality of the product might hurt by reducing the operating and non-operating costs. Further steps should be taken to investigate and cure the quality matter to stabilize the revenue.
From the 2001 projections, the company`s sales revenues reached the 90.9 million mark in 2001 representing a 15 million rupees growth over the previous year. Despite this remarkable increase, there are a number of financial challenges that must be taken into account when evaluating the forecast. For example, based on the company`s total assets turnover which tells how efficient the company is using its assets to generate sales, Kota`s total assets turnover ratio is suboptimal. In 2000, the