Essay about Oracle Systems Corporation

1264 WordsOct 15, 20136 Pages
A Case Study: Oracle Systems Corporation EXECUTIVE SUMMARY In 1977, Lawrence J. Ellison founded System Development Laboratories to sell a database management system he had developed in a CIA project. It was only in 1982 that the company was renamed to Oracle Systems Corporation, to reflect the success of their first product, Oracle Database. Oracle used the C programming language to create its products, which was a big part of its success since this allowed Oracle software to run on various platforms and eventually became the industry standard. Oracle achieved highly impressive growth throughout its early years, almost always doubling their…show more content…
Along with these, it is also evident that the company must fix its processes involving bad debt accounting and revenue recognition. They should also attend to their accounts receivable to come up with better terms that would make collections faster and more efficient. ANALYSIS Days in Accounts Receivables: 137 days (assuming 365 days) Computation: = 365 / (970,844 / ((261,989 + 468,071) / 2)) Conclusion: Higher than the industry average at 62 days Please see the next page for more analysis. Table 1.1 A table comparing Oracle’s financial ratios with the industry average. It’s noticeable how the company’s operations have been deteriorating as they are having a more difficult time translating sales into cash. Their A/R turnover is not where it needs to be, and in line with that, their liabilities are increasing as well. The company has also been inefficient with the use of their assets as their current activity ratios are not up to par with the industry standards. RECOMMENDATIONS After analysing Oracle’s historical data and financial statements as well as identifying key points for the company to consider, the group proposes the following recommendations in order to improve their current financial standing: 1. Currently, the collection period of Oracle is at 137 days which is higher than the industry average of 62 days. The company must reduce credit terms implementing tighter credit control activities
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