Liquidity : it is the ability of an organization satisfying immediate obligations, maintaining positive cash flows and it most likely based on the balance sheet of company depicting the financial condition of organization. Stability: the ability or an organization to remain in the business for the longerperiod of time without sustaining significant losses while conducting the business operations.
By assessing the stability of the company needs use of balance sheet and income statement as well as non-financial and financial indicators. Significantly, creating the financial ratio add meanings to the accounting and financial data of the business.
Therefore, being the use of the financial ratios would provide assistance thereby leading to the overloaded information. Theratios are sub-divided into the major groups that tend to cover the financial areas. The sales amount of an organization depicts the business size. The sales implications for the selling and purchasing power, economies of scale and amount of market share. The ration lay under profitability are discussed below;.
Return on assets ROA : it is one of the most commonly and widely used performance measure of an organization. The return on equity likely measures the profit amount that had generated by assets. It is used with the intent of analyzing that how well an organization have put their assets to work comparing to other competitors. Return on equity ROE : This performance measuring parameter measures the return that the company has earned in relation on the owner funds.
The matric can be adjusted for thepurpose of reflecting the average equity amount being employed during the span of year, giving the more accurate and realisticpicture of how the organizationhas been performing throughout the year. Gross profit margin GPM : it is also referred to operating profit margin.
It is most common use with the objective of assessing the business model and financial health of company through revealing the remaining portion of money from revenues after deducting cost of goods sold. Operating return on total assets ORTA : this matric most commonly provides better way of looking at the ability of the organization to generate profit returns from the principle or core activities since it does not involves other expenses including interest expenses not it includes marketable securities income, interest income or onetime extraordinary transaction.
Asset turnover: this measure is widely used in order to measure the ability of the company in generating sales from the fixed assets.
Fixed assets turnover : it is supposed to be vulnerable to the asset valuation issue. It is most important ratio in companies which are capital intensive. It is comparatively low importance for the companies with minimum need for capitals such as leased retail operations and wholesale distribution.
In case an organizationis decreasing fixed asset turnover so it means that the production has been running at lower than capacity. Current asset turnover: it measures the current asset level that is require for supporting sales.
The collection time is measured by days receivables on credit sales. Days of inventory: it is the indication of how the company efficiently managing inventory. Financial leverage multiplier : it is the connection between return on equity and return on assets of an organization.
It provides the way of looking at the relative equity and debt amount that has been using by company in order to finance the assets. Current debt to equity ratio: it is the mix if the debt of an organization. In case of high current debt to equity ratio, it means that the company would be in problematic situation while paying its bills. Equity turnover : in case of high debt to equity ratio, it might because of the too little equity or too much debt burden on an organization.
In case of high equity turnover ratio, indicating that the shareholders have efficiently used equity. It is considered as the best model as it does not reveal anything regarding the liquidity of an organization. One of the unavoidable advantage of this model is thatit has begun establishing benchmarks — across companies and over the period of time which can be used for flagging the potential issues areas where more than one ratios are reflecting the key problem or issue.
The useful snap shot can be taken by analyzing the financial condition of an organization in a particular time period. Also, there are many questions that can be bets answered by comparing the figures in percentages. For instance; which are the areas of company getting stronger or weaker? Which areas are in need of immense attention?
The major advantage is that it enables the significant comparison between time periods. There percentages are most likely providing analysts or managers with the fast or rapid way for finding key issues or problems. Additionally, the attention can be paid to certain weakness and strengths through seeing the appropriate changes over the period of time. The evaluation of the performance of company is often easier in case of having benchmark or standard performance for the comparison. The suitable benchmark can be found with some problems such as unique attributes problem and averages problem etc.
The assessment of the operational efficiency in the initial stage as a whole for business or any of the business sub-division is likely performed through a percentage analysis of income statement. Individual expenses or cost items are associating to gross sales revenue adjusted for all allowances and returns. Cost of goods sold and gross margin analysis: in operational analysis the most commonly used ratios involves the calculation of the cost of sales as a percentage of sales.
The ratio depicts that the magnitude of the cost of services provided or cost of good manufactured or purchased in relation to gross profit or gross margin left over for operating profit and expenses. It is noteworthy that the gross margin reflect the relationship of volume, price and cost. Such type of calculation needs very selective estimate or analysis of the variables and fixed cost or expenses of the company while taking into consideration the operating leverage effect.
The earnings multiplier ratiois considered as a broad indicator of how the earnings performance and prospects of organization is judged by the stock market. The straightforward calculation related the common share current market price to the most recent available EPS on the yearly basis. Relative movements in price: targeting for the purpose of creating the shareholder value depends on the relative performance of price.
The movement in price are likely expressed in mentioned ratios and absolute dollar terms. Value drivers : in recent time, the approach that has been significantly gaining the increased recognition is identifying the key elements standing out as vital in shareholders value creation of the specific organization.
Combining all of these lasting inevitable impact on the expectations of market regarding the cash flow generation and future success of the company. Value of firm: this is the most common concept recognizing the components of capital structure of an organization debt and equity are tends to be values separately in the market. By having a closer look over the matrices used for financial analysis, it is to say that the financial statements holds notable importance because it evaluates the management performance, plans and corporate strategy for future.
In addition, the financial analysis helps companies in making the more informed decisions for the firm. The underlying objective of the financial analysis is organizing the financial statement as well as other accounting data of an organization enabling the comparisons with other companies, also enabling to accurately evaluate raw data. The particular section deals with the different ways the problem can be resolved. Many times these options are already in hand with the management or re-developed from the scratch through strong brain storming.
In typical situation, there are three options that are developed in by the organization to deal with the given problem. The options developed entails and includes the maximum factor that the organization should analyze or achieve, thus offering great value. While developing The Alternative, the following factor are taken in account, in order to develop the best alternative that may resolve the problem effectively.
The cost includes if the option proposed is cost effective or can be afforded easily by the company without effecting the overall profitability and other operations of the company. The consideration of cost is important in the alternative generation in order to attain the maximum feasibility with overall business strategy and the budget allocated. The reliability factor includes if the option developed is successful or has the successful track record in the past or with the pats companies.
Such is important to analyze or else it would lead to failure. The Invulnerability of the option is also analyzed, in order to understand the sustainability of the option if the one part factor is missing so to understand the suitability of the option.
The merit factor, outlines if the option really resolving the issue or aligned with the given situation. The simplicity factor analyses if the option proposed is easy to implement.
Because adopting or proposing an alternative that is difficult to implement or takes a lot of resources with no definite outcomes is vain. In addition, the compatibility of the option is also analyzed, in order to understand if the given option is aligned and compatible with the procedures of the organization.
Such factor analysis is important in order to avoid any resistance implementation and also save the resources and efforts. Among the above factors, the reversibility factor carries high importance.
It is due to the fact that the organization needs to analyze exact factor in terms of its reversibility to see, if the process can be reversed, if the option fails to offer the respective results.
The ability of the option is considered while the alternative generation process, so gauge if the option will remains table, if the given situation and markets changes.
And will it make the organization sustained in the changing market situation. The robustness of the option also needs to be analyzed. It is due to the fact that such analysis allow the organization to see, if the option will remain strong in future or not.
Apart from this while developing the option, it is important to consider the realistic nature of the option. The option has to be realistic and should have imperative results on the organization. The realistic and SMART nature of the option is important to be considered and developed, so it offer maximum value and also resolves the problem effectively. Hence, it is suggested, that while developing the alternatives, it is important to consider the realistic and smart nature of options along with the avoidance of developing such issues that are not offering the right solution or the suggesting such options that are of no use to the organization.
Alternative are the different ways of achieving a same end goal through two or more different methods. It is not a close substitute of a first define choice or other alternatives or must provide the solution of the problem in a particular way. For instance, lower price, special offer, and money back guarantee etc. Alternatives are generally mutually exclusive in a way that if we combine two or more alternatives together it will eventually create a new alternative.
They are the technical and economically ways through which the project can be carried out feasibly. It is encouraged to be consider especially for a projects that are large and complex in nature. Begin slowly - underline the details and sketch out the business case study description map. In some cases you will able to find the central problem in the beginning itself while in others it may be in the end in form of questions.
Business case study paragraph by paragraph mapping will help you in organizing the information correctly and provide a clear guide to go back to the case study if you need further information. My case study strategy involves -. Once you are comfortable with the details and objective of the business case study proceed forward to put some details into the analysis template.
You can do business case study analysis by following Fern Fort University step by step instructions -. Once you finished the case analysis, time line of the events and other critical details.
Focus on the following -. In our live classes we often come across business managers who pinpoint one problem in the case and build a case study analysis and solution around that singular point. Business environments are often complex and require holistic solutions. You should try to understand not only the organization but also the industry which the business operates in.
Porter Five Forces is a strategic analysis tool that will help you in understanding the relative powers of the key players in the business case study and what sort of pragmatic and actionable case study solution is viable in the light of given facts.
You should make a list of factors that have significant impact on the organization and factors that drive growth in the industry. Once you have developed multipronged approach and work out various suggestions based on the strategic tools. The next step is organizing the solution based on the requirement of the case. You can use the following strategy to organize the findings and suggestions.
The goal of the business case study is not only to identify problems and recommend solutions but also to provide a framework to implement those case study solutions. Implementation framework differentiates good case study solutions from great case study solutions.
If you able to provide a detailed implementation framework then you have successfully achieved the following objectives -.
A : Power Tools Division case study solution. Once you finished the case study implementation framework. Take a small break, grab a cup of coffee or whatever you like, go for a walk or just shoot some hoops.
After refreshing your mind, read your case study solution critically. They must carefully observe all the case facts and use this information to make an informed decision and report back to Gali. If the correct methods and processes are used, Black and Decker will be able to successfully market their product to the Professional-Tradesman segment, steering them clear of any revenue loss or other problems in the future. Therefore this is a decision case. They can choose to continue focusing on dominating the Consumer and Professional-Industrial segments and just leave the Professional-Tradesmen part completely.
The second suggested option is for Black and Decker to use a sub-branding strategy that had been proven to work before on several occasions. The third most intensive option is to drop Black and Decker from the Professional-Tradesmen segment completely, like in option one, but in this scenario instead of focusing on the other two segments, the company would re-enter the market with a new brand name. This would a major change and Gali would need to decide the best way to propose this idea without losing his job.
Although they have not been very successful in the Professional-Tradesmen segment of the power tools market, Black and Decker is far from being a bad company.
The first owners literally invented the first portable drills. They have consistently increased revenue, sales, and operating income as shown in the chart below. Revenues and Operating Income, Because of this, and is the seventh-largest company in the States, the company has brand recognition.
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