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Financial Analysis

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by

Ammara Haque

on 22 April 2014

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Transcript of Financial Analysis

Financial Analysis

Conclusion

Analysis

Risk Position


Financial Analysis

Case Study Analysis & Recommendations

Merbatty Boats

?

We are happy to answer any questions you might have.

Thank you for listening.

New Design Supplier

Cooper design
Advantages Disadvantages:
Location Price difference
Diversity of designs
Extranet service
Cheaper than Aqua Design
Positive brand image
Increase of potential interior design services
Increase in available options.


New Design Supplier

Issue 5

Feasibility:
Breakeven number of boats: 11
High level of uncertainty regarding the future demands of this boat
Main priority on hand is to expand the company successfully
Suitability:
Does this align with company’s main strategic goals? -Merbatty’s predominantly builds luxury boat
Further increase market share by advertising boat at race
Acceptability:
Transparency to stakeholders – to what extent to they agree with this proposal
- Already low ROCE of 4.8%, a decline in this could adversely impact Merbatty’s financial position


Racing Boat P-3000

Profitability


Financial Analysis

Liquidity

Financial Analysis

JKL

JKL hold a 28% shareholding in the company
Alberto views Merbatty as his own personal property
‘Family is Family’
Recommendations:
Simone should address these issues to the board
Alberto must act in the best interests of Merbatty
Alberto should ensure that there is no conflict of interest when making decisions



JKL

Accidents at Work

Health and safety Management Inadequacies
Paulo’s Drug use



Accidents at Work

Sales Staff Proposal

Some key personnel perceive sales agents as complacent
Hiring full time sales staff will reduce costs
Future plan involves an extensive increase in sales, therefore there is a need for new sales offices

Sales Staff Proposal

Potential benefits to be gained from establishing reliable supplier for planned boat building facility in Surania

Design Supplier

Stable and dependable sales channel crucial for value creation
Instill understanding of company’s boats and range of specifications

Sales Staff

Significant threat to present and future production schedule
Impacts outstanding reputation – 43% of sales revenue from European sales

Topcrest

Risk Prioritization

Conclusion & Questions

Strategic Issues

Analysis

Financial Analysis

Introduction

Agenda

Ethical Dilemma

If an ethical dilemma appears try to use this layout to address it as it is CIMAs own approach to ethics

Analysis

Strategic Issues

Introduction

Conclusion

Recommendations

Alberto showing conflict of interest – must overcome this to align with company’s objectives to maximise shareholder wealth

JKL

Causing family feuds and affecting firm’s corporate governance system – must resolve this

Racing Boat

Health & safety issue is a significant threat to company’s reputation
Must ensure highest standards are complied with in the future


Accident at work

Risk Prioritization

Recommendation 5

Racing Boat P-3000

Analysis

Strategic Issues

Introduction

Conclusion

Recommendations

Chairman views Merbatty as his personal property.
Jesper believes that he will get around his father as ‘family is family’


Health and Safety inadequacies and the issue of Paulo’s drug use

JKL

Work Accidents

New Design

Suppliers in future Middle Eastern Facility.

Strategic Issues

To employ sales staff as opposed to keeping current sales agents

Jesper Blanco is encouraging the company to participate in the Global Speedboat Races to advertise their P-3000 boat

Usual hull supplier has taken up a lucrative contract resulting in a 2 month delay of Merbatty’s customer hull delivery

Sales Staff

Racing Boat

Topcrest

Strategic Issues

Recommendation

Recommendations

Analysis

Strategic Issues

Introduction

Conclusion

Recommendations

Recommendation 1

Topcrest

Analysis

Strategic Issues

Introduction

Conclusion

Recommendations

Macroenvironment

Energy supply restrictions in Asian countries


Legal

Environmental

Technological

Commitment to investing in most advanced technology
Must ensure appropriate training of employees

PESTEL Analysis (cont’d)

Topcrest

Costing Merbatty 110k
Delivery date is approximately the same
Paul Lavie’s position as advocate for long standing relationships affirmed



Compensation contract is appealing, +98k
Topcrest understand Merbatty’s design and standard of quality.

Positive PR

High Cost

Quality compromised

Topcrest Offer

New Supplier

Attractive
Contract

Relationship

Hull Supplier

DECISION TREE

Must get accustomed with diversity and variety of cultures present
Presence of language barrier in communicating company policy and procedures

Enhanced specifications required by wealthy customers – must strive towards customer satisfaction
Global downturn may interfere with increased production of 300 boats

Macroenvironment

Socio-Cultural

Economic

Political/Legal

Set up in 3 continents – possible occurances of political/civil unrest
Health and safety regulations must be complied with strictly


PESTEL Analysis

Team member 2’s course

Team member 2

Team member 4’s course

Team member 4

Team member 3’s course

Team member 3

Team member 1’s course

Team member 1

Picture

Picture

Picture

Picture

DCUBS Team

Threats

Weak dollar
Competitor pricing, wages and actions
Shifts in demand
Loss of clientele


Opportunities


Growing market
European stock exchange
JKL
Reduction in employment costs


Weaknesses

Lack of choice of suppliers
Additional delivery charges
Health and safety inefficiencies
Single bottom line focus



Strengths

Strategic boat building facilities
USP- Interior design service
Wage structures
Under capacity
Experienced Personnel
Technological investments
Positive brand image





SWOT Analysis

Analysis

Strategic Issues

Introduction

Conclusion

Recommendations

Analysis

Strategic Issues

Introduction

Conclusion

Recommendations

Indicator of how well business is running
‘off the shelf’ production management software

Boat market becoming increasingly competitive
Late delivery from Topcrest

Customer Perspective

HR director finds it challenging to persuade the chairman of the importance of training staff
Can be demotivating



Raised $4 million towards a new hospital wing
Donated $500,000 to a European child poverty prevention charity



Goal is to remain profitable
Sales risen by 10% each year
Profit before dividends in 2012 of €40 million


Environment of continuous learning
Investment in new technologies
New boat building facility in USA

Environmental Perspective

Employee Satisfaction

Learning & Growth

Business Perspective

Financial Perspective

The Balanced Scorecard

Analysis

Strategic Issues

Introduction

Conclusion

Recommendations

Strong individually
Luxury purchase, not a necessity
Demand for high quality


Professional relationships with key suppliers
Orders spread across various suppliers
Receive good prices and efficient services



Supplier Power

Due to profitable growing market
Market rivalry acts as a barrier
High investment costs acts as a barrier




Substitutes (165 other models) are readily available for consumer in this growing competitive industry
No cost to consumers to switch




Consistent growth in demand
Demand for variety and high specification
Continual investment needed



S

Threat of Substitutes

Threat of New Entries

Consumer Power

Market Rivalry

Porters Five Forces

Competition

Conclusion

Financial Analysis

Analysis

Risk Position


Financial Analysis

Case Study Analysis & Recommendations

Merbatty Boats

New Design Supplier

Cooper design
Advantages Disadvantages:
Location Price difference
Diversity of designs
Extranet service
Cheaper than Aqua Design
Positive brand image
Increase of potential interior design services
Increase in available options.


New Design Supplier

Issue 5

Feasibility:
Breakeven number of boats: 11
High level of uncertainty regarding the future demands of this boat
Main priority on hand is to expand the company successfully
Suitability:
Does this align with company’s main strategic goals? -Merbatty’s predominantly builds luxury boat
Further increase market share by advertising boat at race
Acceptability:
Transparency to stakeholders – to what extent to they agree with this proposal
- Already low ROCE of 4.8%, a decline in this could adversely impact Merbatty’s financial position


Racing Boat P-3000

Profitability


Financial Analysis

Liquidity

Financial Analysis

?

We are happy to answer any questions you might have.

Thank you for listening.

JKL

JKL hold a 28% shareholding in the company
Alberto views Merbatty as his own personal property
‘Family is Family’
Recommendations:
Simone should address these issues to the board
Alberto must act in the best interests of Merbatty
Alberto should ensure that there is no conflict of interest when making decisions



JKL

Accidents at Work

Health and safety Management Inadequacies
Paulo’s Drug use



Accidents at Work

Sales Staff Proposal

Some key personnel perceive sales agents as complacent
Hiring full time sales staff will reduce costs
Future plan involves an extensive increase in sales, therefore there is a need for new sales offices

Sales Staff Proposal

Conclusion & Questions

Strategic Issues

Analysis

Financial Analysis

Introduction

Agenda

Potential benefits to be gained from establishing reliable supplier for planned boat building facility in Surania

Design Supplier

Stable and dependable sales channel crucial for value creation
Instill understanding of company’s boats and range of specifications

Sales Staff

Significant threat to present and future production schedule
Impacts outstanding reputation – 43% of sales revenue from European sales

Topcrest

Risk Prioritization

Ethical Dilemma

If an ethical dilemma appears try to use this layout to address it as it is CIMAs own approach to ethics

Analysis

Strategic Issues

Introduction

Conclusion

Recommendations

Alberto showing conflict of interest – must overcome this to align with company’s objectives to maximise shareholder wealth

JKL

Causing family feuds and affecting firm’s corporate governance system – must resolve this

Racing Boat

Health & safety issue is a significant threat to company’s reputation
Must ensure highest standards are complied with in the future


Accident at work

Risk Prioritization

Recommendation

Recommendations

Analysis

Strategic Issues

Introduction

Conclusion

Recommendations

Recommendation 5

Racing Boat P-3000

Analysis

Strategic Issues

Introduction

Conclusion

Recommendations

Recommendation 1

Topcrest

Analysis

Strategic Issues

Introduction

Conclusion

Recommendations

To employ sales staff as opposed to keeping current sales agents

Jesper Blanco is encouraging the company to participate in the Global Speedboat Races to advertise their P-3000 boat

Usual hull supplier has taken up a lucrative contract resulting in a 2 month delay of Merbatty’s customer hull delivery

Sales Staff

Racing Boat

Topcrest

Strategic Issues

Chairman views Merbatty as his personal property.
Jesper believes that he will get around his father as ‘family is family’


Health and Safety inadequacies and the issue of Paulo’s drug use

JKL

Work Accidents

New Design

Suppliers in future Middle Eastern Facility.

Strategic Issues

Macroenvironment

Energy supply restrictions in Asian countries


Legal

Environmental

Technological

Commitment to investing in most advanced technology
Must ensure appropriate training of employees

PESTEL Analysis (cont’d)

Must get accustomed with diversity and variety of cultures present
Presence of language barrier in communicating company policy and procedures

Enhanced specifications required by wealthy customers – must strive towards customer satisfaction
Global downturn may interfere with increased production of 300 boats

Macroenvironment

Socio-Cultural

Economic

Political/Legal

Set up in 3 continents – possible occurances of political/civil unrest
Health and safety regulations must be complied with strictly


PESTEL Analysis

Topcrest

Costing Merbatty 110k
Delivery date is approximately the same
Paul Lavie’s position as advocate for long standing relationships affirmed



Compensation contract is appealing, +98k
Topcrest understand Merbatty’s design and standard of quality.

Positive PR

High Cost

Quality compromised

Topcrest Offer

New Supplier

Attractive
Contract

Relationship

Hull Supplier

DECISION TREE

Team member 2’s course

Team member 2

Team member 4’s course

Team member 4

Team member 3’s course

Team member 3

Team member 1’s course

Team member 1

Picture

Picture

Picture

Picture

DCUBS Team

Threats

Weak dollar
Competitor pricing, wages and actions
Shifts in demand
Loss of clientele


Opportunities


Growing market
European stock exchange
JKL
Reduction in employment costs


Weaknesses

Lack of choice of suppliers
Additional delivery charges
Health and safety inefficiencies
Single bottom line focus



Strengths

Strategic boat building facilities
USP- Interior design service
Wage structures
Under capacity
Experienced Personnel
Technological investments
Positive brand image





SWOT Analysis

Analysis

Strategic Issues

Introduction

Conclusion

Recommendations

Analysis

Strategic Issues

Introduction

Conclusion

Recommendations

Indicator of how well business is running
‘off the shelf’ production management software

Boat market becoming increasingly competitive
Late delivery from Topcrest

Customer Perspective

HR director finds it challenging to persuade the chairman of the importance of training staff
Can be demotivating



Raised $4 million towards a new hospital wing
Donated $500,000 to a European child poverty prevention charity



Goal is to remain profitable
Sales risen by 10% each year
Profit before dividends in 2012 of €40 million


Environment of continuous learning
Investment in new technologies
New boat building facility in USA

Environmental Perspective

Employee Satisfaction

Learning & Growth

Business Perspective

Financial Perspective

The Balanced Scorecard

Analysis

Strategic Issues

Introduction

Conclusion

Recommendations

Strong individually
Luxury purchase, not a necessity
Demand for high quality


Professional relationships with key suppliers
Orders spread across various suppliers
Receive good prices and efficient services



Supplier Power

Due to profitable growing market
Market rivalry acts as a barrier
High investment costs acts as a barrier




Substitutes (165 other models) are readily available for consumer in this growing competitive industry
No cost to consumers to switch




Consistent growth in demand
Demand for variety and high specification
Continual investment needed



S

Threat of Substitutes

Threat of New Entries

Consumer Power

Market Rivalry

Porters Five Forces

Competition
Full transcript