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CASE SONORA
MEMBERS:
- Adnane Benmoumen
- Massimiliano Brevini
- Fadi El Hachem
- Juan José Guale
- Riccardo Pradella
BUSINESS ANALYSIS
SWOT ANALYSIS
SWOT ANALYSIS
SALES AND CUSTOMERS
SALES & CUSTOMERS
-Spain (50% sales)
-Brazil
-France
-Germany
Installation and Maintenance of Infrastructure.
40M euros of sales in 2010
Sales depend on contracts.
Customer Types:
Private customers: In need of maintenance - Installation
Governments
OPERATIONS AND PRODUCTS
OPERATIONS AND PRODUCT
150 days typical projects.
5 years - Maintenance ( 10% of total revenues ).
Production is based on demand.
Process duration:
20-25 projects per year.
STRATEGY
STRATEGY
Geographic
Across Industry
- Increase of 20% in sales.
Diversification
Services provision
- Consortia
- Lower Value Agencies
- Contracts
COMPETITIVE ADVANTAGE
COMPETITIVE ADVANTAGE
Portfolio diversification.
Trustworthy Partners.
Rapid Growth.
ISSUES
ISSUES
4 million credit line.
Lack of liquidity.
Need of market development strategies.
Operational strategy.
Retain of earnings.
ECONOMIC ANALYSIS
P&L ANALYSIS
P&L
RATIOS
P&L RATIOS
FINANCIAL ANALYSIS
FINANCIAL ANALYSIS
FINANCING/ INVESTMENT
HOW THE COMPANY HAS BEEN FINANCED?
WHERE HAS THE COMPANY INVESTED?
BALANCE SHEET RATIOS
- DEBT/ EBITDA: 2006-2007 2009
- NFO/SALES IN %: NFO
- LEVERAGE RATIO: Not particularly increasing or decreasing.
NFO & WC
- The NFO is increasing at a higher rate compared to WC, which is consequently requiring each year more credit needed
FINANCIAL & ECONOMIC DIAGNOSIS
FINANCIAL AND ECONOMIC DIAGNOSIS
FINANCIAL & ECONOMIC PROBLEMATIC
Economic & Financial Problematic
P&L RATIOS
Ebit/Financial expenses in 2009 = 0
Not able to paid debt and access to credit.
OPERATIONAL
OPERATIONAL
INCREASE DAYS OF COLLECTIONS OF RECEIVABLES
AND INVENTORY.
High NFO
HIGH INVESTMENT ON INVENTORY.
Financing with bad quality debt.
SONORA has already too much debt.
NFO higher than WC.
FORECASTS ANALYSIS
Forecasts Analysis
ECONOMIC
ECONOMIC
DIAGNOSIS
FINANCIAL
FINANCIAL
DIAGNOSIS
Sonora S.A is also in a constant need of credit, given the fact that the NFO, is way higher than WC.
The bad collection days policies will keep to increase the NFO and so the credit needed to balance it.
The financial operational situation is not feasible.
SENSITIVITY ANALYSIS
SENSITIVITY ANALYSIS
OBJECTIVE 1
NET INCOME = 0
COSTS OF COMPONENTS : 66%.
OPEX: 80%
COGS: 7%
OBJECTIVE 2
BANK CREDIT = 0
RECEIVABLE DAYS: 47-48
INVENTORY DAYS: - 10
PAYABLE DAYS: 217
ACTION PLAN
ACTION
PLAN
SCENARIO 1
COSTS OF COMPONENTS: 54% OF SALES
Reassess the contracts with the suppliers.
Maintain long term period of Inventory : 150 days
Reduce the costs of components to 54% of sales
RESULTS
- Higher profitability (ROS, ROE, ROA).
- Less need of financing
RECOMMENDATION: Change the quality debt.
SCENARIO 2
REDUCING THE DAYS OF INVENTORY TO 75
Reassess the contracts with suppliers.
Keep the cost of the components at the same level.
Reduce the period of inventory to 75.
RESULTS
- Decrease in the needs of credits to cover the investment.
- Strong decrease in the NFO.