[Author’s Name]
[Institution’s Name]
Ans-A)
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Economics is a field which has its recognition in almost every walk of life. Different authors have different views about the concepts of economics and among them; the name of “Adam Smith” is one of them. According to the Concept of Adam Smith, Economics is the name of earning and consuming the money (Martin Cardel Gertsen, p.12). The main concept of economics strides that, how to earn the money and how to consumer it?
Eco Products are the products that meet with eight assessment based criteria which includes weight, resource recycling, reduction and energy based efficiency. According to the book, Eco Products are the products which have the tendency to change in liquid cash easily. These products have the ability to transform into cash without any problem and ambiguity. Usually short term marketable securities and short term investment are some of the major types of Eco Products. From the era of 1990 to 2003, there are number of Eco-products were available and each of the products have their own recognition and importance for its investor. Among some of the major eco products of that time, short term marketable securities including treasury papers are some of the major forms which were extremely essential (Martin Cardel Gertsen, p.14). Securities which are of short term and COD are some of the major aspects which move along with the London Interbank Offer Rate (LIBOR) and Euro Dollar Time Deposit were some of the major things of that era. There were number of banks which were engage in the same activity including Wells Fargo as well, which has been identified in the book.
Eco-Products are not very much essential for the outside investor but they are extremely wonderful but they are extremely effective for the companies, as they are some of the major resources from which an organization could arrange cash instantly and certainly they are viewed as firm during the period in being a lifestyle business with perfection.
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Ans-D)
Financial Ratio Analysis (FRA) is one of the most important and widely used tools which used to assess the financial competitiveness of an organization in total. It is important to analyze the same in a perfect and well organized manner. Profitability, Liquidity and Efficiency are some of the ratios which would be taken into account for the same
Profitability
Basically there are two different ratios which come under the umbrella of Profitability Analysis, which are Net Profit Margin and Gross Profit Margin (GPM) (Martin Cardel Gertsen, p.12).
Net Profit Margin
Net Profit Margin (NPM) is one of the most widely used analytical ratios used in Ratio Analysis Section. High NPM is basically an indication of the efficiency of an organization in total. Mentioned below is the NPM of the company covering period from 2005 to 2007
High and positive amount of NPM is extremely important from the viewpoint of a company in total. From the above mentioned analysis, it is clear that the NPM of the company decreased drastically in all of the analytical years. It was -461.5% and it went to 473.1% in the year 2007. It was not a great sign from the viewpoint of the company from any angle.
Gross Profit Margin
Gross Profit is yet another important measure of the company’s profitability. It analyzes how much efficiency a company has in terms of having its cost efficiency.
Likewise the NPM, GPM of the company was also not in a perfect position. It was in negative term in both of the fiscal years like 2005 and 2006 merely because of low amount of sales and high amount of operational expense or direct expenses. It went to a level of 1.9% in the year 2007 which means that the company is doing a good job in that year as compared to couple of last years.
Efficiency Analysis
In analyzing the level of efficiency in a company, there is an important thing which is all about analyzing the working of the operational assets of the company is concerned. A ratio of Return on Assets would be used for the same purpose.Return on Assets (ROA)
ROA is basically a tool used to assess the efficacy level of the assets of the company. If ROA is high then it means that the company is in dominating position to use its operational assets for the sake of the company. Mentioned below is the analysis of ROA
Liquidity Ratio Analysis
In Finance, Liquidity means a thing which has the tendency to change into cash quickly. There is a ratio with the name of Current Ratio associated with the ratio
Current Ratio Analysis
Current Ratio is a ratio which is used to assess the liquidity
The current ratio of the company is very low as compared to the psychological level of 1, showing that the company is not competent as far as meeting with its short term financial obligations is concerned.
Summary
In summary, it could be said that the financial position of the company is not perfect, as every ratio analytical indicator is going against the company.
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Ans-E)
In this question, it is required to analyze the cash position of the selected company in total. Operating cash flow to sales ratio could be used for the same purpose.
When it comes to cash investing activities, the company has -0.3 million of cash in investment for year 2005 and in the year 2006 it was -0.5 million respectively, which will not be perfect for the company in future. Eco-Products is in net cash burn position in all of the analytical years, including the year 2007.
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Ans-F)
Financing is an important activity from the viewpoint of an organization and it is occurred from different angles in total. The early round of financing for Eco-Products way back in 1990 was only owner’s own equity. The company was no way near to the external loan from the bank for the company or from any sort of thing near to the shareholder’s equity in total (Martin Cardel Gertsen, p.12). The company used number of methods to increase the external financing because the essence of external financing was extremely important for this particular company, likewise other companies as well.
The cash flow of the company increased heavily from the year 2005 to 2007 due to number of things. Capital and Common Stock based values have been increased tremendously well in these time periods with perfection which was extremely favorable from the viewpoint of the company. The issuance of payment or the Common Stock was around 5 million in the year 2005, which increased by 0.9 million and 0.1 million in the years 2006 and 2007 respectively, which was a sign that external investor were having some confidence over the company’s net productivity and efficacy in total. In early part of the 2008, the company was willing to have the same amount of external financing.
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Ans-I)
Continuous Development and enhancement is extremely important from the viewpoint of an organization and no organization could be in the net of economic and strategic prosperity and expansion without having effective development and enhancement based strategies. Inevitably, increasing the revenue of a company is extremely important from the viewpoint of a company and it is vital for a company to make and mold such strategies from which this particular section would get appreciated automatically (Pokras, p.50).
Eco-Products were one of those companies which endeavored a lot to increase its financial belongings including increment in the revenue recognition in total. According to the book of entrepreneur financials, there were basically two things which became the major reason behind the high sales value o the company in total, which particularly are, betterment in the economic consequence of the country in which the company operates, from which the level of consumptions of the people in that country increased wonderfully well which deemed extremely important and vital for the company as a whole. In the commencement of 2008, the climate of the current economic crisis was moving away from some of the industries and food industry is one of them. Apart from this particular factor, there was yet another important factor which became the major reason behind the astounding growth of the company in total, which was the high level of confidence of the shareholders (Pokras, p.50).
When the company was issuing shares in the financial market through Initial Public Offering (IPO), the confidence level of the people were increasing too much over the company and the growth of the company made it perfect for them to continue this thing for a long span of time in particular. According to the main crux of the book, this particular provision could be extremely important for the company as a whole, which may assist the company as far as increasing their financial growth with perfection. Eco-Products have chance to increase their financial belongings with perfection in total. Let’s now move towards the other question of this analytical framework.
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Ans-J)
When it comes to organizational productivity, there are motley things which have to be in regular consideration for its productive both from financial and non financial angles in total.
It is more than important for the entities to utilize and mold their strategies in a perfect and well organized manner. There are number of departments usually work and found in an organization, and the real productivity of an organization lies in the fact that how effectively it utilizes its department with perfection. Among different departments, usually found in an organization, the name of Supply Chain department is one of them (Pokras, p.60). Supply Chain department is a department which is used to supply the raw material to a place from where things could have been made perfectly in total.
Likewise other companies, Eco-Product Company also has a supply chain department and the supply chain model of the company described in the book is mentioned below
The model of supply chain of the company is mentioned above which has been categorized into three different steps. There is no hard and fast and complex tool is applied accordingly. The major strength of this particular model is that it is very easy and not complex enough for a company but the major weakness is that the company has to bear two different cost accordingly which are of suppliers and vendors as well. The implication of this supply chain model is perfect on the Eco-Products, but it increases the cash conversion cycle of the company, because most of the sales to the consumers are on credit basis and most of the purchases are also on the credit basis. According to this book, it would be perfect for the company to use the same model at least for next 5 years, until they found a new model for the same purpose.
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Ans-K-2)
Investment analysis and investment recommendations could be quite vital for the companies as a whole and it is also an important provision that comes under the ambit of Finance. Investment is an essential thing from the standpoint of an organization and no organization could be in the net of economic prosperity without having effective investment stance. There are certain tools which are extremely helpful to let the companies to invest or not to invest in a given project (Pokras, p.52).
Though there are number of investment appraisal tools and techniques are there which could be used by the companies and mentioned in this particular book as well. According to this book, Net Present Value (NPV) and Internal Rate of Return (IRR) are two of the dominating techniques which are extremely essential for Eco-Products to vitalize and analyze its investment base stance. The investment term mentioned in the book are perfect and according to these terms, the company only took those projects or investment into consideration which will increase the financial belongings of the company with perfection, and which deems favorable for the company in terms of enhancing the revenue and attract high amount of investors in particular. The company would break the deal, if any of the pair of investment tool is against the investment or project in total. If I be in the management of the company, then I would suggest that emphasizing too much on just couple of investment tool is not at all a wise decision for the company in total as it needed to be change accordingly, because investment should be check and analyze from some different angles in total. Might be the investment which is initially not perfect may bring economic and strategic based prosperity for the company in the upcoming years of operations. Most of the big companies of the world are utilizing these tools for investment based appraisal but not break the deals if any of these tools go against the company in particular. Therefore, for Eco-Product it is advised that they have to use some other analytical tools as well rather than emphasizing on a single one in their entire life as it is now become extremely important for the company to increase their financial belongings with effectiveness and with perfection at the same time.
Work Cited
Martin Cardel Gertsen, A.-M. S. (1998). Financial Management international mergers and acquisitions. Chicago: Pearson Group
Pokras, S. (2002). Workin Financial Management g in Teams: A Team Member Guidebook . New York: McGraw Hill
