...Provisional Topic Title : Analyze the impact of customer retention on company profitability (Case Study of Leasing Industry in Sri Lanka –ABC Company) 1 Introduction 1.1 Introduction to the industry ABC is classified as one of the strongest players among the Non Banking Financial Institutions (NBFI’s) in Sri Lanka. The NBFI’s can once again be categorized into two main sectors and they are the Licensed Finance Companies (LFC’s) and the Specialized Leasing Companies (SLC’s) such as ABC. The NBFI sector in Sri Lanka consists of 48 LFC’s and 8 SLC’s as at2014. The total market of the Non Banking Financial institutions in Sri Lanka, it can be interpreted that the portfolio is divided into three major markets and mainly classified as Finance Leasing, Hire Purchase, Secured Loans and Advances. 1.2 Introduction to the Company “ABC Finance Company PLC is one of the most stable and reputed financial institutions in Sri Lanka”. The life time of the company spans over a period of nearly six decades and has served to add value and positively impact the lives of all its stakeholders. ABC Finance Company PLC (herein after referred to as ABC) started operations as a private limited liability company in the hill capital, Kandy in the year 1967. ABC is among the top 35 corporate entities in Sri Lanka consecutively for the last 12 years. As per the annual report of the company for the year 2014/2015, currently ABC employs 1244 employees, has a distribution reach of 87 branches and serves...
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...of Management Sciences, COMSATS Lahore, Pakistan E-mail: talatafza@ciitlahore.edu.pk Abdul Qayyum Professor / Registrar, Pakistan Institute of Development Economics, Islamabad E-mail: abdulqayyum@pide.org.pk Mahmood Ahmed Bodla Professor & Director, COMSATS Sahiwal, Pakistan E-mail: director@ciitsahiwal.edu.pk Abstract Working capital management plays a significant role in better performance of manufacturing firms. This paper analyzes the impact of working capital management on firm’s performance in Pakistan for the period 1998 to 2007. For this purpose, balanced panel data of 204 manufacturing firms is used which are listed on Karachi Stock Exchange. The results indicate that the cash conversion cycle, net trade cycle and inventory turnover in days are significantly affecting the performance of the firms. The manufacturing firms are in general facing problems with their collection and payment policies. Moreover, the financial leverage, sales growth and firm size also have significant effect on the firm’s profitability. The study also concludes that firms in Pakistan are following conservative working capital management policy and the firms are needed to concentrate and improve their collection and payment policy. The effective policies must be formulated for the individual components of working capital. Furthermore, efficient Management...
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...Capital Management And Profitability – Case Of Pakistani Firms Abdul Raheman* and Mohamed Nasr ** Working Capital Management has its effect on liquidity as well on profitability of the firm. In this research, we have selected a sample of 94 Pakistani firms listed on Karachi Stock Exchange for a period of 6 years from 1999 – 2004, we have studied the effect of different variables of working capital management including the Average collection period, Inventory turnover in days, Average payment period, Cash conversion cycle and Current ratio on the Net operating profitability of Pakistani firms. Debt ratio, size of the firm (measured in terms of natural logarithm of sales) and financial assets to total assets ratio have been used as control variables. Pearson’s correlation, and regression analysis (Pooled least square and general least square with cross section weight models) are used for analysis. The results show that there is a strong negative relationship between variables of the working capital management and profitability of the firm. It means that as the cash conversion cycle increases it will lead to decreasing profitability of the firm, and managers can create a positive value for the shareholders by reducing the cash conversion cycle to a possible minimum level. We find that there is a significant negative relationship between liquidity and profitability. We also find that there is a positive relationship between size of the firm and its profitability. There is also a significant...
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...Capital Management And Profitability – Case Of Pakistani Firms Abdul Raheman* and Mohamed Nasr ** Working Capital Management has its effect on liquidity as well on profitability of the firm. In this research, we have selected a sample of 94 Pakistani firms listed on Karachi Stock Exchange for a period of 6 years from 1999 – 2004, we have studied the effect of different variables of working capital management including the Average collection period, Inventory turnover in days, Average payment period, Cash conversion cycle and Current ratio on the Net operating profitability of Pakistani firms. Debt ratio, size of the firm (measured in terms of natural logarithm of sales) and financial assets to total assets ratio have been used as control variables. Pearson’s correlation, and regression analysis (Pooled least square and general least square with cross section weight models) are used for analysis. The results show that there is a strong negative relationship between variables of the working capital management and profitability of the firm. It means that as the cash conversion cycle increases it will lead to decreasing profitability of the firm, and managers can create a positive value for the shareholders by reducing the cash conversion cycle to a possible minimum level. We find that there is a significant negative relationship between liquidity and profitability. We also find that there is a positive relationship between size of the firm and its profitability. There is also a significant...
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...considered to be life-giving force to an economic entity and managing working capital one of the most important functions of corporate management. Working capital management (WCM) is the management of short-term financing requirements of a firm which includes maintaining optimum balance of working capital components – receivables, inventory and payables – and using the cash efficiently for day-to-day operations. The main objectives of this study are to examine and evaluate the working capital management in ACC Limited, examine the management pattern of inventory, liquidity, cash position and receivables management. This also finds the relationship between Working Capital Efficiency and Profitability, Profitability and Market ratios. Keywords Working Capital, Liquidity, Profitability, Market ratios, Inventory I. Introduction Global slowdown that severely affected several countries had its invariable effect on Indian Industrial production as also on other important sectors of Indian Economy. The Cement Industry, which exhibited resilience in the face of the global financial meltdown by sustaining a near 8% growth (7.9%), during 2008-09, jumped up to record a double-digit growth of 12.7%, in 2009-10. The Indian cement industry ranks the second largest amongst cement producing countries in the world and added a capacity of 37 mn.t. in 2009-10. This paper is prepared to examine the relationship between the...
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...Chapter 15 Corporate Valuation, Value-Based Management, and Corporate Governance MINI CASE You have been hired as a consultant to Kulpa Fishing Supplies (KFS), a company that is seeking to increase its value. KFS has asked you to estimate the value of two privately held companies that KFS is considering acquiring. But first, the senior management of KFS would like for you to explain how to value companies that don’t pay any dividends. You have structured your presentation around the following questions. a. List the three types of assets that companies own. Answer: Assets-in-place, growth options, and nonoperating, or financial, assets. b. What are assets-in-place? How can their value be estimated? Answer: Assets-in-place are tangible, such as buildings, machines, inventory. Usually they are expected to grow. They generate free cash flows. The PV of their expected future free cash flows, discounted at the WACC, is the value of operations. c. What are growth options? How can their value be estimated? Answer: Growth options are not tangible. They include R&D, such as at drug companies and genetic engineering companies, and building customer relationships, such as at amazon.com. Growth options are valued using option pricing techniques in Chapter 17. d. What are nonoperating assets? How can their value be estimated? Answer: Nonoperating assets are marketable securities and ownership of non-controlling interest in another company. ...
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...most respected models to assist with this analysis is Porter’s Five Forces Model. This model, created by Michael E. Porter and described in the book “Competitive Strategy: Techniques for Analyzing Industries and Competitors,” has proven to be a useful tool for both business and marketing-based planning. Background The pure competition model does not present a viable tool to assess an industry. Porter’s Five Forces attempts to realistically assess potential levels of profitability, opportunity and risk based on five key factors within an industry. This model may be used as a tool to better develop a strategic advantage over competing firms within an industry in a competitive and healthy environment. It identifies five forces that determine the long-run profitability of a market or market segment. * Suppliers * Buyers * Entry/Exit Barriers * Substitutes * Rivalry Supplier power * Supplier concentration * Importance of volume to supplier * Differentiation of inputs * Impact of inputs on cost or differentiation * Switching costs of firms in the industry * Presence of substitute inputs * Threat of forward integration * Cost relative to total purchases in industry Buyer power * Bargaining leverage * Buyer volume * Buyer information * Brand identity * Price sensitivity * Threat of backward integration * Product differentiation * Buyer concentration vs. industry * Substitutes available *...
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...30- 36) | 2015 WORKING CAPITAL MANAGEMENT AND PROFITABILITY IN SUGAR INDUSTRY OF PAKISTAN Muhammad Ehsan Javaid Leghari PhD Management Sciences COMSATS Institute of Information Technology Islamabad, Pakistan Email:muhammadehsanjavaid@yahoo.com ABSTRACT Working capital management is necessary for profitability. In this study working capital management of sugar industry and its impact on profitability is checked from 2002 to 2012. Total observations are 308 while 28 companies listed at Karachi Stock Exchange are in sample. Correlation and pooled panel data regression analysis is performed. Results show that day’s inventory, cash conversion cycle, cash ratio, account receivable to sale ratio, short term investment ratio, secured short term obligation and fixed asset ratio are negatively affecting profitability of firm. Whereas quick ratio, days account receivable and working capital are positively affecting profitability. Key words: Return on Asset, Cash Conversion Cycle, Secured Short Term Obligations, Cash Ratio, Account Receivable to Sale INTRODUCTION In finance field two extensively examined areas are capital structure and working capital management. It is matter of great importance both for researchers and corporate individuals to figure out firm’s value and profitability. Working capital management has a direct impact on the firm profitability along with reducing the liquidity risk. Liquidity is one face of coin and profitability is other. It clarify that working capital management...
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...www.sciedu.ca/ijfr International Journal of Financial Research Vol. 5, No. 1; 2014 Shareholders’ Wealth and Debt- Equity Mix of Quoted Companies in Nigeria Amos O. Arowoshegbe1 & Francis Kehinde Emeni2 1 Department of Accounting, Ambrose Alli University, Ekpoma, Edo State, Nigeria 2 Department of Accounting, University of Benin, Benin City, Edo State, Nigeria Correspondence: Amos O. Arowoshegbe Ph.D; ACA., Department of Accounting, Ambrose Alli University, Ekpoma, Edo State, Nigeria. Tel: 234-80-3742-2421. E-mail: futona4christ2@gmail.com Received: October 15, 2013 doi:10.5430/ijfr.v5n1p107 Accepted: October 31, 2013 Online Published: January 10, 2014 URL: http://dx.doi.org/10.5430/ijfr.v5n1p107 Abstract The study examined the relationship between shareholders’ wealth and debt-equity mix of quoted companies in Nigeria. The study was based on a panel data set from 1997 to 2011 comprising sixty non – financial companies. The study specified two panel regression models. Two measures of shareholders’ wealth: Return on Equity (ROE) and Earnings per Share (EPS) were taken as the dependent variables respectively. The principal explanatory variable for each of the models was Debt Ratio (DR). The results of the study conform to our a-priori expectation that there is a significant negative relationship between shareholders’ wealth and debt-equity mix of quoted companies in Nigeria. This is not unexpected considering the inactive debt market in Nigeria, the dominance of the money...
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...HCLT revenues grew at a 5-year CAGR of 29% from $764mn in FY2005 to $2705mn in FY2010. ■ Axon acquisition adds value: Prior to the acquisition of Axon in 2008, about 11% of HCLT’s revenue came from EAS. With the acquisition of Axon, HCLT’s revenues from enterprise solutions increased to more than 20%. ■ Gaining market share in ADM & IMS space: HCLT’s performance has been particularly strong in deals with bundled ADM and IMS. With the rising traction in restructure/renewal of global outsourcing deals in ADM and IMS, we expect the company’s deal flow to remain strong giving boost to overall revenue. ■ Multiple levers for margin expansion: Falling profitability has been a concern for HCLT for past few quarters. Going forward, we believe that the margins will pick up due to SG&A leverage, improving utilisation and better profitability of BPO business. Also, the management...
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...Kewal Kiran Clothing Ltd (KKCL), was incorporated in 1980 as a partnership firm,converted into a private limited in the year 2000. The business line consists of designing, manufacturing and marketing of apparels under its four brands i.e. Killer, Lawman Pg3, Integriti and Easies. Kewal kiran Clothing Limited (KKCL) today is amongst the few large branded apparel manufacturers in India. The company has sales in Asia, Middle East and CIS. The company designs, manufactures and markets branded jeans, semi-formal and casual wear for men and women. KKCL has positioned its brands differently; depending on the segment targeted. Its brands range from the high fashion premium segment such as Killer for denim wear and Easies for casual wear to the middle and economy segments through brands such as Lawman and Integriti. The company’s main target audience includes the youth of India falling in the middle to upper middle class segment. Strong player in the competitive branded readymade garment industry Kewal Kiran Clothing Limited (KKCL) is a strong player in the branded RMG market with brands such as ‘Killer’, ‘Lawman Pg3’ and ‘Integriti’. ‘Killer’, a 20-year-old brand, enjoys a premium position in the branded casual men’s wear segment and is one of the strongest domestic brands in the denim segment. ‘Lawman Pg3’ which is positioned as an affordable fashion brand has done quiet well while ‘Integriti’ a mass brand targeting price conscious segment has also shown tremendous growth...
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...your firm, especially if you are going to compete as a new start-up firm. Also, it is a critical step because it helps you differentiate yourself better from others competing in the market with a similar set of products or services. Although the pure competition model is not a practical tool to assess an industry, Michael Porter’s Five Forces framework helps to truthfully measure all the potential profitability, risk and opportunity. With the help of these five forces, managers can develop and be in a strategic advantage compared to the other companies competing in the industry. The five forces framework: - Rivalry - Threat of entry/ Barriers to entry - Buyer Power - Supplier Power - Threat of substitutes Companies strive for a competitive advantage over their competitors. The amount of rivalry differs within every industry and these differences can be critical for developing a strategy. Concentrated industries usually present high levels of rivalry. Many companies are conscious about industry concentration and in order to measure it, they use the “concentration ratio” (CR). The CR which has been reported by SIC (Standard Industrial Classification code) shows the percentage of the market share seized by the top 4 companies in the industry. If the industry has a high concentration ratio, this means that these firms are controlling the market by holding a big percentage of the market share. With only a few firms holding large amounts of shares, the industry becomes less competitive...
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...entries found. 1.0 Objectives The purpose of this report is to provide a fundamental analysis of Flight Centre Limited (Ltd) and provide recommendation for investors wishing to invest in this company. The recommendation was made based on a number of critical assumptions hence it should be evaluated very carefully as results can significantly differ depending on the assumptions provided. The four main sections discussed in this report include: * Business Strategic Analysis - this opening section provides a brief overview of Flight Centre’s business activity and analyses the travel and leisure industry. It also provides an insight into FLT’s corporate strategy and more importantly it discusses the impact of these external and internal factors on FLT’s profitability in the future. * Accounting Analysis - Includes an analysis of the key accounting policies of FLT and explains these policies are critical to FLT’s success. It also compares the policies applied by Flight Centre with its main competitor Jetset travel. * Financial Analysis - Provides an overview of Flight Centre’s financial performance over the past three years by presenting relevant ratios and also compares these ratios with Jetset Travel. It then offers an interpretation of these ratios and evaluate the company’s cash flow position. * Prospective Analysis - Forecasts on balance sheets, income statements and free...
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...------------------------------------------------- Case Study on H&M Module 1, Business Organization and EnvironmentHuman, physical and financial resources to create goods and servicesH&M is a popular clothing store and it is usually cheaper than other brands. H&M carry out its goods and services through human, physical and financial resources. The resources are designer, stylist, Media (models), stakeholders, distributing channels (stores or online) and share holders. Human resources like designer, stylist, models and shopkeepers are promoted through media to attract customer to increase demands. Most importantly the clothing is up to date with the most recent fashion trend. It sets up a positive image that H&M’s clothing are fashionable and at the same time customers does not need to spend a huge amount of money to be fashionable. Promotion through media also helps gain popularity for their goods and services.H&M Physical Resources plays an important role to create goods and services. The distribution channels are the only possible direct access for customers to consume their goods and services. H&M has distribution channels world wide even on online stores. This various types of distribution channels not only increase its popularity but become similar to a convenient store where customers can easily access to H&M’s goods and services. The Financial resources come from the shareholders, customers and other stakeholders. These people are the business’s...
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...The Investor Relations Society ‘Determinant Factors for Best Investor Relations’ 1. Best Communication of strategy, performance and key performance indicators (KPIs) in the annual report |Business and financial review |Best Practice | |requirements | | |1. ‘a fair review of the company’s |Sensible and understandable explanation of the company’s business. | |business’ |Balanced perspective and clear statement of the company’s strategy. | | |Description of the company’s markets, including regulatory environment and competitive position. | |2.‘the development and performance |Commentary related to the group strategy and progress in achieving objectives. | |of the company’s business during the|Trade or channel relations (where applicable), e.g. service levels, distribution, display, trade customer satisfaction. | |financial year’ |Innovation, e.g. number of new products, new products' revenue and margin as share of total, R&D investment. | | ...
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