FINANCIAL STRATEGY

Choose one program for financial strategy and build detailed description of the program as explained below. The program is new program that have not been implemented by the company before at all.

THE INFORMATION REQUIRED FOR PROGRAM IS THE FOLLOWING:

1. Program Description (including brief discussion of the related function and the importance of such program)

2. Program Expected Outcomes (written as objectives, quantified and timed)

3. Program Detailed Budget (Short text explains the source of financial estimates followed by a table explains different item included in the budget, i.e., fixed costs…… variable costs……..)

4. Program Responsibilities ( Internal or/and external entities that would help running the program)

5. Program Procedures (detailed steps for execution, arranged by order)

6. Program Timeline (Brief text followed by GANTT chard of the activities mentioned in program procedures and arranged over an appropriated period of time)

Link:

http://www.sghgroup.com.sa/index.php/en/

FINANCIAL STRATEGY

 

Company’s financial management concerns about three decisions, which are investment, financing and working capital management.

In this project, profitability analysis would be useful for the students to indicate how profitable the company is over the last three years (2013-2015). The profitability could be measured by return on assets and earnings per share ratios.

  • Return on Assets (ROA): measures how profitable the company is relative to its assets and how management is efficient in using its assets to generate revenue.

Return on assets ratio is affected by two major ratios, profit margin and asset turnover.

  1. Profit Margin Ratio (PM): measures the ability to generate earning from its level of sales; it indicates the overall operation’s profitability.
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  1. Asset Turnover Ratio (ATO): measures the efficiency in utilizing the assets to generate sales (Revenue). Higher level of sales indicates that the company is more efficient in using its assets.

 

Average total assets: (last year total assets + current year total assets) /2

 

  • Earnings Per Share (EPS):  is the portion of a company’s profit allocated to each outstanding share of common stock. Earnings per Share can be different according to the number of shares outstanding and if the company repurchase sufficient shares during the year.

 

Earning per shares is available on the company’s balance sheet by the symbol (EPS).

It is suggested to calculate and compare the above ratios for the period 2013-2015. Also, analyze the fluctuations, or the flow of the ratios. For example: an increase in ROA, is due to increase in the net income or decrease in the total assets. Then, the increase in the net income is due to increase in sales, decrease in the expenses, etc. by comparing between the three years