3.1 Fixed-Asset Turnover Ratio – An overview The ratio of net sales to fixed assets is known as fixed-asset turnover ratio. It is calculated by analysts to determine the operating performance of a company. Basically this ratio accounts for the net sales a company can generate based on its fixed asset investments. They are -property, plant and equipment (PP&E), net of depreciation. A higher fixed-asset turnover ratio is preferred for it is a sign of optimum utilization of investments made in fixed assets and this also reflects the efficiency of human resources a company has.
It expands portfolio theory and helps us to calculate the unexpected risk of asset. As long as we know the risk-adjusted expected return of the asset, we can assess the asset's price as correct. Although CAPM allows us to determine the rate of return required for any risky asset to determine its price, but CAPM is actually used primarily to evaluate common stock. Use the CAPM it may requires some assumptions, including the following: There is risk-free asset so that investors can lend or borrow at a risk-free rate of return. Investors agree on the expected rate of return and probability of these returns.
Profitability is great but it is not enough to become a successful company as a well-managed working capital is equally as important. As a way to avoid bankruptcy in poor situations, companies can use credits or sell off short-term assets to get capital for payments (Pass & Pike, 2007). In order to ease the managing of working capital, senior management use cash a conversion cycle as measurement to help them to keep an eye on the level of working capital they have in different periods of time. They can use different measures but cash conversion cycle is the more common one. Factors impact on Working Capital Management.
The virgin group is highly diverse as it is with the many businesses they own, they risk diluting their brand image and name and so customers may not believe them to be the “consumer champion”. Furthermore, the case suggests Branson’s ‘popular appeal’ could be waning due to discrepancies between his behavior and public image. Since this is a large advantage for Virgin that makes customers trust the brand it could significantly hurt the group, especially combined with dilution of the brand. Moreover, not only a failure in Branson’s image can harm the group, but also a failure in one of Virgin’s businesses can contaminate the entire virgin brand and make it lose its appeal. Additionally, from the Virgin Wings financials we can see that although they seem to be managing their debt, their management of assets and revenue is declining, suggesting that they have grown too large too quickly.
Efficiency synergies are the most popular synergies to chase as cost reductions are relatively easy to realize through layoffs, a combined headquarters, and other cost cutting opportunities due to the merger(Habeck et al., 2000). However, Habeck et al. (2000) assert that potential upside is, in fact, in revenue/growth synergies as cost reductions are not a driving force that will strengthen the company in the future. It is possible to measure cost synergies and, hence, can be adjusted in price as they can be controlled, i.e. they cannot be changed immediately due to change in choice of the customer.
Topic: In what extent the operation managers use Capacity Planning and control strategies to enhance organization operations performance. Capacity is value added activity over a period of time at maximum level that an operation/process achieved under normal conditions. It is fundamental responsibilities of Operations management to satisfy the current and future demand. Operations management should create balance between capacity and demand. An appropriate balance between capacity and demand can satisfied the customers and eventually lead to organization profits.
The market value did fall excessively in the depths of the crisis. And many bankers, and bank regulators, believe the rules worsened the financial crisis." Many challengers consider the key problem that happened during the crisis was that we continued to use fair value accounting although
A good marketing manager also understands that product life cycle as a concept has its limitations. What these limitations can be? There are various limitations tied to product life cycle concept, mostly due to its unpredictable nature. Firstly, each stage of product life cycle is defined by revenue or profit. For example, growth stage is defined as the period when sales increase radically and profit peaks, whereas in maturity stage, sales start to gradually decline (Sally Dibb, 2012).
When a company have inventory build-ups, they are generally not selling enough. This is not a good position as a company needs to turn over good inventory quantities to preserve reasonably high-profit margins and to avoid the costs and other difficulties that come with high levels of inventory. • Lost sales If a company’s inventory turnover is too high, it could have negatively affected their sales. Their suppliers could select to limit their range of products they keep to avoid an excess of inventory and to keep inventory moving through the operation. While other suppliers might rapidly sell the stock they have on hand, they may have difficulty keeping shelves full or may not offer a comprehensive enough range to meet customer needs.
Stocks have the potential of delivering huge amounts of gains compared to certificate of deposit and bonds. v. It also offers two ways for their owners to gain benefit, which is by capital gains and dividends. The disadvantages of stocks: i. The investors will be quite frustrating when they are trying to find out the actual performance and fundamental of company because suddenly the stock values change for no apparent reason. ii.