Unlike its competitors, Root & Cook Ltd (“RCL”) has a well-stipulated vision statement for the company is detailed compared to that of its competitors. The vision of the company is remaining focused on service delivery .The vision statement for the company also talks about the values concerning the Root & Cook Ltd (“RCL”).
The company’s benefits include collaboration, product excellence, and simplicity. The core values of the company include simplicity, and it forms part of the vision statement of the company. The issue of innovation is associated with the company regarding company values and the employees of the company at all levels in the organizational structure (Loomes, Hull & Mandy, 2017). Through the mission statement, Apple Inc. seeks to market the products that it produces on the aspect of both types as well as service offered by the products. In this case, the consideration of technology is regarded to be appealing to most customers who prefer the technological dynamics.
The company has a continued dedication to creating products that are ground breakings as well as those that meet the demands of clients. The company needs to have a great team that will help in coming with the ground more quality delivery. The company also has an objective of innovating products that will offer a dictation on the future technology in the world.
Current Situation
RCL services as a segment help in the provision of smaller delivery services on the ground via the principal Marriage system. The other services provided by the company are held within the jurisdiction of the company line of business.
The company provides a wide range of services in line with hospitality and courier services in countries of operation, for instance, Canada and USA. The company is also engaged in marketing and sales of products for other companies. It provides sales and marketing services on top of the information technology support services as well as customer support services. There is the global supply service as well as the chain supply services (Maina & Sakwa, 2017). The company capital structure in 2016 was approximated for USD 3.2 billion.
The future of RCL is tied in its consistency to serve its subscribers in the best way possible. The company employment of technology in areas of management as well as sales and marketing was stipulated in the company investment and planning portfolio for start of the 2017 last quarter of the financial year forms the company large percentage of its future plans. The company plans to make an average substantive increase in its growth rate in business by 5% on every financial year for the next decade. The company is also focused on making an increment on its revenue through extensions of its services to uncharted frontier. The areas that are earmarked by the company include the Middle East and the Sub-Saharan Africa and India. In this regard, RCL wants to increase on its market coverage and increase on the sales revenue by a consistent 8% averaging for every quarter of the subsequent fiscal years starting from the last quarter of 2017.
The company seeks to improve on the reduction about the costs of operation by making mergers in some locations across the globe for easy accessibility in the interior areas. This is done through the incorporation of its services and products to some local firms. It is also going to be achieved by liaising with the local firms through payment of commission as levies to the firms upon transportation of their products.
Thus total fixed costs for the month are $4,290,000. Fixed costs are expressed per period. Fixed costs are as such treated separately from other costs based on how they emanate in the process of costing for the various causes of expenses in a firm (Bellos, Tzivanidis, Symeou & Antonopoulos, 2017). All activities about company operations are associated with costs that should be catered for in the event of accounting.
The company seeks to increase its current ratio to the targeted 2.0 from the current 1.5 as calculated from the company financial data in 2016 all through to 2017. It would mean an increase in the company cash inflows and control of the outflows through proper management of short-term assets of the firm.
A firm that attains the breakeven period before starting to realize the initial capital invested in the business and is keen on not making additional losses should close its operation immediately after attaining the breakeven period. Breakeven point by definition is the time at which a business can no longer operate if it has so far failed to realize the total am out of capital initially invested in the business.
Payback period would be calculated from the following tables of figures as set out from the given data.
The first step is revenue calculation as the revenue that is provided by the RCL is underpinning revenue in this particular project which is equivalent to 200,000 per month at the current exchange rate. The calculation done for revenue is therefore is.
A$200,000*12 months= A$2,400,000 +Additional food, processing and packaging
The additional food processing and packaging is due to RCL new equipment. The addition shall be added to on the sales growth rate per year with a given percentage.
It is then assumed that the revenue and additional growth is added after every financial year.
After the calculation of the revenue, cost is calculated using this equation
Cost= cost percentage *Revenue* (-1) e.g.
Cost= 56,848,000*60 %*(-1) =-VD34, 108,992,000
Note: All calculations are in pounds
The cost for first year is 60% of the revenue of the same year and for the subsequent years the cost is 50% of their respective revenues. Residual value is added at the fifth year as a positive value rather than a negative.
The cash flow is calculated by subtracting the revenue of each year and the subsequent value of the total cost. Then all the cash flow is summed up to form the Net cash flow.
The business strategy for Root & Cook Ltd is to target the establishment of a differentiation strategy and a market expansion strategy that is aimed at giving the company a competitive advantage (Bruix, Cheng, Meinhardt, Nakajima, De Sanctis & Llovet, 2017).The differentiation in the company is done by the company coming up with different products that can be used by people from different localities and of a diverse age group. Product differentiation provides competitive benefits for many manufacturers (Axelrod et al., 2017). A company should always aim at creating divergence in the products that they manufacture. Apple Inc. is using the strategy, and that has resulted in the development of a competitive advantage for the company.
The issue of expansion has been embarked by the excellent reputation that is associated with the company products. Apple Inc. has managed to penetrate different markets, and that has led to increased profit levels for the company.
Based on porter’s forces, there are different factors that affect Root & Cook Ltd and arise from the industry. The industry is associated with substitute goods. The existence of substitute means that the sales revenue of the company will reduce. The company is also found in a free market whereby there is allowance free entry and exit. There are numerous new entrants in the industry, and that has led to increased competition for the company (Bruix, Cheng, Meinhardt, Nakajima, De Sanctis & Llovet, 2017). The only barrier to entry in the industry is the fact that the industry is associated with high costs of starting up the business. There is also the competition that arises from the existing customers.
The company is optimally in operation at the stock exchange market following the performance of other firms of its level and that of competitors. In an attempt for Corporation to make a relatively larger share of the market, the company underprices its shares and sells them as a lump sum deposit.
The competitors to the company include other companies that distribute as well as offer hospitality services, which is a large corporation that has the financial muscle to increase their marketing skills in an attempt to increase market share. The supplier is bargaining power in the market also serve as a considerable threat.
The technologically advanced products cannot be manufactured by any corporation hence the number of suppliers in the industry is minimal. That implies that the suppliers have a better bargaining chip over the companies and that will make them overprice their products. At the same time, the customers’ bargaining power has depicted a substantial threat in the market. There are many similar products in the product. That implies that the customers can negotiate for cheaper products from the existing companies in the industry.
The organization encounters the weakness of high employee turnover. The technical industry is associated with employee turnover that is high (Altman, Iwanicz, Laitinen & Suvas, 2017). This implies that the companies in the industry will incur many training and recruitment costs for the new employees. The threats that exist in the entry include the fact that there can be legislation that would be aimed at increasing taxation and that will reduce the margin for the companies in the industry.
The enterprise portfolio in as much as it takes into consideration the impact of the government in business it is in no way guaranteed of stagnation to the set rules by the same government. Independence for the business entity in decision making is more important than total compliance to the government set policies that at some point operate contrary to the success of the business. Machines may be used for production purposes but they are also not required for full operation in the entire business activities as they may result to unemployment to the population around and beyond Root & Cook Ltd .
The company should embark on research and development and at the same time marketing. The technical department in charge of R and C ensure that the organization establishes more modernized and innovative products with time. TQM (Total Quality Management) would also be a great idea. This would enable the company to pay special attention to the customer’s needs, design the product accordingly and have a steady and efficient production process and equipment. The results will then be tracked and this very same concept will be emphasized to the suppliers, so that they understand the main needs of the customers and clients of the company they do business with, so they themselves understand the importance of supplying first grade metals to their business partner.
Net Profit Margin (NPM)
= (Net profit- cost of sales/ net profit) *100%
= (48,351,000/38,134,433.70) =21.13%
|
2017 |
|
|
Net Profit |
48,351,000 |
|
Cost of sales |
38,134,433.70 |
|
NPM |
21.13% |
Return on Asset (ROA)
= Net Profit/ Total assets * 100%
= (48,351,000/ 443,994,490.40) =10.89%
|
2017 |
|
|
Net Profit |
48,351,000 |
|
Total assets |
443,994,490.40 |
|
ROA |
10.89 |
Return on Equity (ROE)
= Net Profit/ equity * 100%
=48,351,000/ 130,431,616=37.07%
|
2017 |
|
|
Net Profit |
48,351,000 |
|
Total equity |
130,431,000 |
|
ROE |
37.07 |
Debt-to-Equity Ratio
= Debt/ Equity
= 97,207,000/ 1,113,482=87.30
|
2017 |
|
|
Debt |
97,207,000 |
|
Equity |
130,431,000 |
|
Debt-Equity |
88.30 |
Asset Turnover ratio
|
2016 |
2017 |
|
|
229,234,000 |
Total sales |
215,639,000 |
|
443,994,490.40 |
Total assets |
375,319,000 |
|
51.6 |
ROA |
57.5 |
The company has an overall upward trend in its profitability ratios right from the base year to the target year. A look at the ratios provides an insight and a reason for potential investors to invest in the company shares. There are possibilities of risks in the investment into the company but based on the previous financial information provided, the company stands not to make losses (Velásquez & Meunier, 2017). A decision by investors to venture in into buying the company assets in terms of stocks and shareholding has less associated risks.
The company net cash flows as indicated in the table right from the base year are overall increasing and in such cases, the company has chances of making improvement in future business transactions (Deschamps & Nelson, 2014). The use cash flow ratios above provide insight into the flow of cash in the firm making a good grounding for prediction of the company net cash flows for the next financial year.
Root & Cook Ltd overall Beta Value from 2014 all through to 2016 is recorded for 2.05. The figure is reached at after the estimation of the market risk and risk-free rate and risk premiums of US National Stock Exchange rates (Deschamps & Nelson, B.2014). The annual dividend yield for the company is calculated to be at 0.90 with a net dividend of 0.55 estimated for an average of the three consecutive years. Walgreens however, should work on minimization of costs and in the event of investment risk aversion should be a priority.
Conclusion
Root & Cook Ltd being a business that has kept an eye on making profits and if there is anything to go by make it in as growth is concerned, should put the following in consideration.
The management should see to it that there is limited overtrading and maintenance of the current marketing strategies is given a priority. The business comparative advantage should be kept up to date and nothing in particular should be embraced at the expense of the already placed strategies.
This technique also emphasizes on a lot of team work between the employees and at the end, major customer satisfaction. The marketing investment will ensure that the firm will be in a position to increase their sales income; as a result, this will actuate the motivation level for both leadership management as well as the workforce of the company.
The company cash flow is another concern. The accounting team in collaboration with the auditors should lias to ensure that there is consistency in the records as well as financial management. Root & Cook Ltd however, should work on minimization of costs and in the event of investment risk aversion should be a priority
References
Altman, E. I., Iwanicz?Drozdowska, M., Laitinen, E. K., & Suvas, A. (2017). Financial Distress Prediction in an International Context: A Review and Empirical Analysis of Altman’s Z?Score Model. Journal of International Financial Management & Accounting, 28(2), 131-171.
Axelrod, D. A., Schnitzler, M. A., Xiao, H., Naik, A. S., Segev, D. L., Dharnidharka, V. R., … & Lentine, K. L. (2017). The changing financial landscape of renal transplant practice: a national cohort analysis. American Journal of Transplantation, 17(2), 377-389.
Bellos, E., Tzivanidis, C., Symeou, C., & Antonopoulos, K. A. (2017). Energetic, exergetic and financial evaluation of a solar driven absorption chiller–a dynamic approach. Energy conversion and management, 137, 34-48.
Bruix, J., Cheng, A. L., Meinhardt, G., Nakajima, K., De Sanctis, Y., & Llovet, J. (2017). Prognostic factors and predictors of sorafenib benefit in patients with hepatocellular carcinoma: Analysis of two phase III studies. Journal of hepatology, 67(5), 999-1008.
Deschamps, J. P., & Nelson, B. (2014). Innovation governance: how top management organizes and mobilizes for innovation. Management, 42, 3.
Gutiérrez, M. (2014). Applying PRiSM Methodology in the Canadian Construction Sector. PM World J, 3, 1-10.
Loomes, R., Hull, L., & Mandy, W. P. L. (2017). What is the male-to-female ratio in autism spectrum disorder? A systematic review and meta-analysis. Journal of the American Academy of Child & Adolescent Psychiatry, 56(6), 466-474.
Maina, F. G., & Sakwa, M. M. (2017). Understanding financial distress among listed firms in Nairobi stock exchange: A quantitative approach using the Z-score multi-discriminant financial analysis model.
Velásquez, A., & Meunier, L. (2017). Comparative Marketing Analysis of the UK and Germany for Global Sustain.
Warner-Søderholm, G., & Cooper, C. J. (2016). Be Careful What You Wish for: Mapping Nordic Cultural Communication Practices Values in the Management Game of Communication.
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