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COMPANY XYZ

STRATEGIC FINANCIAL ANALYSIS

SUBMITTED BY

ABC

SUBMITTED TO
PROF. XSSS
SCHOOL OF BUSINESS MANAGEMENT
UNIVERSITY ONE

IN PARTIAL FULFILLMENT OF THE REQUIREMENTS


FOR THE SUBJECT
YYYYY

INTRODUCTION
XYZ Corporation is registered with the ____________ on _______________, and its main office is
located at ________________, __________. The Company was established to provide better solutions in
solving environmental problems brought about by the DDDDD and hazardous _____ wastes. The
Company also provides solutions for the environment-friendly disposal of hazardous industrial waste like
chemicals.
NATURE OF BUSINESS
The Company provides services in disposing infectious and hazardous medical wastes with the use of a
locally-developed machine (called and branded as tttttt) that produces a very high temperature to
convert or turn such wastes into ___________. This machine does not produce ________ that is common
in burn technology machines (like incinerators).
HEALTH CARE WASTE TREATMENT IN THE FGGHHH: AN OVERVIEW
Based on a study of ADB in 2003, 30.37% of wastes coming from health care facilities are hazardous. It
was estimated that a hospital generates an average of 0.34kg/bed/day of hazardous waste. Currently there
are about 2,000 health care waste generators nationwide, including medical centers, hospitals and clinics.
These health care facilities are responsible for the collection, handling, segregation, transport, treatment
and disposal of the waste they produce.
ORGANIZATIONAL STRUCTURE
The Table of Organization of the Company is shown next page.

Figure 1. Table of Organization of xyZ Corporation

The President is the Chief Executive Officer of the Company. He also functions as the chief marketing
officer of the Company. He is assisted by the VP Finance and Administration. The Finance and
Administration Division has a very few staff due to the very low volume of transactions.
FINANCIAL MANAGEMENT PRACTICES CRITICAL TO SUCCESS
The Company continues manage its receivables and payables to take advantage of credit terms. For its
accounts receivables, it bills its clients on a weekly basis instead of monthly. This reduces the collection
period. Such terms were obtained by maintaining a good relationship with the.
For its payables, the Company maximizes the payment term granted by the suppliers. To assure its
suppliers and to maintain fiscal discipline, the Company issues post dated checks, The discount terms are
not availed of because these are very insignificant (cost of money is more expensive than the discount rate
granted).
The Company only borrows money when the need arises at the lowest possible rates and pay them on
time.
FINANCIAL ANALYSIS ON xyz COPORATION
The audited financial statements of XYZ Corporation for years ended XXXX 31, 200N, 200P and 200Q
are attached as Annex A and Annex B.
Shown in the different tables are the following:

1.
2.
3.
4.

Leverage Ratios
Solvency Ratios
Liquidity Ratios
Operating Efficiency Ratios

Leverage Ratios
Leverage ratios measure the extent to which a company utilizes debt to finance growth. These ratios
provide an indication of a companys long-term solvency. The debt to equity ratio provides an indication
of a companys capital structure and whether the company is more reliant on borrowings (debt) or
shareholder capital (equity) to fund assets and activities.
As can be seen in the table, the company is highly leveraged, where it used debt to acquire assets and for
growth.

Solvency Ratios
Solvency ratios measure the stability of the company and its ability to repay its debts. In the debt-toequity ratio, if the ratio is 1 or more, it means that the capital provided by creditors is higher than those
provided by the owners. For working capital, the amount should not be negative.
The above table shows that almost all of the funds used or invested came from creditors. As In this
situation, the risk of the owners in the business is insignificant. The company had maximized the use of
their creditors resources. However, a single error in the management of the accounts can boomerang
negatively against the corporation.
The working capital of the company is a negative. It means that it cannot readily pay off its operating
expenses and maturing or matured loans. If other underlying information are not provided to third
parties, it can e immediately concluded that the company is insolvent. However, the actual condition of
the company is very far from that because the owners are willing and are ready to infuse the needed
working capital as needed.
It should be noted in the table below, however, that the solvency ratios are improving.

Liquidity Ratios
Liquidity ratios indicate whether a company has the ability to pay off short-term debt obligations (debts
due to be paid within one year) as they fall due. Generally, a higher value is desired as this indicates
greater capacity to meet debt obligations.
Current ratio, in simple terms, represents the number of units of current assets that are available for every
unit of current liability. It measures the ability of the company to meet its maturing and due obligations.
Based on the above table, the company does not have enough current assets to pay its current liabilities.
By simply looking at the table, it looks that the company is in a very precarious financial condition.
However, having known the company, it is not in a financial predicament in meeting its obligations since
the shareholders are readily available and willing to lend the company the needed funds.
Similarly, the quick ratio is worse than the current ratio. However, again, as explained above, the
shareholders are ready to provide the needed funds anytime.
It can be gleaned in the table below that the liquidity ratios of the company are improving. This was
caused by the long-term loan obtained from a local bank.
The Liquidity Ratios are shown n the table below.

Profitability Ratios
Profitability ratios measure the Companys performance and provide an indication of its ability to
generate profits. It can be noted in the table below that the Profitability Ratio of the Company increase
when compare to 2013. Also, the operating profit margin significantly increased in 2014. This was due to
the increased in the number of clients, thus the volume of waste treated, in 2014.
Shown in the table below are the Operating Efficiency Ratios.

STRENGTHS AND WEAKNESES IN THE MANAGEMENT FINANCIAL FUNCTIONS


The Company has not properly planned the fabrication of the machines vis--vis the finalization and
completion of their negotiations with their partners. As such, the Company ended up with certain number
of units that are not yet operational. This was due to the overly optimistic expectations of the Company in
their negotiations.
The Company is highly leveraged. As such, it cannot readily react to emerging opportunities. This was
not addressed yet by the Company.
These weaknesses, however, are tempered by the good credit standing of the Company with its creditors
and suppliers.
SWOT ANALYSIS
The following are the significant actions to be taken to address noted strengths and weaknesses of the
Company:
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