Registration Number : EMSC-SM-22-28-215

Student Name : Kalutaraarachchige Anne Kishani

Module Title : Strategic Financial Management

Study Centre : Cambridge College of Business and Management Sri

Lanka

D ECLARATION BY STUDENT

I certify that this assignment is my own work and is in my own words. All
sources have been acknowledged and the content has not been previously
submitted for assessment to Asia e University or elsewhere. I also confirm that I
have kept a copy of this assignment.

Signed:
Kkishani

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Contents

Question 1 .....................................................................................................................................3-5
Question 2......................................................................................................................................5-8
Question 3....................................................................................................................................8-15
Works Cited (Placeholder1)................................................................................................................16

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Q1/.
In today’s competitive job market as a Marketing department head of a manufacturing
company there is major competition to attract, convince and retain employees. By providing a
competitive benefits package can improve the company’s success in both attracting top
talented labor force and retaining the existing employees. As a manufacturing firm ,the
current vacant position is “Marketing manager”
Marketing managers are recruited to play a crucial role in promoting products and services
whilst attracting new customers and retain existing customers of the organization. They
create items and markets, recommend strategies,methodologies and the approaches, and
calculate the consequences of marketing tasks as a team. They're answerable for all
operations of marketing department. Hence recruiting the right person with top talent and
skills is critical.
The job role of a potential marketing manager is namely;
 Carry out market surveys and evaluate new products, business opportunities and
customer reviews
 Execute promoting methodology and the execution of plans for existing products.
 Analyzing potential markets before launching novelties to the market
 Liaise with product improvement teams to create novelty improvement techniques.
 Launching campaigns and manage distribution channels of new and existing products
 Oversee media and promoting staff and outer PR organizations.
 Ensure top brand marketing ,direct marketing and social media marketing and make
reports
When recruiting a suitable candidate, As educational qualifications the firm is in a
look out for a candidate who possess a Bachelor’s degree in marketing and a Masters
degree in marketing is preferred. Considerable amount of hands on experience as a
marketing assistant manager or supervisor of 6+ years is expected from the candidate.
When analyzing the job role which the company seek for at present, the skills and
qualifications needed by a Marketing manager are mainly creative skills, leadership
skills, organizational skills, technical and communication skills
Each type of skill is to be used in order to perform various tasks that comes under the
job role.
Leadership Creative Communication Organizational Technical Skills
Skills Skills Skills Skills
Implement Developing Developing Plan meetings Ability to run
strategic goals unique ways positive rapport and follow ups software tools and
to market with clients and design
novelties staff
Training less Design Positive criticism Filing data and Creating and
experienced aesthetic management carry out editing digital
staff appeal of surveys tools

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 marketing
tools
Delegating Plan Managing press Mentoring Editing and
&assigning advertising releases and employees in evaluate social
tasks campaigns timeliness reaching media campaigns
monthly
objectives
Setting up Brainstormin Team work Set up monthly Managing Mass
marketing g with strategic email
standards designers schedules communication
Another significant overview affirming that advantages help in worker fascination and
maintenance is the Glassdoor's worldwide review 80% of workers would pick extra
advantages over a salary increase as it carries enormous quality to their respective lives over
the long haul. Hence when compensating it is beneficial to add below benefits (costs) for the
compensation package

• Medical care protection (e.g., clinical, dental of 200,000 LKR per annum)
• Bonus and commissions
• Paid days off (Paid Annual Leave)
• The retirement plan as well as annuity
 Life Insurance scheme (1 million LKR)
 Basic salary of Rs 1,216,409 per year
 Overseas training ( per year)

In attracting employees to a venture, all the companies should conduct benefits preference
survey so that you hear the requirements of the candidates and employees. Customizing the
benefits package according to the capacity of the particular company can lead to better
employee retention and attraction. Companies should not base the benefits according to age
groups and gender but rather offer benefits that fits today’s dynamic needs of employees.
A portion of the powerful methods for promoting on the organization benefits bundle to
attract employees are ;
 Internally send emails to the employees or provide awareness through company Intranet
 At interviews ,ask the benefits, perks that they would expect from a work place
 Social media should be used to show how existing employees enjoy the current benefits
provided by the firm at present
 Employee opinion Surveys should be conducted to get the insight of how well company’s
compensation processes
 Organize events by the firm to bring awareness on the benefits

When analyzing the cost related to attracting quality and skilled top talent; Direct and Indirect
costs are usually incurred by a company

Compensation mainly consist of salaries, bonuses,commission ,medical, life insurance,etc.

People are in a quest to land themselves in the best position financially. Vigilant employers
know keeping quality labor force requires offering attractive competitive compensation
packages. But most effective method in today’s corporate world is ‘Skill Based Pay’ It is a
methodology based on employees, knowledge, abilities, expertise andcapabilities. It aims to
bring the morale of employees positively to gain development, by gaining the expertise in
task based capabilities. Salary increments occurs mainly on the depth of job skills of an

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employee. In job-related pay, salary rates are aligned with job burden/ responsibilities. In the
skill-based pay, salary is entirely tied to job based abilities and skills.

A firm can minimize cost involved in retaining and attracting skilled employees by
structuring the compensation process that meets employee and employer dynamic needs
In doing so employee motivation will rise resulting in employees grander delivery in the job
as they are motivated to perform better. Employee loyalty boosts and can retain employees
for a long time. Unnecessary costs for recruitment and advertising can be cut down when
focal compensation requirements are satisfied.
Assessing the cost Vs quality and skill of employees it is clear that there are advantages and
disadvantages in using top talent as it includes high cost but in a candidate driven market, it is
always beneficial for the company to attract skilled, experienced and qualified employees as
it increases the quality of the overall performance that leads to profit maximization in the
long run. If inexperienced unqualified labor is hired, more money, effort and time should be
invested in training and development and final result will not be promising because overall
quality is declined. This may incur extra costs which may adversely affect the business.
Hence overall conclusion is for a business, it is beneficial to hire skilled employees by
assessing the employee needs and forecasting a compensation package in annual basis.

Q2/. The Equity Financing Vs Debt Financing

To collect funds for any business or a venture, organizations have mainly 2 range of
financing sources : Value financing and the debt financing. Majority of firms choose a mix
of the equity and debt capitalizing in order to keep the balance, but there are some benefits
and hindrances to those options. Main fundamental principle is that value financing does not
have the burden of payment obligation and enables money to purchase working capital
which is beneficial to ensure growth in the respective business where as debt financing does
not include losing a composition of the overall ownership

Organizations ordinarily must make decision with regards to do financing through obligation
or,value financing. This decision fundamentally differs on how available both the choices
are for the organization and how its money inflow, and out stream how serious investors are
on losing the power and ownership and having a certain amount of control of the
organization

The Debt Financing involves in loaning cash where as value financing sells a piece of the
organization and it adds to extra monetary weight on the owner

Equity Financing Sources Debt Financing Sources

1. Angel Investors 1. Bank Loans
2. Crowdfunding platforms 2. Family/credit card loans
3. Venture capitalists 3. Bond Issues
4. IPO
5. Corporate Investors

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The Equity Financing
The equity financing consists of vending a part of a firm’s value as commutation for turning
out capital . Value financing puts zero additional weight towards the firm. As there are no
time based loan interests to be settled with equity financing.The company is having
sufficient cash to allocate for resources needed to gain capital to develop the business . In
any case, this never means there are zero shortcomings.

As a matter of fact, the drawbacks are large. Because to collect funds, a composition of
ownership is to be sacrificed to the investor . Profits should be shared and independent
decision making is obstructed as the owner must consult the investors prior to any decision
making which affect the firm and its operations. The soul way to mitigate the issue is to buy
the investors out but that is expensive than the money the investors initially invested in the
firm.

The Debt-Financing
Obligation financing revolves in lending money and settling it with an amount of interest.
Commonly utilized method of debt financing is a cash loan given by banks and financial
institutes. Debt financing often derives various shortcomings related to the company's
activities that will abstain it from making use of available business opportunities within and
exterior boundaries of its business. 

 
Debt depends on the future ability to settle the debt .Hence debt is an incurred
expense. The company is obliged in settling it on a frequent basis even when
company is not functioning well economically and financially. Debt will be a
downside towards the growth of the business

Benefits of Equity Financing

 Lesser risk: Companies face less risk as it does not require monthly based loan
repayments. This is the best for startups as it doesn’t have steady cash flow from the
early stage itself.
 Loan/Credit problems: If company has credit issues and debt financing is the only
viable option to have financial growth. Although obligation financing is available,
lending rates will be high and settlement would be extreme for acceptance
 Ready cash/Cash flow : Equity financing never extract money from its business
where as debt financing involves in the same as loan repayment require money to be
taken out from firm’s cash flow which results in reduction in overall growth
 Long-haul planning: Investors never desire return from the business at the early
stage itself as they have a view that company might face losses at the initial stage of a
business

Drawbacks of Equity

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  Involved Cost: Investors expect return on the money invested in the business.
Business owner should have the willingness to share its profits with other investors.
Amount paid to propreightors may be greater than the lending rates of the loans taken
for debt financing

 Loss of power : The owners sacrifice fewer portion f power of his

organization when he takes aid from additional investors. Investors need to
have a say in decision making on strategies, operations carried out by the
business, mostly the important selections and independent decision making is
obstructed.

 Open for conflicts: Each and every investor will not agree on all decisions as
there is more room for disagreements. These feuds will emit from investors
based on future plans, visions and management techniques related to firm. The
owner should workout distinctions of sentiments.

Pros related to Obligation Financing

 Control: Applying for a loan is not permanent because sooner the loan is settled the
relationship with the creditor ends. Lender has no say in how to operate the business
 Taxes- Advance (loan) interest is tax exemptions, while dividend given to
financial backers are not deductible
 Predictability: Head& loan interests are notified in advance, so it is more
straightforward to add it into the firm's outflow or cash inflow. Loans are
short,long or medium hauled.

Cons of the Obligation Financing

 Credibility Qualification: The company and the owner should have
reasonable FICO figures to obtain debt
 Fixed payments: Head& interest installments should be made on fixed days
regardless of any situation. Companies with eccentric incomes may undergo
problems settling credit installments. Decline in sales makes difficult issues
with meeting loan payment deadline.
 Cash flow Issues: Assuming an excessive amount of loans may put the firm to
a problematic position when they have to settle credit interest in the event
overall revenue decreases. Investors my feel firm is in greater danger and will
not offer financial aids additionally
 Collateral: Creditors will require demand for certain assets considered to be
collateral and proprietor has to provide assurance for the loan on personal
level.

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 In the event companies are on a look out for financial assets to push up the
company, the owner has to ponder on the privileges and hindrances in
reaching out for bank loans or gaining financial aids from potential investors
advances (loans)or looking for extra financial backers. The decision revolves
around numerous variables to reach to a final decision which method will be
resourceful for the firm for a long period of time. As per my understanding,
combination of both debt financing &equity financing is beneficial for the
business in the long run as it maintains the balance of the company.

Q3/.

Ratio Analysis
Throughout the long term, financial backers and experts have fostered various logical instruments,
ideas and procedures to think about the overall qualities and shortcomings of organizations. Financial
ratios set up a foundation of comparison between facts and figures found in fiscal summaries of a
firm. It is beneficial to assess the position of your own firm and take better decisions.

Selected Company- Kelani Cables

Kelani Cables Ltd. was incorporated in 1969, as an import-substitution during the command economy
time. Firstly they imported drawn wire, but later on they assembled this item in their manufacturing
plant. Thus, Kelani Cables is the trailblazer in wire drawing industry of Sri Lanka . Years later they
started mass production of, broadcast communications links, plated twisting cables in Sri Lanka
converting the company to a public listed company.45
In this assignment we shall compute total profitability, solvency, liquidity & efficiency level of Kelani
Cables

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Liquidity Ratios
Liquid assets ratio assess a company’s capability to settle their short period liabilities.

1. Cash Ratio = Cash& cash equivalents

The Current Liabilities

2020 Year 764,898,171

3,193,625,149
= 0.23

2021 YEAR 924,789,700

3,779,492,51
=2.4

In the event that the cash ratio is excessively high it shows that the firm is not making use of
current resources efficiently. monstrate issues in venture capital management as appeared
above in 2021 Kelani cables has no capability to settle short lived debts

2. CURRENT RATIO = Current Assets

Current Liabilities

The working capital proportion estimates the company's current available resources compared to their
c liabilities .A low working capital proportion shows that a firm might struggle paying their present-

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year liabilities in the short span of time and needs further research. Kelani cables show a healthy
current ratio which shows current assets are used efficiently.

2020 year 6,108,622,013

3,193,625,149
= 1.9
2021 year 6,893,213,585
3,779,492,511
= 1.8

3. QUICK RATIO = Cash/equivalents+other current financial assets+Trade

Recievables

Current Liabilities
Similarly how fast a firm can get rid of its current liabilities. Result of 1.1 considered as an ideal
quick ratio a company should maintain in the long run.

2020 year [764,898,171 +2,924,566,40] / 3,193,625,149

= 0.33
2021 year
[924,789,700+2,981,195,149] / 3,779,492,511

= 1.03

Rate of Return/Profitability Ratios

1. “Gross Profit Margin= (GP)Gross Profit

Revenue *100”

Greater gross profit margin shows that a firm is able to generate satisfactory gain from
annual sales, if a firm maintains their indirect expenses in charge. As shown below
average gross profit margin is 10% which means Kelani cables make average profits.
.

2020 YEAR 1,313,406,979

8,759,918,341 *100
= 14.9 %
2021 YEAR 1,283,987,315
9,650,437,531 *100
= 13.3%

2. Net Profit Margin= Profit after Tax

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 Revenue *100

2020 YEAR 355,060,160

8,759,918,341 *100
= 4.0 %
2021 YEAR 620,849,864
9,650,437,531 *100
= 6.4%

Net margin showcase a comparison of firm’s total earnings to its total sales revenue. This calculates
the organization’s convert deals in to shareholders’ returns

3. (ROCE) Return on Capital Employed =Earnings before Interest &Tax

Total assets - Current Liabilities *100

ROCE shows earnings credited to the investors based on the funds that the same investors aid
for the firm during that particular year.

2020 YEAR 428,154,952

7,288,069,290 -3,193,625,149
*100
= 10.4 %
2021 YEAR 744,114,254
8,614,763,014 -3,779,492,511
*100
= 15.3%

4. Revenue Growth Ratio

An organization's income is how much cash it procures in light of its business
exercises. A healthy revenue growth rate is 10% even though a firm’s revenue growth
varies on different factors. In the year 2021 Kelani cables shows a healthy figure
compared to the year 2020

“Revenue Growth Ratio= Present year revenue – Previous year’s revenue

Previous, year’s revenue *100%

”

2020 YEAR 8,759,918,341 -8,492,482,278

8,492,482,278 *100
= 3.14%
2021 YEAR 9,650,437,531 - 8,759,918,341
8,759,918,341 *100
= 10.1%

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Return on Assets = Net Income after Tax

Total No. Assets” *100%

ROA calculates the efficiency of the company in using the assets. If the ratio is high it means
that the company is in a satisfactory position to gain income using available assets.

2020 YEAR 355,512,195

7,288,069,290 *100
= 4.87%
2021 YEAR 766,763,175
8,614,763,014 *100
=8.9 %

Solvency Proportions/Ratios
1. “Debt to Asset Ratio = Total Liabilities
Total Assets”
2020 YEAR 3,329,164,493
7,288,069,290
= 0.45
2021 YEAR 3,987,195,042
8,614,763,014
= 0.46
The debt ratio is, figuring out relevant portion in the firm’s overall assets which is funded by
short lived and long lived liabilities. Comparatively high ratio means the company is using a
larger amount of financial risk.

2. “Gearing/Debt to Equity Ratio = Total Debt

Total Equity”

The leverage ratio calculates overall obligations taken by the firm in comparison with equity
employed by the firm

2020 YEAR 3,329,164,493

3,958,904,797
= 0.84

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 2021 YEAR 3,987,195,042
4,627,567,972
= 0.86

Efficiency Ratios
Efficiency ratios are used to show the efficiency and effectiveness in a company when using overall
number of assets. Overall operational performance will be indicated from these ratios

1. “Trade Receivable Ratio = Amount Receivable

Annual Revenue * 365Days”

Customers are expected to pay their account within 30 days of the date of
invoice but below figures show the unhealthy cash collection of the firm.

2020 YEAR 2,924,566,409

8,759,918,341 * 365 Days
= 121.8 days
2021 YEAR 2,981,195,149
9,650,437,531 * 365 Days
= 112.7 days

2. “Payable turnover = Payable Amount

Cost of Sales *365 Days”

2020 YEAR 1,268,148,186

(7,446,511,362) * 365 Days
= 61.2 days

2021 YEAR 1,960,727,534

(8,366,450,216) * 365 Days
= 85.5 days

Benchmark- It is expected that a customer would pay a supplier for goods purchased
within 30days of the receipt of the invoice.

Ratio investigation looks closely on l information from an organization's

budget statements to draw conclusions related to the benefit, liquidity,

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 effectiveness, andsolvency. Ratio analysis depicts the optimum performance
of the firm over long span of time

References

Works Cited (Placeholder1)

(Garcia) (Mueller)

(n.d.).
Accounts Receivable Turnover: Formula, D. U. (n.d.). www.wikiaccounting.com/accounts-receivable-
turnover/.
company, D. o. (n.d.). Retrieved from www.financialexpress.com.
Debt Financing - Overview, O. P. (n.d.).
Debt Financing - Overview, O. P. (n.d.).
Employers, E. S.-G. (n.d.). Retrieved from www.glassdoor.co.in.
Garcia, M. (n.d.). How to Get Growth Capital for Your Business. Retrieved from
https://smallbusiness.chron.com/.
Marketing Manager Salary in Sri Lanka | PayScale. (n.d.).
Mittal, A. (n.d.). Debt or equity: Find out what’s best for financing a company. Retrieved from
www.financialexpress.com.
Mueller, A. (n.d.). The Cost of Hiring a New Employee. Retrieved from
https://www.investopedia.com/.
PayScale, M. M. (n.d.).
principles of managerial finance. (n.d.).

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Wikiaccounting. (n.d.). www.wikiaccounting.com/accounts-receivable-turnover/. Retrieved from
Accounts Receivable Turnover: Formula, Definition, Using, Example, Explanation.

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