Financial Performance Management

Financial Performance Management

Table of Contents
Part 1................................................................................................................................................3
Financial analysis.........................................................................................................................3
Comparative evaluation...............................................................................................................4
Part 2............................................................................................................................................5
Critical success factors in BSC....................................................................................................5
Pricing and loyalty...................................................................................................................5
Supporting decisions................................................................................................................5
Convenient and fast.................................................................................................................6
Platform specific......................................................................................................................6
Advanced online marketing strategy.......................................................................................6
Fine products with fine price...................................................................................................7
Customer relationship management........................................................................................7
Part 3................................................................................................................................................8
Balanced Score Card....................................................................................................................8
Pros........................................................................................................................................10
Cons.......................................................................................................................................11
Reference List................................................................................................................................13

Part 1
Financial analysis
Financial analysis is undertaken for executing a quantitative analysis for the numbers and figures
found on the financial records of an organization. As such, a tool name ratio analysis has been
developed. Ratios are required linking the three financial records of companies which are the
income statement, the balance sheet and cash flow statement of the company (Fridson and
Alvarez, 2011). Ratios also help in the comparison of these figures and numbers with that of
other companies and competitors across all industries and sectors. In the following assessment,
ratio analysis has been undertaken for the company Amazon, where the important ratios like the
working capital ratio, valuation ratios, liquidity ratios, leverage ratios, and profitability ratios
have been calculated. The working capital ratio includes accounts receivable days, account
payable days and inventory days. These ratios help in determining the total number of days
within which the collection from debtors is done by a company, the payment to the creditors is
made and the number of days which is taken for the inventory to be sold.
The valuation ratios include, Earning per share, price to earnings ratio, book value per share, and
the percentage of dividend. The valuation ratio help in determining the financial value of an
organisation. The liquidity ratios include various important ratio such as the current ratio, the
quick ratio and the cash ratio. These ratios help in determining the capability of an organisation
to pay of its short-term obligations and liabilities by using its current assets. The leverage ratios
include various ratios like equity multiplier, interest coverage and the debt to equity ratio. These
ratios help in determining the level of indebtedness of a company. Finally, the profitability ratios
include various important ratios like the gross margin, operating profit margin, net profit margin,
earnings before interest and taxes, return on equity and return on assets. The profitability ratios
basically help in the determination of a firm's capability of earning revenues by the generation of
sales and earning profits thereof. It helps in determining the overall returns which are fetched by
the means of investing in the business.
For Amazon, it takes nearly 27 days on an average for the collection of the debtors. However, the
payment that is made to the creditors takes nearly 92 days (Amazon, 2017). The average period
within which the inventory of the company is sold off is almost 37 days. The payment collection

period has significantly increased in the past three years that the payment collection procedure of
the company has declined. The creditors are also paid very late in comparison with the previous
financial year records (Amazon, 2016). The Earning per share of the company increase can
become five times to that of the previous records. The price to earnings ratio of the company had
a down fall from the year 2015 to 2016 however was written in the year 2017. There has been an
increase in the book value of the company implying that the overall evaluation of the
organisation has increased. The current ratio of Amazon has been well maintained which means
the company is able to pay off its short term debts its current assets. The debt to equity ratio of
Amazon has increased significantly from 2015 to 2017 implying that the debt financing of the
company has increased. The gross profit margin of the organisation is significant and has been
consistent throughout the years. Operating margin has been fluctuating is it increase from 2015
to 2016 and was retained nearly to the same position in the year 2017 (Amazon, 2015). The
earnings before interest and taxes for Amazon have doubled after 2015 which shows that the
generated revenues have increased significantly. Consequently, the net profit has also increased
by a big margin as it can be seen that the ratio has increased by more than three times from 2015.
Some fluctuations in the return on equity all from 2015. The same effect has been seen in the
return on assets of the company.
Comparative evaluation
The major differences which can be seen in the business of Walmart and eBay, in comparison
with Amazon are, Walmart is able to collect payment from its debtors quite fast in comparison
with the other two companies (Walmart, 2017). The payment made to the creditors is also
quicker in the case of both Walmart and eBay than Amazon. The inventory of Walmart takes
more time to be sold off than Amazon. The Earning per share of eBay for the year 2017 has
become quite low, in fact in negative (eBay, 2017). One of the major differences which has been
seen is that the book value of eBay is the lowest of the three companies (eBay, 2016). Another
major difference is the fact that Walmart and eBay, both have been paying dividends to the
shareholders however, no statistics regarding payment of dividend to shareholders were found in
the financial statements of Amazon (Walmart, 2015). The liquidity ratios of eBay have been
found to be very high and in fact double to that of Amazon and Walmart implying that the
company possesses high amount of liquid assets and has a superior capability of paying of its