Managerial Finance Company Report 2022

MBA 542: Managerial Finance
Company Report
STUDENT NAME: .
Please note:
1. Please submit (1) this report, and (2) Excel file for ratio calculation through Moodle.
2. Your answers should be typed below each question (12 Times New Roman, black fond color).
Please do not change the format of the document. Content of your answers and references should
follow APA style with single space.
3. Make sure you read each question and its specific requirement carefully to meet all requirements.
4. Your submission will be checked using TurnItIn where originality will be checked against other
students’ submission and anything that’s available on the Internet.
5. Please note that whenever the questions mention “your company”, it refers to the company you
choose to analyze.
6. Basic Definitions and Formulas not required
Your Report consists of three parts:
Part 1: Background (Analyze company data, environment, social
aspect, economical, and its competitors, etc.)
Part 2: Financial Analysis including your spreadsheet ratios
(Ratios in an excel sheet and then use them in the document and
analyze it with competitors and then industry on a whole)
Part 3: Managerial Actions (Analyze as a CFO to increase the
value of the company)
Part 1: Background of your company (10 points each)
1. Company
1.1 Brief business description:
 What does your company do? Which industry/industries?
 What is the company’s business model?
 What are the main activities through which your company generates revenue?
 You should get the company’s most recent annual report and provide a pie chart on percentage of
revenue coming from various business units/products, and a similar pie chart on various
geographic areas where revenue is generated.
Note: you should be able to find all the information above on the company’s most recent annual report.
Type your answers starting from here:
The company which is considered for this assessment is Vestas Wind system on the basis of
which the analysis would be conducted. The company is a Denmark-based energy company which is
considered is engaged in the operations of manufacturing and distributing wind turbines which are used
for generation of power. The company was founded in 1945 and has its operations in several countries
such as Denmark, United States, Germany, Australia and several other countries. As per the recent
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estimates, the company is considered to be the largest wind turbine company in the world. The company
operates in two areas which is project and service (www.vestas.com, 2019). The company belongs to
power industry and basically engaged in wind-based power generation. The company is a growing
company and the company has reported revenues of (Euro) EUR10,134 million for the fiscal year ended
December 2018 which is an increase of 1.8% over FY2017.
The business model of Vestas Wind System aims at sustainable growth of the energy sector and
utilize the renewable sources for the purpose of generation of energy. In addition to this, the business
aims to provide efficient source of energy for the future generation. The business model of Vestas Wind
system of providing cheap renewable energy sources so that in the energy sector, sustainable
development can be promoted. The management of Vestas Wind System is dedicated in generation of
energy with the use of renewable sources of energy and therefore, it has become the largest company in
providing wind energy.
The business of Vestas Wind System provides wind energy solutions to the country in which the
business is operating. The business of Vestas Wind System effectively classifies the operations of the
business into two main business segments which are power solutions and services. The services
segments mainly comprise of sale of service contracts, spare parts and related services. The company
provides wide range of services to across equipment manufacturer platforms. The company is able to
generate revenue of E 1,522 million in 2017 which shows a significant increase in the revenue of the
business which is almost around 16.3%. On the other hand, the power solution segment mainly involves
sale of wind power plants, wind turbines and other related services. The company has been able to
record a revenue of E8,431 million which is significant, however, there has been a decline in the
percentage of sales which is achieved by the business (www.vestas.com, 2019). These activities help the
business to generate maximum revenue from operations of the business. In addition to this, the business
has also introduced certain products which are quite popular in the market and some of the products
which is offered by the business includes SiteHunt, SiteDesign, electrical pre-design, powerplant
controller and PowerPlus. The business would be focusing on enhancing the revenue of the business by
focusing on innovation and development of the business. Some of the services which is offered by the
business are installation and operations. Offshore wind project planning, service and maintenance and
several other services. On the basis of different operational segments of a business, the management is
able to generate appropriate revenue from operations.
The annual report of the business for the year 2018 shows that the management relies more on
power solution option for the purpose of generation of revenue while a minor portion is generated from
the services which is provided by a business (www.vestas.com, 2019). The business mainly earns
revenue from two main segments which are business power solutions and services which is provided by
the business. An effective representation of the revenue which is generated by the business from the
segments in the form of percentage is shown below:
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Power
Solutions
85%
Service
15%
Vesta Wind Systems
The above chart effectively shows the percentage of revenue which is generated by a business
from operational process of the business. The management of the company is able to generate 85% of
the revenue from power solution services and only 15% of the total revenue is generated by a business
from the services which is provided by the business. The vestas wind systems have an effective
operational system which allows the business to effectively generate revenue from operations of a
business. The revenue earned by the business also contributes to enhancing the profits of the business.
0
0
0
Region Wise Revenue Generation
Europe, Middle East,
and Africa
Americas
Asia Pacific
The above chart effectively shows region wise revenue generation for the business for Vestas Wind
System. The above figure shows that the maximum revenue is generated from America which amounts
to almost 45% of the total revenue which is generated by the business. In addition to this, the business
has also generated 42% revenue from Europe and Middle East nations. This shows that the overall
revenue which is generated by the business is mostly from America and Europe and Middle East
nations. The analysis also shows that the business is effectively operating and developing in the
countries which are shown in the chart above.
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1.2 Life-cycle analysis: where is your company and its product in the life cycle? Explain your answers
in detail.
Type your answers starting from here:
The analysis relating to lifecycle of a product is considered to be important as the same
effectively positions the business in a market and also shows how much developed is a
product in the market. The analysis of the business of Vestas Wind Power System
effectively shows that the business is well placed in the market and some of the products
which is offered by the business is quite popular in the market. The business is placed in
the high growth stage as the business is still expanding the operations of the business
(Zhang et al., 2017). The products of the business are quite popular in the market and
therefore, it would help the business to enhance the sales of the business. This is the stage
in which the business would looking to expand the operations of the business and make
use of the suitable position in the market for enhancing the market share of the business.
It is at this stage that the business undergoes rapid development and further expand the
revenue of the business (Soto-Acosta, Placer-Maruri & Perez-Gonzalez, 2016). The
stages of life cycle of the business show that the business would be able to achieve
maturity with an increase in the market share of the business. Therefore, in order to move
forward to the next stage in the lifecycle of the business, the management of Vestas Wind
System needs to focus on growth and development of the activities of the business. The
analysis for the company shows that the business would be aiming to enhance the
operations of the business. The analysis of the lifecycle of the business would be
providing valuable insights to the business to take appropriate decisions regarding the
operational process of the business and also regarding how to enhance the revenue of the
business.
2. PEST Analysis (A look at the overall environment)
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 Please note that you should discuss all factors that are relevant to your company and discuss how
each factor and its movement affect the company. You should also predict the future trend of the
factors in order to identify opportunities and threats.
 Since PEST are the factors at geographic level, you should focus on the key markets (or
countries) where your company operates, esp. if your company has a significant global operation.
2.1 Discuss all relevant political factors that may affect your company. Political factors include geo-
political conditions, tax policy, environmental policy, trade restrictions, labor law, health &
infrastructure policy, intellectual property regulation, privacy policy, consumer protection laws, and
political stability.
Type your answers starting from here:
The political factors which can have an impact on the decisions making process of a business and also
affect the revenue generation of the business are discussed below in details:
 Geo-Political Conditions: The political factors of a business include the political relation which
exist between the countries in which the business is operating. The trade relations between two
countries also affects the operations of the business (Gupta, 2013). The business operates in
America and Middle East and African nations. However, it is to be noted that the regulations
which are applicable on such countries and political environment need to be considered before
taking appropriate decision regarding the activities of the business.
 Tax Policies: The tax policies which are applicable on a business can affect the operations of the
business and thereby must be considered in taking important decisions of a business. The taxes
which a business needs to pay affects the profitability of the business and therefore must be
considered. The company needs to pay corporate taxes at the rate of 30% as per the regulations
which are set by the ATO.
 Environmental Policy: Every business needs to fulfill its own CSR policies and the same
includes environment protection regulations. This needs to be followed by the business and the
management needs to ensure that no policy of the business adversely impacts the surrounding
environment. Vestas made a joint venture for offshore wind turbines with Mitsubishi Heavy
Industries, including the 7-9 MW Vestas V164, the most powerful turbine on Earth. This shows
the commitment of the business for maintain environment balance in energy conservation
 Trade Restriction: The trade restriction in the country also affects the operations of the business.
The business needs to acquire trade license for other countries in order to ensure there is no trade
restriction on the business. These factors affect the smooth operations of the business and
therefore proper consideration should be placed on the same while taking major decisions
regarding the business.
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 Labor law, health & infrastructure policy: The labor law and health infrastructure policies are
important part of the code of conduct of the business. These policies need to be followed by the
management of the company for the welfare of the employee and also ensure that the employees
are satisfied with the operations of the business.
 Intellectual property regulation: The business of Vestas Wind System is engaged in the business
of using wind turbines and generation of power and therefore, it is imperative the business has its
own intellectual property which needs to be protected (Sammut‐Bonnici & Galea, 2015). In a
similar manner, the business also needs to adhere to regulations which is set for intellectual
properties. Furthermore, the business also needs to ensure that no such property is damaged or
copied from other businesses.
 Consumer protection laws: The business must also have a knowledge regarding the customer
protection and ensure that no activities is undertaken by the business which can affect the rights
of a consumer. In violation of any such rights heavy penalty is applicable on the business. The
consumer laws are universally applicable on all businesses and therefore decisions relating to the
same needs to be taken appropriately.
 Political Stability: The political environment of the country in which the business is operating is
also a vital factor which affects the revenue generation of a business. If a country is facing from
political instability than the business would not be able to generate appropriate amount of
revenues and it would also be difficult for such a business to survive in such an environment.
2.2 Discuss all relevant economic factors that may affect your company. You should discuss at least
four economic factors (1) economic growth, (2) interest rates, (3) exchange rates, and (4) inflation
rates. Note that you should put more effort if your company has a significant global operation.
Type your answers starting from here:
The economic factors which can have an impact on the operations of Vestas Wind System are provided
below in details:
 Economic Growth: Any business which is trying to enhance the revenue of the business would
be focusing on achieving economic growth from the operations of the business. The management
of Vestas Wind system is also looking for more revenue and the same can be achieved by
economic growth (Gerwick & Sparks, 2014). The business of Vestas Wind System would be
focusing on achieving economic growth for achieving more profits in the future.
 Interest Rate: The interest rate affects the business if the business utilizes debt capital in the
capital structure of the business. The increase in interest rate affects the operational costs of the
business and thereby can affect the profits which is generated by the business.
 Exchange Rate: The business of Vestas Wind system has operations different countries and
therefore fluctuations in exchange rates of currency also can affect the operations of a business
Any major fluctuation in the exchange rate can have an impact on the profits which is generated
by the business and also affect the operations of the business.
 Inflation rates: One of the major economic factors which can have an impact on the operations
of the business is the inflationary pressure in the economy. It can affect the costs of the business
as high inflation can increase the costs of inputs and thereby affecting the profits and the prices
which is charged by the business (Cadle, Paul & Turner, 2014). Therefore, it can be said that
inflationary pressure in an economy plays a vital role in the decisions which is taken by the
business.
2.3 Discuss all relevant social factors that may affect your company. Social factors include demographic
change and the related consumer habit, aging society & related problem, lifestyle trends, health
consciousness, career attitudes, and emphasis on safety.
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