Financial Analysis and Recommendations: Business Operations

This report provides a financial analysis of the company CHESTER, based on its financial reports. It assesses the company's return on sales and assets, leverage, return on equity, and working capital cycle. The report identifies a high leverage as a negative indicator and suggests converting debts to capital to reduce interest costs and improve returns. Recommendations include controlling non-operating expenses, investing in a balanced scorecard, reducing operational risks to improve S&P rating, implementing competitive pricing to enhance market share, exploring new markets, and making new investments with excess cash. The report emphasizes the importance of innovation, customer relationships, and efficient hiring practices for sustainable growth and long-term profitability. Desklib provides this and other solved assignments to aid students in their studies.

Running head: BUSINESS IN OPERATION MANAGEMENT
Business in operation management
Name of the Student:
Name of the University:
Author’s Note:

1BUSINESS IN OPERATION MANAGEMENT
Executive Summary
In the report, we have concluded about the position of the Company CHESTER based on the analysis of
the financial reports of the company. Furthermore, we have recommended the solutions to the company
on basis of the analysis done.

2BUSINESS IN OPERATION MANAGEMENT
Table of Contents
Conclusions................................................................................................................................................. 2
Recommendations....................................................................................................................................... 3
References.................................................................................................................................................. 4

3BUSINESS IN OPERATION MANAGEMENT
Conclusions
From the provided information, we arrive at below conclusion:
 The return on sales and assets is satisfactory. The company is earning revenue of 1.12 times the
amount invested in assets.
 A leverage of 1.74 times is a negative indication for the business. The firm owes more debt than
investments by shareholders. Higher interest cost is also associated with a higher leverage
ultimately reducing the net profits. Investors do not readily invest in companies with higher
leverage (Kharatyan et al. 2017).
 The company’s return on equity is greater than prevailing market earnings.
 Working Capital Cycle can be reduced by accruing payments from debtors early or enhancing
cash sales.
 The cash flows and other parameters like market share in different segments, productivity index
etc. depict a good standing of the company in the industry. With Industry parameters, these can
be compared and worked towards improvement.

4BUSINESS IN OPERATION MANAGEMENT
Recommendations
 The Company should consider converting debts to capital i.e. consider the reduction in leverage
system. This will lower the interest costs and ensure higher returns. If there is higher liquidity
available, it may repay debts as well. (Muda et al. 2018).
 There must be a Control put on the Non-operating expenses for higher liquidity condition in the
company. They should invest in a Balanced Scorecard rather.
 A rating of BB indicates that the company faces major ongoing uncertainties and exposure to
adverse business. The company should reduce risks in operations and ensure positive payment
experiences for an improvement in the S&P Rating (Standards and Poor measures the credibility
and ease of operations of any company with AAA being the best and CC/D the worst ranking).
 There is a lot of scope in market share. Competitive pricing should be enabled for the
improvement in the markets. Innovation, improving customer relationships and acquiring
competitors are further ways to expand market share.
 Exploring markets could bring in buyers. Thus, the company must try reaching out to the newer
markets.Discovering new revenue streams and establishing brand name in customer’s minds
shall lead to sustainable growth and long term profitability. Product samples may also be
provided.
 Making new investments with available excess cash could rope in certain fixed income. Thus, the
company must have a focus on making newer investments. It should also focus in improving
hiring efficiency. The employees should be trained to take cash discounts from suppliers and
prevent quality decline.


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References
Kharatyan, D., Lopes, J. and Nunes, A., 2017. Determinants of return on equity: evidence from NASDAQ
100. XXVII Jornadas Hispano-LusasGestiónCientífica.
Muda, I., Erlina, I.Y. and Nasution, A.A., 2018. Performance Audit and Balanced Scorecard
Perspective. International Journal of Civil Engineering and Technology, 9(5), pp.1321-1333.