Recent orders
Financial Analysis Of EMKE Group in UAE
Financial Analysis Of EMKE Group in UAE
Name
Institution
Course
Date
Introduction
This report analyses and interprets EMKE Group financial performance over a period of 5 years using the five major financial ratios of profitability, liquidity, gearing, asset management, and investment. To achieve this, the report will utilise the companies’ financial statements for the last five years – from 2008 to 2012. In addition, the report will offer a brief overview of the UAE retail industry. Lastly, the report will discuss the limitations of each of the five financial analysis ratios. Overall, the report will argue that these two companies offer investors almost similar value yet they pursue different business models.
Brief Background of the UAE Retail Market
Over the last ten years, the UAE retail market has grown tremendously. The total retail market is worth more than £146.3 billion (as of 2008) from a low of £93.3 billion in 1998 (Li, 2008). Though this is relatively the lowest growth in 40 years, analysts believe that a growth of 1.2 percent is to be experienced in the second and third quarters of 2012 due to major events such as the London Olympics (SAS, 2011). A research by IGD shows that consumers spend 52 percent of every pound on retail shopping with 21 percent of this spent in retail chains (Li, 2008). Nevertheless, the UAE retail market has recently faced a number of uncertainties including the 2008 global recession and the Euro Zone crisis, shrinking consumer income, high unemployment rates, and an unresponsive credit system. Currently there are more than 100 retail chains in the UAE falling within the four major categories of convenience stores; traditional retail; online channel; and hypermarkets, supermarkets, and superstores. The four major retail chains are EMKE Group, Asda, Sainsbury’s and EMKE Group. Other notable retail chains include Waitrose, Marks & Spencer and Iceland.
4.2 EMKE Group
EMKE Group experienced increased revenues in the last five financial years despite operating in a highly competitive and unpredictable environment – £47,298 million in 2008 and £64,539 million in 2012. The company is actually a nice investment for potential and existing investors – it is registering huge sales and giving out its shareholders value for their investment through huge dividends.
However, unlike EMKE Group, EMKE Group has achieved phenomenal growth courtesy of the expansionist strategy it pursues – the company believes in expanding its markets into new product lines such as finance as well as new avenues for reaching out to its customers. It believes in growing its online presence as a way of adapting to customers’ new ways of doing things.
For example, whereas EMKE Group believes in adopting the “street market” approach, EMKE Group believes in expanding its business so as to successfully create more jobs, bring fresh foods to under-developed neighbourhoods, review the quality of its brands, step-up the innovation gear, reduce prices, build economies of scale, and open-up new stores to penetrate traditionally conservative markets. This is in tandem with the official slogan that “no one tries harder for customers” (EMKE Group, 2012: 11).
Financial Analysis
Profitability Ratios of EMKE Group
Profitability 2012 2011 2010 2009 2008
GP 6.9% 7.0% 6.9% 6.3% 6.3%
NP 3.9% 3.8% 3.9% 3.2% 4.3%
ROCE 0.31% 0.27% 0.33% 0.27% 0.24%
ROE 12.8% 11.7% 12.1% 10.2% 12.7%
3.1.2 EMKE Group
Profitability 2012 2011 2010 2009 2008
GP 8.15% 8.48% 8.10% 7.76% 7.67%
NP 3.9% 4.0% 3.7% 3.6% 4.1%
ROCE 13.3% 12.9% 12.1% 12.8% 12.7%
ROE 15.81% 16.07% 15.91% 16.57% 17.94%
As the above tables show, EMKE Group has experienced a larger GP than EMKE Group but the two companies have relatively similar NP for the five year period. Moreover, EMKE Group has a relatively stable GP and NP while EMKE Group’s GP and NP have been erratic within the same period. Both companies registered a low NP in 2009 perhaps due to the effects of the global recession.
Overall, EMKE Group is more efficient in managing its operational costs than EMKE Group (Vance, 2003). Specifically, EMKE Group cannot seem to keep its costs of financing at low levels as shown by a smaller NP for the five year period. Additionally, EMKE Group has registered a large ROCE and ROE than EMKE Group in the same period.
This is an indicator that that EMKE Group keeps its costs of selling, financing, and investment at relatively low levels than EMKE Group. Perhaps this is because the company has a large market share compared to EMKE Group and hence enjoys economies of scale.
Liquidity Ratio of EMKE Group
Liquidity 2012 2011 2010 2009 2008
Current Ratio 0.57 0.55 0.51 0.53 0.50
Acid Ratio 0.24 0.24 0.24 0.38 0.32
5.2.2 EMKE Group
Liquidity 2012 2011 2010 2009 2008
Current Ratio 0.67 times 0.68 times 0.71times 0.74times 0.58 times
Acid Ratio 0.48 times 0.50 times 0.54 times 0.59 times 0.34 times
EMKE Group can meet its short term debt obligations easily than EMKE Group. EMKE Group liquidity has increased by a larger margin than that of EMKE Group over the last five years – EMKE Group’s current ratio and acid ratio for the last five years show a change of 0.09 and 0.14 respectively compared to EMKE Group’s 0.07 and -0.08 respectively. This large and positive range in current ratio and acid ratio indicates that EMKE Group has been steadily improving its ability to offset its short term liabilities than EMKE Group over the same period.
Actually, EMKE Group experienced a decline in acid ratio during the last five years, an indicator that the company is in deficit of short-term assets and can only meet its short term liabilities by selling inventories (Helfert, 2001). Overall, the company’s liquidity ratios are healthy by industry standards as the companies have faster inventory turnover rates.
Asset Management of EMKE Group
Asset Management 2012 2011 2010 2009 2008
Stock Turnover 23.27days 25.83 days 26.71 days 48.58 days 39.90 days
Asset Turnover 3.3 3.0 3.1 3.2 3.0
5.3.2 EMKE Group
Asset Management 2012 2011 2010 2009 2008
Stock Turnover 20.02days 21.21 days 22.91 days 22.27 days 21.31 days
Asset Turnover 3.70 3.42 3.90 4.18 3.98
EMKE Group stock turnover period has been on a decrease since 2008 except in 2009 when it shot from 39.90 days to 48.58 days. Nevertheless, the company seem to be enjoying a relatively stable yet decreasing stock turnover rate over the last five years, with 2012 being its worst year. EMKE Group too has been experiencing decreasing stock turnover rate over the years.
This phenomenon could have been occasioned by the shrinking of disposable income among consumers in the UAE during this period. Nevertheless, EMKE Group has a slightly higher asset turnover than EMKE Group, an indicator that the company is more efficient in turning its assets into revenue. Overall, the two companies seem to be experiencing stable asset turnover in the last five years.
Gearing Ratio of EMKE Group
Gearing 2012 2011 2010 2009 2008
Debt Ratio 27.26% 15.07% 18.67% 14.20% 12.40%
Interest Cover 20.70 times 21.02 times 15.11times 11.18times 10.2 times
3.4.2 EMKE Group
Gearing 2012 2011 2010 2009 2008
Debt Ratio 38.41% 40.85% 54.0% 74.38% 52.06%
Interest Cover 9.56 times 8.176 times 6.0 times 6.6 times 11.1times
Though EMKE Group has a higher debt ratio than EMKE Group, it is clear that EMKE Group has a more futuristic financial approach. This approach allows for the maximization of funding from long-term lenders at the expense of short-term ones. It is therefore not a surprise that EMKE Group has a lower interest cover ratio than EMKE Group as it seems the company prefers utilising short-term finance and reinvesting its profits while suppressing long-term finance.
Investment Ratio of EMKE Group
Investment 2012 2011 2010 2009 2008
Dividend pay-out 1.6% 1.5% 1.4% 1.3% 0.9%
Dividend per share 10.70p 9.60p 8.20p 5.80p 4.80p
EPS 26.68p 23.93p 22.80p 17.39p 20.79p
Price/earnings 11.40 11.60 14.10 15.60 15.20
3.5.2 EMKE Group
Investment 2012 2011 2010 2009 2008
Dividend pay-out 0.5% 0.5% 0.6% 0.6% 0.5%
Dividend per share 14.76p 14.46p 13.05p 11.96p 10.90p
Earnings Per share 34.98p 33.10p 29.33p 27.14p 26.95p
Price/earnings 8.50 11.10 13.20 11.50 14.60
EMKE Group has been paying higher dividends to its shareholders compared to EMKE Group yet it has a low dividend pay-out ratio for the last five years. The reason for this phenomenon is because EMKE Group has huge net income that converts to higher earnings per share. Moreover, EMKE Group has a low price-earnings ratio because its earnings per share is much higher than that of EMKE Group for the five years period – EMKE Group earnings per share has increased from a low of 26.95p in 2008 to a high of 34.98p in 2012 compared to EMKE Group which has grown from 17.39p in 2009 to 26.68p in 2012. Both companies have registered a decreasing PE in the last five years, with EMKE Group registering the lowest PE. This can be interpreted to mean that both companies offer investors almost the same value for their money.
Conclusion
Both EMKE Group have experienced immense growth. This growth is as a result of pursuing robust business models that allow them to offer value to their stakeholders. EMKE Group pursues a somehow lean business model, while EMKE Group pursues an agile one hence the difference in their total share in the UAE market. Overall, both companies offer their shareholders almost the same value for their money as they have almost similar profitability capabilities, short-term debt payment capabilities, asset management capabilities, long-term funding utilization capabilities, investment capabilities yet they pursue significantly different business approaches. As Vance (2002) posits, the five broad categories of financial ratios are not exhaustive in giving the true financial picture of a company but they have succeeded in giving investors a clear glimpse of where the two companies are headed.
References
Helfert, E.A. (2001). Financial analysis: Tools and techniques: A guide for managers. New York, NY: The McGraw-Hill Companies.
Li, E. (2008). Supermarket chains and grocery market in the UAE. Shanghai, China: China Europe International Business School.
EMKE Group PLC (2012). Annual report and financial statements 2011/12. Wm EMKE Group Supermarkets PLC.
SAS (2011). UAE retail 2012 & beyond. [Online]. Available at: HYPERLINK “http://www.sas.com/offices/europe/uk/downloads/press/sas-verdict-retail2012.pdf/” http://www.sas.com/offices/europe/UAE/downloads/press/sas-verdict-retail2012.pdf/ (accessed June 22, 2012).
EMKE Group PLC (2012). Annual report and financial statements 2012. [Online]. Available at: HYPERLINK “http://www.tescoplc.com/files/pdf/reports/tesco_annual_report_2012.pdf/” http://www.EMKE Groupplc.com/files/pdf/reports/EMKE Group_annual_report_2012.pdf/ (accessed June 22, 2012).
Vance, D.E. (2003). Financial analysis and decision making: Tools and techniques to solve financial problems and make effective business decisions. New York, NY: The McGraw-Hill Companies.
Each and every person in the world has a unique personality
Behavioral Style Assessment
Each and every person in the world has a unique personality. The personality of a person can be clearly seen in different environment such as public functions, workplace, and even at home. Personality can also be seen when one is faced with a situation, such as when faced with a disaster, when under stress, and pressure. A person’s personality can also be seen in the way a person communicates with the others, greet other people, and even eye contact.
The DISC Platinum Rule Behavioral Style Assessment is one way that can help a person to assess not only the behavior of other people but also personal behavior. The module looks at how people behave in different scenarios and situations. Under the module behavioral styles are divided into four styles, the dominance style, the interactive style, the steadiness style, and the cautious style.
Dominance style (D Style)
This people who fall under this group are motivated by two main needs, which are the need to be in control and the need to achieve. The persons under this group are very much relaxed when in control of people and situations, they are also very bold and courageous enough even to bend rules. The D styles are always ready to accept challenges; they work very well by themselves, but get annoyed very fast.
Interactive style (I Style)
The interactive style people are very enthusiastic, they are “more relationship Oriented than task oriented.” The I styles love to work outside the office than in the office. The main strength for I styles is their charm, warmth, enthusiasm, and persuasiveness. The other most significant attribute of the I styles is their communications skills not only with individuals but also with groups. These attributes helps them to have influence over people.
Steadiness style (S Style)
The S styles are very nurturing, warm, and supportive. This group of people are very good listeners, they are very devoted friends, and are very loyal employees. They are exceptional team players, good planners, courteous, and persistent. The S styles do not like taking risks they better stay in very unpleasant environment than take a risk. There weakness is that they can become very distressed when disrupted severely. They are also very slow in making decisions.
Cautious style(C Styles)
The C Styles are task oriented people, they like tangible results. Most of the time, they are almost entirely in control of their emotions. They always have high expectations of themselves and others, but they have some weaknesses. They become very irritated by surprises and glitches, they are also very skeptical. They are slow in making decisions but are very deliberate.
Analysis
From the results of the DISC Platinum Rule Behavioral Style Assessment carried out on two members of my group namely Stephen Price and Yasser Addassi I was able to identify their strength and weaknesses. The module also advises on what a person can do to improve on the weaknesses so as to be able to work with other people without unnecessary hitches.
Stephen Price
On assessment Stephen was found to have tendencies such as wanting to change the way things are done, performing at his own standards, in ability to express inner most feelings or thoughts. He also had the tendency of seeking to have control over procedures, people and situations; furthermore he has the tendency of trying to accomplish what is considered as unusual. He had fears of not being able to meet self imposed obligations; Stephen was also very demanding and more detached when under pressure.
From the tendencies that Stephen portrays it can be ascertained that he falls under the category of Dominance style. This is because the primary goal that motivates Stephen is being in a position where he is in charge. He tends to focus more on the future than what is happening at the moment or what happened in the past. He has a passion for accomplishing unique tasks finally he likes to leave things better than he found them.
Yasser Addassi
After undergoing the assessment Addassi was found to have tendencies such as the desire to get results with flair, judging others according to their knack to make things turn out. Working much harder when there is a risk involved or a reward. Yasser is vey much concerned about looking bad and becomes very restless and short tempered when under pressure.
From the tendencies that Yasser displays it can be pointed out that Yasser is in the category of impresser. This is because the main motivation for Yasser is the yearning to have things done with style; is very sensitive to the feelings of other people and is not ready to win at any cost.
Conclusion
Behavior is something that one can change, every category has some strength amd weaknesses, thus the most important aspect is to first be able to ascertain the group that one falls in so that one can be able to work on the weaknesses and improve on the strengths. The DISC Platinum Rule Behavioral Style Assessment only gives all the people a chance to be able to assess others as well as themselves so as to enhance better relation ship between different people. Knowing the weakness of another person as well as the strength goes along way in helping to combat conflicts among people.
FCPA and Anticorruption Case Analysis
Discussion 2.2
Student’s Name
Institutional Affiliation
Course Tittle
Professor’s Name
Date
FCPA and Anticorruption Case Analysis
No matter the situation or the case, I won’t risk anyway by hiring the former Mexican Diplomat Gonzalez. The company might be at risk of delaying to open but trusting Gonzalez and paying him in order to hurry up wings will further worsen things. Paying Gonzalez will have violated the Foreign Corrupt Practices Act, which prohibits Americans from paying bribes to foreign officials in furtherance of a business deal. This act was passed in 1977, which puts no “de minimus” for inducements, highlighting how seriously the United States regime deals with government representatives’ bribery cases. It’s better for me to delay opening the company and pay $25,000 per week than going against FCPA. The pressure from the U.S. management might be stressing but paying one hundred thousand dollars to Gonzalez will not be the best decision to make. There are potential “red flags” of action by paying him to violate the FCPA.
Under the FCPA for the United States, it will not be permissible for me and the business to pay a bribe to the foreign official in exchange for business. Paying the bribe will be an extremely costly mistake to the company in terms of reputation damages and finances. By being the representative of the U.S. firm, I have the duty and responsibility to make sure that I implement suitable programs to make sure that the company is effective in executing the protocols to avoid such kinds of payoffs and bribes from occurring. Being a representative from the United States, it is not advisable to go against anticorruption law. The FCPA Act was enacted to prevent U.S. persons and U.S. companies from making payments to foreign government representatives to obtain government business or retain government business (Department of Justice, 2017). I will not hire or pay Gonzalez in anyway. It is worth to wait for the building permits that violating FCPA Act.
Reference
Department of Justice. (2017). Foreign corrupt practices act. The United States Department of Justice.
Retrieved from: https://www.justice.gov/criminal-fraud/foreign-corrupt-practicesact