A financial performance analysis of bundura nickel ltd by mr lenon watambwa (2019) abstract

25 The bulky of BNC products are sold to South Africa hence it is not only exposed local competition but international competition as well. As competition increase so does market sensitivity (Pratheepkanth, 2011). The industry is very sensitive to quality, price & delivery time. BNC uses these three as its tools for advertising and this gives a competitive edge to its competitors. Its business environment is highly unstable because it has a large number of players at international level who can easily manipulate variables like prices and regulations. The industry requires a huge investment in capital assets and technology, this makes it difficult for new players to enter the market. Compliance regulations by government tight distribution channels also make the industry unattractive to investors though the returns are high.
Performance ratios
Table 1.7 In the case of BNC the fixed asset turnover grew to 0.7 in the year ended 31 March 2018 showing an improvement in the efficient use of fixed assets to generate sales. However this ratio can be misleading if the business keeps using old machinery to generate sales as those machinery will need to be replaced as some point. Trends shown above show that BNC was requiring less cash to maintain its operations as the shown by the decrease in operating days. Along operating cycle may result in a company needing additional financing to grow. Fig 1.4
FIN YEAR
NET SALES
FIXED ASSETS
ACC DEPRECIATION
RATIO
2016 42,268,499.00 71,279,266.00 2,034,861.00 0.61 2017 45,122,963.00 76,546,338.00 2,117,797.00 0.61 2018 53,555,405.00 78,705,836.00 2,665,420.00 FIN YEAR
OPERATING CYCLE DAYS 192.12 2017 181.68 2018 172.90 160.00 165.00 170.00 175.00 180.00 185.00 190.00 195.00 2016 2017 OPERATING CYCLE DAYS Electronic copy available at https://ssrn.com/abstract=3521211

26 Table

Download 1.23 Mb.

Share with your friends: