A financial performance analysis of bundura nickel ltd by mr lenon watambwa (2019) abstract
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- Fig 1.1: DuPont Analysis Ratio Limitation
- Brand analysis
| DuPont Analysis: Corporate Financial Institution (2009) defines DuPont Analysis model as a method of breaking down the original equation for ROE into three components operating efficiency, asset efficiency, and leverage. Operating efficiency is measured by Net Profit Margin and indicates the amount of net income generated per dollar of sales. Asset efficiency is measured by the Total Asset Turnover and represents the sales amount generated per dollar of assets. Finally, financial leverage is determined by the Equity Multiplier. The equation for the basic DuPont model is as follows: Fig 1.1: DuPont Analysis Ratio Limitation: Despite being such a popular and useful technique for the interpretation of Financial Statements, Ratio Analysis has its limitations. Below are some: Doesn’t consider the Ratio Analysis becomes incomparable if there is a significant change in the Accounting policies and procedures adopted by the business. Different business operating indifferent Industries is difficult to interpret based on the standard Ratio Analysis Ratio Analysis standards are not the Electronic copy available at https://ssrn.com/abstract=3521211 8 same across Industries and it is difficult to compare companies based purely on their Standard Financial Ratios it is based on historical figures reported by the business and as such predicts that the history will repeat itself which mayor may not be the case. Due to these limitation we can’t base our analysis on ratios only they are other technics we can use to analyze organization which we are going to mention below Brand analysis: Major events in the company’s history as of December 2016 are such that BNC as a company has gone through a lot of difficulties to establish itself as a going concern. Tracing back from 2003, Mwana Africa Holdings (Proprietary) Limited, a private South African company, acquired major shareholding of the Bindura Nickel Corporation. In November 2008, Bindura Nickel Corporation was placed on care and maintenance and mining resumed at Trojan in September 2012. As of December 2015, there was change of name to ASA Resource Group Plc. and new management and board of directors were appointed. Over the last decade, operating in Zimbabwe, in particular, has been challenging at times, especially when hyperinflation, currency instability and issues with indigenization laws caused uncertainty. The process of restructuring the group’s operations continues, as the business is set on a long-term sustainable growth path once again and the Group is now emerging from one of its most challenging periods with cautious optimism. As alluded by Briggs, S, (2011), greatest producers of nickel are Russia, Indonesia, Canada, Australia, New Caledonia, while possible leaders are South Africa, Brazil, Cuba and Philippines. Small producers are Botswana, Madagascar, Greece, Venezuela, Zimbabwe and Colombia. On the other hand, greatest consumers are the European union (EU, USA, Japan, China and India. Coming back to Zimbabwe, our leading producer company is BNC which according to Mwana Africa 2014 contains at least Mt of Nickel as defined mineral resources and still has to compete with the world giants in order to have a sizeable share of market from those leading buyers. The desire to occupy a distinct, unique identity and valued place in the target customer’s minds force a company to work more on brand management before thinking of the product and all other ways of selling it. According to the American Marketing Association (AMA 1990), a brand is a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competition. Electronic copy available at https://ssrn.com/abstract=3521211 9 Having this background, an analysis was made to check if the BNC as our largest nickel producer in Zimbabwe is doing well to appeal to the international scene which appears to be the market for our product. Before focusing on marketing, we look at the brand BNC as is highlighted that branding is important when trying to generate future business and a strongly established brand can increase a business value by giving the company more leverage in the industry. This makes it a more appealing investment opportunity because of its firmly established place in the marketplace. Download 1.23 Mb. Share with your friends:
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