Consulting Report – Analysis of Financial Performance

Consulting Report – Analysis of Financial Performance

Key Performance Indicators for Various Stakeholders

Shareholders

One of the key performance indicators (KPI) for shareholders is the quick ratio. Also referred to as the acid test, it provides the fastest way to assess a company’s current financial position (Strelnik et al., 2015). The quick ratio shows a company’s ability to pay off debts and liabilities in liquid assets. Another important KPI for shareholders is the return on equity (ROE). ROE measures the profitability of a company from the shareholders’ lens. It is the net return payment to investors accruing from their investments.

Employees

A crucial KPI for a company’s employees is inventory turnover. An inventory turnover shows the inflow and outflow of stock into and out of business. It is the number of times a business replaces specific stock within a given period (Strelnik et al., 2015). Inventory turnover helps employees to plan stock supplies and avoid shortages or surpluses. Also, managers can boost profitability by obtaining more sales revenue from invested capital. The company can achieve that by embracing strategies that reduce working capital (Strelnik et al., 2015). For instance, navigating options to minimize transportation costs can reduce working capital.

Community Groups

A company’s corporate social responsibility (CSR) programs are the key financial performance indicators for the community. Firstly, a company that compensates and regularly increases the salaries of its employees creates a positive reputation among community groups. Other financial benefits such as healthcare insurance coverage also go a long way to create a positive image among community groups.

Triple Bottom Line

The focus on ethical sourcing of supplies indicates that a company practices the triple-bottom-line business model. Ethical sourcing helps companies determine whether suppliers adhere to quality, economical, and transparency standards (Hill et al., 2019). For instance, the beauty company must ensure that suppliers fairly transfer payouts of farm-related beauty products to the farmer. Consequently, this may come at a cost, but it shows a company’s dedication to society’s well-being.

References

Hill, C. W. L., Jones, G. R., & Schilling, M. A. (2019). Strategic management: an integrated approach: theory et cases (13th ed.). Boston, Ma Cengage Learning.

Strelnik, E. U., Usanova, D. S., & Khairullin, I. G. (2015). Key Performance Indicators in Corporate Finance. Asian Social Science, 11(11). https://doi.org/10.5539/ass.v11n11p369

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Overview
Analyzing the financial performance of a company is crucial for any business at any given point in time, especially when the company is heading in a new direction.

You are aware that your company has made the strategic decision to move to a triple bottom line (TBL)-focused business model. You have already collaborated with various departments within your organization to understand their perspectives.

Now you will review the current financial performance of your organization and evaluate whether the operational plan aligns with key performance indicators of the finance department.

Prompt
Using the financial records of the health and beauty company that you work for, as well as the financial records of the company you chose in Module One, create a consulting report outlining the following criteria:

Explain key financial performance indicators that various stakeholders would be most interested in. Support your rationale and include the following stakeholders in your response:
Employees
Shareholders
Community groups
Explain additional key financial line items related to the triple bottom line that are required to measure cost. Support your rationale.
Supporting Material
Financial records of the health and beauty company you work at

Consolidated balance sheet
Consolidated cash flow statement
Consolidated income statement
Financial records of the company you chose in Module One

A balance sheet of your chosen company
Cash flow statement of your chosen company
Income statement of your chosen company
List of global companies provided in Module One