Capstone Task 2 Part D: TRAC Team Analysis
Capstone Task 2, Part D
Tamara Bickston
Rekeesha Duncan
Christopher Lyles
1. Analysis of TRAC Team’s Financial Statistics with Competitor Analysis
An analysis of TRAC Team’s performance over the first eight years of its operations revealed several noteworthy trends and benchmarks in relation to its competitors within the sensor industry. Highlights of these trends, peaks and lows are summarized in the following report to emphasize the critical lessons learned and to guide TRAC Team’s business strategies over the next several years.
A. Return on Sales (ROS)
Also known as operating profit margin, Return on Sales (ROS) is a financial ratio that provides insight into a company’s operational efficiency (Investopedia, 2015). Determined by dividing Net Income (before interest & taxes) by Sales, ROS provides information regarding the profit generated per dollar of sales. An increase in ROS would be indicative of increased operational efficiency of a company. From the graphs below, it can be seen that Year 6 (2020) saw a significant increase in ROS over prior years, with an ROS of 14.8%, whereas prior years had produced ROS’ of 3-8%. Year 6’s increase in ROS and related operational efficiency is primarily the result of increased automation to near maximum levels by 2020 as well as the introduction of TQM tactics, which enabled TRAC Team to generate higher Net Income values relative to its sales volumes. Because of TRAC Team’s aggressive and early adaptation of automation and implementation of TQM measures, our ROS of 14.8% in Year 6 was more than double that of any of our competitors, with Erie Company having the next highest ROS of 6.7% in that same year and two other competitors barely breaking 1%. However, Year 8 (2022) saw a dramatic drop in ROS value to 7.7%, which was the fourth highest ROS level out of six companies. Despite TRAC Team’s effective implementation of automation and TQM strategies, Year 7 saw the largest stocking out amounts of all the years
Tamara Bickston
Rekeesha Duncan
Christopher Lyles
1. Analysis of TRAC Team’s Financial Statistics with Competitor Analysis
An analysis of TRAC Team’s performance over the first eight years of its operations revealed several noteworthy trends and benchmarks in relation to its competitors within the sensor industry. Highlights of these trends, peaks and lows are summarized in the following report to emphasize the critical lessons learned and to guide TRAC Team’s business strategies over the next several years.
A. Return on Sales (ROS)
Also known as operating profit margin, Return on Sales (ROS) is a financial ratio that provides insight into a company’s operational efficiency (Investopedia, 2015). Determined by dividing Net Income (before interest & taxes) by Sales, ROS provides information regarding the profit generated per dollar of sales. An increase in ROS would be indicative of increased operational efficiency of a company. From the graphs below, it can be seen that Year 6 (2020) saw a significant increase in ROS over prior years, with an ROS of 14.8%, whereas prior years had produced ROS’ of 3-8%. Year 6’s increase in ROS and related operational efficiency is primarily the result of increased automation to near maximum levels by 2020 as well as the introduction of TQM tactics, which enabled TRAC Team to generate higher Net Income values relative to its sales volumes. Because of TRAC Team’s aggressive and early adaptation of automation and implementation of TQM measures, our ROS of 14.8% in Year 6 was more than double that of any of our competitors, with Erie Company having the next highest ROS of 6.7% in that same year and two other competitors barely breaking 1%. However, Year 8 (2022) saw a dramatic drop in ROS value to 7.7%, which was the fourth highest ROS level out of six companies. Despite TRAC Team’s effective implementation of automation and TQM strategies, Year 7 saw the largest stocking out amounts of all the years
References: Cash Flow Statement. (2015). Wikipedia. Retrieved from http://en.wikipedia.org/wiki/Cash_flow_statement Current Ratio. (2015). Investopedia. Retrieved from http://www.investopedia.com/terms/c/currentratio.asp Income Statements Investopedia. (2015). Leverage. Accessed via: http://www.investopedia.com/terms/l/leverage.asp Investopedia Investopedia. (2015). Return on equity. Accessed via: http://www.investopedia.com/terms/r/returnonequity.asp Investopedia Investopedia. (2015). ROA and ROE give clear picture of corporate health. Accessed via: http://www.investopedia.com/articles/basics/05/052005.asp