Strategies to achieve financial targets, Financial Management

The XYZ company supplies products to a number of original equipment manufacturers (OEM's). It employs 5,000 mostly unionized workers and generates about $2.2 billion in revenue annually. In 2002, it won an "Excellence Award" from one of its major client companies for having supplied an OEM product at the quality level of ten defects per million in three consecutive years, thereby exceeding the specific target of 15 defects per million set by this client. However, the corporate parent of the XYZ Company was less than happy with its financial performance. It declared this subsidiary a " troubled operations" in 2002, giving notice that if its business performance did not get better within certain time frame, the XYZ Company would be closed down or divested. The specific financial targets set by the corporate parent consisted of

(1) Net income (NOPAT) to sales ratio at 5 percent

(2) Earnings before interest and tax (EBIT) to sales ratio at 10 percent, and

(3) Return on assets at 22, 5 percent

Needless to say, management worked diligently to find ways to improve the company's business performance. One strategy was to induce 700 early retirements from the unionized workforce by November 2002. As of April 2002, only 480 workers signed up for this heavily promoted early retirement program that qualified them each to receive a $ 35,000 cash incentive. Besides encouraging workers to retire earlier, what other strategies do you think the XYZ Company should pursue to achieve all three of the noted financial targets?

Posted Date: 3/2/2013 8:17:28 AM | Location : United States







Related Discussions:- Strategies to achieve financial targets, Assignment Help, Ask Question on Strategies to achieve financial targets, Get Answer, Expert's Help, Strategies to achieve financial targets Discussions

Write discussion on Strategies to achieve financial targets
Your posts are moderated
Related Questions
Define the balance of payments. Answer:  The balance of payments that is abbreviated as BOP can be defined as the statistical record of a country’s international transactions ove

What are the advantages and the disadvantages of a new stock issue? A new stock issue increases funds and reduces the riskiness of the firm. It as well tends to send a negative

Objectives and Functions of ASIC The objective of ASIC is to ensure the confident and informed participation of consumers in the financial system. To attain this objective, it


Explain some Examples under FASB 52 that a foreign entity's functional currency would be similar as the parent firm's currency. Answer:  Three instances under FASB 52, in which

Nortel is considering the purchase of a new  call routing system.  The system will cost $50M to purchase, an additional $7M to install, and will last for 30 years.  The CCA rate as

6 KEY STAGES OF INVESTMENT DECISION WITH APPROPRIATE DIAGRAM

Ashok is to receive an amount of Rs. 15,00,000 from his relative after 3 years. He wants to buy a house for which he wants the money to be paid now. His relative had al

1. Of course a swaption will be needed. The major reasons being that Bond A is callable after 3 years and matures in 4 years whereas Bond B matures in 5 years. It is understandable

Q. Nature of the business? The working capital requirement of the firm basic depends upon the nature of the business. public utility undertaking like the water supply and rai