Case Study: Alpha's Return Of Activity

The earlier analysis proved that Alpha’s return of assets (on a before-tax basis) significantly lower compared to Gamma. This is because Alpha does not have sufficient pure profit. This was also due to lower operating profit margin which tells us that Alpha is not generating sufficient return. To help Alpha, the possible solution to advise to Alpha is to identify the non-performing assets in the balance sheet and to study the financial statements to identify specific assets or groups of assets that are idle or not performing. This will help Alpha to match the income to the specific assets that produce the company income. The more useful the return on assets measure will be helping Alpha to improve profitability.

Beside that to help Alpha
Another thing can suggest if to increase demand for the product is to offer a sales promotion to increase the amount of inventory that leaves the warehouse in a given period of time. Alpha is also advice to optimize the supply chain supplier will enable supplier to deliver materials in a timely, low cost fashion. This would allow Alpha to minimize the inventory and cost of materials while elevating your supplier’s competitiveness as a business. Other than that establish partnering relationships with customers, can enable Alpha to make demand for products more predictable thereby allowing Alpha to minimize finished product inventory without failing to meet the customers needs for volume and
Alpha is also recommended to balance its source of capital so that it can lower the company’s dependency on long-term debt to grow the business.

The earlier discussion also indicate the Alpha earnings per share (EPS) were fluctuate which will affect the future investor interest reduce. Thus, there are several ways that possible to suggest growing the EPS. Alpha is advice to ensure the management is doing a better job at running the company. This will be the main tasks that need to remind to the management.

Other than that the possible way is undertaking a share buyback to reduce the number of shares on issue is a great idea providing the shares are selling at below what they are worth when they are bought back. The other alternative which is not really a good possible solution is to buy other companies. But if Alpha decide to do this, there are a lot of management analysis and decision making process that need to go through as many acquisitions do not achieve what they set out to achieve. These may not necessarily improve profitability, but they may help Alpha to increase the EPS and further attract future