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Free «GISMO» Essay Sample

In carrying out the market analysis of GISMO between the year 2003-2010 there is a need to calculate the financial ratio of each firm in order to come up with the trend analysis and of the firm’s performance. On the other hand, the industrial analysis measures of the performance of firms that are in the same industry is necessary. This analysis is carried out in terms of return on assets ratio, whereby the measure of the ratio indicates the profitability measure concerning how effectively and efficiently the firm’s asset are used (Dash, 2009). In the year 2003, the industry analysis using the return on asset ratio indicated that firm AAA was the leading with 0.1429 followed by firm BBB with a ratio of 0.11997 while company DDD and FFF had the same ratio of 0.106956 and thereafter firms CCC and EEE were last in the industry with a ratio of 0.065992. In the year 2004, company AAA is still in the lead with a ratio of 0.1656 while firm BBB follows with a ratio of 0.129999 and firm DDD follows with firm FFF coming in fourth followed by firm CCC and EEE with a ratio of 0.00701.

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In 2005, the return on assets ratio of firm EEE takes over as company AAA comes in second with 0.615 indicating that there was a decline in the returns on the net profit from the assets, as they were not used effectively (Kass-Shraibman & Sampath, 2011). However, company BBB that comes in last as compared to the previous year second position indicating a drastic decline in the profitability. In the year 2006, company AAA seems to be more viable in profitability as compared to the rest as it records ROA of 0.15886 while company BBB performance gives a ratio of 0.126, which is the lowest in the industry thus indicating that the assets were not fully utilized (Longenecker, Petty, Palich & MooreSmall, 2010). In the financial year 2007, the performance in the industry takes a different turn as company AAA becomes the lowest with a ROA of 0.04611 although it has the highest asset turnover ratio of 1.3021. On the contrary, company CCC takes the new lead as it records ROA of 0.14201. In the year 2008, company CCC still takes the lead in the industry with its ROA standing at 0.170007. The lowest company in profitability is BBB with its ROA standing at 0.054 .The markets in the year 2009, indicate that company CCC still leads with an ROA ratio at 0.193008.In the year 2010 company CCC takes the lead in the industry.

 
 
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Company AAA development cycle in the industry is evenly distributed product lifecycle as the profits increase from rapidly over the years despite a drastic decrease in the net income and asset values at the year 2008 the company significantly employs workers throughout each year as a result there is increase in production levels (Weske, 2010). Company BBB profitability development and its product life cycle in the market is evenly distributed in the years as the income from sales increases however, its production curve declines as the full-time workers are increased indicating that the company has reached its peak in the sales (Brigham & Daves, 2009). Company CCC net income and revenue from the sales increase as the labor force is increased indicating that its factors of production are not fully utilized. Company DDD revenue from sales increase as the labor force is increased over the years designating that the firms sales are growing over the years thus there is need to exploit further its markets (McKinsey & Company Inc., Koller,  Goedhart  & Wessels, 2010). Company EEE indicates an increase in sales revenue as the labor force is increased this gives a clear sign that the company’s market still has room for growth in the industry. Company FFF also, gives a clue that its market is more rapidly growing as it increases its workforce this is therefore, a significant growth.

Newton (2010) asserts that the most common characteristic of a company in the industry is the free economic system existence. In the above industry, there exist maladjustments in the market, as there is decline in sales and production from the firms as the businesses operate. Another, characteristic is the freedom of action as the firms employ labor force as a way of adjusting to the fluctuating market forces.

Grant (2005) affirms that the industrial analysis of competitiveness is determined by profitability of the firms. Indeed, the industry is competitive as the firms compete to be more profitable than the rest. The industry is thus healthy as it allows room for competition among the firms present in the market (Moles, Parrino, & Kidwell, 2011).

   

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