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Financial Performance and Market Capitalization |
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Shubnum's processes play a significant part in the prudent operations of an organization in the private and public sector. These processes reduce the cost of goods sold (COGS), Materials, Repair and Operating (MRO) supplies, large capital outlay and continuing operating expenses in a vertical industry. Such an industry would employ manufacturing as a significant part of their operation. The processes also reduces the sales, general and administrative (SG&A) - operating expenses as well as large capital outlay for equipment/services/ projects; for organizations whose primary function is a service, such as a governmental agency. These reductions are in the range of 8% to 56% of the funds-currently-budgeted for such activities. Please refer to the section titled Results. Note that the savings shown are for single transactions not accumulated over time nor aggregated over many transactions. Shubnum's processes have the capability to aggregate such single transactions, which can affect the performance of an organization very dramatically. The savings have a significant positive affect on the net profit margins for a non-public organization; taxpayer contributions saved for a public body or a better return on investment on borrowed funds for a lending agency.. These affects are illustrated in the accompanying tabulation.
In the accompanying illustration of an
'ABC corporation', the operating expenses are noted to have been
reduced by 12% of the benchmarked operating expenses, prior to
using our processes. This reduction translates as an increase
in earnings by 42% based on the same gross revenue and other
sales, general and administrative (SG&A) expenses.
If the above 'ABC corporation' was an organization in the vertical industry and the above reductions were in COGS and/or SG&A, then the increase in the net profit margins is equivalent to an increase in gross sales revenue growth of 42%, based on constant net profit margin of 10%. A growth of such magnitude would take a long time in most industries. This growth may be translated as a 6% growth per year for 7 years. Based on a rough calculation of the capitalization
of an organization at 3 times the revenue, the corporation increased
its capitalization by $630,000,000 Effect on Economic Value Added (EVA) EVA measures the net profits in the context of the 'true cost of capital employed'. In simple terms, Shubnum's processes make the existing capital work harder thus increasing the efficiency and hence the subsequent effect of 'reduced cost of capital employed'. In other words it takes less capital to perform the same equivalent-work as it would have, if the strategies were not employed. This reduction of the cost of capital employed, enhances the EVA which translates as improved shareholder value. Our processes have a significant impact on an organization's EVA. Prior to an assignment, and with your permission;
we would model your current financials and benchmark them to
compare the affect of implementing our processes in a consistent
manner. 1. Economic Value Added
(EVA) is a registered trademark of Stern Stewart & Co.
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