Business Studies
Posted: August 25th, 2021
The long-term goal of the company is to succeed in future, both financially and strategically. This is the management’s chief objective. The board of directors has since highlighted some of the investor’s objectives which are mainly financial. As the management, however, we find their expectations limited and our focus is much wider. On the company list of objectives, additional financial milestones to propel the company into the class of the most effective and efficient firms in the action-capture camera and UAV drone industries are outlined.
These objectives are précised in the two charts below. In chart1, the investors’ expectations are summarized. They act as the blueprint which the management relies on. Chart 2 has the executives’ objectives. Though they appear farfetched, they are reasonable. They are the drivers which propel the company to achieve its full potential. An EPS annual increase by $0.15 over what the investor had anticipated, for example, sounds unachievable. However, this estimation is based on the fact that the expected increase in net income is likely to override the additional outstanding common stock. Besides, there is a plan to increase dividend payouts every year, and hence, making the company’s shares appealing to the investor than expected.
Financial Objectives: Investor Expectations
| Yr. 6 | Yr. 7 | Yr. 8 | Yr. 9 | Yr. 10 | Yr. 11 | Yr. 12 | Yr. 13 | Yr. 14 | |
| EPS ($) | 1.00 | 1.75 | 2.75 | 4.00 | 5.25 | 6.5 | 7.5 | 8.5 | 9.25 |
| Stock Price/Sh. Inc. ($) | 5.50 | 12.50 | 30.00 | 30.00 | 30.00 | 30.00 | 30.00 | 30.00 | 20.00 |
| ROE (%) | 17.0 | 20.0 | 25.0 | 30.0 | 32.5 | 35.0 | 37.5 | 40.0 | 42.5 |
| CR | B+ | B+ | B+ | B+ | B+ | A- | A- | A- | A- |
Financial Objectives: Executive Expectations
| Yr. 6 | Yr. 7 | Yr. 8 | Yr. 9 | Yr. 10 | Yr. 11 | Yr. 12 | Yr. 13 | Yr. 14 | |
| EPS ($) | 1.20 | 1.90 | 3.00 | 4.20 | 5.45 | 6.75 | 7.65 | 8.70 | 9.50 |
| Stock Price/Sh. Inc. ($) | 7.00 | 15.00 | 35.00 | 35.00 | 35.00 | 35.00 | 35.00 | 35.00 | 30.00 |
| ROE (%) | 19.0 | 22.0 | 27.5 | 32.0 | 35.0 | 38.5 | 41.0 | 44.5 | 47.5 |
| CR | A- | A- | A- | A- | A- | A | A | A | A |
| Yr. 6 | Yr. 7 | Yr. 8 | Yr. 9 | Yr. 10 | Yr. 11 | Yr. 12 | Yr. 13 | Yr. 14 | |
| EPS ($) | 1.20 | 1.90 | 3.00 | 4.20 | 5.45 | 6.75 | 7.65 | 8.70 | 9.50 |
| Stock Price/Sh. Inc. ($) | 7.00 | 15.00 | 35.00 | 35.00 | 35.00 | 35.00 | 35.00 | 35.00 | 30.00 |
| ROE (%) | 19.0 | 22.0 | 27.5 | 32.0 | 35.0 | 38.5 | 41.0 | 44.5 | 47.5 |
| CR | A- | A- | A- | A- | A- | A | A | A | A |
(Above: Chart 2)
The outlined financial objectives are to be pursued conjointly with a few strategic goals. These includequality image rating, which is the investors’ objective,market share, percentage of new customers, and increased PAT productivity. By the year 14, the management anticipates a 30% and 5.5% increase in market share and customer base respectively. As a low cost provider, the management does not foresee the image rating going above 80%. The following chart 3 illustrates year-by-year strategic objectives.
Strategic Objectives
| Yr. 6 | Yr. 7 | Yr. 8 | Yr. 9 | Yr. 10 | Yr. 11 | Yr. 12 | Yr. 13 | Yr. 14 | |
| IR | 71 | 72 | 73 | 74 | 76 | 77 | 78 | 79 | 80 |
| Mkt. Sh. (%) | 25.0 | 25.8 | 26.4 | 27.0 | 27.5 | 27.8 | 28.4 | 29.2 | 30.0 |
| X Rate of new customers (%) | 1.0 | 2.0 | 2.5 | 3.0 | 3.4 | 3.8 | 4.4 | 5.0 | 5.5 |
| PAT Prod. (units) | 4,800 | 5,000 | 5,300 | 5,800 | 6,100 | 6,500 | 6,800 | 7,200 | 7,500 |
(Above: Chart 3)
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