Financial Analysis Assignment

Company Name: Sanco (Business of Technology)

Written and Submitted by

1421229: Amir Shehzad

Submission Date

27.02.2015

BACKGROUND

Sanco Pakistan is doing the business of technology; it provides the advanced and important

instrumentation for educational institutions and industry. Sanco has special expertise in the areas of

Nanotechnology, Robotics & Automation, Enterprise mobility solution and Project sourcing. Here are

the products which company is providing to the different sectors from business industry to

educational institutions.

INDUSTRIAL PRODUCTS

1: Lightweight tablet PC which is use by the field workers who can work and enter data during field

works.

2: Industrial Scanning electron microscope

For industrial application SEMS is third generation. This machine is use for quality control and failure

analysis inside the manufacture plant.

EDUCATIONAL PRODUCTS

1: SEMs is use in the field of education, it enables the students to get a better view of the material.

2: Mobile robots

To keep the students rolling, classrooms need navy of mobile robots. Mobile robots to help

universities for modern learning with advanced technology.

PROCESSES

As Sanco itself is not manufacturing company of scientific products, it plays a role of intermediary

between the buyers and sellers. Sanco has a license by the government of Pakistan to provide

scientific products to its customers, because customers cannot buy these types of products directly

from the manufacturing companies. Sanco has four processes to do its business which are following

Sanco has direct contracts to industries, hospitals and educational institutions to provide the

products which they demand. These institutions send the quotations and our company

provide those products.

Sanco

Supply

Order

Industries/Institutions

Companys marketing department people visit different institutions and offer the company

products to them and tell them the specifications, advantages and prices of the products.

Sanco itself send the quotations to different institutions and take the orders by competing

the prices and specification of other competitors.

Sanco attend seminars and science fair festivals to market their products and get orders at

the spot.

Sanco

Visit to companies

Giving offers

Tell specification & prices

Orders Customers

Sanco

Emails

Quottions Customers

Orders

Sanco attend seminars

Market product Customers attract

and give orders

Direct Contracts

COMPETITORS

Ezetech

Linketech

Both companies are doing the same business and target the same market as Sanco is doing. Both

these two companies almost have same procedure of marketing and advertisement.

Policies

Provide better and advanced technology to all industries

Follow the rules and regulation settled by the government

Accept claims and provide services within 15 days

Casual dress and smoking is not allowed

Company employees cannot work for others

Quotations can only be sent by company personal email I.D

Review of Management Accounting

Relevant costing and Decision making

In relevant costing we studied that how we can find out the costs of cost production, process or

service. It tells how much does it cost. It helps us to find how relevant cost is used how short term

decisions can affect by reducing price, sub contracting and other changes. By relevant costing we can

easily make a business decision.

Cost Volume and Profit

We studied the cost-volume-profit analysis which helps to find the interrelationship between cost,

volume and profit. This CPV analysis helps in Sanco ltd to find out how much every process cost and

what will be the volume or output of that process. Finding out the breakeven point we can easily

make short term decisions on the basis of those costs and volume which tells us the profit of that

product or process.

Overhead allocation

We studied in overhead allocation that how full, or absorption, costing can be used to calculate the

costs of a businesss core activities. We divide all the costs between products or processes. When we

allocate overhead, then we see the effects of change and using our analysis to make decisions about

future activities. It helps to make a decision whether this process should continue or stop.

Budgeting

Budgeting is a tool which provides control for managers; budget is a quantitative term which

allocates the financial resources of the company. It is based on short term objectives and planed

activities. It also tells us that targeted goals are achieving according to budgets or not.

Variance analysis

We studied in variance analysis that we compare the planned budget and actual results after setting

the goals, when we get results then we analyse the variation between the planned budget and

actual results. This really helps the manager to make reforms for short term and long term goals.

This variation tells us that either process is going in the right direction or not.

Management techniques

For Sanco there are two techniques which we use because these two techniques are important and

relevant to the company, first budgeting and 2nd is Variance analysis.

Budgeting

Budgeting is a technique which provides an estimation of revenue and expenses for the future.

Budget is important administrative tool; it is a plan of action for achieving quantified objectives and

standard for measuring the performance. Budget is based upon short term objectives and planed

activities.

Importance: As Sanco have four processes to do its business, so every process need budgeting for

decision making. When we fix the budget then we can make good decisions for those four processes

of company. As we know that in Sanco there is no specified budget for every process, so we need to

make budget, first we will determine which process is efficient and give more output then we

allocate the budget. By using this technique we will make more efforts and hard work as we will

know about the budget and work to achieve the goals. Sanco dont allocate budget for above four

processes, they just spend the money when they need at a time. They dont have any budget type

thing. So it is important to set the budget for Sanco.

Budgeting technique is very important for Sanco as it covers all key problems and weaknesses of the

company, very shortly we will discuss those issues which budget covers.

Planning: Budget helps in planning and to set the short term goals for the company, as Sanco has

four processes so we can plan which process is more important and worthy for the Sanco. It tells

where employees should have to be more focus.

Motivation: When budget is fix then employees will be more motivate because they will know that

they have this much budget to get the orders from the different companies, so they will visit more

companies and institutions to market their products so they can get orders.

Performance evaluation: Budget easily evaluates the performance of the employees as well as the

output from all four processes. This performance evaluation has great impact on overall company

performance, budgeting will give the feedback between actual results and budget that will be

variation.

As an example we are comparing two processes of Sanco.

Attending Seminars sending direct quotations

1. Seminar attending fee 1. Office rent

2. Employees salary hour 2. Time value

3. Transport expense 3. Employees salary

Work in a whole month and see the results

Cost on seminar 500000 cost of sending direct quotations 300000

Orders got 5 orders got 1

Profit earned 2million profit earned 200000

First process is more efficient and profitable so more budget is allocated for the first process.

Method: variance analysis is used to see the difference between these two processes, this variance

analysis is directly related to the Sanco because it clearly differentiate the profit and expenses of two

process and helps in decision making.

Decision making:

1. Spend more budgets on first process

2. Attend more seminars instead sending the direct quotations

3. Target more companies and attend seminars in more big cities

Recommendations

1. Sanco should allocate the budget for all the four processes.

2. Sanco should do variance analysis to check the performance of the company

3. Sanco should have monthly or quarterly targets to achieve them

4. There should be commission for the employees so they work more to get the orders

5. There should be check and balance over the employees

SWOT Analysis

Strength

Key problems are clearly addressed which affects the company performance, its efficiency, quick

processing and its management style. All processes and facts are authentic and clearly defined.

Management techniques are used to solve those problems which were identified in the Sanco.

Weakness

Complete management techniques and strategies arent applied because of low structure

management in company. It was difficult to apply those techniques in weak structure and procedure

of company. If we compare the actual processes in company and management techniques there was

too much mismatching and missing which created a lot of problems during doing this project.

Opportunity

If I have more time for this project, I would like to apply more management techniques deeply and

try to relate them with current management strategies using by the Sanco. Moreover I would like to

use real calculations and figures to show the performance in numbers.

Threats

As for as I know that overall classmates have to follow the same headings and procedure, but still I

fell like my work is done simply and very precisely, I followed the actual assignment procedure.

1. Investopedia (2014) Investopedia.com [online]

http://www.investopedia.com/terms/r/relevantcost.asp. [Accessed: 25 February 2015]

2. Sanco (2015) Sanco-me.net [online]

http://www.sanco-me.net/. [Accessed: 20 February 2015]