Paper Topic:

strategy management of Novell

Management strategy of Novell

Introduction

Novel inc . is an American based corporation that specializes in computer software

The company is the inventor of e-security . A part from this , its other products include desktop solutions , data center and resource management

Financial efficiency

This is a measure of how well the firm is able to management finances at its disposal for the realization of the overall objectives of the firm It is also a matter of how effective the firm can maintain its production , operating and financing activities

From the income

statements of Novell , the cost of goods solds expenses are declining with time

At 405 .5 million in 2003 , they have reduced to 316 in 2006 . But this can also be attributed to the low sales figure in 2006 . As a percentage of sales , the cost of goods sold form 36 and 32 in 2003 and 2006 respectively . This can be as a result of quite a number of financial strategies : - purchasing in bulk to attract quality discounts cash purchases to attract cash discounts . Consequently , there is a decline in the general administration selling expenses . This can be a result of change of remuneration policies for instance from fixed to commission based for the marketing staff avoidance of unnecessary overhead costs removal of irrelevant fixed costs etc

Gearing for Novell Inc stands at 24 i .e . as a t 31st December 2006 . It had increased from 21 .7 in 2005 . And in 2004 it was 26 .1 . This means that the company is using more debt than internal sources to finance its assets . However , the firm has enough liquid assets that can be used to meet its maturing financial obligations

Even though gearing can lead to bankruptcy , the firm 's strategy here is to use financial instruments like long term debt that are tax allowable .ROI , ROA , ROE , etc

ROI

This is the denomination for Return on Investments . The ratio indicates the earnings generated by the firm from the utilization of

It is calculated as under

ROI Net profit after tax (earning after tax

br 2004 57 .2 x 100 2 .45

2293 .4

2005 3767 x 100 13 .6

2161 .9

2006 18 .7 x 100 0 .76

2449 .7

The company 's Return on Investments is quite low . In 2006 it was at its lowest at 0 .76 with 2005 recording the highest at 13 .6

The management needs to review its financial strategies especially the kind of investment decision made . It might not be channeling its investments to viable projects with positive benefits in Net present value terms . Either , its strategy might be `investing in assets with long-term benefits

Return on equity (ROE

Equity is the net worth of the company . The ratio is an indicator of the earnings generated by the firm from utilization of capital supplied by the owners (shareholders

It is calculated as under : -

ROE Net Profit after tax

Equity

For 2004 57 .2 x 100 5 .79

988 .4

2005 376 .7 x...

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