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Turnaround is possible for all Business Entity

On analyzing the table as stated in the post dated 06.07.2016, the person tries to find out the

  • Period when the duration of operating cycle was minimum alongwith the inflow and outflow of cash during that operating cycle

  • The period when earning was maximum due to lesser amount of outflow of cash along with the operating cycle time and inflow of cash during the operating cycle;

  • The period when earning was maximum due to maximum amount of inflow along with operating cycle and outflow of cash during the operating cycle

The need for application of the above mechanism for calculation of Return on Investment in Working Capital is most acute in business organisation having apparently looking continuous business operation due to its wide and complex area of operations results every scope for lack of co-ordination and oneness. An honest effort is required to be taken to convert and break up the continuous cooperation (as seen in naked eye ) into a number of visible discrete and distinct segment of operations for the limited purpose of establishing one-to-one relationship with inflow and out flow of cash for each operation.

Earlier it was stated that the benchmarking will be done considering performance of the business entity during the period when it did not incur loss. By breaking down the performance of the business entity for each business cycle and comparing the same with the performance during benchmark period, the gap is identified and the action plan for filling the gap is drawn to ensure turnaround of the business entity for loss – making to profit – making business entity.

Before drawing the action plan, some analysis at the macro level and micro level is also required – Market share, Industry Structure and the business entity itself and the same are discussed here.

Market share – before determining market share, size of the market is required to be determined. If the business entity has become loss-making business entity due to substitute product, the market size is to be determined considering the market of substitute product also.

Analysis of Business Structure – The detailed analysis is presented through a video.