Bluntly Media: Valuation Of Private Company Case Study Solution
In the recent times, the number of green customers is increasing, who are critical to the impact of operations of the company on the natural environment. There are considerable opportunities available for Bluntly Media, to increase its reputation by abandoning the newspaper advertisement,in order to protect natural environment and trees. Furthermore, the revenue from newspaper advertisement is also reducing drastically, due to obsolescence of newspapers. Divesting from potential loss-making segment through this strategy, might have some positive implications for Bluntly Media.
As a marketing service provider, Bluntly Media should have to follow certain strict rules and regulations, regarding the content of the advertisement. There ascertain restriction on marketing service providers regarding the content, material and consequences of advertisement.Failure to comply with those stringent rules and regulations, might have substantial adverse effects regarding outflow of cash and negative publicity for Bluntly Media.
The gross profit margin of Bluntly Media,appears to be relatively constant from the year 2009 to 2013, and same is the case for the net profitability of the company. However, it can be said that,profitability is reduced, due to the difficult trading conditions in the U.S. Furthermore, it can be argued that, further decrease in profitability is expected, due to increasing difficult trading condition in the U.S. On the other hand, the return on assets is also improving Bluntly Media, despite the poor economic condition.The return on equity is decreasing, by almost 100% from the year 2009 to 2013.However, even after the reduction,the return on equity is still more than 100%, which might be quite good for the organization, especially in the worse economic condition.
The efficiency ratios of Bluntly Media also faces minimum fluctuation between the periods. The accounts receivables are reducing slightly, which depicts the improved performance of credit control department. On the other hand, the accounts payable turnover days are also reducing slightly, which allow Bluntly Media to take advantage of the early payment discounts as well.
The gearing ratio of Bluntly Media is reducing drastically, which can be very positive for the organization. There can be many positive implications, for the companies of the reduced gearing ratios.Firstly, the interest cost will be reduced, which improves the profitability of Bluntly Media.This factor is critical for Bluntly Media, as the profitability margins are reducing day by day. Furthermore, higher gearing might also result in the increased covenants being placed, by the debt providers, which might reduce the pace of growth of Bluntly Media.
Despite the extreme reduction in the level of debt, the interest cover ratio is decreasing considerably, this might be primarily due to the heavy reduction in the margins of profits.
The current ratio of Bluntly Media is improving, but the improvement is petite, the ideal current ratio is almost 2:1.The current ratio of Bluntly Media, is well behind the per-defined threshold.Which means that, Bluntly Media have just enough current assets, to meet-up its current liabilities. Further decrease in the current assets or increase in the current liabilities, could affect the current ratio more adversely, which might be very dangerous for Bluntly Media.
The growth in turnover of Bluntly Media is improving in the year 2013, as compare to the previous years.This increase indicates the improving performance of Bluntly Media. As clients of Bluntly Media are spending lower on marketing expenditure, due to difficult trading conditions, there should be decrease in the revenue of Bluntly Media. As opposed to this factor the revenue of Bluntly Media is increasing, indicating the good performance of the company. Same is the case for other ratios, such as an increase in gross and net profit margin as well.
The main strength of Bluntly Media is the expertise of management, which is the primary factor in increasing the sales revenue. As Bluntly Media is operating in the industry, in which expertise of management plays an important role in increasing the revenue of the company.They might be considered, the most critical strength of Bluntly Media. In addition to this, the company has lower external debt, which means that it can get further debt finance in fulfilling the growth needs. Moreover, the company has a very positive reputation in the market regarding the quality of its services. In the marketing industry, reputation plays an important role in increasing the revenue and profits..Normally customers avoid to associate with the company, whose reputation is not up to the mark regarding quality…………….
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