The Barkan Companies Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Q6.) How you maximize the profits how you attempt to keep cash and maximize shareholder value?

Profitability maximization has always been at the top; therefore, I try to finance the projects and capital expenditure using the internal funds in order to avoid the cost of external borrowing. In addition, being a CFO I encourage my finance team to control the project cost through negotiating with suppliers on prices of raw material used. Cash plays a key role in successful running of a business; therefore, the revenue stream alone cannot be a critical success factor so I manage the timing of capital investments and working capital to keep the cash at a reasonable level in order to meet the cash requirements. Through profit maximization coupled with positive cash flows will definitely contribute to the maximization of shareholders value.

Q7.) What precautionary steps do you take to avoid giving wrong analysis?

I diligently performed the financial analysis by paying attention to details, however, this concentration do take some extra time but it is worth doing it right the first time than to do it again. Additionally, I asked someone else to check the analysis because was looking at the analysis work for long time, which would not enable me to find very common mistakes. Moreover, I compared my analysis with the industry and past performance in order to get a sense and look for variances that may have been miss-calculated. Additionally, I used my common sense and understanding of the general practice of business and industry to analyze the analysis for potential errors.

Q8.) How you as financial manager reduce expenses and increase revenue?

As a financial manager, I recommend undertaking new projects which yield higher returns, additionally, I make plans and budgets for the project in order to make sure that they are completed within due time and do not use more finance than initially allocated for it. Moreover, in order to analyze the profitability and higher returns, I use project appraisal techniques such as internal rate of return (IRR) payback period.

On the other hand, as an effort to reduce expenses I use the internal funds on first priority along with debt and equity financing at second and my third priority is to avoid or reduce the cost of finance.

Q9.) Did Barkan care more about securities safety than maximize profit and why? What this will affect on profits?

The Barkan Companies did care about the safety and security of its employees through provision of safety equipments and insurance policies for its employees. Moreover, the company had been committed to provide safe and secured rental along with housing projects to its clients. Additionally, the provision of safety and healthy environment to its employees would avoid the issues of non-compliance with labor laws and would increase the employee efficiency along with motivation level and they would become more loyal to The Barkan Companies. On the other hand, provision of safe and secured rentals as well as housing projects to its customer would make loyal customers and would generate free marketing for The Barkan Companies in the form of word of mouth through satisfied clients.

The provision of safety and security would incur cost, consequently, this would lower the profitability of The Barkan Companies but in the long run it affected the provision of safety and security; which would increase the prodigality through customer retention and decrease cost of hiring along with training new employees by retaining the existing employees

Q10.) What is the impact of the internet for Barkan to financial management staff opinion?

The use of internet will enable the financial manager to gather required data for analysis as well as forecast in real time and at low cost. Moreover, the online access to financial market will bring the ease of access to financial market. Furthermore, the internet helps financial managers in making quick financial decisions through accessing the executive for taking their opinion before taking a final decision of raising finance for investment.

Q11.) What is the last financial crisis the real estate industry faced and what you learned from it?

The last financial crisis that real estate business faced was the Indian real estate crisis in mid 2011, which was due to the raising interest and inflation rates. Real estate investor could not meet the increased interest rates, consequently, they defaulted and sold their properties in order to pay the interest expense and principle borrowing amount. Additionally, the unexpectedly increased supply of properties into the market lowered the prices of real estate properties, which caused the real estate crises. The learning aspect of that real estate crisis was that the investors should not be highly reliant on the debt financing in order to acquire real estate properties. In fact the mixture of equity and debt financing should be used for investment in real estate business..............................................

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