ERA Group Inc. Corporation Strategic Plan Analysis
Since 2008, ERA Group Inc has experienced fluctuations in its financials. The revenue was about US $250 in 2008; then it reduced to about US $225 in the years 2009 and 2010. In the year 2011 it increased to about US $260 and increased further to about US $275 in the year 2012. There was an increase in revenue from the financial period that ended in Sep. 30, 2012 to that of Sep. 30, 2013. This is a clear indication that the company is presently enjoying high sales that easily translates to higher operating margin. An operating margin ratio is calculated by dividing operating income by the net sales. The result gives us the earnings received per dollar of sales. From the graph, the operating margin for basic shares is 26% and for the diluted shares is 25%. My justification for picking on the operating margin ratio can detect whether the company is making losses or profit per every dollar. Hence targets for sales revenue can easily be set and monitored.
There is an increase in expenses, which translates into a decrease in profits. Expenses need to be closely monitored at ERA Group Inc so that it does not exceed the budgeted estimates. Another way to compensate for the expenses is by investing in other ways of earning income say by diversifying the company’s portfolio to include activities beyond the basic gas and oil operations. The successful establishment of The ERA Service and Rescue program is a good initiative in the direction of increasing earnings of the company.
There is a significant increase in the cash inflows from investments and cash settlements as indicated in the cash flow statement. This brings optimism that the company is bound to receive more profits from its operations than before.
Corporate governance is an aspect of finance that deals with the management of the firm’s operations in a manner that will boost those operations and win the confidence of the stakeholders. The stakeholders would include customers, employees, shareholders, suppliers, creditors and investors. A well managed company will definitely do better than a poorly managed one. ERA Group Inc. has put several mechanisms in place to ensure that it is well governed. They have in place a Board of Directors, Board Committees and Governance documents. On March 18, 2013, the Board of Directors approved the expansion of the board to have 8 directors and not six as it had been previously. This was as a result of the addition of appointed directors with Charles Fabrikant being the Chairman and Sten L. Gustafson being the Chief Executive Officer and Director of the company. Furthermore, the Board of Directors appointed Jennifer Whalen as the Company’s Vice President and Chief Accounting officer. She also assumed the responsibilities of the Principal Accounting Officer.
There are 3 board committees: The Audit Committee, Compensation Committee and the Nominating and Corporate Governance Committee. There is a charter that governs each of the three committees’ operations. This is to ensure there are no excesses that can endanger the company’s life. Employees have access to the audit committee so that they can report any malpractices in the firm. The members of this committee have been chosen by merit, having considered their wealth of experiences in the business world.
Stockholders have a keen interest on the need for their shares to increase in value. This is why they put in place directors to manage their wealth on their behalf. The shareholders equity ratio determines the amount payable to shareholders when all debts and creditors have been paid. It is calculated by dividing total shareholder equity by the total assets as indicated in the balance sheet. According to the balance sheet for the year ended Sep. 30, 2013, the total assets amount to US $927,569 while the total equity amounts US $433,675. This translates to a shareholder’s ratio of 0.48 or 48%. This means that in the event of liquidation, the shareholders will receive 48% of the total assets. Corporate governance is put in place to monitor this ratio. These deductions have been made from this balance sheet;
The next table below represents the market value per share as traded on the New York Stock Exchange fluctuating in value between US $28.02 and US $27.54 as at February 19, 2014 with the volume of trade standing at 61,334 shares.
Era Group Inc. (ERA)
27.75 0.10(0.36%) Feb 19, 4:03PM EST
The Directors should lay down strategies to make trading in the ERA Group Inc shares attractive to investors. This measure will also make the shareholders receive more dividends.
In conclusion, I see a link between the Finances and the management of the organization. Being able to integrate the two will improve the undertakings in the company. Managers are responsible for budgeting and budgetary control measures which are strategies that ensure the organization achieves its objectives. The Financial overview points out loopholes in the finance area of the ERA Group Company which need adjustments. Managers lay down measures to fill in the loopholes and make business better.
Era Group Inc. (2013) Retrieved on February 10, 2014 from http://ir.stockpr.com/eragroupinc/financials
Era Group Inc (NYSE: ERA, 2014) Retrieved on February 10, 2014 from https://www.google.com/finance?q=NYSE%3AERA&fstype=ii&ei=Ucf4UvhVyYbAA6aXAQ
Robinson, P. L (2012.) Securities and Exchange Commission: Amendment no. 4 to Form S-1. Florida. Retrieved on February 10, 2014 from http://www.nasdaq.com/markets/ipos/filing.ashx?filingid=8095021#D213533DS1A_HTM_TOC213533_3
Era Group Inc. (2013) Retrieved on February 10, 2014 from http://ir.stockpr.com/eragroupinc/annual-reports
Era Group Inc. (2013) Retrieved on February 10, 2014 from http://ir.stockpr.com/eragroupinc/board-of-directors