PERFORMANCE EVALUATION

Performance Evaluation

Performance Evaluation

Introduction

Adacel Technologies basically affianced in designing and selling the simulation and software applications and also in stipulation of the related services. They are dealing primarily in the economy of Australia and North America. The Australian subsidiary is engaged in operation in the domestic market of the Australia for simulation and software development services. The business is one of the biggest names of the industry and is a massive organization covering a huge chunk in the market.

This paper is going to deal with the financial ratios of the Adacel Technologies. The dynamic in which Adacel Technologies will also be studied for making a better understanding of the scenario in which it is dealing and which are effective on the financials of this organisation. The performance of the current year will be compared with the last year and this will give a more brief understanding of the fact that how well or how bad the organisation has done in the recent two years of its operation.

Market Segments

The market segments in which the organization is dealing are bifurcated and covered by two subsidiaries which are; North American company and the Australian company. The management of the organization has determined two major operating segments which are based on the reports reviewed through the BODs who have formulated the strategic decisions in accordance to the requirement of those identified segments. North American subsidiary is servicing the US and Canadian clients and also the global markets through their air traffic control simulation and air traffic management software and services. On the other hand Australian subsidiary is servicing the domestic market of Australia for simulation and software development services. Segment revenues, segment expenses and segment results are inclusive of the transfers among the segments. Revenues of Adacel Technologies are almost 54% of the total sales which are consequential from three external customers; all of these have more than 10% of sales (Annual Report of Adacel Technologies, 2012).

Financial Risks

There are so many risks which are associated with the organisations which are operating in the complex environment of today. The Adacel Technologies operates internationally and this is the fact which is exposing it to the forex rate risks which are known usually as foreign exchange risk which are arising through the currency exposures primarily to the US dollar, Canadian dollar and also Euro. For the sake of minimising this risk the organisation manages all of their natural hedges which may be existing and may also be entering the forward exchange contracts.

There is also existence of the price risks; these are risk due to the fact that the organisation is exposed to the price risks of the equity securities. All the investments are impaired and recorded at the impairment values. Not even single of the investment is found to be impaired with the investments are in the publicly traded equity vehicles. The group is also not much exposed to the price risks of the commodity. Another issue is the Cash flow and fair value interest ...