Tag-It Corporation Financial Analysis

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This report represents an analysis of the income statements of Tag-It Corporation for the past four years. Profitability analysis is conducted on the income statements of Tag-It in Corporation for the past four years. Cash flow analysis and statistical analysis indicated that Tag-it Corporation was not incurring high operation costs hence the desirable gross profit throughout the years. Net profit retained its positive trend due to other income, profits, and gains from relating companies. In addition, Tag-It Corporation incurred decreasing revenues over the four years.

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Introduction

Tag-It Corporation is a modern powering bank that has consumer-first advanced banking solutions. Tag-It Corporation’s leading-edge technology engagement solution enables government agencies and financial institutions to retain competitive advantages and enhance consumers’ engagement in the increasingly dynamic and complex environment. Tag-It Corporation helps customers redefine the advanced client experience, deliver inventive advanced business solutions, and accelerate digitization through robust advancement platforms. Government and government entities are required to anticipate clients’ needs and provide know-hows that motivate good emotions while expanding customers’ loyalty. Tag-It Corporation helps companies define and understand customer roadmaps to design appealing interfaces that offer seamless business services across different digital platforms. Organizations ought to factor in new client trends and influence innovation of technology when generating digital strategies.

Based on an agile growth approach and rich industry repository abilities, Tag-It Corporation helps companies deliver and enhance updated digital organizational services designed to meet customer needs. Tag-It Corporation’s multi-channel digital involvement platform motivates government agencies and financial institutions to hasten their updated transformation and contest effectively in the fast-growing universe. Tag-It Corporation plays a significant role in guiding consumers via digital transformation and helps them build their updated objectives and strategies. In addition, Tag-it Corporation provides digital commitment solutions by providing product offerings such as the Mobeix updated platform given to banks and governments. Tag-It Corporation revenues in the years 2018 increased when compared with the year 2017.

Cash-flow Analysis

Cash budgeting is vital to organizations, particularly for small businesses. Cash budgeting permits companies to be aware of the quantity of credit they can extend to customers without facing challenges with liquidity (Ermakova & Zharov, 2018). On top of that, cash budgeting enables companies to get rid of cash shortages when the companies face high amounts of expenses. Cash budgeting also approximates revenues, plans for costs, and restricts excessive spending not included in the business plan. Cash budgeting ensures capital gets assigned to the activities that support the functional goals of the company.

Additionally, well-communicated cash budgets enable every individual within a company to understand the business priorities. For a company to conduct cash budgeting, the company financial analyst must perform the cash-flow analysis to be aware of the probability of generating profits or losses for proper budgeting (Ermakova & Zharov, 2018). Tag-It Corporation cash-flow analysis enables the company to know its working capital and the total amount of money Tag-It Corporation needs to run its business tasks and complete transactions. The cash flow analysis of Tag-It Corporation is shown below:

2018 2019 (FORECAST)
Total revenue 71839 79067
Cost of revenue (51125) (56238)
Gross profit 20754 22829
Operating expenses:
Selling, general, and administrative (14248) (15673)
Research and development
Special income and other charges (2194) (2413)
Total operating expenses (16442) (18086)
Operating income 4312 4743
Net interest income (666) (733)
Pre-tax income 3646 4011
Provision for income tax (19.5%) (711) (782)
Net income 2935 3229

Table 1: Tag-It cash flow-analysis

Statistical Analysis

Statistical analysis refers to the interpretation and collection of data to reveal trends and patterns. Analyzing financial statements gives investors ideas before they make the decisions of investing their capital in a specific company. In addition, analyzing financial statements helps government agencies study the taxes they owe (Ermakova & Zharov, 2018). On top of that, statistical analysis allows businesses to forecast their financial statements to know their future trends, a process known as financial forecasting, which helps companies prepare for the future. Financial forecasting informs companies if they are on the right track by approximating total income and total revenue that a company will attain in the yet to come. Financial budgeting develops a basis for comparing the actual findings to know how the results differ from the expected performance. To perform financial forecasting, companies must project their income statements, balance sheets, and cash flows.

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From Tag-It cash flow analysis in Table 1 above, Total revenue has been decreasing in the past four years but increased in the year 2019 from 71879 to 79067 in the year 2019. The cost of revenue in the year 2018 was 51125 but raised in the year 2019 to 56238. Pre-tax income increased in the year 2019 from 20754 to 22829 in the year 2019. Net interest income increased in the year 2019 from 14248 to 15673 in 2019. Total operating expenses, operating income, exceptional income, and other charges, Research, and development, selling, general and administrative, gross profit, and Provision for income tax (19.5%) also increased in the year 2019, probably to the decreased functional activities of the Tag-It Corporation. The average growth rate of Tag-It Corporation for the past four years is shown below:

Year 1 Year 2 Year 3 Year 4
72618 73785 69495 71879
0.01607 -0.05814 0.034304626
Average growth rate= AVERAGE () =-0.26%

Table 2: Tag-It Average Growth Rate

The average growth rate of Tag-It in the last four years, as shown above, may not attain the 12% growth rate in the following year because its average growth rate was -0.26% in the past four years.

Strategies to address the future financial position in an organization

When addressing an organization’s future financial position, businesses need assessment by financial analysts to identify sectors that need improvement. Different factors determine the general economic performance of a business (Ermakova & Zharov, 2018). In addition, there are strategies that organizations need to consider to have good results in the future. Some of these strategies include lowering a company’s expenses, recovering outstanding payments, disposing of unwanted assets, consolidating debts, lowering or raising prices, and giving multiples payment opportunities to customers. In addition, applying more business funds and proper marketing also play a significant role in determining the future financial position of a firm.

Among the best strategies for improving a company’s future financial position is reducing the company’s expenses by looking for affordable alternatives for services, equipment, and supplies. For high costs, companies should arrange for deferred payments to retain the cash available for business operations (Ermakova & Zharov, 2018). An unpaid invoice may cause more harm to a business’s cash flows and the general health of the business’s finances. Companies, notably Tag-It Corporation, ought to ensure they regularly remind their debtors to honor their obligations. On top of that, when making sales contracts, Tag-It should ensure that the terms are clear concerning when payments are due and the consequences of overdue payments.

Businesses should save money for storage expenses if they are reimbursing for storage. If a company has many products that need to be stored, the firm should consider putting the products for auction or selling the products online using online retailers or auctions. It is also crucial for companies to evaluate their current debts when looking for new means of improving their future financial position (Ermakova & Zharov, 2018). It is economical, and more simples refinanced a business’s debts into single payments by doing more Research and comparing varying plans before starting new arrangements. Lowering prices is also a better way of improving the future financial position by ensuring the business is not incurring losses. While decreasing prices helps companies attract more clients, it is good to increase costs in some cases.

Some companies offer too low prices because they have not probably adjusted to the market. Increasing prices without discouraging customers contribute to the better financial position of a business. Applying for business loans helps companies acquire the capital they need and improve the business’s financial situation (Ermakova & Zharov, 2018). Exploring invoice factoring ensures that companies are not uncomfortable with their growth rates and avoid many debts. Lastly, improving the marketing strategies of a company determines its better future financial position. Considering the latest platforms and marketing options, including retargeted advertising, video advertising, social media, and email advertising, plays a significant role in the marketing of a business, which attracts more customers, hence increasing the financial position of a company in the future.

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Reference

Ermakova, K., & Zharov, A. (2018). Ways of improving the enterprise in crisis financial position. Theoretical & Applied Problems of Agro-Industry, 37(4), 61-64. doi: 10.32935/2221-7312-2018-37-4-61-64

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BusinessEssay. (2022, July 31). Tag-It Corporation Financial Analysis. Retrieved from https://business-essay.com/tag-it-corporation-financial-analysis/

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BusinessEssay. 2022. "Tag-It Corporation Financial Analysis." July 31, 2022. https://business-essay.com/tag-it-corporation-financial-analysis/.

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