International operation and risk management of ICAP plc Contents Contents 2 Introduction: ICAP plc 3 Performance - Financial Trend 3 Globalization strategies 8 Managing Risks 10 Foreign Exchange risk 10 Country and Political risk 11 Recommendation for the management of different types of Risks 13 Conclusion 14 References 15 Bibliography 18 Introduction: ICAP plc ICAP plc is an electronic and voice dealer broking company that is based in the UK…
The company is a public limited company and is listed on the London Stock Exchange. The company was founded in the year 1986 and has more than 5000 employees who provide the risk services in the company. The company focuses mainly on the key principles of leadership, Integrity, entrepreneurship as well as respect for control. Performance - Financial Trend A ratio analysis has been conducted for ICAP in order to understand the financial performance of the company. Ratio Analysis 2013 2012 2011 2010 2009 Liquidity Ratios Current Ratio 1.026 1.004 1.003 1.002 0.999 2013 2012 2011 2010 2009 Cash Ratio 0.089 0.017 0.016 0.025 0.014 Profitability Ratio Gross Profit Margin 0.990 0.989 0.984 0.765 - 2013 2012 2011 2010 2009 Operating Profit Margin 0.145 0.160 0.163 0.176 0.191 2013 2012 2011 2010 2009 Net profit Margin 0.030 0.083 0.109 0.074 0.117 Leverage Ratio Debt Ratio 0.939 0.985 0.984 0.981 0.966 2013 2012 2011 2010 2009 Debt Equity Ratio 15.31 66.19 60.37 48.89 28.68 Profitabilty Indicator Ratio Return on Assets 0.09% 0.17% 0.49% 0.24% 0.55% 2013 2012 2011 2010 2009 Return on Capital Employed 0.41% 0.33% 0.40% 0.58% 1.78% Liquidity The current ratio of the company has increased by 22% over the last one year from 1.004 in 2012 to 1.026 in the financial year 2013. The inventory of the company for all the years is equal to zero. This means that for ICAP the current ratio and the quick ratio are the same (Atrill and Mclaney, 2008, pp. 142-178). The increase in the current ratio means that the company has efficient cash management and that the company can meet its short term debt obligations quite comfortably (Kieso, Weygandt and Warfield, 2007, p. 738). Thus ICAP has sound liquidity position. Profitability The profitability levels of the company can be estimated from the profitability ratios as shown in the table above. The gross profit margin for the company has increasing steadily from 2011 to 2012 and then from 2012to 2013. The gross profit margin for the year 2013 is 0.939 which means that the company has been able to use the different resources that it has in the most appropriate way (Williams, Haka, Bettner and Carcello, 2008, p. 266). Source: ICAP 2013, p. 03 The operating profit margin for the company fell almost more than one percent in the year 2013. Thus it shows that the company has not been able to achieve economies of scale for the last one year but the steady figure over the years reflects the efficiency of the company in maintaining the scale of operations (Gallagher, 2003, pp. 94–95). The different compositions of the operating profit of ICAP as per the different businesses have been shown in the dough nut chart as above. This means that most of the operations of the company are equally prosperous and has been able to achieve the desired scale of operations for the long term (Weston and Brigham, 1990, p. 295). The return on assets for the company is 0.09% in 2013 as compared to 0.017% in 2012 and 0.27% in 2011. Looking at the steady level of net income of the company it shows that the company has increased its assets over the phase of 3 years which has resulted in a declining ROA (Tracy, 2004, p. 173). ...
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