Cortex Corp - Globus Book Report

This book report grasps the strategies used by the Cortex Corp – Globulus Company in terms of their use of debts versus equity, dividends, stock issues and maintaining their credit rating. These are the important factors that keep a business afloat. Analyzing these variables is based on the provided evidence based on the performance of the Cortex Corp – Globulus Company over the years. The company has been operational due to its competitive strategy and this calls for an analysis and documentation and even evidence. This report also outlines the strategies that were used in outdoing the competition provided that the simulation trend continued. Cortex Corp - Globulus Dividends The dividend strategy used by Cortex – Corp Globulus is aimed at maximizing the cash income generated by the Company’s portfolio. This strategy comes instead of waiting for stock prices to rise in the market. It is an objective strategy because the Company portfolio throws off enough dividends which replaces the incomes from jobs in the company. Three factors attract investors in the company, these are; healthy dividend yield, the cash flows are reliable hence the cut in dividends is minimal and finally, Cortex – Corp Globulus company has minimum or no dividend cuts. The current taxed dividend income for Cortex Corp - Globus company is at 20%. The company has strong cash position, hence able to pay its investors’ dividends in a regular basis thereby, attracting more investments. In the next two years, my interest as a company manager is to pay out two dividends – stock and liquidating dividends.

Use of Debts versus Equity

Debt financing refers to borrowing money from a lender and paying back in a specified period of time with an interest. In equity financing, an individual trades the company ownership to an angel investor in return for their capital (Hovakimian, Opler & Titman, 2001). Cortex Corp – Globulus company uses both equity and debt financing. This is because equity financing takes time and the ownership of the company, including the management, is transferred to the angel investor. Such an investment takes time (equity financing) and is appropriate for large amount of money involved. Therefore, in the case of short – term loans, the company employs debt financing. The Return on Equity (ROE) was highest during year 11 with a percentage of 51%. This suggest that Cortex Corp - Globus uses equity financing and the returns are satisfactory.

Stock prices or Repurchases

The best stock price per share in $ at Cortex Corp - Globus is at $ 259.17 per share and there is a general increase in prices of stock per share from year 6. This trend suggests that the company’s performance is on an upward trend over the years. Cortex Corp - Globus employs a time-tested strategy while investing in stocks. The company sticks on these strategies for a long time, this is the more reason why the stock price per share increases from year 6 to year 15. The best strategy for stock prices is the Trending Value, which has been in place since 1963. This method works because it combines both value and momentum strategies.

Maintaining a Strong Credit Rating

A strong credit rating is possible through sticking to the financial strategies employed regarding the dividends, stocks, and equity versus debt financing. Through this, it is possible to meet the Company obligations to investors and shareholders. Further Cortex Corp - Globus maintains a strong Credit Rating through sticking to the Trending value stock strategy thereby enabling the organization to realize very high Return on Equity (ROE) and stock prices per share. However, the best strategies of maintaining a stable credit score are through payment of bills on time. Credit bureaus use different algorithms in computing the credit rating, the payment history forms an important part of the credit score. Cortex Corp – Globus maintains a high credit score by paying the company bills and expenses on time and complying with regulations where need be.

Cortex Corp – Globus also promptly checks the credit report of the organization and ensures that the available credit is not maximized. Frequent checks on the credit scores of the organization allows for constant checking on ratings and making amends where necessary to keep the credit rating strong enough (Staff, 2017). Investors are interested in organizations with the ability of regulating their credit score – organizations which are not running on losses. From the history of Cortex Corp – Globus for the last 15 years, the net profit of the organization has been on an upward trend. This is a clear indicator that the organization is not running on losses.

Actions Aimed at Outcompeting Rivals

Entry Point Level

Entry level refers to a level at which no prior experience or technical expertise is required. In the case of the entry level, the best way of outcompeting rivals is through employing long – term stock strategies and appealing to investors (Fleisher & Bensoussan, 2003). This is possible through increasing dividends and applying equity and debt financing accurately where necessary. Cortex Corp - Globus can define its brand and make the market have the knowledge of its brand to attract more investors in the organization. Further, the company can define its competitive advantage in terms of employing technical indicators in technical analysis to predict the future stock prices. Quality is also appealing in the case of beating competition.

The image a company portrays to its clients plays a very big role in attracting both investors and clients. Cortex Corp – Globus has achieved to maintain a positive image to its clients and investors. Therefore, the organization has captured more clients to hire its thereby resulting into the expansion of the organization. The level of professionalism and ethics of the employees at Cortex Corp – Globus is equally an admirable virtue which investors find attractive. Though other organizations have an established brand in equal measure, the good image of Cortex Corp – Globus in the public domain has made it possible for the company to remain in business for long.

Multi – Featured Cameras

At this level, more intensive strategies ought to be employed in order to beat the competition. This is because the competition is equally good therefore, service terms and conditions are not solely adequate to outdo them. Prices, quality and standards of service are the main factors to look at while beating competition at this stage. A customer database can also be instrumental in gaining a competitive advantage.

Organizations and investors are always interested in organizations operating with strong credit ratings. Cortex Corp – Globus has achieved to maintain a strong credit rating in comparison to its competitors. The strong credit rating has enabled Cortex Corp – Globus to win many investors willing to get into business with the company. This has been a competitive advantage because a strong credit rating coupled with high net profit is an affirmation of regular dividends which is the interest of both the shareholders and investors. Cortex Corp – Globus offer regular dividends to its shareholders and investors, this is the greatest strength of the Company because the investors speak in one language.

Lessons Learnt

In outdoing competition, market trends have to be accurately determined through forecasting and technical analysis. The prices of securities are ultimately decided by traders and investors by the market forces of supply and demand. It is therefore advisable to concentrate on long term strategies of increasing stock prices as opposed to short term strategies, beating equals is all about strategy (Hillier, Grinblatt & Titman, 2011).

Companies should not solely concentrate on dividends as a strategy of improving their earnings. There are other sectors to pay keen attention to such as the level of competition, the image portrayed by the organization to clients, the quality of services provided in the organization, and the forces of supply and demand (Lin & Pavlova, 2006). Business is dynamic and changes do occur overtime. These changes ought to be anticipated. The best tool for anticipating the future changes in prices of securities is through technical analysis. This method allows for forecasting which is a very important technique of predicting market trends. Technical analysis is important to both the investors and traders because it enables them to plan ahead and engage in calculated risks.

In consideration of using debt or equity financing, there ought to be some factors which come to play. These factors are: the amount of money needed to run a venture, the length of time for which the amount is needed, and the nature of the angel investor. Both equity and debt financing are important and there is none considered better than the other. It is the business and the nature of the circumstances which dictate the method to be employed in financing. In cases where the organization needs large sums of money, equity financing is the better choice because it does not pin interests on the organization. In cases where some short – term loan is needed by the organization; debt financing can be a better option. Cortex Corp – Globus employs both equity and debt financing in its operations.

Conclusion

Cortex Corp – Globus is a competitive company with high Return on Equity (ROE). Simulation analysis reveals that the prices of the stock per share will increase within a period of 15 years. If these predictions are accurate and the organization (Cortex Corp - Globus) follows this trend, then the organization is likely to outdo its competitors and realize an increase in the number of investors. However, the market forces of supply and demand ought to be put into consideration. Moreover, technical analysis ought to be employed to establish the market trend regularly to ensure that the simulation is accurate. In case there are changes, a new simulation analysis ought to be done based on more accurate and current research.

References

Fleisher, C. S., & Bensoussan, B. E. (2003). Strategic and competitive analysis: methods and techniques for analyzing business competition;(p. 457). Upper Saddle River, NJ: Prentice Hall.

Hillier, D., Grinblatt, M., & Titman, S. (2011). Financial markets and corporate strategy. McGraw Hill.

Hovakimian, A., Opler, T., & Titman, S. (2001). The debt-equity choice. Journal of Financial and Quantitative analysis, 36(1).

Lin, X. S., & Pavlova, K. P. (2006). The compound Poisson risk model with a threshold dividend strategy. Insurance: Mathematics and Economics, 38(1), 57-80.

Staff, A. (2017). Maintaining a Stable Credit Score. AOL.com. Retrieved 2 April 2017, from https://www.aol.com/article/2010/11/11/maintaining-a-stable-credit-score/19695753/