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MANAGERIAL FINANCE

Ali Baba

AASTM, MBA, Group 2H


Youssra Sayed Othman Fadl, ID: 18221827
Alibaba Evolution:

From the Nov 11 in 2009, the Single's Day evolved from a campaign on Taobao
Mall to a promotion in Tmall, and later it became a nationwide shopping carnival
of various major shopping websites in China, and also a grand festival of
shopping for all customers. The volume of transaction during the Double 11
shopping carnival also increased exponentially, from less than 100 million at the
beginning, to 91.2 billion in 2015, and further to more than 100 billion this year.
The technologies supporting the rising volumes of transaction are the result of
efforts by tens of thousands of technicians in Alibaba Group.  
In general, the peak requests during the Double 11 shopping carnival will be
dozens of times of that in the normal period. You can imagine the tremendous
ordeal imposed on the entire internet infrastructure when tens of millions of
users visit the same website at the same time. However, with Alibaba Cloud's
CDN service, the website weathered the peak periods of Double 11 shopping
carnival stably.

Alibaba Ownership Issues:

Alibaba’s first round of outside funding came in 1999 for Alibaba.com and consisted of $3.3
million from Goldman Sachs plus an additional $1.2 million from Fidelity Capital, Investor AB,
Transpac Capital, and Singapore’s Venture TDF.59 Japan’s Softbank led a second round of $20
million in financing in January 2000.

Alibaba’s IPO would entitle its shareholders to the profits, but not the ownership of, Chinese-
domiciled restricted assets.

Although Chinese companies created VIEs to avoid Chinese law barring foreign ownership,
substantial uncertainty remained because the Chinese government had previously asserted its
right to prohibit and to unwind such structures.

Board Members:

He is our lead founder and, since May 2013, has served as our executive chairman. From our
founding in 1999 and until May 2013, Jack served as our chairman and chief executive officer.
Joseph C. TSAI

joined our company in 1999 as a member of the Alibaba founding team and has served as our
executive vice-chairman since May 2013.

Joe previously served as our chief financial officer and has been a member of our board of
directors since its inception.

Jonathan Zhaoxi LU

joined our company in 2000 and succeeded Jack Ma as chief executive officer in May 2013, and
has at different points served as the top executive officer of almost all of our key business units.
Prior to his current role, he served as our chief data officer and also oversaw the Alibaba Mobile
Operating System division. Before that, he served as chief executive officer of Alibaba.com from
February 2011 until its privatization in 2012. He joined Taobao in January 2008 and served as its
chief executive officer from January 2010 to June 2011. In September 2004, he led a dedicated
team to establish Alipay and became Alipay’s president. From 2000 to 2004, Jonathan held
several leadership roles at Alibaba.com and managed its South China sales region.

Daniel Yong ZHANG


Has been our chief operating officer since September 2013.

J. Michael EVANS

Serves as an independent director of Alibaba Group Holding Limited, and as Senior Director of
Goldman, Sachs & Co. Mr. Evans has more than 20 years in leadership positions at Goldman
Sachs.

Walter Teh Ming KWAUK

Serves as Independent Director of Alibaba Group Holding Limited and as an Independent Non-
Executive Director of Alibaba.com Limited.

Chee Hwa TUNG

Serves Independent Director of Alibaba Group Holding Limited.

Jerry YANG
He served as a Director of Alibaba Group Holding Limited from October 2005 to January 17,
2012.

Masayoshi SON

Vision
Has been our director since 2000 and is the founder, chairman and chief executive officer of
WeSoftBank Corp.
aim to build the future Mission
infrastructure of commerce. We
envision that our customers will meet, As part of the Alibaba Group, our mission is to
work and live at Alibaba. We do not make it easy to do business anywhere.
pursue size or power; we aspire to be a We do this by giving suppliers the tools
good company that will last for 102
necessary to reach a global audience for their
years.
products, and by helping buyers find products
and suppliers quickly and efficiently.
Revenue Streams
◦ China Commerce
◦ International Commerce
◦ Cloud Computing and Internet Infrastructure
◦ Others

Alibaba Implemented Extensive Cloud Native Application

Comprehensive stress testing, rapid elastic scaling, and cloud native full-stack
technology have been widely applied in Internet, finance, retail, manufacturing,
industries. These practices lower the threshold for application development, enabling
enterprises to make full use of the technical benefits of cloud native.

Cloud native architectures can streamline drills and practices in a cloud-based


environment, improving efficiency and reliability even during unexpected traffic spikes.
Alibaba Cloud ACK provides high elasticity of businesses at the container application
layer. Furthermore, PolarDB offers capabilities of database scaling. PTS implements full-
link stress testing by simulating actual business traffic.

Successful container-based applications include the following:

 The 2020 Olympic Games will use ACK to empower its Olympic Channel Services in
Europe for agile development and efficient O&M.
 Siemens currently uses ACK to provide MindSphere's microservice architecture, and to
allow DevOps and other related services to have high availability.
 Xunlei Limited deploys a container-based hybrid cloud solution for deployment and
scheduling purposes, which has allowed for greater elasticity and lower management
costs.
Financial ratio Analysis
1.Liquidity ratio:
Ratio Equation Year2012 Year2013 Year2014

Current ratio Current assets /


(As at 30 March Current
2.37 1.80 1.81
each year- Liabilities
Values are in
RBM millions)

Quick or Acid (Current assets


ratio (As at 30 – Inventory) /
2.37 1.80 1.81
March each Current
year-Values are Liabilities
RBM millions)

Liquidity of Average selling Not Valid as


Inventory Period (ASP) + Alibaba like eBay
(As at 30 Average but unlike
March each Collection Amazon didn’t
Period (ACP)
year-Values own the
ASP = (Inventory
are RBM merchandise
X 360) / COGS
millions) sold on its
website
Liquidity Ratios
Current = Current Asset / Current Liabilities
Acid = (Current Asset - Inventories)/ Current Liabilities
2.50
2.37

2.00
1.80 1.81
1.50

1.00

0.50

0.00
2012 2103 2014

2-Debt Ratios:
Ratio Equation Year2012 Year201 Year2014
3

Debt-to-Total Asset 0.27 0.83 0.63


Debt ratio = Total Liabilities /
Toatal Assets

Debt / Equity ratio Debt-to-Equity =


Total Liabilities /
Total Equity 0.37 102.81 2.33

Capitalization Captitalization=Long
Term Liabilities +
Total Equity =
(Total Liabilities - 35429.00 29258.00 63764.00
Current liabilities) +
Total Equity

Total Capitalization Total Capitalization 0.36 1.80 1.11


=
Total Liabilities / (LT
Liabilities + Total
Equity)
3-Assets utilization / management (activity ratios):

Ratio Equation Year2012 Year2013 Year2014

Purchase >>Cogs Purchase = COGS


only in this case as + End Inventory
6554.00 9719.00 13369.00
no inventory as -Beginning
mentioned above Inventory
Total Accounts Total Account
Payable payable= Income
tax payable +
5373.00 10535.00 15813.00
Escrow payable+
Other account
payable
Avg. Account Avg. Account
payable payable 5373.00 7954.00 10573.67

Payable Turnover Payable Turnover


= Purchase / Avg. 1.22 1.22 1.26
Payable accounts
Payable Turnover Payable Turnover
per day perdDay =
299.23 298.71 288.68
365/Payable
Turnover
4-Profitability ratios:

Ratio Equation Year2012 Year2013 Year2014

GPM gross
profit margin Gross Profit Margin =
0.67 0.72 0.75
Gross Profit / Net Sales

NPM Net Profit Margin = Sales


Profitability = Net profit 0.23 0.25 0.45
after tax / Net Sales
ROI Return on Investment
(ROI) = Net profit after tax 0.10 0.14 0.21
/ Total asset
ROE Return on Equity (ROE) =
Net profit after tax / Total 0.14 16.86 0.77
eqyity
Earning Earning power = Sales
Power Profitability*Asset 0.10 0.14 0.21
Efficiency = ROI
EM Equity Multiplier = Total
Asset / Total Equity = 1.37 124.34 3.67
Degree of Leverage
Return on ROE = Net Profit Margin *
Equity (ROE) Asset Turnover * Equity
Multiplier = 0.14 16.86 0.77
Earning power(ROI)*
Equity Multiplier
Leverage Ratios
120.00

100.00

80.00

60.00

40.00

20.00

0.00
2012 2103 2014

Debt-to-Equity = Total Liabilities / Total Equity

Capitalization Ratios
2.00
1.80
1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00
2012 2103 2014
Interest Coverage = EBIT/Interest Charge =
Operating profit/ Finance Expenses
80.00

70.00

60.00

50.00

40.00

30.00

20.00

10.00

0.00
2012 2103 2014

Total Asset Turnover = Asset Efficiency = Net Sales / Total Asset


0.60

0.50

0.40

0.30

0.20

0.10

0.00
2012 2103 2014
Operation Cycles in day =
Average selling period + Avg. Collection Period
As Ali Baba has no Inventory so Operation Cycle in day similar to
Avg.collection period
72.00
70.00
68.00
66.00
64.00
62.00

60.00
58.00
2012 2103 2014

EBIT/GrossProfit
0.70

0.60

0.50

0.40

0.30

0.20

0.10

0.00
2012 2103 2014
Equity Multiplier = Total Asset / Total Equity = Degree of Leverage
140.00

120.00

100.00

80.00

60.00

40.00

20.00

0.00
1 2 3

Payable Turnover in Day = 365/Payable Turnover


302.00
300.00
298.00
296.00
294.00
292.00
290.00
288.00
286.00
284.00
282.00
2012 2103 2014
Chart Title
0.80
0.70
0.60
0.50
0.40
0.30
0.20
0.10
0.00
1 2 3

Gross Profit Margin = Gross Profit / Net Sales


Net Profit Margin = Sales Profitability = Net profit after tax / Net Sales

Return on Equity (ROE) = Net profit after tax / Total eqyity

18.00
16.00
14.00
12.00
10.00
8.00
6.00
4.00
2.00
0.00
1 2 3
Avg. Collection Period in days= 365/ Receivable turnover
72.00

70.00

68.00

66.00

64.00

62.00

60.00

58.00
1 2 3

Return on Investment (ROI) = Net profit after tax / Total asset


0.25

0.20

0.15

0.10

0.05

0.00
1 2 3

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