The two focused organizations in this context are inclusive of the Apollo Global Management Company, which is an international corporation situated in the United States. The company manages leveraged buyout financial transactions and it also buying distressed securities. The second company is the American Financial Group and it is a corporation that deals with casualty and property insurance for business organizations.
Two Issues That Cannot Be Derived From the Financial Statements of the Two Companies
There are two financial issues that cannot be revealed by financial statements in an organization. The first financial issue is the loss or profits recorded by a corporation’s major customers during an accounting period. The second financial issue that cannot be revealed by financial statements is the information about the competitive environment in which the company operates.
Explanation of Why the Issues Would Be of Concern to Investors and Other Stakeholders
The knowledge of the two stated issues would be important to investors and other stakeholders of an organization. Additionally, that is because the knowledge of the loss of key current investors in an organization would reflect on the ability of the company to be sustainable in the market in future accounting periods. Also, information on the company’s market competition would inform potential investors of the ability of the corporation to perform well in the competitive market. Subsequently, this may enable a potential investor to predict whether the company will turn a profit or not in the oncoming accounting periods.
Comparison and Contrast of the Two Companies in Reference to their Profit, Debt and Asset Turnover
The net profit, debt amount, and asset turnover recorded by the Apollo Global Management Company in the financial period ending December 31, 2019, was $3,038.127, $2,650.6, and $8,542.117 billion respectively (WSJ, 2020). Contrary, the net profit, debt amount, and asset turnover recorded by the American Financial Group is $897, $1,650, and $51,250 billion respectively (AnnualReports, 2020). In this case, although the profit and debt margin of Apollo Global Management are higher than those of the American Financial Group, the Asset Turnover recorded by the Apollo Global Management is less than that of the latter corporation.
Apollo Global Management (000,000) American Financial Group (000,000)
Profit $3,038.127 $897
Debt $2,650.6 $1,650
Asset Turnover $8,542.117 $51,250
Table 1: Table summarizing the financial data between the Apollo Global Management and American Financial Group for the financial periods ending on December 31, 2019 (WSJ, 2020; AnnualReports, 2020).
Appropriate Strategies for Possible Improvement in Each Area
There are several improvement strategies that can be utilized to address the issues identified above. First, profit and loss accounts should be published and provided to new investors. Also, such accounts should illustrate the general ledger entry data illustrating the profits or losses of other clients to the business. Second, a competitor analysis report should also be prepared and offered to potential customers. Such reports should also provide a summary of the competitive environment in which a company operates, through the utilization of competition analytical tools like the SWOT and Porters’ Five Force Model. The SWOT assesses the strengths, weaknesses, opportunities, and threats of an organization in its market environment (Gürel, 2017). Contrary, the Porter Five Force model determines the attractiveness of an industry where an entity operates (Bruijl, 2018). The information presented from the two analytical frameworks can help an investor to make an investment decision on whether or not to invest in an organization.
AnnualReports. (2020). Apollo Global Management. Retrieved from AnnualReports.com: http://www.annualreports.com/HostedData/AnnualReports/PDF/NYSE_APO_2019.pdf
Bruijl, G. H. (2018). The relevance of Porter's Five Forces in today's innovative and changing business environment. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3192207
Gürel, E. (2017). SWOT analysis: A theoretical review. Journal of International Social Research, 10(51), 994-1006. https://doi.org/10.17719/jisr.2017.1832
WSJ. (2020). American Financial Group Inc. Retrieved from WSJ Markets: https://www.wsj.com/market-data/quotes/AFG/financials
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