Indonesian Stock Market » Management

Evaluating Company Management in Fundamental Analysis

bullbear — Fri, 06 Aug 2010 12:23:00 +0000

Evaluating Company Management in Fundamental Analysis
BY STOCK RESEARCH PRO • APRIL 21ST, 2009

When evaluating a stock, many investors will look at the strength and effectiveness of company management as part of the due diligence process. The corporate scandals of recent years have reminded all of us of the importance of having a high-quality management team in place. The role of the management team, as far as investors are concerned, is to create value for the shareholders. While most investors see the significance of strong management, assessing the competence of an executive team can be difficult.

The Role of Company Management
A strong management team is critical to the success of any company. These are the people who develop the ongoing vision of the company and make strategic decisions to support that vision. While it can be said that every employee brings value, it is the management team that “steers the ship” through competitive, economic and the other pressures associated with running a company. In measuring the effectiveness of the management team the investor is able to determine how well the company is performing relative to its industry competitors and the market as a whole.

Assessing Management Performance
Some of the metrics a fundamental investor might use in measuring the effectiveness of company management might include:
Return on Assets: The ROA provides an indication of company profitability in relation to its total assets. Part of effective company management is the efficient leverage of company assets to produce earnings.

A Return on Assets Calculator

Return on Equity: The ROE measures net income as a percentage of shareholders equity. For shareholders, the ROE provides a means of measuring company profitability against how much they have invested. The ROE is best used to compare the profitability of the company (and company management, by extension) with other companies in the industry.

A Return on Equity Calculator

Return on Investment: The ROI measures the effective use of debt for the benefit of the company. Skillful use of debt resources by company management can play a significant role in the growth and prosperity of the company.

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Managing the various structural units of a Company

bullbear — Mon, 26 Jul 2010 23:48:00 +0000

Zech Management GmbH is the main service company in the Zech Group. The team of around 90 employees provides a variety of services on behalf of the parent company, Zech Group GmbH, as well as for the operating companies.

Zech Management discharges the controlling and steering functions. It supervises, for example, the strategy and the agreed-upon targets. Zech Management coordinates activities in the various fields of business and of the operating units. The following areas or sections are integrated in Zech Management:

Controlling
Accountancy, Financial Statements and Taxation
Financing and Cash Management
Group Financial Statements and Company Planning
Mergers & Acquisitions
Personnel
Insurance
IT (Information Technology) and Organization
Corporate Communications and Public Relations
Internal Audits (in preparation)
Central Services
Corporate Governance, Corporate Compliance and Code of Conduct
The company is headquartered in Bremen. Zech Management GmbH reports to Zech Group GmbH.

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