Financial Analysis of Fabrica Company - Case Study Example

The paper “Financial Analysis of Fabrica Company” is a perfect example of the case study on finance & accounting. Fabrica Company's financial projection provided aims at attracting potential investors into the organization. As the business operations are undertaken in Thailand, the region enjoys economic and political tranquility, and as such its financial projects are usually met with ease. The imperative factor that enhances investors from different geographical regions to invest in business operations is the political and economic stability of a region. The stability in the foreign currency shows that inflation has been curtailed. The company’s exchange rate of 35Baht to 1 US dollar implies that the economy is enjoying a relatively favorable foreign exchange rate. Its currency is superior and it can easily dictate the economy.

Thailand's exchange rate policy has seen the country achieve its economic goals. This is attributed to the protectionists’ pressures that arose from the exchange rate policies that were initially undertaken; the exchange rate that is appreciating with slight change in economic conditions, exchange rate level, and the rigid exchange rate policy. These three accounts have been well endowed in the Thailand economy enhancing its low rate of currency exchange with the US economy (Bernstein Leopold, 2000). Many scholars have been arguing on the efficiency and accuracy of the exchange rate of Thailand as they perceive it to be either undervalued or overvalued, but the endowment of the country in terms of resources, and economic and political stability is a sure way of denoting that the exchange rate provided is accurate and stable.

In the determination of the investor's interest in the company’s operations, financial analysis of Fabrica Ltd's core financial instruments and tools will be done. The focus will be majorly on the profitability ratios. The company’s gross profit margin has seen an increment since 1999. This is attributed to the diversification of operations in the company. In the year 2000, the gross profit margin was reported at 55.89%. This was achieved after a tremendous increase in the sales revenue by approximately 7 million dollars.