Operations and Supply Chain Hw 1 Funda

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Homework 1

Sector – Financial Services      Industry – Asset Management

Three Companies chosen:

1. KKR & Co LP (NYSE: KKR)
2. Blackrock INC (NYSE: BLK)
3. Blackstone Group LP (NYSE: BX)

Table 1: Management Efficiency Measures – Asset Management Industry

 Company Name Total Employees(annual) Income/employee (annual) Revenue/Employee (annual) Receivable turnover Inventory turnover Asset Turnover KKR 1209 395,046 5,440,806 5.02 N/A 0.11 BLK 12400 270,000 921,803 4.92 N/A 0.05 BX 2190 723,557 3,478,382 4.04 N/A 0.25 Industry Average 77,500 691,225 2.36 N/A 0.08

*Receivable Turnover ratio in this table is calculated as Trailing Twelve Month Total Sales/Accounts Receivable from most recent quarter

What company appears to have the most productive employees?

In order to analyze the productivity of labor employed by the firm, we have to look at the Income/employee ratio and Revenue/employee ratio. All three firms have a ratio above the industry average. This is not surprising since these three firms are in the top ten major firms in the financial sector. However, KKR definitely has the most productive employees. It has the lowest number of employees and the highest revenue per employee annually. It is an important thing to note that KKR also has the lowest overall revenue. This is an positive sign of favorable management effectiveness.

Which company has the best operations and supply chain processes?

The best way to figure this out would be to look at the inventory turnover ratio since this is the ratio that is controlled the greatest by operations and supply chain processes. However, in the financial industry this can’t be calculated directed. The reason is because in investment firms there are no tangible goods being sold. An intangible service is being sold. In order to figure this out another way, I hypothesize one can use the tangible common equity ratio. This ratio directly represents the leverage a firm has in the industry which directly relates how it is being operated in the service sense. According to the table below, KKR has the highest leverage as a firm.

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