Susquehanna International Group

The entrepreneurial approach of these firms is determined by theunderstanding of technology and marketing strategy the financialunderstanding of these organizations also determine their successthough they are considered to be less confident with that. Companiesthat have a sound financial understanding succeed more. Such anoccurrence attributes to the fact that a company’s financialanalysis establishes a platform for perfection primarily, inassessing a company’s functions. As a result, the involvedorganizations are accorded the chance to pinpoint the strength andweakness in their different operations.

As Kaplan &amp Atkinson (2015) hold, heestablishment of a transparent financial evaluation requires areflection of the previous business functions and the surroundingenvironmental conditions for a chance to make sure the evaluatedinformation is not delusional and gives an explicit portrayal of theprevailing situation. Essentially, the reflection process helpsdetermine the incurred financial debts as well as the applicablefirm’s stock and financial ratios (Hillier,Grinblatt &amp Titman2011).The business world has not beenquite positive for most organizations. The analysis of SusquehannaInternational Group is expected to give a clear depiction of thecompany’s financial status. That is, as per the analyzedinformation, there will be a comprehensive understanding of thecompany’s functions, financial indicators, illustrating thewitnessed strengths and pitfalls, and give recommendations for thebetterment of their position. However, since analysis requires asuccinct ground for evaluation, the first process will be a briefoverview of the company’s functions.

Company Overview

(SIG) is an outstanding institutionthat is privately owned, and its prominence is globally recognized. SIG was founded about thirty years ago with the aim of offeringinvestment banking services to its target market. The company’score functions include global investments trading and involvement intechnology firm servicing. SIG is a world leader in derivativestrading and equity options. They are listed on the main stock marketsin the world and deal with big name stakes. Some of their clientsinclude Google, Microsoft and Goldman Sachs. The success of thisbusiness is made possible by the fact that the company’s corefunctions concentrate on the provision of trading grounds,qualitative research platform and technology perfection.

is comprised of many member entitiesinvolved in the diverse operations of the group. The corporateclients are imperative in the organization since they propel the firmto provide differentiated banking services such as public equity,mergers and acquisitions, bond trading, advisory among otherservices. Generalization of all the functions of the company isinappropriate and calls for a particular focus on the role of equitythat is commonly offered to institutional investment managers. Inproviding investment banking services, the organization tops the listwith consultancy services that helps their clients make soundinvestment decisions.

Looking back at the past years` operations in the banking segment ofthe financial sector, investment banking has been faced withdifficulties. As a result, the involved organizations have had torefurbish their functions to bring a balance in the entire process.For instance, looking back at the years between 2007 and 2009, thefinancial sector in investment banking was greatly hit and theefforts by the central banks and the governments have not managed tostabilize the situation. Commercial banks have overshadowedinvestment banks.

For effective financial analysis, the sole idea is to understand thefundamental concepts involved in measuring a company’s financialprogression (Zimmerman&ampYahya-Zadeh, 2011). The financial gain ina business entity is measured in terms of earned profits before tax.Auditors the responsible for keeping financial information andtherefore are expected to release the information to the shareholderswhenever they need it (Kaplan &amp Atkinson,2015). Considering financialanalysis, the assessment directs at pinpointing periods when theorganization has been undergoing sizeable transformations that resultfrom the banking sector preceding drawbacks.

Following the 2007 to 2009 shakedown in investment banking, the had hard times trying to regain itsprominence. As a result, each and every year comes with improvements.For instance, 2014 company statistics compared to 2013 revenuereturns shows that the organization enjoyed a 10% increase inprofits. The increased profits resulted from the company’s dealingswith various banks across the world, offering them advisory servicesand being entrenched in international foreign exchange.

Financial Analysis

Financial Statements

Financial statements for are preparedunder the GAAP standards. The figures for 2014 are audited, while thefigures for 2015 are unaudited.

Source: quote.morningstar.com

  1. Balance Sheet

March&nbsp31,2015

&nbsp

&nbsp

December&nbsp31,2014

&nbsp

&nbsp

&nbsp&nbsp

(in&nbspthousands,&nbspexcept&nbspshare&nbspdata)

&nbsp

Assets

&nbsp&nbsp

&nbsp

Cash and due from banks

&nbsp&nbsp

$

446,797

&nbsp

&nbsp

$

506,304

&nbsp

Unrestricted short-term investments

&nbsp&nbsp

&nbsp

34,183

&nbsp

&nbsp

&nbsp

37,149

&nbsp

&nbsp&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Cash and cash equivalents

&nbsp

480,980

&nbsp

&nbsp

543,453

&nbsp

Interest-bearing deposits held by consolidated variable interest entities that can be used only to settle obligations of the consolidated variable interest entities

&nbsp

0

&nbsp

&nbsp

1,439

&nbsp

Restricted short-term investments

&nbsp

54,884

&nbsp

&nbsp

42,949

&nbsp

Securities available for sale

&nbsp

2,567,988

&nbsp

&nbsp

2,438,085

&nbsp

Restricted investment in bank stocks

&nbsp

115,370

&nbsp

&nbsp

115,570

&nbsp

Loans and leases, net of deferred costs and fees

&nbsp

13,487,951

&nbsp

&nbsp

13,455,046

&nbsp

Loans held by consolidated variable interest entities that can be used only to settle obligations of the consolidated variable interest entities

&nbsp

0

&nbsp

&nbsp

62,836

&nbsp

Less: Allowance for loan and lease losses

&nbsp

134,733

&nbsp

&nbsp

136,522

&nbsp

&nbsp&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Net loans and leases

&nbsp

13,353,218

&nbsp

&nbsp

13,381,360

&nbsp

&nbsp&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Premises and equipment, net

&nbsp

162,323

&nbsp

&nbsp

167,048

&nbsp

Other real estate and foreclosed assets

&nbsp

10,002

&nbsp

&nbsp

10,099

&nbsp

Accrued interest receivable

&nbsp

40,151

&nbsp

&nbsp

39,249

&nbsp

Bank-owned life insurance

&nbsp

447,659

&nbsp

&nbsp

446,676

&nbsp

Goodwill

&nbsp

1,275,439

&nbsp

&nbsp

1,275,439

&nbsp

Intangible assets with finite lives

&nbsp

24,240

&nbsp

&nbsp

25,575

&nbsp

Deferred income tax assets

&nbsp

7,012

&nbsp

&nbsp

7,648

&nbsp

Other assets

&nbsp

158,028

&nbsp

&nbsp

166,800

&nbsp

&nbsp&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Total Assets

$

18,697,294

&nbsp

$

18,661,390

&nbsp

&nbsp&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Liabilities and Shareholders’ Equity

Deposits:

Noninterest-bearing

$

2,019,931

&nbsp

$

1,964,510

&nbsp

Interest-bearing

&nbsp

11,745,374

&nbsp

&nbsp

11,757,333

&nbsp

&nbsp&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Total deposits

&nbsp

13,765,305

&nbsp

&nbsp

13,721,843

&nbsp

Federal Home Loan Bank short-term borrowings

&nbsp

850,000

&nbsp

&nbsp

850,000

&nbsp

Other short-term borrowings

&nbsp

506,756

&nbsp

&nbsp

516,089

&nbsp

Federal Home Loan Bank long-term borrowings

&nbsp

61,674

&nbsp

&nbsp

63,449

&nbsp

Other long-term debt

&nbsp

175,214

&nbsp

&nbsp

175,217

&nbsp

Junior subordinated debentures

&nbsp

146,175

&nbsp

&nbsp

146,117

&nbsp

Long-term debt of consolidated variable interest entities for which creditors do not have recourse to Susquehanna’s general credit

&nbsp

0

&nbsp

&nbsp

30,570

&nbsp

Accrued interest, taxes, and expenses payable

&nbsp

66,791

&nbsp

&nbsp

85,075

&nbsp

Deferred income tax liabilities

&nbsp

153,556

&nbsp

&nbsp

133,932

&nbsp

Other liabilities

&nbsp

191,646

&nbsp

&nbsp

185,173

&nbsp

&nbsp&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Total Liabilities

&nbsp

15,917,117

&nbsp

&nbsp

15,907,465

&nbsp

&nbsp&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Shareholders’ equity:

Common stock, $2.00 par value, 400,000,000 shares authorized Issued: 182,811,814 atMarch&nbsp31, 2015, and 182,591,930 at December&nbsp31, 2014

&nbsp

365,624

&nbsp

&nbsp

365,184

&nbsp

Treasury stock, at cost, 555,462 at March&nbsp31, 2015, and 553,295 at December&nbsp31, 2014

&nbsp

(5,599

)&nbsp

&nbsp

(5,571

)&nbsp

Additional paid-in capital

&nbsp

1,612,414

&nbsp

&nbsp

1,609,663

&nbsp

Retained earnings

&nbsp

838,109

&nbsp

&nbsp

825,471

&nbsp

Accumulated other comprehensive loss, net of taxes of $16,364 and $22,344, respectively

&nbsp

(30,371

)&nbsp

&nbsp

(40,822

)&nbsp

&nbsp&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Total Shareholders’ Equity

&nbsp

2,780,177

&nbsp

&nbsp

2,753,925

&nbsp

&nbsp&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Total Liabilities and Shareholders’ Equity

$

18,697,294

&nbsp

$

18,661,390

&nbsp

&nbsp&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

  1. Income Statement

Three&nbspMonths&nbspEndedMarch&nbsp31,

&nbsp

&nbsp

&nbsp&nbsp

2015

&nbsp

&nbsp

2014

&nbsp

&nbsp

&nbsp&nbsp

(in&nbspthousands,&nbspexcept&nbspper&nbspshare&nbspdata)

&nbsp

Interest Income:

&nbsp&nbsp

&nbsp

Loans and leases, including fees

&nbsp&nbsp

$

140,769

&nbsp

&nbsp

$

149,538

&nbsp

Securities:

&nbsp&nbsp

&nbsp

Taxable

&nbsp&nbsp

&nbsp

9,609

&nbsp

&nbsp

&nbsp

9,648

&nbsp

Tax-exempt

&nbsp&nbsp

&nbsp

3,276

&nbsp

&nbsp

&nbsp

3,501

&nbsp

Dividends

&nbsp&nbsp

&nbsp

3,421

&nbsp

&nbsp

&nbsp

1,765

&nbsp

Short-term investments

&nbsp&nbsp

&nbsp

24

&nbsp

&nbsp

&nbsp

19

&nbsp

&nbsp&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Total interest income

&nbsp

157,099

&nbsp

&nbsp

164,471

&nbsp

&nbsp&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Interest Expense:

Deposits:

Interest-bearing demand and savings

&nbsp

5,338

&nbsp

&nbsp

3,962

&nbsp

Time

&nbsp

10,086

&nbsp

&nbsp

9,628

&nbsp

Federal Home Loan Bank short-term borrowings

&nbsp

4,544

&nbsp

&nbsp

4,621

&nbsp

Other short-term borrowings

&nbsp

1,984

&nbsp

&nbsp

2,100

&nbsp

Federal Home Loan Bank long-term borrowings

&nbsp

202

&nbsp

&nbsp

245

&nbsp

Other long-term debt

&nbsp

3,307

&nbsp

&nbsp

3,851

&nbsp

&nbsp&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Total interest expense

&nbsp

25,461

&nbsp

&nbsp

24,407

&nbsp

&nbsp&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Net interest income

&nbsp

131,638

&nbsp

&nbsp

140,064

&nbsp

Provision for loan and lease losses

&nbsp

5,799

&nbsp

&nbsp

6,000

&nbsp

&nbsp&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Net interest income, after provision for loan and lease losses

&nbsp

125,839

&nbsp

&nbsp

134,064

&nbsp

&nbsp&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Noninterest Income:

Service charges on deposit accounts

&nbsp

8,518

&nbsp

&nbsp

9,000

&nbsp

Vehicle origination and servicing fees

&nbsp

1,449

&nbsp

&nbsp

2,968

&nbsp

Wealth management commissions and fees

&nbsp

12,800

&nbsp

&nbsp

12,719

&nbsp

Commissions on property and casualty insurance sales

&nbsp

4,698

&nbsp

&nbsp

5,666

&nbsp

Other commissions and fees

&nbsp

5,638

&nbsp

&nbsp

5,035

&nbsp

Income from bank-owned life insurance

&nbsp

1,853

&nbsp

&nbsp

1,637

&nbsp

Mortgage banking revenue

&nbsp

2,887

&nbsp

&nbsp

2,410

&nbsp

Capital markets revenue

&nbsp

2,408

&nbsp

&nbsp

1,240

&nbsp

Net realized loss on sales of securities

&nbsp

(5

)&nbsp

&nbsp

(8

)&nbsp

Other

&nbsp

2,066

&nbsp

&nbsp

1,422

&nbsp

&nbsp&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Total noninterest income

&nbsp

42,312

&nbsp

&nbsp

42,089

&nbsp

&nbsp&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Noninterest Expense:

Salaries and employee benefits

&nbsp

67,165

&nbsp

&nbsp

65,581

&nbsp

Occupancy

&nbsp

13,970

&nbsp

&nbsp

13,847

&nbsp

Furniture and equipment

&nbsp

3,815

&nbsp

&nbsp

3,944

&nbsp

Professional and technology services

&nbsp

7,253

&nbsp

&nbsp

6,070

&nbsp

Advertising and marketing

&nbsp

2,720

&nbsp

&nbsp

3,576

&nbsp

FDIC insurance

&nbsp

4,757

&nbsp

&nbsp

5,121

&nbsp

Legal fees

&nbsp

1,537

&nbsp

&nbsp

1,527

&nbsp

Amortization of intangible assets

&nbsp

1,979

&nbsp

&nbsp

2,539

&nbsp

Vehicle lease disposal

&nbsp

2,914

&nbsp

&nbsp

2,251

&nbsp

Merger related

&nbsp

4,432

&nbsp

&nbsp

0

&nbsp

Other

&nbsp

16,048

&nbsp

&nbsp

18,576

&nbsp

&nbsp&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Total noninterest expense

&nbsp

126,590

&nbsp

&nbsp

123,032

&nbsp

&nbsp&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Income before income taxes

&nbsp

41,561

&nbsp

&nbsp

53,121

&nbsp

Provision for income taxes

&nbsp

12,536

&nbsp

&nbsp

15,959

&nbsp

&nbsp&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Net Income

$

29,025

&nbsp

$

37,162

&nbsp

&nbsp&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Earnings per common share:

Basic

$

0.16

&nbsp

$

0.20

&nbsp

Diluted

$

0.16

&nbsp

$

0.20

&nbsp

Cash dividends per common share

$

0.09

&nbsp

$

0.08

&nbsp

Average common shares outstanding:

Basic

&nbsp

182,140

&nbsp

&nbsp

187,455

&nbsp

Diluted

&nbsp

183,053

&nbsp

&nbsp

188,378

&nbsp

Three Months EndedMarch&nbsp31,

&nbsp

&nbsp

&nbsp&nbsp

2015

&nbsp

&nbsp

2014

&nbsp

&nbsp

&nbsp&nbsp

(in thousands)

&nbsp

Net Income

&nbsp&nbsp

$

29,025

&nbsp

&nbsp

$

37,162

&nbsp

Other comprehensive income:

&nbsp&nbsp

&nbsp

Change in unrealized gain on securities available for sale

&nbsp&nbsp

&nbsp

12,841

&nbsp

&nbsp

&nbsp

16,121

&nbsp

Tax effect and reclassification adjustment

&nbsp&nbsp

&nbsp

(4,672

)&nbsp

&nbsp

&nbsp

(5,807

)&nbsp

&nbsp&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

8,169

&nbsp

&nbsp

10,314

&nbsp

&nbsp&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Non-credit-related unrealized loss on other-than-temporarily impaired securities

&nbsp

(72

)&nbsp

&nbsp

0

&nbsp

Tax effect

&nbsp

26

&nbsp

&nbsp

0

&nbsp

&nbsp&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

(46

)&nbsp

&nbsp

0

&nbsp

&nbsp&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Change in unrealized gain on cash flow hedges

&nbsp

3,662

&nbsp

&nbsp

4,100

&nbsp

Tax effect

&nbsp

(1,334

)&nbsp

&nbsp

(1,497

)&nbsp

&nbsp&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

2,328

&nbsp

&nbsp

2,603

&nbsp

&nbsp&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Changes in postretirement obligations

&nbsp

0

&nbsp

&nbsp

0

&nbsp

Tax effect

&nbsp

0

&nbsp

&nbsp

0

&nbsp

&nbsp&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

0

&nbsp

&nbsp

0

&nbsp

&nbsp&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Total other comprehensive income

&nbsp

10,451

&nbsp

&nbsp

12,917

&nbsp

&nbsp&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Total comprehensive income

$

39,476

&nbsp

$

50,079

&nbsp

&nbsp&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Ratios

  1. Liquidity Ratios

Current ratio

Current ratio is arrived at by dividing the current assets by thecurrent liabilities, i.e.

Current ratio =

=16,572,44015,188,852

=1.09

Note: The figures are in thousands.

The company’s current ratio stands at 1.09, indicating the SIG’sability to meet their short-term obligations. According to Needles&amp Powers (2013), this is healthy for the company. Theyhave managed to keep their current obligations in check as well asenhancing business growth.

Quick Ratio:

Quick ratio is calculated by dividing current assets (less stock) bycurrent liabilities.

i.e. (Current assets-stock) Current liabilities

=16,572,44015,188,852

=1.09

The quick ratio for Susuquhenna has been maintained at 1.09, meaningit can meet their obligations from their current assets, in case theydo not sell stock on time. Ideally, they do not have stock since theyare a financial services company hence the current ratio and quickratio remain the same. This is a strong position to be in.

Cash ratio:

This is a ratio between actual cash and current liabilities.

i.e. 480,98015,188,852

=0.03

This ratio is relatively low. However, this being financial servicescompany involved in trading, they have deployed their cash intoinvestments. The bulk of it is in loans and marketable securities.

  1. Profitability Ratios

Gross Profit Margin/Sales

=131,638 157,099

=0.8379

The gross profit margin (GPM) of the company stands at 83.79%. Thisbeing a financial services company, they do not have a direct cost ofgoods sold since they do not have tangible stock. In fact, in thisanalysis, the interest expense is what stood in for the cost of goodssold and it is 16.21%

Net Margin

This is calculated b dividing the net profit after tax by sales. Thenet margin for this company stands at 18.48%. Although it is a slightdrop from the 22.59% net margin of the financial year ending 2014, wenote that these are only first quarter results.

Return on assets

Return on assets is the ratio of net profit to the total assets

i.e. ROA= Net profit Averagetotal assets

For SIG, return on assets stands at 0.16. This ratio is okay, and isattributed to the fact that over 80% of Susquehanna’s assets aretrading assets.

Return on Equity

This is a ratio that measures the return an investor is likely tomake from their equity in the company. It is calculated by dividingthe net profit by the average total equity. SIG’s return on equitystands at 7.94. This is a very high return ratio, positioning thecompany as a good destination for investment.

  1. Efficiency Ratios

Debtors turnover

Debtors turnover is the ratio of sales to average debtors. Thedebtors turnover for SIG is 0.01. This may look bad but it isbecause of the nature of activities the company is involved in. Whatis captured as accounts receivables are actually prepayments andshort term investments. They do not have the conventional debtors assuch.

Inventory turnover

The company does not have stock, hence there is no inventory turnoverratio.

Asset turnover

This is a ratio of sales to average total assets. The asset turnoverfor SIG stands at 0.01. This is low, and is attributed to the factthat the company does not trade in tangible stocks. Being a financialservices company the assets are mainly investments.

Debt:

Thetotal debt for the company currently stands at $ 15.5 Million. Thedebt ratio is calculated by dividing the total debt by the totalassets. The debt ratio for SIG is therefore

1550505518,697,294= 0.82

This implies that most of the company’s assetsare financed by debt, hence greater financial risk (Roca &ampSearcy, 2012). However, leverage is a tool most companies use togrow. This being a financial services company, high debt ratios arethe norm.

Profitability:

From the income statement above, The Companyremains profitable. For the financial year ending 2014, the companymade a net profit before unusual items (NPBUI) of USD 37M and fromthe unaudited accounts, they made USD 29M in profits for the firstquarter of 2015. Assuming a similar trend, it can be projected thatthe company will make a net profit of over USD 100M for the financialyear ending December 2015. Such increases in earnings signal soundfinancial performance and growth trajectory. The bulk of revenues isfrom interest income.

Stocks

The company has a common stock of USD 365.624Million. This represents 182,811,814 issued shares at USD 2.00 pershare. Authorized shares stand at 400 Million, with per value of USD2.00. Total shareholders’ equity stands at USD 2.78.

retained earningsof USD 825 M for 2014 and USD 838 M for the first quarter of 2015.This is a positive sign of growth as part of the profit is ploughedback into the business. Shareholders did not take all the profits individend payouts, even though they paid cash dividends of USD 15M forthe financial year 2014 and USD 16.39M for the first quarter of 2015.

It is worth noting that Susquehanna and BB&ampThave entered into a merger agreement where BB&ampT will take overSusquehanna through stock and cash transaction. Subsequently,Susquehanna shareholders will receive 0.253 shares of BB&ampT commonstock, par value $5.00 per share, and $4.05 in cash, for each shareof Susquehanna common stock, par value $2.00 per share.

Working Capital

This is also referred to as net currentliabilities. The company has a positive working capital of USD 1.38Billion. This is because the company has more current assets thancurrent liabilities. This scenario is reflected in the healthycurrent ratio and massive working investment as well.

Recommendations

1. Debt

This company is highly geared. As evidenced by thefinancial statements, over 80% of the company’s assets are financedby debt. Of the USD 15.5 billion total debt, only USD 2 Billion doesnot bear interest. This is a financial risk since they do pay hugeamounts in interest. I would recommend the reduction of the debtsthrough equity injection to caution the company against the interestrisk.

2. Structured Financial Products Investments

Structured financial products investments resultedin unrealized losses for Susquehanna, valued at USD 13.62M for 2014and USD 13.20M for the first quarter of 2015. It would be prudent tore-evaluate their product positioning and consider repackaging themor cleaving them off completely since it is a division that does notseem to perform in tandem with the company’s goals (Hillier,Grinblatt&amp Titman, 2011).

3. Competition

To handle competition from other financialservices providers, the company must ensure quality is upheld, moveproducts services nearer to people and employ aggressive marketingthat will include the use of the internet as a prime advertisingplatform (Hillier, Grinblatt&amp Titman, 2011). Even thoughSusquehanna has spread its wings to other parts of the world, therestill lies enormous market potential in the developing nations thatthe company can capitalize on. Use of social sites to promote theirproducts will be efficient and economical. To minimize costs whileenhancing visibility, they can adopt the representative officestrategy. They cannot just sit back and assume their long-standingreputation will keep bringing in business they have to market theirproducts continually. Otherwise, they may find themselves beingdisplaced from stock markets.

4. Research and development

The future of depends mainly on its adaptation to the dynamics of the financialsector. The company has to invest in research to understand theshifts in customer tastes and new technologies and products beinginvented or innovated (Roca &amp Searcy, 2012). Customers willalways want something more than what everyone else offers, hencegathering reliable information from the markets is key. If newproducts are introduced or regulatory environment in a particularlocation changes and Susquehanna takes time to learn of or implementit, its competitors will gain the advantage. The company should shunstrategies that centeron specific markets only, to avoid financialcalamities and legal battles that have far-reaching financial andreputational implications.

References

Damodaran,A. (2016). Damodaran on valuation:security analysis for investment and corporate finance(Vol. 324). John Wiley &amp Sons.

Douma, Sytse Schreuder,Hein(2013).Economic Approaches to Organizations (5th ed.). Harlow:Pearson Education Limited

Hillier,D., Grinblatt, M., &amp Titman, S. (2011).Financialmarkets and corporate strategy. McGrawHill.

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