Each international companies around the world deal with foreign currency transaction. It impacts negatively or positively on the income of the company. As it plays a role in the income of the company, it must be a concern in the financial statement of the company. In this report, I have choose Tiles industry in the UAE which is RAK Ceramics. The research will analyse financial statement and see whether the foreign currency transaction makes a loss or gain to the company, and how reduce and avoid the risk of foreign currency transaction.
The reasons for choosing Tiles industry is the UAE’s tile market is poised for solid increase mainly driven by the construction activities related to the Dubai Expo 2020, which affect hugely of UAE revenue and growth.
The UAE’s constant construction boom ahead of Expo 2020, has moved demand for ceramic tiles to rise by almost 70% and, with almost 40% of tiles imported from overseas, this poses large opportunities for international manufacturers to win contracts on prestigious UAE projects. As the largest exporter of tiles to the UAE (UAE tile market set for growth amid Expo 2020 boom, 2017).
In the UAE, demand for tiles is predicted to increase by 12% to 2020, driven by hotel and tourism projects, which currently amount to a pipeline valued at $8.1bn (AED30bn) to 2020, according to the 2015 Frost and Sullivan report, Tiles and Ceramics Market Assessing Growth Trends and New Opportunities in Gulf Cooperation Council (UAE tile market set for growth amid Expo 2020 boom, 2017)..
The reason for choosing RAK Ceramics is one of the biggest ceramics industrialists in the world and has sold over 1 billion square meters of tiles (rakceramics, 2013). RAK Ceramics was established in Ras Al Khaimah in 1989 under the management of Sheikh Saud Bin Saqr Al Qasimi and Swiss Lebanese engineer Khater Massaad in 1991. who aspired to have the best machinery, latest technology, and to produce the best products with high quality possible for sale in the world (rakceramics, 2013).
RAK Ceramics mission is ‘to be close to customers by listening to their needs and adapting to market requirement franchise in producing high-quality products that show the best value for money. Redefining the product innovation and design process Accountable to its clients, trade partners, stakeholders, and employees motivate employee in order to improve them into future entrepreneurs Integrity of the management towards the organizational objective. Make a commitment to the society by participating towards a healthy environment, Sustainability in every field of business’, and their vision is ”to maintain its standing as world’s leading innovator in the ceramic field”.
The SWOT analysis of RAK Ceramics represent the SWOT for the Tiles industry:
The strengths of RAK Ceramics include massive markets, which it holds in the area. It is approximated that 85% of the total population in UAE buy their ceramics from this company. This allows the venture to grow and maximize the profits realized from their effort (Njeri, 2016).
The weakness of RAK Ceramic has always under scrutiny and the public eye for any decision taken as being famous. The other weakness faces are the fragile aspect of earthenware. It is estimated that almost $100 million is lost every year as a result of breakages of these goods (Njeri, 2016).
RAK Ceramics has opportunities of receiving franchising offers due to their position in the marketing. That allowed them to expand their company to other parts of the world. Help it strengthen the brand and enter untapped markets as well.
RAK Ceramics has the threat of new intranets in the market with an available resource that let them compete, no restrictions and barriers. Involve unhealthy competition from companies, which are imitating its techniques to manufacture their terracotta.
Statement of problem
In this research, I planned to study four CLOs which are:
BUS 4183 Corporate Finance:
• CLO 4- Recommend strategies to improve financial performance using financial analysis.
• Justification; analysis financial statement is necessary to improve the financial performance of RAK Ceramics which involve a foreign transaction.
• Statement of problem: improve financial statement involve managing problems that show a loss in the financial statement, and avoid issues.
• Objectives: study the annual report in 2016 of RAK ceramics and evaluate financial statement performance.
• CLO 1- Explain the principles of auditing and professional standards of auditors
o CLO 3- Evaluate internal control policies and procedures adopted by organizations
o Justification: auditing is played aa key role in company performance, so the principles of auditing and policies of the organization make ensure the financial statement run in the right way.
o Statement of problem: the internal policies of the company and principles of auditing assist to prevent and reduce the loss and issues.
o Objective: study the principles of auditing and internal policies of the company, and see how they follow up the auditing to evaluate it.
• CLO 4- Recommend an accounting treatment for selected issues on financial reporting
• Justification: evaluate the financial statement and write a recommendation to improve selected issues.
• Statement of problems: helps to improve financial performance by providing accounting treatment.
• Objective: study financial reporting of the company, and evaluate the issue of the financial report, and overcome of this issue by provide soulations.
The researcher planned to combined data between primary and secondary sources. The primary source is doing survey by monkey survey that is answered by the company, and other survey by the people that I will show it in a report by charts may I face limitation in this area, maybe the company didn’t respond, so instead of that I will do survey for public people. The secondary data by a collect website of the company, and read articles by using HCT library of the research, and analysis the annual report of RAK Ceramics