Assessing the performance of a company over several years a comparison should be made with how effective it had grown in relation to comparable companies. The effect of the economic environment should also be taken into account together with the effect of inside and outside influences of the industry sector. A ratio analysis reflecting the current state of the company in relation to its own history as well as comparable figures would also indicate how Oracle performed.

Due to the fact that the technology industry growths faster than the normal economic growth it would be of more value to compare the sales growth and market share of Oracle to its competitors. The expected worldwide market share of Oracle in DBMS reflects that it would most probably have 40% market share in 1991. Its nearest competitor IBM is expected to have 27% and the rest less than 7% market share. This in itself shows that irrespective of the economic environment Oracle had phenomenal growth for a company that only started 12 years before.

Porters five forces model can be used to determine how effectively the company performed in rela

The Price per Earnings Ratio which is the market share price over the earnings per share will thus be lower as the investors will pay less per share for the same earnings in relation to another company with lower risk and more growth potential. The share price of Oracle would thus drop as investors would sell their shares to invest in other companies until the P/E ratio is acceptable in relation to the future growth and risk of Oracle.

The Price/Earnings ratio is very sensitive to share price fluctuations. The date used in respect of the share price could thus make a big difference in this ratio. In determining the ratio the date as per year end was used. In May 1989 the share price was $10 per share, for the previous month $14.50 and for June 1989 $14.9. A more realistic ratio would be to use the previous month¡¦s price. The table above then gives a clearer indication of Oracle¡¦s performance. Oracle have a very high Price per Earnings ratio giving an indication that investors have trust in the company in regards to both the expected growth rate as well as the risk attached in regards to the managers abilities to sustain the good performance. This has changed with the announcements and the share price has dropped drastically. The lower Price per earnings ratio thus giving an indication that it is a high risk company.

Some topics in this essay:
Quick Ratio, Report Corporate, Oracle Threat, Summary Oracle, Oracle Strategy, Price/Earnings Price/Earnings, Oracle DBMS, Performance Oracle, Price Earnings, Earnings Ratio, share price, profit margin, earnings share, market share, net profit, shareholders value, bargaining power, price earnings, non-financial information, maximising shareholders value, 1989 1990, net profit margin, price earnings ratio, 1989 1990 31-aug, operating profit margin,