ANALYSIS OF PERFORMANCE OF NVIDIA

. The role of ethics and compliance in Nvidia’s financial environment

The company Nvidia and directors of its board are devoted to sound rules and regulations of corporate governance. Nvidia has incorporated codes of conducts, strategies and charters to define corporate governance at the workplace, merchandize the interests of its stakeholders, and create general expectation of the way conduction of the business took place at the company.

1.1. Ethics

It is believed by the company that the integrity with which business is being conducted by the company is significant to the ability of company to maintain its repute and run an innovative, successful business. The company expect its workers, executives and directors to play their roles with highest degree of honesty, integrity and ethics.

The International Code of Conduct of NVIDIA is applicable to its all the workers, officers, executives and directors, including its principal accounting officer and principle financial and executive officer. Furthermore, the company has created a Financial Team Code of Conduct that is applicable to its financial members, directors, executives, and treasury and accounting departments. The Financial Team Code of Conduct and the International Code of Conduct of the company is available on the official website of the company under Corporate Governance. If the company do any change to either grant any rejection from a provision of either code to its director or executive officer, the company promptly publishes the type of change or rejection on its website.  The code of the company prevents engaging in activities or transactions which are not a part of company’s interest. When registering purchase requisitions, workers must acknowledge that there isn’t any conflict of interest by them. For better protection of its stakeholders and itself, NVIDIA reviews its policies related to its code of conduct to make sure that apparent guidance is being provided by them to the company’s workers, executives and directors.

The company has created a corporate hotline to permit a worker to anonymously and confidentially file a complaint against any auditing, internal control, accounting or any other matter of worry. Workers were motivated to file a case against suspected conflicts of interest to HR representatives or their respective managers or they can also report through hotline. An external company runs the hotline, and this managerial choice intensifies the comfort level of its employees by reporting anonymously. The company has a serious policy of “no retaliation” for activity reporting which operate counter to its ethical expectations. If a worker has violated ethical norms given either by Financial Team Code of Conduct or International Code of Conduct, a serious action will be taken by the company and might lead to termination of the employee.

1.2. Ethics Training

Every worker of the company receives sexual harassment and ethical training. The goal of the company is to provide International Code of Conduct training to its employees globally, which covers social and environmental responsibility problems, and by the end of 2013, 90% of the employees have successfully completed this training. Whereas, 80% workers that have contact with suppliers, partners and customers on consistent basis also got training of anti-corruption. Workers who perform at higher levels such as director level got sessions of legal training in 2009.

While the perfect way to establish a behaviour and code within a workplace is for higher staff to set an example, but it is not enough sometimes in bigger organizations. As the growth of companies and its culture is regulated by various individuals, ethics of company can be diluted. An ethical code of conduct is a significant tool for gaining standards of ethical behaviour.

2. Procedures Nvidia has in place to ensure ethical behavior.

Nvidia follow the following procedures in order to ensure the ethical behavior.

2.1. Benchmark

A written code of ethics works as being guideline and as an expectation for the conduct of employees. In most of the conditions, code of ethics is provided to new employees over which induction and acknowledgement is developed. This works as the source for ensuring that employees have proper interpretation of the significance of ethics and that their job needs adherence to the standards of organization.

2.2. Training

For being effective, a code of ethics need to be more than just a piece of paper, it needs to become the way of life in culture of an organization. One of the best thing NVIDIA do is that it lifts it up for creating necessary ethics trainings. In NVIDIA, employees get appreciation for ethics and they have better interpretation of seriousness. They also get opportunity to do work with the help of potential services and situations.

2.3. Enforcement

For ethical code to have some meaning, NIVIDIA enforce it. It needs someone to be terminated or disciplined for some breach of ethics. If NVIDIA desires to have strong ethics then it should give free pass to employees. Along with it, organizations need to make compromises for upholding standards, like giving free merchandise or standards due to the mistakes of company. Employees learn and watch through practices of management (Ji et al, 2014).

3. Financial Markets

The financial markets of U.S. involve many markets for diverse items that are provided on range of exchanges and trading platforms. A financial market is a wider term that depicts any of the organization where sellers and buyers make participation in trades of assets like derivatives, currencies, bonds and equities (Pasquariello, 2014).

Financial markets are defined through transparent pricing, market forces, fees and costs, basic regulations over training and market forces that identify the securities’ cost that trade. Some of the financial markets of U.S. are small. Some of the markets are open to those investors who are private; others are the basic domain of financial professional and international banks until the end of twentieth century (Chen et al, 2016).

Following are the financial markets present in U.S;

3.1. Capital Markets

A capital market does the working in institution and individual financial securities. Institutions and companies present in private and public sector often sell different securities on capital market for increasing funds. Therefore, this kind of market involves both secondary and primary markets. The money is raised through securities sales, bonds and stocks in the name of organization. These are sold and bought in capital markets.
3.2. Stock Markets

Stock markets work through letting the investors to sell and buy shares in public organizations. They are the most important regions of market economy as they give access to the organizations. The division of these markets can be done into two main parts: the secondary market and primary market. The primary market is the one where new problems are offered at first, with trading being done in the secondary market.
3.3. Bond Markets

A bond is termed as the investment of debt in which investor loans money for the entity (governmental or corporate), which gets funds for some fixed time period at fixed rate of interest. Bonds are utilized through organization, foreign governments, states and U.S., municipalities, to finance large number of operations and projects. Bonds can be sold and bought through investors over credit markets present all around the world. This market is referred to as fixed-income, credit or debt market. It is larger in nominal form. Corporate bonds and municipal bonds are the main categories of bonds.
3.4. Money Market

The segment of financial market is the money market in which trading of financial instruments having short maturities and high liquidity is done. Participants use the money market as being the resources for lending and borrowing in shorter time period, from days to year. Securities of money market involve repurchase agreements, acceptance of bankers, certificates of deposit, commercial paper, repurchase agreement, federal funds, Eurodollars, and municipal notes. Money investment markets are also termed as cash investment as they have short maturities (Valdez & Molyneux, 2015).

4. Evaluation of Financial Performance

4.1. Current Ratio

2016

1.644128114

2015

1.479648843

2014

1.573364486

2013

1.424298205

2012

1.489247312

 

For the period in review the company can fulfil its obligations using the current assets however the change in the ratio is unstable from year to year. In 2012 it decreased and increased in 2013 but decreased in 2014 but again increased in 2015 and later increased in 2016. Current assets were properly estimated hence the company is in proper operations.in every financial period current assets are surpassing the current liabilities of this company.

4.2. Quick Ratio

2016

1.473309609

2015

1.351955307

2014

1.372429907

2013

1.301426599

2012

1.306451613

 

Since, the trending ratios for the reviewed period are above 1 the company has the ability to meet its current obligations with the use of current asesets that are most liquid with the inventiries excluded.

4.3. Debt to Equity Ratio

2016

0.855010661

2015

0.99284141

2014

1.008328376

2013

0.994620253

2012

0.939644554

 

Though the company has debts accruing debts the trend shows a proper usage of those debts in relation to the owners’ equity. The company uses a particlar dollar of debt in the equity employed or investaed in the company as per the ratio figures there by shown.

4.4. Return on Equity

2016

0.304051173

2015

0.236811674

2014

0.249631172

2013

0.263797468

2012

0.282435333

 

Return on equity is used for measuring the capability of a company for generating profits from investments of shareholders in the firm. From the above table it can be seen that value of return on equity for 2012 to 2016 ranges from 0.23 to 0.30 that means from every dollar of shareholder, the company earned about $0.23 in 2012 and so on.

 

 

References

Chen, Q., Filardo, A., He, D., & Zhu, F. (2016). Financial crisis, US unconventional monetary policy and international spillovers. Journal of International Money and Finance67, 62-81.

Ji, L., He, X., & Mao, H. (2014). Opportunism or Ethical Behavior? Earnings Management of the Companies Committed to Corporate Social Responsibility. Journal of Accounting and Economics5, 002.

Pasquariello, P. (2014). Financial market dislocations. Review of Financial Studies27(6), 1868-1914.

Valdez, S., & Molyneux, P. (2015). An introduction to global financial markets. Palgrave Macmillan.

 

 


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