Case Analysis: Superior Buildors And Contractors, Inc.

On the other hand one single employee can take care of Large corporations an professional users . (One single person can be responsible of 90% of the companie’s revenue) So , we have two solutions : first , to find the best employee and put him in charge of the professional users and large corporate accounts and use the other 9 employees to cover DIYs . The second solution is to make a cost-benefit analysis to determine if having 9 employees that generate only 10% of the companie’s revenue is profitable (Pareto principle) . So , we think that the company should let go to the DIYs clients and maybe use this employees to find new bigger customers. On this manner, the company would focuss only in professional users and large corporate accounts , this would generate much more profit and reduce cost of unnecessary employees and time.

MTC initially needed to obtain substantial investment capital due to two main factors: a research-heavy industry, and the need to create most of the markets for its products. Although the founders' goal was to become a major manufacturing company, they did estimate that the company would need $50 million in capital before it would become self-sufficient. Their initial financing model was to first recruit a superior technical team, use that to attract additional equity investment and development funding from interested corporations, and then develop manufacturing capabilities. Commercial sales began 2.5 years after inception, and MTC is nearing the break-even point in 1990.

A profit and loss account is supposed to show a businesses’ income and expenditures and calculate the company’s net profit or loss based on the difference between those numbers. It is really useful in determining past performance and to try to predict future

Robert Chuckrow Construction Company (Chuckrow) was employed as the general contractor to build a Kinney Shoe Store. Chuckrow employed Ralph Gough to perform the carpentry work on the store. The contract with Gough stipulated that he was to provide all labor, materials, tools, equipment, scaffolding, and other items necessary to complete the carpentry work. Gough’s employees erected 38 trusses at the job site. The next day, 32 of the trusses fell off the building. The reason for the trusses having fallen was unexplained, and evidence showed that it was not due to Chuckrow’s fault or a deficiency in the building plans. Chuckrow told Gough that he would pay him to reerect the trusses and continue work. When the job was complete, Chuckrow paid Gough the original contract price but refused to pay him for the additional cost of reerecting the trusses. Gough sued Chuckrow for this expense. Can Gough recover?

This case analysis commences by explaining the type of accounting officer needed to execute the job functions for the client, Big Spenders Inc. The next objective will be to examine the income statements of the two prospective business entities that the client intends to choose from concerning investment – in order to diversify its portfolio. The strategies that will be explored in terms of the analysis of the income statements includes the computation of (i) operation profit margin, (ii) gross margin, (iii) net profit margin, and (iv) return on equity – for both companies of interest. The results of examinations will put the accountant in a position to make sounds recommendation to his superior at BUSI 1043 LLP, so that Big Spenders Inc. can be properly guided.

2. Forecast the firm’s financial statements for 2002 and 2003. What will be the external financing requirements of the firm in those years? Can the firm repay its loan within a reasonable period? In order to forecast the financial statements of 2002 and 2003, the following assumptions need to be made. The growth of sales is 15%, same as 2001, which is estimated by managers. The rate of production costs and expenses per sales is constant to 50%. Administration and selling expenses is the average of last 4 years. The depreciation is $7.8 million per year, which is calculated by $54.6 million divided by 7 years. Tax rate is 24.5%, which is provided. The dividend is $2 million per year only when the company makes profits. Therefore, we assume that there will be no dividend in 2003. Gross PPE will be $27.3 million (54.6/2) per year. We also assume there is no more long term debt, because any funds need in the case are short term debt, it keeps at $18.2 million. According to the forecast, Star River needs external financing approximately $94 million and $107 million in 2002 and 2003, respectively. In order to analysis if the company can repay the debt, we need to know the interest coverage ratio, current ratio and D/E ratio. The interest coverage ratios through the forecast were 1.23 and 0.87 respectively, which is the danger signal to the managers, because in 2003, the profits even not

* No proper market segmentation – wide age of customers 18 -45 years male and female

Scenario 3 shows us what would happen if he fails and looses market share. According to the case, Miller would make the visit to the dentist more pleasurable and stress-less. The only way this scenario can happen is if new competition come in or he does a bad job in fixing teeth. Just to show the “worst case scenario,” I set growth rate at 0% and the rest of the years decline 5%. We would hope that after declining of sales, Miller would liquidate the firm in 2009. As we can see, change in working capital is increasing as sales are decreasing, which means he can’t pay off the debits. If we look at the cash flow forecast, if Miller decides to liquidate the firm in 2009, then the book value of the fixed assets would be 14,836 and the salvage value would be 10,385. This scenario is unlikely to occur

The company lost money almost every year since its leveraged buyout by Coniston Partners in 1989. The income generated was not sufficient to service the interest expenses of the company which stood at $2.62B in 1996. From Exhibit 1, we can say that interest coverage ratio computed as EBIT / Interest Expense was 1.31 in 1989 and has been decreasing over years and currently stands at 0.59. This raises a question of how the company can meet its interest payments without raising cash or selling assets.

The company currently faces serious financial challenges. It was struggling with declining sales and increasing costs. Since 2004, revenues had fallen by more than 40% while costs especially for employees health insurance, maintenance, and utilities climbed. Credits and loans had been borrowed to

The firm’s accounts receivable ratio increased from 68.71 in 2006 to 74.56 in 2010. This means that it is taking Abbott almost six days longer to collect from its customers today than it did five years ago. Furthermore, the firm’s accounts payable days has decreased from 43.72 in 2006 to 38.22 in 2010. This means that Abbott is paying its suppliers 5½ days earlier today than it did in 2006. A change in the inventory ratio from 8.01 in 2006 to 11.03 in 2010 indicates that it is taking the firm longer to sell finished goods than it used to. The increase in the accounts receivable and inventory ratios, combined with a decrease in the accounts payable ratio, indicates poor working capital management and helps to explain why the firm has increased its holdings of cash and short-term investments. To correct this, Abbott’s managers should focus on collecting cash from its customers faster and delaying payments to its suppliers. To maximize its cash position, the firm would be best served by paying its suppliers in the same amount of time as it collects payment from its customers.

The need for financial stringency in public organizations due to budgetary pressures and tax resistance coupled with the need to Managing /balancing budget deficits and provide quality services with a reduction in revenue has always been a major challenge for public organizations. The need to save money and at the same time provide quality services, had forced government agencies to privatize and contract out. Recently, there is greater involvement of the private and nonprofit sector in public service delivery. More and more government functions in service delivery are now carried out by private and nonprofit organization. This is one part attributed to the belief that private organizations can provide services more efficiently and effectively than government operated services. And the other is the fact that it is cost effective and takes a lesser time frame. These two process are indeed unarguably beneficial to the government and private sector as well as the beneficiaries, but they can be also very daunting accompanied with huge challenges especially when not executed in the rightful manner. The case of the crummy contractor by Rainey depicts such a complex situation , where the process of contracting out was poorly conducted. The case highlights the demand for privatization and contracting-out and most importantly some of the challenges of privatization and contracting in government organization. it goes on further to identify some crucial pointed to be

Victoria has one of the strongest economies in British Columbia (Greater Victoria Chamber of Commerce, 2012). Greater Victoria has a fast-growing knowledge based economy with growing business opportunities in its more significant sectors including “advanced technology, tourism, marine, government, and education - as well as other sectors, including construction [See Figure 1 in the Appendix for the trend in major projects in the Vancouver Island/Coast Region], retail, agriculture, and arts and culture, contribute to the overall strength of the economy and demonstrate the healthy diversity of the business environment” (Greater Victoria Chamber of Commerce, 2012).

When it is time to do some form of construction it is not an easy process. Many people want to do construction on various parts of their homes. Sometimes a family has decided it is time to remodel their kitchen and sometimes people figure out that their bathroom is way too small and it is time for it to be updated. Unfortunately a few people try to do the updates themselves and somewhere along doing the project they realize that maybe they should have contacted some construction companies a long time ago. If someone wants for the update to their home then it is best that they contact some professional construction companies to do the work. This way they can completely forget about the project and it will take a great deal of stress off

(a) The Company has liquidity problem, whereby it is in a negative cash position, i.e. cash borrowings is higher than its own cash. At the end of Dec 2001, it is forecast to have a debt outstanding of INR3.5 million;