National Fabricators Essay

1534 Words7 Pages
Key Events/Case Synopsis

National Fabricators Inc. is a company that specializes in the manufacturing of lockers, school furniture, toilet partitions, steel shelving, and is now currently owned by Tom Kruger after buying out $75,000 of shares from shareholders in 1992. The industry is very competitive as costs are rising and prices being cut while the economy declines at the same time. As the president of National Fabricators, Tom Kruger needs to bring the company back on its feet in order to generate profits and reduce its losses of $480,315 and outstanding bank loans of $784,000. Tom Kruger also predicts that sales would fall as much as 10% during the 1994 fiscal year due to government cutbacks on medical and educational spending as
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• The company has the opportunity to grow in various markets and aquire new customers such as malls, hotels, offices, and motels not only in Canada but as well as the United States.

Threats:

• Tremendous price and wage competition in a recurring industry will lead to additional losses in profits.

• The highest risk for National Fabricators is the three companies which are dominating the industry that have the investment ability to control industry standards and requirements, which could lead to a decrease in profits.

• Due to the long term contracts from the government it is impacting the company’s cash flow in a negative trend.

Historical Financial Analysis

• Sales fluctuate due to the frequently cyclic nature of the industry but they aim to remain above 3 million annually.

• In 1993 cost of goods sold being 90% of sales and 9.6% gross profit of sales. Company’s lack of ability to manage inventory and lack of cash forced them to order from more expensive (12-15%more) warehouse than steel mills.

• Net profit margin has been negative and no major patterns over the 9 year period on net profit since the trend of the industry is based mostly on economic factors, and whether or not they secure contracts. Due to high percentage of COGS they are only left with a net profit of $980 or
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