Case Study Drivers of Industry Financial Structure

Case Study Drivers of Industry Financial Structure Executive Summary KR+H is a manufactory company in cabinet industry and it had devised a unique operating strategy of producing high quality custom cabinets at a low cost. Because the investments will reduce costs and increase the working efficiency in manufacturing process. And the analysis will show that adding investment is valuable and profitable. Based on KR+H’s past financial performance and the cost of investment, KR+H would need additional financing to fund the proposed capital investment.The internal financing could be very difficult for KR+H based on it had a deficit in 1992. And internal financing may also slow down the investments because KR+H has to retain its profit. Also rising the price is not a very good option in a long-term perspective. Because it could retard their growth and therefore did not represent a viable path to a long-term profitability. So we suggest that KR+H should finance the proposed capital b y relying on external financing from a bank or an outside investor. ContextKR+H is a manufactory company that designs,fabricates and installs high quality, uniquely designed cabinetry. Now it had devised a unique operating strategy of producing high quality custom cabinets at a low cost. KR+H believes that the use of computer-controlled equipment allowed the firm to significantly reduce their labor cost and other production cost while increasing the efficiency of the manufacturing process. In order to support the development if their innovative operating system, KR+H need to clearly define the scope and speed of growth for their business.However, the partners do not have internal funds to finance the investment and their access to external capital markets is limited. Therefore KR+H needs a better operating and financial strategy to managing rapidly growth and its capital. I think the article â€Å"Seize advantage in a downturn† is very helpful. Many companies fail to see the opportunities hidden in economic downturns. In order to take advantage of opportunities, KR+H first need to do a thorough but rapid assessment of its own vulnerabilities and then move decisively to minimize them. David and Daniel, 2009) KR+H could approach their problem by using some of those steps introduced in this article such as Monitor and maximize its cash position 1. Evaluating the capital position: In the cash flow statement Exhibit 6, the net decrease in cash by $15,298 in 1991 and $46,955 in 1992. In order to meet cash requirement during 1992,KR+H gets a personal loan about $35,000 and the bank overdraft to cover its deficit about $14,000,which shows us that KR+H are short of cash during the past years and it gets worse. The total enhancement of the new investment will be: Category |Cost | |Require in Capital |$300,000 | | |$100,000(developing in 2 years) | |Software | | | |$25,000 – $30,000 (maintain & update per year) | |Marketing |$40,000 |Based on KR+Hâ€⠄¢s past financial performance and the cost of investment, KR+H would need additional financing to fund the proposed capital investment for sure. 2. Adding investment is valuable and profitable: I think the proposed projects are profitable investments and it will add values. Because the investments will reduce costs and increase the working efficiency in manufacturing process: |Category |Number | |Increase production capacity |50% | |Labor cost saving per year |$170,000 |Another fact is that on a pro forma basis, KR+H’s cost of goods sold in 1990, the year before merged is approximately 60% of sales. In 1991,the percentage is increased to 67% and in 1992 the year after the merger the percentage rose to almost 75%. It shows us that some unanticipated cost increasing rapidly while the revenue is rising. If KR+H could adopting the new investment it would make its production more efficiently and the technique may also save some cost of goods. In addition, the cabinet industry exp erienced a decline in efficiency in 1992. Firm size |Sales per work |Compare to 1991 | |Large |$120,000 |gain 9% | |Medium |$84,000 |decline 11% | |Small |$80,000 |off 2% | |KR+H could gain a long-term rapid growth in sales by first adopting the new technique and the improvements in production efficiencies will give KR+H more advantages in sales. There is no doubt that the investment will increase the operating leverage and also increase risk. In Exhibit 9, with investments KR+H will yearly saving $207,900. Therefore, adding the investment is very profitable. And also rising the price is not a very good option in a long-term perspective. Because it could retard their growth and therefore did not represent a viable path to a long-term profitability. I think KR+H finance the proposed capital by relying on external financing.Because the internal financing could be very difficult for KR+H based on it had a deficit that was covered with a personal loan to company about $35,000 by a partn er and a bank overdraft $14,000 in 1992. And internal financing may also slow down the investments because KR+H has to retain its profit. The investors wouldn’t want a low return just because the firm wants to invest. Thus, external funding will be a better choice. Ratios In 1992 and 1993, exhibit 4 Year |Return on Sales |Return on Equity | |1992 |2. 1% |21% | |1993 |8. 3% |98% | | Besides this, KR+H also is profitable in 1992 and assume that it will have 10% growth rate. Meanwhile, with the investments could save KR+H about $209,900 each year.Those profitable data in its financial performance will help KR+H to get a loan from a bank or other outside investors. Conclusion: KR+H has its new investments developed and they focus on reduction by continuing to increase the level of automation in the process. And this investment is valuable and profitable. Based on KR+H had performed not very well in their cash flow in the past 3 years. The company also troubled with limited access to the capital market. Therefore, it is necessary for KR+H to get external financing in order to maintain its revenue and get a rapid growth. References: Robert C. Higgins(2012), Analysis for financial management David Rhodes and Daniel Stelter(2009), Seize advantage in a downturn

Separation of Classes on Gender Basis Research Paper

Separation of Classes on Gender Basis - Research Paper Example This essay "Separation of Classes on Gender Basis" aims to analyze the pros and cons of the separate classes for boys and girls. Supporters of the movement argue that the learning ability of boys and girls are different. The recent research has clearly indicated natural differences in how male and female understand and learn their lessons at class and society at large. It is very necessary to impart education to the pupil based on the gender, as their understanding ability differs with respect to their sex. When the necessity of single sex education is debated it includes the issues of socio-economic, political, civil rights and legal concerns which are very important in terms of practical perspective. Leonardo Sax (2005) states in his book that the behavior of girls and boys when they are together reflects the larger society to which they belong. His opinions that the girls are most expressive in a single sex school than in a co-ed school. Because of less or no pressure they tend to react instantly and actively in a single sex school. In a coed school the boys came forward with an attitude to put up and spoke on any given topic with ease, while the girls were forced to talk a very few words. He even noticed a considerable change in the courage of the single sex school and co-ed students. The teacher enthusiastically praised, corrected, helped, and criticized the boldly spoken boys who could speak voraciously on any topic given and with the girls who were soft spoken with less courage he nodded his head and would hardly help them overcome their mistakes. But the girls in the single sex school could easily dare to speak on any given topic without pressure, where the teacher could correct the students and also inculcate new teaching techniques based on the gender for better understanding. This in turn would help the students to enhance their learning capabilities. The doctrine of Single Sex Public Education (SSPE) is a good example of the above. SSPE informs teachers in male classrooms to move constantly in the classroom with a pitch of loud voice, even to the point of shouting. But the teachers in the female classes are asked to be still and use a soothing tone to talk to the pupil. This was introduced as the young males thrive on competition and confrontation, while the young females expect care and co-operation in a learning environment. This was the ideology of SSPE (Datnow and Lea, 2002). Few researches have pointed that the single sex schools can foster each gender to excel in

Compensation Essay Example | Topics and Well Written Essays - 750 words - 1

Compensation - Essay Example Each company in every industry across all countries has accountants who similarly have the same qualifications and skills with all the other accountants and thus, accounting is one example of a benchmark job. Once an individual is able to afford all the basic needs then the attainment of these needs seizes to become a motivating factor. However, the individual can become motivated again if he or she focuses on achieving other higher needs such as safety or social needs. If a school administrator sets a target for teacher to achieve for example to ensure that more than 50% of the students achieve grade B and above, if the teacher achieves this target he or she will receive an extra pay that is known as merit pay. According to the writings by (Milkovich, 450-700), broad banding is described as a practice whereby the human resource categories different jobs in ‘bands’ based on a broader classification such responsibilities and skill requirements. Broad banding eliminates small grouping of jobs, which usually result in many jobs groups. (Milkovich, 450-700), noted that among the key advantages of broad banding is that it reduces rivalry between employees in an organisation since it eliminates the emphasis on hierarchy or status within the organisation. Secondly, broad banding is advantageous to an organization because it makes the payment structure to be more flexible and responsive to the vary needs of the evolving environment. (Milkovich, 450-700) stated that it is not possible for certain organisations or countries to adopt the practice of broad banding, this is especially if the organisation or countries gives much regards to status or titles because of social factors and either the country or organization prefers the use of well defined procedures and policies. However, the practice can easily be adopted in organizations that are much flexible and prefer cross or lateral

The Invention of the Transistor and the British Media Landscape Article

The Invention of the Transistor and the British Media Landscape - Article Example Sjoberg (n.d) mentions that the transistor changed the way information was received earlier to the discovery. The transistor made it possible for the individuals to take ones radio to whatever place which was not possible in the case of television. And moreover, electronic media use outside the households was only possible with the transistor.5 It is further stated that the application of frequency modulation technique for superimposing audio signals on the VHF carrier was a serious development in radio broadcasting in 1950. This facilitated the people to listen to the radio with great digitized audio at a better frequency. In 1960, a geostationary communication satellite was yet another innovation in radio technology, the idea which was conceived by British scientist Arthur C. Clarke. It is pertinent to mention that an innovation called stereophony was developed in the late 1950s and used in the United Kingdom for sound broadcasting (Vardhan, 2002). The changes in the technology use d to produce and transmit radio have been linked to the rise of autonomous youth culture and the introduction of the portable transistor radio in the early 1950s (Chignell, 2009)6. The invention of the transistor has resulted in audio digitization which was first introduced by Alec Reeves of England which is known as pulse code modulation. As a result of the most cost-effective audio digitization of analog audio signal, broadcasting of additional data with added values to traditional voice and music as possible.

Management Issue Paper Essay Example | Topics and Well Written Essays - 750 words

Management Issue Paper - Essay Example These areas of diversity bring a challenge to managers when they try to rally every employee to offer his or her best to the organization due to influence from their backgrounds. Some of the challenges that managers face includes resistance of some employees to the organizations diversity plan. Some of these employees present a challenge to the management as they try to sabotage the management efforts of ensuring that all employees relate well to each other and understand the organization’s demand. Employees’ negative attitude reduces productivity as they slow down positive change and damage moral of other employees. Secondly, communication in organizations with workforce diversity poses a challenge since there are people from different sexes, age groups among others are represented. Due to these differences, a challenge of dealing with different communication styles employees and between employees and management arises. There is also misunderstanding leading to poor of fice relations and misinterpretation of each other’s intentions. Thirdly, workplace diversity runs the risk of causing disorganization in the work place. People from the same background tend to form their own subgroups since they present the same ideas and viewpoints. This poses a challenge to the management, as they cannot rally all the employees to take a common stand through consensus building. Due to the disorganization in the workplace, the organization suffers as production is lowered when all employees and management cannot come together to champion a common course (Douglas 46). Fourthly, diversity in the workplace comes with stereotypes on how different groups of people work in the organization. Stereotyping increases stress and anxiety as the worker faced with such a challenge feels discriminated upon leading to low output levels (Konrad & Pringle 27). The main problem mangers face is coming up with strategic measure that will ensure effective management of people th rough creation of an organizational environment that attracts and retains diverse workforce by responding to changes in the demographic and social patterns in the workplace. Managers have a role to play in creating an organization that attracts workforce from diverse background while at the same time being supportive of their aspirations, promotes equality, and ambitions, (Cornelius 147). Several strategic plans can prevent crises that may come up in the organization due to the diversity of its workforce. Firstly, setting targets for diversity in the organization can help manage employees. In this regard, the management needs to come up with plan that determines the recruitment targets for various groups whether women, men, disabled, ethnic minority. Through such initiative, the organization is able to determine its progress towards workforce diversity and further practices and policies can be evaluated against the set targets (Cornelius 152). In order to manage diversity at the wor k place, managers need to create flexibility practices and policies that will ensure all employees are treated fairly in the workplace. Creating flexible time schedule ensures that all employees are available and offer their best to the organization. Other than cultural

Macro and Micro Economics and their Predictions for the Future Term Paper

Macro and Micro Economics and their Predictions for the Future - Term Paper Example Research has it that this growth began in the postwar period from 1955. Between this year and 1973, there was a rapid growth in the GDP at 8% but later, the GDP per capita was at 3%. Most of this growth has been attributed to the increase in the manufacturing sector. Various spheres of human development also improved greatly during this period, for instance; infant and maternal mortality rates declined such that by 1993 it was one of the lowest in the world. Some researchers say that over the past decade, Japan's economy has been stagnant due to poor population growth, debt, deflation and natural disasters. According to Buttonwood, however, the growth per capita over the last ten years is at 1.6% greater than that of the United Kingdom, Germany, France and even America (www.economist.com). Apparently, Japan has plans to start trans-pacific partnership trade to increase its economic growth. Another indicator of economic growth is the Human Development Index, currently in Japan; it is at 0.901, the 12th out of 187 countries. The purchasing power parity according to the wall street journal is 1$= 110.784 yen. The main industry in Japan is the manufacturing industry inclusive of electronics, automobile, biochemistry and optical media. Agriculture is not that well developed due to lack of farming land. These two industries provide the population with employment and according to the economist, in 2008, the ratio of job offers to applicants is at 0.59. However, the low birth rate is troubling this economy due to the high probability of lack of available indigenous workforce in the next few years. Japan is known to be one of the easiest and best places to do business due to its low tax rate. This is one of the members of G-20 countries, an upcoming economy. Currently, its economy has an expectation to expand by 8.5% (the Economist). The increase in the workforce is one of the reasons why there is a high expectation of its economic growth. The growing national income per capita has been seen to triple at a  percentage of 13.7% according to the wall street journal. Human development index in India is still questionable but expectations of improvement are very high.

What are management techniques. Which ones are effective Research Paper

What are management techniques. Which ones are effective - Research Paper Example The Balanced Scorecard Technique is a performance-based technique that is structured in a way that enables a sequential check and evaluation of processes in order to determine the level of conformity with the expected outcomes (Armstrong 46). The popularity of the Balanced Scorecard has been witnessed largely in western countries. Studies have also found out a significant level of preference of this management tool in Scandinavian countries, the Middle East and Spain. Over the times, theorists and management experts have managed to develop related techniques and concepts of management basing on the structural foundation of the Balanced Scorecard. Some of the related techniques are Results Based Management and the Performance Prism technique. The fundamental feature in these techniques is the linking of all actions towards some specific outcomes. The balanced Scorecard operates through the creation of ‘target values’ that are used to measure the progress and specific outcomes of various processes within the organization. Essentially, the units of measurement are designed in ways that provide the most relevant information about the nature of performance of a given measure. Both financial and non-financial units of performance are assessed against these target values, which act as safeguards to the nature of performance (Armstrong 50). For instance, the volume of sales could be assigned to some specific target value so that all subsequent actions and results regarding the trends of sales are measured against this target value. On this score, it becomes necessary to consider the fact that other matters such as employee performance are regulated and observed through these values. Such measures could involve appraisal processes in which the performance of employees is measured against definite goals in order to deter mine the levels of progress in relation to certain