Fin 571- Guillermo Financial Analysis -Week 6
Making a sound financial decision is a vital component of the success of a business. The business must conduct market research, description of products, services and marketing strategies, and setting principles for the business’s success. Expenses should be noted prior to writing a financial plan. The goal of a business is to operate on a predefined budget. Ensure there are no undefined or hidden cost that could cause problems later. The business plan helps the business to make day-to-day decisions on its operations. Team“D” will analysis Guillermo’salternatives and make a recommendation on which alternative will enhance the businesses financial decision.
Maintain Current Operational Levels One option available to Guillermo is to make no adjustments to the company’s current operations. This option supports the top concerns of acquisition from a larger firm and spending a large amount of cash on high-tech equipment investments, it does not solve the problem of a shrinking profit margin because of a rise in labor costs. Supporting the option to maintain current operations overlooks potential opportunities that are identified to allow the company to move away from its primary manufacturing role and act as a distributor for the Norwegian competitor. According to the assets, liabilities, and equity information provided by the University of Phoenix, sales growth is slowing to 1% from previous periods. These low profit margins willnot sustain Guillermo in the long-term;they will not improve if there is not a choicemade to adjust to the financial situation. Maintaining current operations does not address the shrinking profit margins. To continue to move Guillermo furniture in a positive direction, Mr. Navallez needs to apply some options already available and within the current operating structure. One option available to Guillermo is expanding the patented flame retardant process already in use within the manufacturing process, by applying a
Maintain Current Operational Levels One option available to Guillermo is to make no adjustments to the company’s current operations. This option supports the top concerns of acquisition from a larger firm and spending a large amount of cash on high-tech equipment investments, it does not solve the problem of a shrinking profit margin because of a rise in labor costs. Supporting the option to maintain current operations overlooks potential opportunities that are identified to allow the company to move away from its primary manufacturing role and act as a distributor for the Norwegian competitor. According to the assets, liabilities, and equity information provided by the University of Phoenix, sales growth is slowing to 1% from previous periods. These low profit margins willnot sustain Guillermo in the long-term;they will not improve if there is not a choicemade to adjust to the financial situation. Maintaining current operations does not address the shrinking profit margins. To continue to move Guillermo furniture in a positive direction, Mr. Navallez needs to apply some options already available and within the current operating structure. One option available to Guillermo is expanding the patented flame retardant process already in use within the manufacturing process, by applying a
References: Emery, D. R., Finnerty, J. D., & Stowe, J. D. (2007). Corporate Financial Management (3rd ed.). Retrieved from The University of Phoenix eBook Collection. University of Phoenix. (2009). Guillermo 's Furniture Store Scenario. Retrieved from University of Phoenix, FIN571 - Corporate Finance website.