Quality Furniture Company
Operational Analysis
The company focuses on the manufacturing of assets thus obtaining raw materials from the suppliers for the execution and satisfaction of the needs and preferences of the consumers. The company is asset intensive. This is because for the organization to maximize its profits and revenues, it is essential to acquire a large amount of assets in the generation of turnover. This is evident in the low projections of the TAT thus the need for the maximization of the raw materials for the realization of targets of the sales department.
In order to maximize the production, manufacturing, and distribution of the products and services of the organization, it is essential for the entity to manage its sourcing and production levels effectively. This is through adoption and integration of quality measures in the management of the accounts receivable, assets, inventory, and production thus realization of efficient outsourcing approach. The organization can manage its outsourcing, receivable accounts, and production levels through four critical methods. The first critical aspect in the management of such issues is the development and integration of total asset turnover to evaluate the performance of the organization. Another approach is the computation of the average collection period for maximum management of the production and inventory aspects of the company. The organization has the ability to implement the aspect of fixed asset turnover in the management of outsourcing. The last concept is the adoption and incorporation of the inventory days in the management of outsourcing, production, and inventory aspects. Apart from sufficient workforce, there are no significant human resource issues affecting the realization of the goals and objectives of the organization while handling the needs and demands of consumers in the market of operation. Quality is the driving factor towards the achievement of the targets of the organization. The management of quality production enables to generate trust and honesty thus the opportunity to develop valuable image and reputation among the consumers.
Financial Analysis
The company finances its operations from bank loans and various mortgages thus supplementing generated funds from stock or inventory. There have been changes in the minimization of the bank loans thus enabling the company to sustain its operations through maximization of the available capacity and resources. This enables the organization to focus on ways of reducing cost of distribution of products and services to consumers in various market segmentations. The cash flow of the organization is healthy. This is through projection of the positive numbers thus illustrating the realization of healthy profits while meeting or satisfying the needs and preferences of the targeted audiences. Current assets exceed current liabilities thus the realization of the positive current ratio reflecting healthy profitability or liquidity ratio. Current ratio stands at 2.40, 2.28, and 2.70 thus reflection of a positive liquidity presentation. Return on equity reduces across the three financial years. This is evident through the values of 0.55, -0.02, and –0.06 for the three consecutive years in financial evaluation.
The leverage risk of the organization is relatively low because of the increase in the levels of debts in comparison to the equity levels. The organization is considerably profitable through illustration of positive gross profit and net income. The distributions of the cash of the owner of the organization are appropriate towards the realization of effective management of the functions and distribution aspects of the entity. This is vital for the achievement of financial stable organization hence realization of competitive achievement. The current funding sources are appropriate thus no need for alteration in the near future. This is essential for the stability within the industry. The Total Asset Turn is low thus financial stability of the organization. This is evident through 2.17, 1.64, and 1.56 for the 3 financial years. Gross profit margin is also stable at 0.40 for the second and third years of financial evaluation. This enhances the stability of the organization in meeting the needs and objectives of the consumers.
