Factor number two is the company offering free shipping to orders over $100. Not only did this cause the company to lose the income that it brings in for shipping and add shipping costs to it’s expenses, it also added to marketing by $13,000 plus an additional $32,000 for magazine marketing when ‘Marketing and administration’ it was only budgeted at $90,000. The shift in the economy during this time frame affected the budgeted ‘labor’ expense due to the increase in pay for it’s hourly employees. All of these factors combined worked against the company to cause a negative in operating profit. Although AGM fell short in meeting it’s master budget for this quarter, these unexpected occurrences can help them to better budget for the future of agm.com.
Case question 1 During the recent years, Robertson Tool has been underperforming. Poor profit and sales performance reflects potential profits to be achieved from an acquisition with Robertson. At Robertson, key line items such as sales income, cost of sales and administrative expenses are much likely to be improved. Despite the fact that Robertson’s distribution system has a great range with wholesalers selling to over 15,000 retailers in 137 countries, the company’s sales growth (2%) falls behind the industrial sales growth by 4 per cent (6%). Poor sales performance and relatively high cost of sales have contributed to the profit margins to slip to one third of other hand tool manufacturers.
From its balance sheet it’s clear that the company is able to put its liabilities in check hence it has no gearing and liquidity problems. Through it cash flows one is able to derive the fact that the management has control over its cash spending. Ratio Analysis The return on invested capital ratio (ROIC) in the current year is lower than the cost of capital this shows that there is a decline in the production of wealth through the invested capital. Though there has been a consistent growth of the ROIC, this shows an increase in the company’s wealth. The book value per share of Alamo group is lower than its market share showing that the shares are overvalued.
Not only the ROCE has improved, the gearing ratio has decreased by 4%. This means the business is low geared, and it reduces the long term risk of superstyle. Nevertheless Superstyles asset turnover has decreased. This is not so good as they receive less money from every asset owned. However the reason for that is their high profit margin, which means that it will decrease when the profit margin will decrease as well.
iii)There is very little increase in SG&A as not much was spend in terms of sales effort. iv)AR increased significantly with some of the promissory notes are payable in June 1994 (6 months after sale) v)Probably increase marketing, promotional and expenses related to discounts in the subsequent year due to “Premier Vision” plan. This impact is significant. From the statements, B&L reported a 13% YoY increase in sales revenue. However, exhibit 6 showed that there was a decline in market demand for conventional lenses, but an increase in both planned replacement and disposal lenses.
This is not an improvement given the fact that the DCOH decreased by one full day. This would not be good information for the management or financial teams as the cash flow is decreasing by one day. In addition the quick ratio dropped a few points showing that the organization is becoming less able to pay for the debt it is incurring. Relationship between Revenue Sources and Expenses The revenue sources relationship with the expenses go hand in hand. The net patient revenue increase discussed in the report by the chief financial officer showed with the
PPG anticipated its full-year share repurchases to be at the high end of what they had originally projected. They also reported earnings per share from continuing operations to be $1.52, which included previously announced charges from restricting and nonrecurring costs. (About PPG, 2013) The health of the economy is critical for the company because its products are not primary products; so during a recession, people will choose to purchase items of more importance than maintenance products. This explains the big decline in revenues for 2012; this equates to a 14% drop compared to the previous year. Also, it can be seen the earnings per share were down by 12% and the return on average capital was down by 10%.
1. BOOK VALUE AND MARKET VALUE PER SHARE StarHub’s book value per share fell by nearly 60%, from 3.15 cents in 2010 to 1.32 cents in 2011. While this may make StarHub appear less attractive to investors, the fall in book value is mainly attributed to the large fall of $31.4 million in shareholder’s equity, which resulted from lower retained profits after distribution of dividends. StarHub’s market value per share as at 31 December 2011 was $2.91. Over the last year, its share price has risen from $2.63 to $2.91 and there are no signs of slowing down in its growth.
Statistics state that the trade value of the U.S music market decreased 10.7% in 2009 due to the up rise in piracy. (IFPI Report) 1. In the 2011 IFPI report, under section 14 “Digital Piracy- Facts and Trends” it is stated, “Despite the surge by more than 1000% in the digital music market from 2004-2010, an estimated value of $4.6 billion, global recorded music revenues declined by 31% over the same period. The two figures powerfully illustrate how, in the face of piracy, even the most progressive strategy of licensing hundreds of digital music services has been unable to prevent the steady decline in the overall legitimate music market and that decline will continue unless action is taken.” B. The same database continues to give statistics about how there has been a steady decline in profits through album release and
The firms stock has declined $2 per share over the last nine months but the firms profits have been rising. Shareholders normally receive what is called cash dividends and from the text the firm has never paid a dividend in 20 years. From what is written in the first paragraph, shareholders wealth is reducing during this time, and this shows that there is an agency problem. With the management team their actions show that pollution controls will show a profit maximization try, which means the managers are trying to maximize his or her salary, instead of the attempt to maximize shareholders wealth, the stock price. Evaluate the firms approach to pollution control.