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FLORENCE INDUSTRIES,INC.
Subtitle
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Content
•
Brief Introduction• Financial Analysis
• Issues and Recommendation
• New project Proposal
• Cash Flow Manaement
•
In!estment Center
• Balanced Scorecard
• "ther Suestions
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Brief Introduction
#hree di!isions$• Consumer Products
• Industrial Products
• Professional Ser!ices
Pro%t Center
In!estmentCenter
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Brief Introduction
Performance &!aluation$
•
'ross Return on Assets• Net Return on Assets
#aret$
• "!erall 'ross R"A of ()*
• New project$ (+*
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Financial Analysis
),,- ),,.chane percentae
A/R -)()- .012) ((+(23,, (23,)*
in!entory (0).4) (+)-,) (.-0,3,, (23.(*
net PP& (24-(, (4-+2) 0,40)3,, ),34.*
lon term debt 4+40) .)1-- (1.+13,, ))30.*
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Issues andRecoendations
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Issue !" Ne# $ro%ect $ro&osal
Issue ($ New Project ProposalBene%t
Preta5 Pro%t about )3+ Million
Increase &PS (, cent
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Issue !" Ne# $ro%ect $ro&osal
'ross Return on Asset
(03(*
Consumer current 'ross Return$ (
(03(*()*
Recommendation:Accept
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Issue '" Cas( Flo# )ana*eent
Cas( in+o# froO&eration '.-)
Cash out6ow fromin!estment
+130M
Cash in6ow from%nancin
)4M
Cash Flow
• )1341M is %nancin from Short7term and 8on7term 9ebt
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Issue '" Cas( Flo# )ana*eent
Increase in le!erae ratio
'//0 '
De1t2to2E3uity 0(31* 0
De1t2to2Assets (.34* )
L2T De1t2to2E3uity 0(31* 0
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Recoendations
(3 More accurate
)3 Better e!aluation of di:di!isions; performance
03 8e!erae ration contro
9i!isionRe!enue
Brea<down cash 6ow st
Manaers do not care about cost ofwor<in capital
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Issue 4" In5estent Center
&!aluate di!isional performance based on net R"A• =ead>uarter e5penses are not controlled by di!ision?
• =ead>uarter e5penses arbitrarily allocated based on
re!enue3
• Inconsistent with the taret measurement@ ross R"A
Same ross R"A taret for all three di!ision
• Not in same business acti!ities or industries?
• 9i:erent assets re>uirement?
• 9i:erent le!el of ris<s3
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Issue 4" In5estent Center
9isad!antaes of ross R"A measurement
• &5cess le!erain
• Increase in return on sales
"ther issues$
• sae of old and less ecient asset
• #a<e ad!antae of depreciation
• 9isareement towards the measurement
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Recoendations
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Balanced Scorecard 6 Consuer$roduct
7oals )easures
Financial
Ma5imiDe ShareholderEalue
Return on 'ross Assets
Ma5imiDe &ciency Return on Sales
Ma5imiDe 'rowth Sales 'rowth
Customer
Increase Mar<et Share Mar<et Share
Impro!e Brand Imae Brand Awareness Sur!eys
Retain Customers of Commercial Customerslost/#otal CommercialCustomers
Internal $rocess7oals Measures
I&ro5e 8uality of$roducts
Rate of RetGreturns/tot
Introduce Ne#$ro&rietary $roducts
of Patent
I&ro5e )ar9etin* Mar<etin PAudit
Learnin* and 7ro#t( 7oals Measures
Trainin* of E&loyees #rainin hoemployee
Retain $ersonnel &mployee t
O&tii:e ;or9force Producti!itGlabour hou
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T#o Content Layout #it( Ta1le
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T#o Content Layout #it(SartArt
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