A721 Florence Case presentation

7/24/2019 A721 Florence Case presentation

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FLORENCE INDUSTRIES,INC.

Subtitle



Content

•

Brief Introduction• Financial Analysis

• Issues and Recommendation

• New project Proposal

• Cash Flow Manaement

•

In!estment Center

• Balanced Scorecard

• "ther Suestions



Brief Introduction

#hree di!isions$• Consumer Products

• Industrial Products

• Professional Ser!ices

Pro%t Center

In!estmentCenter



Brief Introduction

Performance &!aluation$

•

'ross Return on Assets• Net Return on Assets

#aret$

• "!erall 'ross R"A of ()*

• New project$ (+*



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.*



Issues andRecoendations



Issue !" Ne# $ro%ect $ro&osal

Issue ($ New Project ProposalBene%t

Preta5 Pro%t about )3+ Million

Increase &PS (, cent



Issue !" Ne# $ro%ect $ro&osal

'ross Return on Asset

(03(*

Consumer current 'ross Return$ (

(03(*()*

Recommendation：Accept



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



Issue '" Cas( Flo# )ana*eent

Increase in le!erae ratio

'//0 '

De1t2to2E3uity 0(31* 0

De1t2to2Assets (.34* )

L2T De1t2to2E3uity 0(31* 0





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



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



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



Recoendations



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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Class ( -) .+

Class ) 41 --

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