Inner-City Paint Corporation (Revised) Essay

Alternatives1. Management profit Mr. Walsh should take up management degree. He needs to learn employee authority and delegation. He needs to learn employee say-so and delegation. The plant motorbus needs to be trained on leadership since he has no learn in management. He should in like manner start hiring a public traffic specialist and a grocerying specialist to improve on these cardinal aspects of the business.2. Facility Improvement Equipment at Inner-City blushing mushroom is three large mixer, deuce smaller mixers, machines in the lab and the trucks. Mr. Walsh should buy more equipment so that his consumers wont shit to worry ab pop out their order non beingness ready. He has enough transportation Equipment. But he should buy many new mixer and more lab equipment. In order to get a line all of this he should take the loan.RecommendationI would recommend the frontmost alternative which is to improve management. Mr. Walsh wasnt trained and didnt understand mana gement. He could handle the order when it was small. He got lost as the Inner-City headstone grew. If Mr. Walsh did round training, then the company probably wouldnt be in much(prenominal) a mess. He did understand how to expand the business and add employees were they are needed but he lacked giving trust to other people. With employee empowerment training he should be able to trust new employees. So with this alternative we can see that the company will grow favorably.METHODS OF abridgmentS.W.O.T AnalysisStrengths Competitive prices of its products. Steady growth in its market. The companys reputation had been built on its fast service it frequently supplied paint to contractors within 24 hours.Weaknesses Customers view Inner City as a company that negotiates on price and payment out of despe dimensionn. His plant managers only experience has been that of a painter. Operating without management controls or financial controls. Inability to pay providers on time Poor occasion of facilities All records are processed manually store records are not kept. Lack of proper delegation of authority. Employees take turns making paint and unprompted the delivery trucks. Unskilled employees.Opportunities Considering a purchase of a computer to fix the business and reduce needless paperwork. Consultants who are able to quickly dot problems in business. The production of color paintsThreats The slowdown in the housing market combined with the slowdown in the overall economy caused financial encumbrance for the company. Walsh manages the corporation today in much the same way that he did when the business began. Walsh lacked on giving trust to other people. Rumors abound that the company is in difficult financial straits, that it is unable to pay suppliers, and it owes a ample sum for payment on back taxes. Paint contractors are hesitating to give larger orders. Larger orders usually go to larger companies that confound demonstrated their reliability and solven cy. No audit has been performed. This could lead to penalty by the Internal Revenue Service (IRS).Porters Five Forces fabrication AnalysisThreat of New entrantsthither are low intro barriers in the paint manufacturing effort. This is because it is based on the low costs to submit the market and product unanimity. This is due to an easy and cheap development stage. As for capital requirements, firms need to grace small financial resources before entry this market.Rivalry Between Competing FirmsInner-City Paint is confronted by aggressive competition in its business. There are small paint manufacturers in Chicago that release the immediate area. The market for paint is highly competitive. It doesnt compete with giants such as Glidden and DuPont. Competition among the giants isnt that fierce, but they lose their large orders to them. negociate Power of SuppliersThere is a high bargain power of suppliers since the industry is highly dependent on component suppliers, a powerful supplier could exert pressure on the market, by supplying components at a high price to increase his profits. their products are the primary raw significant for the paint manufacturing companies. They could also erect high switching costs. Since Inner-City Paint is working(a) only with few selected suppliers, the company is running at a higher risk than the average.Bargaining Power of BuyersThere is a low bargaining power of buyers this is due to high number of other paint manufacturers in the area in the industry and the customer has the options to take the cheapest and the best.Threat of SubstitutesThere is a high threat of substitutes because there are larger companies that have demonstrated reliability and solvency that paint contractors can choose. There are also other small paint manufacturers in the area.FINANCIAL ANALYSISInner-City Paint Corporations revenue for the year is $1,784,080. It experienced a electronic network Income of $ 17,610.Profitability dimensionsReturn on assets = $ 17,610 = 5.98%$ 294,565This shows that Inner-City Paint is not providing an adequate bring around on the firms investment.Net Profit Margin = $ 17,610 = 0.987%$ 1,784,080This ratio indicates how much money Inner-City Paint makes with each incremental dollar in sales that they experience, meaning that a higher ratio would result change magnitude profit with each additional dollar in sales.Liquidity proportionCurrent Ratio = 262,515 = 0.92285,030This ratio shows that Inner-City Paint is currently in exsert meeting its financial commitments because its current ratio is below 1.Leverage RatiosDebt Ratio = 300,030 = 1.02294,565This measures the portion of total assets provided by the companys creditors. In connective with other ratios, this ratio indicates the degree to which operating losses may be cushioned from adverse actions by creditors.Common Size Financial report AnalysisINCOME STATEMENT% to SalesSales$ 1,784,080 100.00%Cost of Goods Sold 1,428,730 80.08% star ing(a) Margin 355,350 19.92%ExpensesSelling expenses 72,460 4.06%Administrative expenses 67,280 3.77%Presidents salary 132,000 7.40% self-confidence Managers salary 66,000 3.70% numerate expenses 337,740 18.93%Net Income $ 17,610 0.99%BALANCE bed sheetAmount % to native AssetsAssetsCurrent AssetsCash $ 1,535 0.52%Accounts receivable (net of ADA of $63,400) 242,320 82.26%Inventory 18,660 6.33%Total current assets 262,515 89.12%Non-current AssetsMachinery and transportation equipment 47,550 16.14%Less accumulated depreciation 15,500 5.26%Total non-current assets 32,050 10.88%Total Assets 294,565 100.00%LiabilitiesCurrent LiabilitiesAccounts payable $ 217,820 73.95%Salaries payable 22,480 7.63%Notes payable 6,220 2.11%Taxes payable 38,510 13.07%Total current liabilities 285,030 96.76%Non-current LiabilitiesLong-term notes payable 15,000 5.09%Owners EquityCommon equity 12,400 4.21%shortfall (17,865) (6.06%)Total liabilities and owners equity $ 294,565 100.00%With all of this informati on we can point out that most of the expenses is attributable to Walshs salary. His six-figure income is not the average salary of a president in such a small company. He efficiency try taking a small pay cut to invest that money in the business. He should also make set interchange prices. Next, he should check into finding cheaper suppliers to bring his direct materials cost down. financially ICP needs a financial account manager to start invest money and watch finance closer.