Inner-City Paint Corporation (Revised) Essay

Alternatives1. Management Improvement Mr. Walsh should feature up management degree. He needs to elate employee authorization and delegation. He needs to learn employee em military unitment and delegation. The plant manager needs to be ingenious on leadership since he has no learn in management. He should also start hiring a public relations specialist and a marketing specialist to improve on these two aspects of the business.2. adroitness Improvement Equipment at Inner-City headstone is three life-size mixer, two small(a)er mixers, machines in the lab and the trucks. Mr. Walsh should pervert to a greater extent equipment so that his consumers wont sacrifice to worry about their order non world ready. He has enough transportation Equipment. But he should buy about new mixer and more lab equipment. In order to acquire all of this he should shoot for the loan.RecommendationI would recommend the first alternative which is to improve management. Mr. Walsh wasnt adroit and didnt escort management. He could handle the play along when it was small. He got lost as the Inner-City blusher grew. If Mr. Walsh did some training, then the company probably wouldnt be in such a mess. He did understand how to expand the business and add employees were they argon mandatory but he lacked giving boldness to otherwise people. With employee empowerment training he should be able to trust new employees. So with this alternative we mess see that the company will grow favorably.METHODS OF summaryS.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 at bottom 24 hours.Weaknesses Customers view Inner City as a company that negotiates on price and hire out of desperation. His plant managers whole experience has been that of a painter. Operating without management controls or financial controls. Inability to chip in suppl iers on sentence Poor condition of facilities All records ar bear upon manually Inventory records are non kept. escape of proper delegation of authority. Employees take turns making paint and driving the delivery trucks. Unskilled employees.Opportunities Considering a get of a computer to organize the business and lose weight needless paperwork. Consultants who are able to quickly tell problems in business. The production of color paints banes The s milddown in the housing market combined with the slowdown in the overall economy caused financial intemperatey for the company. Walsh manages the mickle today in a great deal the same guidance 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 colossal sum for payment on back taxes. Paint contractors are hesitant to give larger orders. bigger orders usually go to larger companies that have present their reliability and solvency. No audit has been performed. This could lead to punishment by the Internal Revenue Service (IRS). doorkeepers Five Forces Industry AnalysisThreat of New entrants in that location are low gateway barriers in the paint manufacturing industry. This is because it is based on the low greets to enter the market and product unanimity. This is delinquent to an easy and cheap development stage. As for neat requirements, firms need to invest small financial resources in the first place entering this market.Rivalry Between Competing FirmsInner-City Paint is confronted by aggressive competition in its business. There are small paint manufacturers in Chicago that write out 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.Bargaining supply of SuppliersThere is a high bargaining po wer of suppliers since the industry is highly dependent on destiny suppliers, a powerful supplier could exert force on the market, by supplying components at a higher(prenominal) price to increase his profits. their products are the first-string raw material for the paint manufacturing companies. They could also stand high switching costs. Since Inner-City Paint is working tho 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 collect 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 scourge of substitutes because there are larger companies that have demo 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 dismiss Income of $ 17,610.Profitability dimensionsReturn on assets = $ 17,610 = 5.98%$ 294,565This shows that Inner-City Paint is not providing an adequate return on the firms investment.Net Profit Margin = $ 17,610 = 0.987%$ 1,784,080This ratio indicates how much money Inner-City Paint makes with for each one incremental dollar mark in sales that they experience, meaning that a higher ratio would result increased profit with each additional dollar in sales.Liquidity RatioCurrent Ratio = 262,515 = 0.92285,030This ratio shows that Inner-City Paint is shortly in trouble meeting its financial commitments because its menstruation ratio is below 1.Leverage RatiosDebt Ratio = 300,030 = 1.02294,565This measures the per centum of total assets provided by the companys creditors. In conjunction with other ratios, this ratio indicates the degree to which direct losses may be cushioned from unfortunate actions by creditors.Common Size Financial controversy AnalysisINCOME STATEMENT% to SalesSales$ 1,784,080 100.00% personify of Goods Sold 1,428,730 80.08%Gross Margin 355,350 19.92%ExpensesSelling expenses 72,460 4.06%administrative expenses 67,280 3.77%Presidents salary 132,000 7.40%Office theatre directors salary 66,000 3.70% entire expenses 337,740 18.93%Net Income $ 17,610 0.99% eternal rest SHEETAmount % to add up AssetsAssetsCurrent Assets bills $ 1,535 0.52%Accounts receivable (net of ADA of $63,400) 242,320 82.26%Inventory 18,660 6.33%Total real 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 due $ 217,820 73.95%Salaries due 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%Deficit (17,8 65) (6.06%)Total liabilities and owners equity $ 294,565 100.00%With all of this information we can render 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 cleverness try taking a small pay cut to invest that money in the business. He should also make set selling prices. Next, he should check into finding cheaper suppliers to bring his direct materials cost down. Financially ICP needs a financial tarradiddle manager to start investing money and await finance closer.