Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Week 4 DQs DQ 1 1. What are the most important financial components to track to determine the success of a small business? Explain why. 2. Provide an example of a company with a high volume of sales and a low profit margin, and provide an example of a company with a lower volume of sales, with a higher profit margin? Which company is more financially successful and why? 1. What are the most important financial components to track to determine the success of a small business? Explain why. The most crucial fiscal elements to trace are the cash-flow report, income report, as well as the balance sheet. The cash-flow report demonstrates shareholders the amount of money a company will require to meet their expenditures. The income report demonstrates the earlier makings of the company; it demonstrates how nicely the company is doing in a period of time. The company can keep track of the growth or fall of the organization on a monthly basis, quarterly, or annual basis. Final, the balance sheet demonstrates just how much the company is investing in assets, debts, stock, or other expenditures all through the month, quarter, or year. Tracking the balance sheet may help find out when the company is spending excessively in a single area or that the expenditures overwhelm the profit. 2. Provide an example of a company with a high volume of sales and a low profit margin, and provide an example of a company with a lower volume of sales, with a higher profit margin? Which company is more financially successful and why? Big Lots experienced a drop in profit in 2008, from $158.5 to $151.5, as per Watershed Publishing (2012). The drop in income was attributed to the rises in gross margin and operating profit. Essentially, expenditures surpassed profit and Big Lots over-purchased and sales didn't increase as predicted. PetSmart, Inc. has enhanced sales from $4,217,716 in 2007 to $4,538,563 in 2008 (Retail Sails, 2012). Their profit margin dropped from 5.5% in 2007 to 3.8% in 2008. Big Lots appears to decrease in sales during a year’s period however PetSmart continues to enhance sales with time. PetSmart is much more fiscally successful in this case as this organization appears to surge in profit every year whereas Big Lots appears to decrease in profit every year. DQ 2 1. What are some of the differences in problem-solving techniques as they relate to increasing sales and controlling costs? 2. How does a small business keep a balance of increasing sales while controlling costs? 3. Suppose you manage a small business and notice that sales are high, but costs are higher. What areas would you look at changing to create a more profitable business? 1. What are some of the differences in problem-solving techniques as they relate to increasing sales and controlling costs? To start with, it is usually essential to keep track of your business’s income and balance reports, which will specify the issues in sales and costs. For problem-solving methods, administrators can narrow down which area has got the issue and change the expenditures or increase their price for the product. One more problem-solving way is to set concentration to collecting on accounts receivables quicker. Perhaps the company is not collecting on bills quick enough. There are plenty of issues that can happen fiscally with a business however by way of tracking and observation, administrators can tweak at its expenditures and sales to earn a profit. 2. How does a small business keep a balance of increasing sales while controlling costs? Consider stock for instance: when a company buys stock for its store, the company must label the product for how much they paid for the product and 75% more. For instance, when the product cost the company $4, I would label that product at $6-$7 to earn a profit. A company must earn sufficient profit to pay for its suppliers, overhead, workers, and liquidities. It demonstrates in the balance sheet just how much the company spent that period and just how much that company earned, demonstrating a profit or loss. When the firm is paying more than it is actually earning, the expenditures must be modified to balance out the sales and expenses. 3. Suppose you manage a small business and notice that sales are high, but costs are higher. What areas would you look at changing to create a more profitable business? I now run a small company and struggle with the expenses and sales continuously. Initially, I would take a look at what expenditures may be decreased, if we are overstocking on items which aren't selling as we expected. Secondly, I would take a look at if what we pay money for our goods is not improving. If that's improving, I would consider modifying our rates for all those items. I would then produce a budget for the company, produce a weekly budget which could arrange the way the company pays its expenditures every week. Among the issues I face at the office is material being squandered, we spend a lot of money on materials and there's an excessive amount waste remaining. You don’t realize how valuable inventory and products are before you pay for them. DQ 3 1. What data might be used to distinguish short-term success or failure versus long-term trends when measuring financial performance in a small business? 2. Why is it important to look for long-term trends, even if things are looking great for the short term? Provide an example of a situation where the short-term success of a business is doing well, whereas the long-term trends are pointing towards future decline. 3. What would you do to change the long-term trends into something more positive for that company? 1. What data might be used to distinguish short-term success or failure versus long-term trends when measuring financial performance in a small business? I would look into the fiscal papers and historical market information. The information is in the cash flow reports as well as the company’s balance sheets; I would get this information and compare with the historical data to find out if the temporary achievement can go on for the long run. 2. Why is it important to look for long-term trends, even if things are looking great for the short term? Provide an example of a situation where the short-term success of a business is doing well, whereas the long-term trends are pointing towards future decline. Long run tendencies are essential since companies as well as the overall economy are cyclical. I was employed by a smaller investment organization and we had a property supported finance which contained more than 40 shareholders. When the real estate market was flourishing we made a nice income with bridge and gap financing. We worked with only a few custom home constructors and the end loans were already in place therefore when the home was finished we were paid in full and the shareholders got their payouts. In the short period we were doing excellent, 11% returns for around 3 years. After that the economy transformed, the housing industry modified, as well as the growth was finished. We had one purchaser walk away from a house which she put 60k up front into since the market price changed this much it was cheaper for her to accept the 60k loss rather than attempt to purchase the house. Had we been more conscious of the real estate industry as well as the long-term tendencies we might have better placed ourselves moving forward. 3. What would you do to change the long-term trends into something more positive for that company? I would have been much more conscious of the real estate tendencies. I had lately begun to be employed in the industry and had no knowledge. We were “living in the moment” and didn't take a look far enough ahead; whenever we did it was far too late. Had we looked into the market tendencies we might have observed the death of the housing industry quicker which would have helped us to be ready and re-structure our business design therefore we might still work with our constructors and make our investors’ money.