Salem Telephone Company Financial Analysis
In 2001, Salem Telephone Company created a subsidiary, Salem Data Services (SDS). The intent of creating SDS was to provide a revenue stream to subsidize the telephone operations and alleviate the need for a rate increase. Unfortunately, after 3 years, SDS has not met profit expectations. In fact, SDS continued to experience losses at the rate of $40-$45k per month making it necessary to reassess operations. While providing services to both internal and external customers, SDS found that their computer system had surplus capacity to support additional commercial sales. Based on the amount of unsold monthly computer hours, Salem Data has about $190k of revenue potential from the commercial sales. With increasing pressure from shareholders and record low financial performance, Salem Telephone reexamined the current business model for SDS. However, Salem Data’s ability to reduce costs is limited based on 91% of expenses being fixed presents a challenge to overcome losses. The following analysis is an overview of performance, assessment of costs and estimates for possible effects of increasing profits concluded by a future recommendation for Sales Data Services.
During first quarter operations, Salem Data Services reported 90% of accrued costs were fixed with the remaining being variable. Fixed costs included rent, custodial services, computer leases, equipment maintenance, depreciation, power, system development/maintenance, employee salaries. Salem Telephone also provides corporate services for processing accounts receivable and past-due accounts which fixes the cost paid out by SDS for an essential function of the company. Variable costs include hourly wages and sales promotion since they depend on the amount of business and can change with business activity. Since these were the only variable costs, the cost per revenue hour was calculated (Figure 1) for both operations and sales during first quarter.
While January through March remained constant at a level of $24.00 per revenue for hourly operations, sales promotion per revenue hour went down $24.04 in January to $22.39 per revenue hour in March. As a result, expenses went down as revenue hours decreased. March, however, was the highest revenue generating month all quarter. SDS has focused their efforts to increase revenues by selling the available hours that are available to other companies to turn a higher profit. In order to achieve higher sales and increase profits, Salem needs to focus its efforts on sales promotion. The extra revenue will cover the fixed costs and improve the profit outlook.
Using the 5 different ratio analysis used earlier to analyse BMO life insurance company’s Q2-2015 Consolidated Income statement and Q2-2015 Consolidated Balance sheet. BMO’s profit margin is 9.79%1. Meaning BMO earns more net income per $1 of sales than some or even most of its competitors. This can be rated as favorable in comparison to its industry average of 9.58%. BMO’s days’ sales uncollected is 21.84days2 favorable when compared to its industry’s average of 98.59 days. This means that BMO can liquidate it receivables in lesser days than some or most of its competitors. BMO’s equity ratio shows that the owners of the company only owns 10.66%3 of the company’s assets. Compared to its industry
Lowe’s Companies, Inc. is the fourteenth largest retailer in America, and overall the world’s second largest home improvement retailer. They are the 108th ranked corporation on the Fortune 500 top corporations list. With an impressive in store stock of 40,000 home improvement items on hand, ranging from lumber to Home décor items, plus an additional 400,000 home improvement items available through a special order program. Lowe’s provides a onetime stop for all home improvement needs, for both the Do-It-Yourselfer, and the ever-expanding market of the Commercial Business Customer.
Situated in the heart of North Carolina, the Town of Chapel Hill is located in Orange County (and part of Durham County), and dubbed the “Southern Part of Heaven” (Town of Chapel Hill, 2014). Serving home to the University of North Carolina at Chapel Hill, along with UNC Health Care and UNC Children’s Hospital, it is the 16th largest municipality in North Carolina, with an assorted population of over 58,424 residents (Chapel Hill Community Overview, 2014).
Variable costs, for a manufacturing company, are those costs that increase or decrease as production increases or decreases. If production increases, then variable costs will increase; if production decreases, variable costs will decrease. For Claire’s Antiques, examples of their variable costs would be manufacturing labor, raw materials, and manufacturing overhead. Examples of manufacturing overhead would be the utilities that are used in the production facility, and the oils and lubricants used in the machinery. Fixed costs in a manufacturing company are those costs that remain constant regardless of the level of production. Examples of fixed costs for Claire’s Antiques are: sales and administrative costs, rent and/or mortgage on the production facility, and depreciation. Semi-variable, or mixed, costs are costs that have both fixed and variable costs. An example of a semi-variable cost could be if Claire’s leases their delivery trucks, and the lease includes a mileage fee. The monthly lease would be considered a fixed costs, but the mileage fee would be a variable cost. (Hofstrand, 2007). In most cases, fixed costs are usually higher than variable costs, and can absorb a great deal of profits. Because of this, some companies may consider converting their fixed costs to variable costs.
Part II: Financial Analysis Section 1: Business Analysis Honeywell International Inc. (see also, attached Excel spreadsheet) Honeywell International Inc. operates as a technology and manufacturing company all over the world. It is an American multinational company that produces a large variety of commercial and consumer products, as well as engineering and aerospace systems for major companies and international governments. It is a Fortune 100 company, and in 2012 was listed as number 77 in the Fortune 500 America ranking.
DataClear had also recorded very impressive sales growth in its first two years and, given the projections, were looking at 300 percent average revenue growth thru '02. The case analysis available shows that DataClear has a $600 million annual domestic market for its current product and $1.2 billion when you add in the global market in telecommunications and financial services. With product expansion, there was a potential annual $2.7 billion market ($1.5billion domestic/$1.26 billion abroad) to target in the telecommunications, financial services, chemical, petrochemical, and pharmaceutical industries combined.
Service fees could be a concern if business in the first six months is not on target to meet the first year revenue of $25,000. Improvement in this area may require looking at costs incurred compared to revenue coming in. Changes such as driving routes, time spent in traffic and time spent with pet must be reviewed for better efficiency.
The customer support and customer service functions are more than departments; they are part of an essential strategy for growing your business. In the modern business climate, customers expect answers to their questions immediately. When the right information is available anytime, from anywhere in the world, customers are more likely to have a positive experience, thus customer loyalty will be increased. It is a known fact that the cost to obtain a customer is ten times higher than to maintain and keep existing customers. (Gouran, Dennis, W.E. Wiethoff, & J.A. Doelger. (1994). Mastering communication. 2nd ed. Boston: Allyn and Bacon.) Not in Reference Pg.
The soft factors can make or break a successful change process, since new structures and strategies are difficult to build upon inappropriate cultures and values. These problems often come up in the dissatisfying results of spectacular mega-mergers. The lack of success and synergies in such mergers is often based in a clash of completely different cultures, values, and styles, which make it difficult to establish effective common systems and structuresBased on the case study, extensive research and annual reports of AT&T the writer has mapped AT&T in the different domains. AT&T should strive to attain a perfect circle as close to the centre as possible, which indicates total synergy, order and equilibrium. Where the circle is skewed drastic change is needed as it moves closer to the outer ring of chaos:
Taylor, P. and Bain, P. (2003) 'Call Centre Organizing in Adversity: From Excel to Vertex' in G. Gall (ed.)
Strategic Audit of Motorola Corporation. Motorola Corporation is a leading supplier of wireless communication systems, wireless accessories, wireless handsets, digital entertainment devices, and broadband systems. They are well known for their MOTORAZR, MOTORIZR Z3, and MOTOKRZR handsets and are the only provider of iDEN network to Sprint Nextel which uses infrastructure equipment. They also are leading providers for the delivery of networks which are used in the delivery of video, voice and data services. Their headquarters are in Schaumburg, IL and operates in the United States with 66,000 employees (Motorola, inc., 2007).
Consumers desire timely, resourceful help at their fingertips. Plus, the cost of call centers can be expensive and difficult to manage.
This report defines the activities of BT Group (British Telecom), including financial performance, i.e. statistics and balance sheets of the past five years. Showing considerable amount of evidence on how BT Group has evolved since its beginning.
Prior to the start of the Information Age in the late 20th century, businesses had to collect data from non-automated sources. Businesses then lacked the computing resources necessary to properly analyze the data, and as a result, companies often made business d...
The Resources Group, 2012, Components Of A Computerized Accounting System. Available at: . [Accessed 12 November 2013]