Preview

Fin 571 Week 6

Powerful Essays
Open Document
Open Document
2305 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Fin 571 Week 6
5Running head: GUILLERMO FURNITURE SCENARIO

Guillermo Furniture Store Scenario
University of Phoenix
FIN/571

Guillermo Furniture Store Scenario
Guillermo Navallaz is the proud owner of Guillermo’s Furniture Store located in Sonora, Mexico. He chose this area because of its excellent supply of timber for the variety of tables and chairs produced by his company. Business was going well until the late 1990s’ when two events caused a decline in Guillermo’s business. First, a new overseas competitor entered the Sonora furniture market with their high-tech approach that provided furniture to exact customer specifications at low prices. The second event was that the community of Sonora began to grow. The increase of people and jobs raised the cost of labor significantly and Guillermo experienced shrinking profit margins as prices fell and costs rose (University of Phoenix, 2011).
In order for Guillermo to increase his profits, maintain his market share, and have an advantage over his competitors, he must look at alternative projects to improve business. The object of this paper is to make a recommendation for Guillermo to follow based on the financial analysis of the data presented and to evaluate three alternatives for Guillermo to consider. Once a course of action for Guillermo to follow is agreed upon, the team will analyze the financial data to support their recommendation, which will address the issue of foreign competition and labor cost. The analysis will focus on how the alternative chosen will help Guillermo increase profits over the next five years and lower all the costs involved in producing or distributing the furniture. The paper includes a Cash Flow Budget, including assumptions, which will be based on the projected sales and expense budget for the year and any capital investments the company projects over the next five years.

Summary of Three Alternatives
Guillermo is considering three main alternatives. The first alternative is for



References: Internal Rate of Return. (2011). In Investor Words.   Retrieved from http://www.investorwords.com/2564/Internal_Rate_of_Return.html. Net Present Value. (2011). In Investor Words.   Retrieved from http://www.investorwords.com/3257/Net_Present_Value.html. QFinance The Ultimate Financial Resource. (2011). Weighted Average Cost of Capital.   Retrieved from http://www.qfinance.com/balance-sheets-calculations/weighted-average-cost-of-capital. University of Phoenix. (2011). Guillermo furniture store scenario [Simulation]. Retrieved from University of Phoenix, Simulation, FIN571- Corporate Finance website.

You May Also Find These Documents Helpful

  • Satisfactory Essays

    Acc 543

    • 1057 Words
    • 5 Pages

    Guillermo Furniture, a company that manufactures midgrade and high-end sofas, has just hired you as an accountant. The owner, Guillermo Navallez, has assigned you the tasks of determining which decisions provide the greatest returns.…

    • 1057 Words
    • 5 Pages
    Satisfactory Essays
  • Satisfactory Essays

    ACC 543 Entire Course

    • 537 Words
    • 3 Pages

    Guillermo Furniture, a company that manufactures midgrade and high-end sofas, has just hired you as an accountant. The owner, Guillermo Navallez, has assigned you the tasks of determining which decisions provide the greatest returns.…

    • 537 Words
    • 3 Pages
    Satisfactory Essays
  • Powerful Essays

    Austin Wood Products

    • 2298 Words
    • 8 Pages

    As seen in the case of Austin Wood Products, although the company is profitable and offers a variety of high quality products, there are a number of flaws and problems that the company face in different functional areas related to purchasing and supply management.…

    • 2298 Words
    • 8 Pages
    Powerful Essays
  • Better Essays

    As a result Guillermo watched his profit margin deflate as the price fell and the cost rose. Team B will analyze Guillermo’s alternatives to overcome this situation. The alternatives that will be covered in the analysis will be the current, high-tech, and broker alternatives. After the analysis Team B will select the best alternative for Guillermo’s store, and present a Pro Forma Cash flow budget for the next five years, along with a recommendation based on the results of the analysis.…

    • 1966 Words
    • 8 Pages
    Better Essays
  • Good Essays

    Lajoma Furniture

    • 677 Words
    • 3 Pages

    Potential loss of customers due to delays of materials causing increasing orders not to be accommodated.…

    • 677 Words
    • 3 Pages
    Good Essays
  • Good Essays

    The Guillermo Furniture Store success can be credited for the focus on quality and the handcrafted furniture manufactured sold at a premium. In the late 1990s, Guillermo’s business model started to change when two new events brought change to Guillermo’s business environment. The first event came in the form of a competitor from overseas. The new competition brought a high-tech approach to making furniture that used exact specifications and produce products that resulted in rock bottom pricing. The second event that took place resulted from development in the area that brought an influx of people and jobs. This created a rise in labor costs that resulted in a decrease in profit margins for Guillermo Furniture Store. As the new competition took sales away Guillermo’s profits fell and cost started to rise quickly. Guillermo has to choose among alternatives to compete in this new business environment. Choosing the right alternative will return profit levels to optimum levels.…

    • 2159 Words
    • 9 Pages
    Good Essays
  • Powerful Essays

    Research Paper

    • 4573 Words
    • 19 Pages

    Today, the Philippine furniture industry has metamorphosed in a highly diversified manufacturing sector, which is composed of roughly 15,000 furniture firms directly or indirectly employing about 800,000 people. This is thrice the employment estimate of 250,000 in the 1980’s and does not include the estimated 1,000,000 people in the sub-contracting network.…

    • 4573 Words
    • 19 Pages
    Powerful Essays
  • Good Essays

    Fin515 Week 1

    • 1390 Words
    • 6 Pages

    Corporate finance is important to all managers because you need to be aware of the tools needed to evaluate the firm’s value and be able to accurately make decisions to maximize wealth.…

    • 1390 Words
    • 6 Pages
    Good Essays
  • Powerful Essays

    Guillermo Furniture Store Scenario. Retrieved December 10, 2012 from University of Phoenix, Week four, and FIN/571-Corporate Finance Course website. Weight Average Cost of Capital. (2011).…

    • 1256 Words
    • 6 Pages
    Powerful Essays
  • Satisfactory Essays

    Fin Week 7 Checkpoint

    • 264 Words
    • 2 Pages

    Trade credit is the most popular form of short term financing, figures show that over 40 percent of businesses use this form. Trade is also known as accounts payable. This form of short term financing happens when manufacturers or suppliers provide goods or services upfront to companies with the expectation of getting payment within 30 to 60 days from time of delivery. Usually suppliers may offer discounts if the receiving company makes payment within a specified period of time. This kind of short term financing would be chosen by businesses for many reasons such as the company may not readily have the cash on hand to purchase inventory.…

    • 264 Words
    • 2 Pages
    Satisfactory Essays
  • Powerful Essays

    FAMILY

    • 1704 Words
    • 7 Pages

    Family Furniture was established in 1953 by Sy Sokol and Patrick O’Reilly to pent up housing Demands after World War 2. The firm was renowned for an inviting store appearance, good service, extensive collection and moderate prices. The firm occupies a large warehouse and shipping facility along with an 80,000 square foot store. It dealt with the business of Exclusive Furniture Material.…

    • 1704 Words
    • 7 Pages
    Powerful Essays
  • Better Essays

    JET2 Task 3

    • 2414 Words
    • 8 Pages

    Capital structure is how a company finances its overall operations and growth by using funds from equity or debt (Investopedia, 2012). Of course, every company must determine its preference on its debt-to-equity ratio and determine which capital structure works best for them.…

    • 2414 Words
    • 8 Pages
    Better Essays
  • Satisfactory Essays

    FIN 415 Week 3 Set I

    • 472 Words
    • 3 Pages

    Be sure to make use of local transportation. It might not take longer using the bus. You will not have to worry about a parking spot or have to pay for parking if that is the case. If you want to drive your own car, expect to pay for a parking pass. This is also a good way to do something for the planet.…

    • 472 Words
    • 3 Pages
    Satisfactory Essays
  • Powerful Essays

    BUS Final Business Plan

    • 5434 Words
    • 22 Pages

    Delivering and offering furniture is a $12 billion industry. The center of the business is on the well-to-do client who can spend upwards to $3,000 on furniture buys. There are dependable furniture stores that are seeking the clients with profound pockets. Those clients who can 't bear the cost of these high costs are left with a poor determination of sub-par items.…

    • 5434 Words
    • 22 Pages
    Powerful Essays
  • Satisfactory Essays

    Fin 516 Week 1

    • 632 Words
    • 3 Pages

    4. How much additional capital (Debt and/or Equity) will the company have to raise from outside sources in 2012 if it invests in this capital project, and follows a residual dividend policy?…

    • 632 Words
    • 3 Pages
    Satisfactory Essays