Qualitative Analysis of Paisley Industries
Financial statements, the cash flows play crucial roles in the modern economies for various industries. The roles arise from the various regulatory pronouncements and demands by the investors to create accountability and transparency of data.
The quantitative analysis from Paisley Industries reveals positive cash flows with a high operating profit of $980,000. The operating dividends are essential aspects for the business since it shows an indirect measure to the efficiency of the company. The higher the operating profit for a company, the more profitable it is and form the core business of the firm. A high operating profit implies that the firm has balanced its labor costs, price of the raw materials, and has a working strategy, and this is an advantage that Paisley Industries enjoy. It also illustrates that the company turns a higher profit margin.
Moreover, the high gross profit by the company in the 2018 financial year indicates the efficiency of the management in using labor and supplies in the process of production. It shows profitability and excellent financial performance of the company, and this is crucial in attracting investors into the business due to its performance (Fraser, Ormiston, & Fraser, 2007). The gross profit of the Paisley industry indicates that it can make a reasonable profit on its sales as long as its overhead costs are kept in control. The investors pay more to companies with high gross profit, and this will enhance the financial position of the company.
The impressive gross and operating profits in the company can be kept if the firm controls its overhead costs. However, for the demonstration, I recommend that the company should make smart hiring decisions and develop brand ambassadors. When hiring, the firm should consider recruiting employees with multiple strengths. Also, investments in professional development for the employees will help keep them happy and promote the long-term growth and success for the company as the motivation will influence the productivity of the employees. Besides, advertising is always expensive for most companies and adds to overhead costs.
Also, the ads do not always guarantee impressive results. The companies pay hundreds of dollars to run the TV, radio, and print media ads but end up drumming only a handful of businesses. I recommend that Paisley should consider getting the clients to become their brand ambassadors. The company should offer its clients and customers incentives for talking up and giving referrals. Even in this digital age, word of mouth is still a potent tool, also though most companies take it for granted. The company should strive to get satisfied customers to tweet for them for discounted services an offer certain free services to their current customers for every client they refer to the organization. The practice will ensure enhanced sales by the company and improve the generation of the revenues in the firm.
The company should consider the easy-to-use financial reporting tools that will allow the owners of the business to understand their real-time cash flows. Every package in the report should cover the basics that include financial performance reporting (Fraser, Ormiston, & Fraser, 2007). The approach will ensure that the organization and the management do not worry about paying more for the reports they need. Also, the company will consider the provision of customer support when they run into problems. The company may also consider improving its inventory. Paisley should take an inventory check. The goods that do not move at the same pace as others tie the cash. Instead of buying more of what does not sell, the company should get rid of them even if it means selling at a discount to acquire the goods that are highly demanded. Paisley has, however, done well with its sales, having low ending inventories in its schedule of raw materials place in production. Much of its inventory has been used in manufacturing and, thus, the high revenues.