Jones Electrical Essay

Williams Electrical Division is a business involved in wholesales of electric powered devices and appliances. Although Jones Power has been able to turn a profit in the last few years, they have noticed a shortage of funds when looking to take advantage of control discounts. Their particular current traditional bank is unable to lengthen financing over $250, 500, and Williams believes they may need significantly more to fund their functions. Therefore , Nelson Jones provides decided to look for additional debt financing by simply discussing his options which has a larger local bank. Jones Electrical Circulation has been in a position to compete on the basis of competitive costs, effective inventory management, and aggressive sales team. But although the company appears to be operating successfully, its inadequate collections plan has used up the company's funds leaving that in dreadful need of more financing. In order to afford to continue taking advantage of operate discounts Williams Electrical Division needs to tighten its cash collection procedures. Another course of action is to sign up for a bank loan for $350, 000 to finance his operations, which is the main discord Nelson Smith is facing. The increase in accounts receivable and products on hand in 2005 and 2006 were brought on by the revenue growth of $2. 24 mil in 2006. The effective twelve-monthly rate of interest, if perhaps Jones will pay on the deadline rather than on the 10 day discount, can be 27. 24%. The $350, 000 should be sufficient for 2007. Williams could decrease that by purchasing securities and also other outside money. Jones must cut spending without having to cut sales with his new greater line of credit.

Salary Statement being a Percentage of Sales

2005 2005 06\

Net Sales 95. 00% 100. 00% 100. 00%

COGS80. 30% 80. 11% 81. 09%

Major Profit on Sales19. 70 percent 19. 89% 18. 91%

Working Expense16. 73% 16. 02% 15. 48%

Interest Expense1. 66% 1 . 57% 1 . 38%

Net Income Prior to Taxes 1 . 29%2. thirty percent 2 . 05%

Provision to get...

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