Study to Increase Profitability for the Main Street Home Improvement Company: A Completion Report By Ron Parks of Parks, Smith, & Jones Accounting
Introduction <ul><li>As a result of the Main Street Home Improvement Company suffering a financial loss in the last seven quarters, the store manager sought the financial advice of Parks, Smith, & Jones. After receiving approval, we began seeking ways to reduce both the store’s labor and material costs in an effort to raise profitability. What follows are the highlights from our financial analysis. </li></ul>
Solution 1 <ul><li>Parks, Smith and Jones Accounting offered several solutions to the Main Street Store’s financial dilemmas: </li></ul><ul><li>1) Change your supplier of raw materials to Hong Kong, thereby saving 10% in shipping costs. </li></ul>
Solution 2 <ul><li>2) Use automation, specifically forklifts and self check-out cash registers to replace manual labor. These implementations will save your company labor costs of up to 35%. </li></ul>
Solution 3 <ul><li>3 ) Re-negotiate contracts with the local Teamster representative. By making compromises concerning mandated overtime and the wages of skilled vs. unskilled labor, you will save an additional 20% in labor costs. </li></ul>
Conclusion <ul><li>By implementing the changes that Parks, Smith and Jones suggested, we concluded that the Main Street Home Improvement Company could recoup their loses and even increase their profits by about $600,000 by the end of the fiscal year. The following slide shows a visual representation of this increase. </li></ul>
References <ul><li>“ Building and Decoration Materials and Hardware Fair.” 2000. Hong Kong International Retrieved February 13, 2009, from http://www.hkbdh.com/index.htm </li></ul><ul><li>“ Increase in 'Do-It-Yourself' Consumers Presents New Opportunities for Home Improvement Stores; New Vertis Customer Focus Study Reveals Home Improvement Plans and Trends” Business Wire Retrieved February 28, 2009, from http://findarticles.com/p/articles/mi_m0EIN/is_2006_ </li></ul><ul><li>May_23/ai_n26872280 </li></ul><ul><li>Knee, Richard. “Hong-Kong Still a Free Wheeling Economy.” Pacific Shipper 83.31 (2008): 18- 19. </li></ul><ul><li>Warren, Carl S. et al. Accounting 22 ed. Mason: Thomson, 2007. </li></ul>
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