Free Samples
BAM101 Business Administration
.cms-body-content table{width:100%!important;} #subhidecontent{ position: relative;
overflow-x: auto;
width: 100%;}
BAM101 Business Administration
0 Download4 Pages / 946 Words
Course Code: BAM101
University: Seneca College
MyAssignmentHelp.com is not sponsored or endorsed by this college or university
Country: Canada
Question:
Identify the problem and not the symptom of a problem. For example, a decline in sales is a symptom of a problem; you must identify the actual cause of the decline in sales.
Answer:
Problem definition:
BBC Private Limited was a chemical-based organisation situated in India and it was founded in 2004. The managing director of the organisation was in a rush to obtain additional funds for ensuring a contract with the Indian Railways. The manufactured products of BBC were of inferior quality due to the use of cheaper cost-effective production techniques. However, this has helped the organisation in obtaining cost advantage in maintaining its market position (Ross et al., 2016).
The primary issue of the organisation is that it used a conservative and conventional method in approaching towards working capital management. The organisation made debt repayments to its creditors before the credit term had arrived. The overall assets of BBC were nearly 10 times compared to its liabilities. Moreover, the approach of the organisation was casual in relation to credit management. It allowed credit extension to its customers for greater amount of time and the large inventory base of the organisation, which were in the forms of raw material and finished goods, would lead to additional blockage of working capital (Damodaran, 2016).
Case analysis:
Working capital policy:
This policy was not a successful one for BBC due to the adopted conservative approach. The approach depicted in the year 2010/11 at an increased level of net working capital was found to be more than 4.2 million INR. Although assets are way too higher than liabilities, a significant portion of assets was in the form of accounts receivable and inventory. Moreover, the organisation was too fast to repay debts to its creditors, which adversely affected its liquidity position. It has been identified from the case study that the organisation had maintained cash credit limit of above 2 million INR with UBI.
The Indian Railways’ structure could cost one-time expense of 200,000 INR and due to this; the administrative department of BBC would rise. In addition, a cost of nearly 500,000 INR is needed for warehouse building and this mandates the need for a workshop as well. The primary reason that the working capital policy of BBC would not be successful is because of the credit limit with UBI. Moreover, it is essential for BBC to maintain considerable cash reserves for meeting the loan payments without interference in production operations (Ehrhardt & Brigham, 2016). The managing director of BBC was considering that the credit limit of above 2 million INR had reached due to which the receivables had been blocked.
Inventory turnover ratio:
According to the above table, it could be seen that the inventory turnover ratio of BBC declined from 9.67 in 2009 to 7.15 in 2010 after which it increased to 21.13 in 2011. The reason behind such decrease is the lack of efficiency in inventory management leading to liquidity crisis in the organisation for obliging the contract of Indian Railways. Another difficulty was the exponential rise in the inventory holdings of BBC. The increase was deemed to be one of the reasons that the organisation had encountered a lower inventory turnover ratio within the stipulated time. Hence, BBC needed to emphasise on minimising inventory level to the maximum possible limit (Fracassi, 2016).
Cash position of BBC:
BBC Private Limited encountered a sharp decline in its cash holdings, which was depicted with negative 18% between 2009 and 2011. The balance sheet of the organisation represents cash balance including a fixed deposit with UBI. However, this deposit could not be used in the working capital management of the organisation despite of sustainable interest. The conservative approach towards the payments of the creditors as well as trade credit policy is believed to be the main reason behind sharp decline in creditors. These creditors were deemed to be the backbone of working capital management and the financing source of current assets. This validates the reason behind the serious issue of a liquidity crisis in BBC. Thus, the cash position of the organisation was worsening over time; however, the liberal policy in terms of trade credit terms assisted in increasing the sales revenue of the organisation (Vernimmen et al., 2014).
Areas of improvement in BBC:
After evaluating the cash position of BBC, it could be inferred that the organisation was not in growth stage. In addition, it had developed a reputation in the market. However, there were certain challenges confronting the organisation, which need improvements for assuring future growth (Vishny & Zingales, 2017). One of the significant areas requiring improvement was the placing order of the organisation. It is necessary for BBC to place its order with the correct source to acquire best quality and quantity. Moreover, it should consider the time and pricing of the orders placed. The production of BBC needs to be facilitated by restricting interruptions and maintaining supplies of raw materials. Along with this, the organisation requires ensuring adequate stock of raw material when there would be supply shortage. Furthermore, the finished goods inventory needs to be available adequately for assuring smooth selling services to the customers. Finally, some guideline factors are required to be followed by BBC for effective management of its credit sales. These include credit time, collection policy, optimum credit policy and discount policy.
References:
Damodaran, A. (2016). Damodaran on valuation: security analysis for investment and corporate finance (Vol. 324). John Wiley & Sons.
Ehrhardt, M. C., & Brigham, E. F. (2016). Corporate finance: A focused approach. Cengage learning.
Fracassi, C. (2016). Corporate finance policies and social networks. Management Science, 63(8), 2420-2438.
Ross, S. A., Westerfield, R. W., Jordan, B. D., & Roberts, G. S. (2016). Fundamentals of corporate finance (9th Canadian ed.). Whitby, Canada: McGraw Hill Ryerson Ltd.
Vernimmen, P., Quiry, P., Dallocchio, M., Le Fur, Y., & Salvi, A. (2014). Corporate finance: theory and practice. John Wiley & Sons.
Vishny, R., & Zingales, L. (2017). Corporate Finance. Journal of Political Economy, 125(6), 1805-1812.
Free Membership to World’s Largest Sample Bank
To View this & another 50000+ free samples. Please put
your valid email id.
Yes, alert me for offers and important updates
Submit
Download Sample Now
Earn back the money you have spent on the downloaded sample by uploading a unique assignment/study material/research material you have. After we assess the authenticity of the uploaded content, you will get 100% money back in your wallet within 7 days.
UploadUnique Document
DocumentUnder Evaluation
Get Moneyinto Your Wallet
Total 4 pages
PAY 3 USD TO DOWNLOAD
*The content must not be available online or in our existing Database to qualify as
unique.
Cite This Work
To export a reference to this article please select a referencing stye below:
APA
MLA
Harvard
OSCOLA
Vancouver
My Assignment Help. (2021). Business Administration. Retrieved from https://myassignmenthelp.com/free-samples/bam101-business-administration/cash-balance.html.
“Business Administration.” My Assignment Help, 2021, https://myassignmenthelp.com/free-samples/bam101-business-administration/cash-balance.html.
My Assignment Help (2021) Business Administration [Online]. Available from: https://myassignmenthelp.com/free-samples/bam101-business-administration/cash-balance.html[Accessed 18 December 2021].
My Assignment Help. ‘Business Administration’ (My Assignment Help, 2021)
My Assignment Help. Business Administration [Internet]. My Assignment Help. 2021 [cited 18 December 2021]. Available from: https://myassignmenthelp.com/free-samples/bam101-business-administration/cash-balance.html.
×
.close{position: absolute;right: 5px;z-index: 999;opacity: 1;color: #ff8b00;}
×
Thank you for your interest
The respective sample has been mail to your register email id
×
CONGRATS!
$20 Credited
successfully in your wallet.
* $5 to be used on order value more than $50. Valid for
only 1
month.
Account created successfully!
We have sent login details on your registered email.
User:
Password:
At MyAssignmenthelp.com, we are committed to deliver quality assignment assistance in the fastest way possible. To make our service delivery fast, we have hired subject matter experts to work on different subject specific assignments. We have hired experts who owe in-depth knowledge in their respective subjects. As per their expertise, they provide geography assignment help, Physics assignment help, Strategic assignment help, history assignment help, art architecture assignment help and assistance with other subjects as well.
Latest Management Samples
div#loaddata .card img {max-width: 100%;
}
MPM755 Building Success In Commerce
Download :
0 | Pages :
9
Course Code: MPM755
University: Deakin University
MyAssignmentHelp.com is not sponsored or endorsed by this college or university
Country: Australia
Answers:
Introduction
The process of developing a successful business entity requires a multidimensional analysis of several factors that relate to the internal and external environment in commerce. The areas covered in this current unit are essential in transforming the business perspective regarding the key commerce factors such as ethics, technology, culture, entrepreneurship, leadership, culture, and globalization (Nzelibe, 1996; Barza, 2…
Read
More
SNM660 Evidence Based Practice
Download :
0 | Pages :
8
Course Code: SNM660
University: The University Of Sheffield
MyAssignmentHelp.com is not sponsored or endorsed by this college or university
Country: United Kingdom
Answers:
Critical reflection on the objective, design, methodology and outcome of the research undertaken Assessment-I
Smoking and tobacco addiction is one of the few among the most basic general restorative issues, particularly to developed nations such as the UK. It has been represented that among all risk segments smoking is the fourth driving purpose behind infections and other several ailments like asthma, breathing and problems in the l…
Read
More
Tags:
Australia Maidstone Management Business management with marketing University of New South Wales Masters in Business Administration
BSBHRM513 Manage Workforce Planning
Download :
0 | Pages :
20
Course Code: BSBHRM513
University: Tafe NSW
MyAssignmentHelp.com is not sponsored or endorsed by this college or university
Country: Australia
Answer:
Task 1
1.0 Data on staff turnover and demographics
That includes the staffing information of JKL industries for the fiscal year of 2014-15, it can be said that the company is having problems related to employee turnover. For the role of Senior Manager in Sydney, the organization needs 4 managers; however, one manager is exiting. It will make one empty position which might hurt the decision making process. On the other hand, In Brisba…
Read
More
MKT2031 Issues In Small Business And Entrepreneurship
Download :
0 | Pages :
5
Course Code: MKT2031
University: University Of Northampton
MyAssignmentHelp.com is not sponsored or endorsed by this college or university
Country: United Kingdom
Answer:
Entrepreneurial ventures
Entrepreneurship is the capacity and willingness to develop, manage, and put in order operations of any business venture with an intention to make profits despite the risks that may be involved in such venture. Small and large businesses have a vital role to play in the overall performance of the economy. It is, therefore, necessary to consider the difference between entrepreneurial ventures, individual, and c…
Read
More
Tags:
Turkey Istanbul Management University of Employee Masters in Business Administration
MN506 System Management
Download :
0 | Pages :
7
Course Code: MN506
University: Melbourne Institute Of Technology
MyAssignmentHelp.com is not sponsored or endorsed by this college or university
Country: Australia
Answer:
Introduction
An operating system (OS) is defined as a system software that is installed in the systems for the management of the hardware along with the other software resources. Every computer system and mobile device requires an operating system for functioning and execution of operations. There is a great use of mobile devices such as tablets and Smartphones that has increased. One of the widely used and implemented operating syste…
Read
More
Tags:
Australia Cheltenham Computer Science Litigation and Dispute Management University of New South Wales Information Technology
Next