Filmore Furniture Ltd Essay

1264 Words Feb 27th, 2013 6 Pages
Filmore Furniture Ltd

Company Background * Incorporated in 1970 by Fred Filmore, a sole proprietor. * In 1983, Phil obtained his father’s furniture business and acquired the management of the business. * In 10 years the sales income increased to $5,100,000 and employed 58 full-time employees. * He is an aggressive manager and strategist. * During 1986 to 1993, Filmore Furniture modernized its manufacturing facilities. * Phil owned 63% of the share, 31% the five investors and the rest is retained by the employees of the company.
Problem
She is having a tough time choosing between whether she should sell the business, or manage the business herself.
Objectives
Choose the best option that will favor in
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deas implemented * Excellent operation manager * Brand Equity * Efficient production of high-quality products * Modernized plant * New product design and accessories * Owns 63% of company shares * Canadian furniture will be cheaper in the U.S due to the low Canadian dollar

Weaknesses: * High cost of living * The furniture industry is highly competitive * Lucinda has no knowledge of the industry or experience * Lucinda does not have complete ownership of the company * Due to low-profit margins Filmore did not have sufficient funds to pay for the modernized programs * Company is close to industry average * Proceeds from Phil’s life insurance policy is not large enough to cover her expenses

Opportunities: * Find someone to manage the company while she goes back to work as teacher * If Lucinda keeps the company she could find a Canadian exporter to distribute their products to the U.S * Sell her 63% share in the company and use the money to invest in a private firm

Threats: * Competition with other competitors in the furniture industry * Shareholders might not agree with Lucinda’s decision * If Lucinda decides to run the company herself her lack of knowledge could hurt the company Financial Analysis
Debt to Equity = Total Debt/ Shareholders Equity = 1200000/65,000 = 18.46%

Company’s after-tax profit = $204,000
Alternatives
Alternative 1: Keep the

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