Filmore Furniture Ltd Essay
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.
She is having a tough time choosing between whether she should sell the business, or manage the business herself.
Choose the best option that will favor in …show more content…
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
Alternative 1: Keep the