SEAL TIGHT COMPANY ANALYSIS
Execute summery
A company can only be termed to be moving in a progressive direction if it can exude financial stability regarding an upward trend in its income and its command of the market. There are so many measures that can be set to gauge a company’s performance but the commonly used are the related financial methods (Liston, 2016). These are produced at least annually and consist of the balance sheet, the income statement and the statement of cash flows. Most companies and businesses prefer using income statement and the balance sheet. A balance sheet gives the picture of the organization as a whole i.e. the assets and liabilities, which entails what the business owns and what the company owes other firms.
Introduction
Seal Tight Company’s annual profit and loss account provide the financial outflow and inflow of the company. The content includes the net sales; this is the sales that is generated by the company after the deduction of returns, the discounts, and allowances for the damaged or missing goods. It also provides information on cost and expenses; the costs are the expenditures that the company incurred while performing the revenue generating activities while the expenses are the value of the items acquired that have been consumed (Clausen, 2008). It also provides the depreciation, administrative expenses, interests, estimated taxes and profits from operations.
The two competitors of the company Metalmax and Superior Can Companies financial statements have also been provided to facilitate weighing the performance of the company in the market and show its position. When these information are vividly analyzed the progress of the company can be determined throughout the fiscal year and also over the span of five years. The observations and recommendations arrived at will be significant in ensuring the company settles for a strategy that can propel it in a progressive direction or improve their income generation.
Method
This is a research that is aimed at determining the progress of the Seal Tight Company and also to determine its position in the market by comparing the financial records in the years beginning 2008 to 2012 and also against their major competitors. The method applied in this research is by balancing the accounts of the company, comparing its expenses against the profits. The statement is provided, with complete workout and additional information about the annual net sales of the competitors over the five years period.
Results
From the financial statement an upward trend regarding net sales is observed, therefore explaining that the company has been growing, by 2008 the net sales were $40,000,000 but five years later their net sales had gone up making $53,000,000. The profits from other operation indicated an unpredictable trend by 2008 it was $6,000,000 but moving into the preceding year the value fell to $5,400,000 which shows a decline but a year later there is observed an increase in the profits, the following years similarly give varying values until 2012.
The company incurred expenses that must accompany the operation to ensure quality and timely service delivery. The cost and expenses incurred by the company indicates a lower value in 2008 at 34,000,000 but shows an upward trend going into the latest year 2012 at 48,400,000. Between the year 2010 and 2011, the company recorded a huge difference in the costs and expenditure, whereby, in 2010 it recorded 40,800,000 while in 2011 it recorded 47,700,000. That shows a huge difference compared to the other financial year trends for the fluctuation in consecutive expenditures. The other expenses incurred by the company are the taxes which ranged between 2,400,000 and 2,640,000 with a very slight variation.
Comparing the sales of the company with those of the major competitors in the market, in 2008 Superior Can Company had the highest sales at 41,000,000 followed by Seal Tight Company at 40,000,000 and lastly Metalmax Company at 35,000,000. The preceding years until 2012 Seal Tight shows superior sales compared to the other competitor recording 53,000,000 compared to 48,000,000 for both Metalmax and Superior Can Companies respectively.
Conclusion and Recommendations
Seal Tight Company has a positive upward trend in the market and as well as in sales. The superiority in the market is evident from the net sales compared to the major competitors in the market that have recorded lower sales over a similar period. The company was at a lower status by 2008, but over the five years, it has seen a gradual rise to overtake its closest rival and eventually command the control of the market. The massive deviation of 5,000,000 in their sales after the five years give the picture of their performance.
The company needs to limit its expenditures in order to ensure that more profits is retained in the company, the other sources of revenue should also be stabilized to subsidize the sales as the major source of revenue. It has indicated an unpredictable trend over the five years which suggests probably something could not be correct hence the company needs to consider making an adjustment
References
Clausen, B. (2008). Expenses and Costs. Business Today, 140-142.
Liston, H. (2016, January 26). How to Read and Analyze an Income Statement. Retrieved from Bplans: http://articles.bplans.com/how-to-read-an-income-statement/
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