James River Heating and Air conditioning Company is a leading home and commercial solutions provider in the state of Virginia. James River Air and Conditioning Company has been providing excellent services to businesses and home repair and maintenance in the line of heating and air conditioning since 1967. In addition to providing heating and air condition services, the company also installs and repair systems. At this time, the company is struggling financially. There is need for the company to streamline its financial position for profit maximization (James River Air, 2012).
In order to improve its financial objectives, James River Heating and Air Condition Company has laid out three objective that will assist in improving the company’s financial position. A healthy financial situation for the company will not improve efficient delivery of services but also provide effective competition for rival firms.
The first objective of the company is to have a Certified Public Accountant Organize James River’s Co financial and operational metrics. The CPA organization of the company’s finances would be helpful in benchmarking the company’s current financial performance.
Another objective of the company’s cash position is to improve the company’s cash position by generating a positive cash flow for the company. A stringent financial objective would make it difficult for the company has expenses that supersede the income. James River Company will improve its financial objective through tracking utilization. Utilization assesses how the company uses the resources that it has in its dispensation.
Measuring the Objectives (Dahl, 2012).
The first objective of the company requires an assessment of the company financial by a CPA. The tool required for this process is a balance sheet that highlights the company’s assets, liabilities, liquid cash, and stocks. The target for this objective is finding a balancing balance sheet for the company to ensure that the company has a healthy balance sheet.
The second objective of improving the company’s cash position is through checking the company bankruptcy’s status by the formula Cash in Bank/ Monthly = Number of Months until Bankruptcy. This is an important tool since it measures the company’s actual financial position. The target here is to reduce the chances of going into bankruptcy as much as it is possible.
James River Heat and Air conditioning company can track its utilization by employing the formula (OEP) which refers to the Overhead Expenses /Sales. This tool measures the company’s expenditure per head on recurring costs such as salaries. Cost cutting is essential for the company if it intends to reduce expenditure and to increase its profits. The target would be reducing as the company’s overhead cost by approximately 30 percent per worker.
Coen & Jenkins refute the argument that money increments insinuate performance. According to them, pay for work incentives have unintended side effects that are not often pleasant. These side effects usually undermine the company’s real objectives and goals. “The bottom line is that any approach that offers a reward for better performance is destined to be ineffective (p.248). The goal is to ensure that the company rewards workers for their effort and not to insinuate performance.
Hoftand (2009) argue that profitability refers to the company’s ability to generate earnings as compared to its expenses and other costs incurred during a specific period. Profitability varies depending on the type of service, company, and season. Some companies experience high revenues and earnings during certain seasons and our company’s strategy is to ensure that we maximize on our high seasons.
Lastly, Weinstein& Johnson (1999) write that successful companies do not satisfy customers, they work hard to please them. Superior customer values means continually creating a business experience that exceed the ordinary expectations (p.4). In their view, value is the strategic driver that most multinational corporations utilize to differentiate themselves from the rest in the view of customers. In the abstract form, values means the excellence usually based on desirability or usefulness (Weinstein & Johnson, 1999, p.5). The most successful way of regaining financial foothold is building a brilliant customer value program.
Coens, T., & Jenkins, M. (2010). Abolishing Performance Appraisals. Chicago, USA: ReadHowYouWant.com.
Dahl, D. (2010, August 30). How to Evaluate Your Company’s Financial Position. Retrieved June 23, 2012, from http://www.inc.com/guides/2010/08/how-to-evaludate-your-financial-position.html
Hofstrand, D. (2009, December). Understanding Profitability [AG Decision Maker]. Retrieved June 9, 2012, from http://www.extension.iastate.edu/agdm/wholefarm/html/c3-24.html
James River Air. (2012, February 12). James River Air [Fact sheet]. Retrieved June 20, 2012, from http://www.jamesriverair.com/page4.php?pagename=Overview
Weinstein, A., & Johnson, W. (1999). Designing and Delivering Superior Customer Value: Concepts, Cases, and Applications. Miami, FL: CRC Press.