Riley Instruments is a rapidly expanding electronic parts distributor that is revolutionizing the supply chain industry. With their innovative strategies and commitment to customer satisfaction, the company has been able to establish itself as a leading player in the market. In this article, we will discuss how Riley Instruments is changing the game and what the future holds for them.
Revolutionizing the Supply Chain: Riley Instruments
In an industry that is constantly evolving, Riley Instruments is staying ahead of the curve by implementing cutting-edge technology and innovative solutions. The company has established a state-of-the-art warehouse system that allows for quick and accurate order processing. Additionally, they have streamlined their logistics network to ensure that products are delivered to customers on time and in perfect condition.
One of the key aspects of Riley Instruments’ supply chain strategy is their commitment to sustainability. The company has implemented eco-friendly practices throughout their operations, from utilizing energy-efficient lighting to reducing packaging waste. By taking these steps, they are not only helping to protect the environment, but also improving their bottom line.
A Bright Future Ahead: Riley Instruments’ Expansion
With their continued success, Riley Instruments is in the process of formulating plans for expansion. The company has already established a strong presence in the domestic market and is now looking to expand globally. By tapping into new markets and establishing partnerships with international suppliers, Riley Instruments is poised to become a major player in the global electronic parts distribution industry.
In addition to expanding their geographic reach, Riley Instruments is also expanding their product offerings. The company is constantly adding new products to their inventory, ensuring that they are able to meet the ever-changing needs of their customers. With their commitment to innovation, sustainability, and customer satisfaction, the future looks bright for Riley Instruments.
In conclusion, Riley Instruments is a company that is changing the game in the electronic parts distribution industry. With their innovative strategies, commitment to sustainability, and dedication to customer satisfaction, they are well positioned for continued success. As they expand their reach and offerings, we can expect to see even greater things from this dynamic and forward-thinking organization.
Riley Instruments, a rapidly expanding electronic parts distributor, is in the process of formulating plans for next year. Bill Stockton, the firm’s director of marketing, has completed his sales forecast and is confident that sales estimates will be met or exceeded. The following sales figures show the growth expected and will provide the planning basis for other corporate departments.
Samantha Carlson, assistant controller, has been given the responsibility for formulating the cash flow projection, a critical element during a period of rapid expansion. The following information will be used in preparing the cash analysis.
1. Riley has experienced an excellent record in accounts receivable collection and expects this trend to continue. Sixty percent of billings are collected in the month after the sale and 40% in the second month after the sale. Un-collectibles are nominal and can be ignored in the analysis.
2. The purchase of electronic parts is Riley’s largest expenditure: the cost of these items is equal to 50% of sales. Sixty percent of the parts are received by Riley one month prior to sale and 40% are received during the month of sale.
3. Historically, 80% of accounts payable have been cleared by Riley one month after receipt of purchased parts and the remaining 20% have been cleared two months after receipt.
4. Hourly wages, including fringe benefits, are a function of sales volume and are equal to 20% of the current month’s sales. These wages are paid in the month incurred.
5. General and administrative expenses are projected to be $2,640,000 for the next period. These include $480,000 in salaries, $660,000 in product promotions, $240,000 in property taxes, $360,000 for insurance, $300,000 in utilities, and $600,000 in depreciation. All expenses except property taxes are incurred uniformly throughout the year, and property taxes are paid in four equal installments in the last month of each calendar quarter.
6. Riley makes income tax payments in the first month of each quarter based on the income for the prior quarter. Riley is subject to an effective income tax rate of 40%. Riley’s pretax income for the first quarter of the next year is projected to be $612,000.
7. Riley has a corporate policy of maintaining an end-of-month cash balance of $100,000.
Cash is invested or borrowed monthly, as necessary to maintain this balance.
A. Prepare a spreadsheet with the cash receipts and disbursements budget for Riley Instruments by month for the second quarter. Be sure that all receipts, disbursements, and borrowing/investing are presented on a monthly basis. Ignore the interest expense and/or income associated with borrowing/investing.
B. Although this industry has experienced rapid growth over the last few years, competition from outside the country has also increased markedly and is beginning to affect prices. In fact, an offshore electronics manufacturer recently contacted Riley’s largest customer and has offered the same electronic product at a lower price. The customer would prefer to stay with Riley, but only if Riley will cut prices by 20%. Assume that half of all sales are to this customer. Perform sensitivity analysis using the cash budget as a flexible budget to determine whether Riley would be better off to reduce prices or to drop the customer.
C. Consider the decision that needs to be made from the following viewpoints: (1) vendors who supply Riley with the parts, (2) direct labor employees, and (3) managers. Would any of these stakeholders be willing to make concessions to help Riley meet the 20% price reduction? Explain.
D. Write a memo detailing your findings and making a recommendation to the CEO of Riley about the decision to drop the customer or to lowerprices.
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