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1.What’s wrong (if anything) with saying the basic financialgoal of a business is to “maximize profits?”

2. Explain and provide an example of how a company can generatelots of profits, but still go out of business because they don’thave anycash.

3. In a typical corporation the finance function is divided intotwo divisions, or departments. What are they? What does eachdepartment do?

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Trinidad Tremblay
Trinidad TremblayLv2
28 Sep 2019

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On Monday, May 26, Tina Brown walked into Innovative Patios to begin her new job as Payroll Manager. She was met by Julie Thornbury , President and major shareholder of the company. Julie got to the point: “Good, you’re here. I need a payroll plan by Friday. This place is a mess.

Yesterday I got a call from Human Resources & Skills Development Canada . He said we aren’t filing ROEs. Do you know what they are?

We’ve got employees telling us that they get more tax deducted than their friends who earn the same amount. Jim, our production manager is barking that he should have a tax credit for his kid. We’ve been fined for sending in employee taxes late. I don’t get it. I pay two people to run the administrative side of things and they mess things up.

I hear there are changes in the pipeline. I heard the federal budget, but I don’t know if we will benefit or not. Will it be just more paperwork? The bottom line is that I don’t want any more government types coming around here threatening me. Tell me what we have to do.”

Company History

Innovative Patios is a private corporation that installs patios stones made from recycled material. The company was started twenty years ago by Julie’s parents Elena and Seamus. Elena and Seamus were immigrants to Canada and earned a living through a small landscaping business. They hired workers on contract and paid in cash for many years until they were audited by the tax department.

To avoid further problems, they incorporated the company five years ago, put their workers on the payroll and hired Mary as a bookkeeper to fill out all the government forms.

Payroll Department

Mary quickly became Innovative Patios’ office manager, human resources manager, financial administrator and payroll manager. The workload was overwhelming and she convinced Julie to hire Liza to help her. Liza suggested they use Quicken to keep track of all accounts including payroll.

Mary and Liza fill out all cheques by hand for the ten employees and fill out all the government forms by hand. The company’s remittances are based on a checklist Mary developed in 2009 (See Exhibit), Mary is unhappy because she works very hard, but everyone complains about things being wrong. When Julie landed a large contract that would require 15 more people be hired, Mary recommended that Julie hire a professional payroll manager. “I can handle the other stuff, but the Canada Revenue Agency and the employee complaints are driving me crazy. I just can’t keep up. I will be as helpful as I can”.

Julie led Tina to her office and rushed off to take care of a crisis on the loading dock. Before Tina could get settled, Mary walked in, “I’m so happy to meet you. Just tell me what you need and Liza and I will get it for you. The employees are paid bi-weekly and this Wednesday is a payday. I haven’t prepared anything

because I knew you would be here.

Exhibit: Mary’s 2009 Remittance list

Item

Amount

How much to remit

When

Payroll

Annual $500,000

$1,000 payroll remittance

Monthly

Pay balance plus interest when assessment arrives

CPP

4.95% earnings (to annual max)

$2,062.50

Monthly

EI

1.98% earnings (to annual Max)

$49,000

Year -end

GST

Net annual subject to HST $200,000 at 13%

$1,500

Monthly

Use refund to go toward payroll remittances due

Please answer the following questions:

a) Who are the key stakeholders in this case?
b) What are the resources needed?
c) What resources are available?
d) What is the main issue in this case?

Thank you in advance!

home / study / business / finance / questions and answers / keeping the customers satisfied shelly sanders ... Your question has been answered Let us know if you got a helpful answer. Rate this answer Question: Keeping the Customers Satisfied Shelly Sanders has... Bookmark Keeping the Customers Satisfied Shelly Sanders has just been promoted to supervisor of the home furnishing department of the large department store where she works. The store manager made it clear to her that her first challenge was to turn around the poor performance of the department, particularly in sales, which were below budget, and customer satisfaction. The department receives more complaints than any other in the store (although it rates about average in the chain). Dissatisfied customers contribute to a poor reputation in the community, which translates into poor sales. Shelly decides she needs to learn about the department’s current customers and find out how they feel about purchasing from it. Her first move is to check the department’s information on repeat business. There is none. Next, she hunts out the department’s customer suggestions and complaints records to analyse and finds a notebook of scrawled customer comments and queries- all negative. Wondering how valid the information is, but realising she probably won’t find anything better, she draws up a check sheet to break down complaints and suggestions by frequency and type. Then she transfers the data onto Pareto charts and finds that the most common cause of customer dissatisfaction is problems with the delivery of furniture customers have ordered. On investigation, she finds that, when furniture is ordered, the manufacturer quotes a lead time, which sales staff pass on to their customers. The manufacturer is often late with delivery. In turn, manufacturers often blame their suppliers for late delivery of raw materials, However, because the store has no tracking system, the first the staff in the furnishings department hear of a problem is when customers ring up to complain that their order is overdue and ask when they can expect delivery. The staff then have to search through back orders, check with suppliers to find out the new delivery date and ring the customer back. This is time consuming and creates ill will between customers and the store. It’s also difficult for the staff to find the time to track down late orders, since their priority is meant to be serving customers and ensuring the display area is well presented. (Reference: Cole,K (2010).Management: theory and practice) Based on this case study, assume you are a customer service staff and answer the following questions: Outline the concept of internal and external customers; provide examples using this case study. List the internal and external customer’s needs of the home furnishing department. Outline how you will identify the customer’s needs? Identify the causes for the customer service problem in the home furnishing department. Provide suggestions to improve the customer service at home furnishing department. “Quality customer service adds value”. Using this case study as an example, discuss this statement. Develop policies and procedures to avoid any delay in delivering furniture to customers. Explain how you will ensure customer’s requirements are met? Provide a strategy. What lessons can you learn from this case study?

Please read the article and answer these THREE questions:

1. Why are conditions currently favorable for firms to issue debt and pay out the proceeds to stockholders?

2. What are dangerous impacts of issuing additional debt mentioned in the article?

3. TransDigm used the proceeds of their debt issue to pay a one-time dividend while Intel used the proceeds to repurchase shares. How does a repurchase differ from a one-time dividend? Why do you think the two firms chose different approaches to distributing cash to shareholders?

___________

"Borrowing for Dividends Raises Worries" at the Wall Street Journal on 10/06/2009

Rock-bottom interest rates and thawed credit markets are emboldening some companies to use bond-sale proceeds to go on the offensive, even if that means rewarding shareholders at the expense of bondholders.

The nascent trend is controversial because corporate borrowers are sinking themselves deeper into debt to pay out special dividends, buy back stock or finance acquisitions. While such moves were all the rage during the credit boom, most corporate-bond offerings during the recession have been used to reduce debt or stockpile cash.

Eric Felder, global head of credit trading at Barclays Capital, says the lure of low rates and companies' stables of cash increases "the risk of non-bondholder friendly events."

Last week's sale of $425 million of bonds by aircraft-parts manufacturer TransDigm Group Inc. is one of the back-to-the-past corporate-bond deals causing concern among some analysts. More than $360 million of the proceeds will be used to pay a special cash dividend to shareholders and management of the Cleveland company.

The added debt increased TransDigm's borrowings to 4.3 times its earnings before interest and taxes, compared with 3.1 times before last week's deal. The expected dividend of $7.50 to $7.70 a share is equal to nearly all of the net income that TransDigm reported since the end of fiscal 2003, according to Moody's Investors Service.

Moody's said the dividend "illustrates the company's aggressive financial policy." Moody's gave the new debt a junk rating of B3, even though the ratings firm said TransDigm's "strong operating performance will enable the company to service the increased debt level."

Sean Maroney, director of investor relations at TransDigm, says the "stability of our business, high profit margins and consistent cash flow" give the company "the ability to support this level of leverage."

Borrowing from bondholders to pay shareholder dividends is "a hallmark of an earlier credit era," Jeffrey Rosenberg, head of credit strategy at Bank of America Merrill Lynch, wrote in a report Friday. Such deals were popular in 2003 and 2004, the last time the Federal Reserve lowered its benchmark interest rate to historically low levels, keeping it at 1% for more than a year.

Companies like Dex Media Inc. DEX -0.18% took on debt to pay dividends to its private-equity owners, including Carlyle Group and Welsh, Carson, Anderson & Stowe, before taking the companies public. Dex Media filed for bankruptcy earlier this year under a mountain of debt.

With the federal-funds rate at 0% for nine months now and confidence returning to the stock and debt markets, investors have been driven to take on more risk. That is flooding the corporate-bond market with cash. Investors poured $43 billion into investment-grade corporate-bond funds in the second quarter and nearly $40 billion in the third quarter -- almost double previous peak quarters, according to Lipper AMG Data Services.

The wave of buying drove down borrowing costs for the average highly rated corporation to about 5%, according to Merrill, a level not seen since 2005. In the heat of the crisis last October, such rates averaged 9%. Through the end of September, more than 1,000 high-rated companies borrowed a record $860 billion, according to Dealogic.

In July, Intel Corp. INTC 0.33% sold $1.75 billion of convertible bonds, planning to use $1.5 billion of the proceeds to buy back shares. A spokesman for Intel declined to comment.

The computer-chip giant has a strong credit rating of single-A, so it doesn't carry a burdensome debt load. Still, the deal raised eyebrows among some analysts and investors, who say floating debt to buy back stock could become more common as companies regain confidence.

And as merger-and-acquisition activity revs up, the cheaper cost of debt compared with equity is tempting companies to use bond sales as a deal-making war chest.

Analysts are watching Kraft Foods Inc. in anticipation that the company would finance its proposed purchase of U.K. chocolate, candy and chewing gum maker Cadbury PLC by raising tons of debt. Last month's unsolicited bid by Kraft was then valued at about $16.7 billion, but it could be weeks before Kraft submits a formal offer.

Three major credit-ratings agencies have warned Kraft that they could slash the company's debt ratings if the company reaches a deal agreement with Cadbury. At the current offering price, Kraft would need to shell out at least $6 billion in cash, much of it likely from the debt markets, according to corporate-bond research firm Gimme Credit.

"Kraft is committed to maintaining an investment-grade rating," a Kraft spokesman said, declining to comment further.

So far in 2009, returns to high-grade bond investors are 19%, according to Merrill. "We've seen a feeding frenzy" because of low interest rates, says Kathleen Gaffney, portfolio manager at Loomis, Sayles & Co. She sold some bonds recently to take profits from the rally. Loomis Sayles wants to have cash on the sidelines in case the Fed raises rates soon or Treasury bonds sell off.

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