Advanced Medical Technology
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|Advanced Medical Technology Corporation |
|Case Analysis |
Executive Summary
Advanced Medical Corporation is experiencing significant growth; however, large expenditures in R&D and poor inventory and accounts receivables management process have resulted in negative earnings. By reducing the company’s spending, employing lower cost developing techniques, and adjusting the inventory and accounts receivables management process, AMT will be able to generate enough positive cash flow to pay off its debt and eventually increase its R&D expenditures.
Problem Statement
Mr. Haskins’ eagerness to maintain AMT’s market position is damaging to the company in the long-run. Extraordinary sales growth is resulting in major operating losses, and external funds are necessary to be able to continue with this rapid expansion. Even though the medical device manufacturing industry seems to be very promising, the banks are reluctant to provide additional funds to the company. Mr. Haskins’ inadequate cost management imposed a pessimistic view of AMT’s ability to generate profits. Acquiring a new loan of $8M may be very unlikely.
There is an option for a merger with Biological Labs Corporation, however, it is not recommended at this time. There are few aspects of the current operations AMT employs which are undeniably the key factors to its unprofitability. Concentrating on market share by spending tremendous amounts of capital on R&D and SG&A does not prove to be beneficial at this time.
Analysis
To understand how AMT’s increasing growth is continuing to result in negative net earnings a chart has been created to examine the
|Advanced Medical Technology Corporation |
|Case Analysis |
Executive Summary
Advanced Medical Corporation is experiencing significant growth; however, large expenditures in R&D and poor inventory and accounts receivables management process have resulted in negative earnings. By reducing the company’s spending, employing lower cost developing techniques, and adjusting the inventory and accounts receivables management process, AMT will be able to generate enough positive cash flow to pay off its debt and eventually increase its R&D expenditures.
Problem Statement
Mr. Haskins’ eagerness to maintain AMT’s market position is damaging to the company in the long-run. Extraordinary sales growth is resulting in major operating losses, and external funds are necessary to be able to continue with this rapid expansion. Even though the medical device manufacturing industry seems to be very promising, the banks are reluctant to provide additional funds to the company. Mr. Haskins’ inadequate cost management imposed a pessimistic view of AMT’s ability to generate profits. Acquiring a new loan of $8M may be very unlikely.
There is an option for a merger with Biological Labs Corporation, however, it is not recommended at this time. There are few aspects of the current operations AMT employs which are undeniably the key factors to its unprofitability. Concentrating on market share by spending tremendous amounts of capital on R&D and SG&A does not prove to be beneficial at this time.
Analysis
To understand how AMT’s increasing growth is continuing to result in negative net earnings a chart has been created to examine the
Cited: Battelle Memorial Institute. State Government Initiatives in Biotechnology 2001. Prepared for Biotechnology Industry Organization. Columbus, Ohio: Battelle Memorial Institute, Technology Partnership Practice, 2002. Cortright, Joseph and Heike Mayer. Signs of Life: The Growth of Biotechnology Centers in the U.S. Washington, DC: The Brookings Institution, Center on Urban and Metropolitan Policy, 2002.