Monday October 8, 2009
Guillermo Navallez is the owner of a successful furniture and manufacturing company located in Sonora, Mexico. Navallez’s establishment is known for its quality pieces, crafting a variety of chairs and tables from the abundant supply of timber in the area. In the late 1990’s, Navallez competitors became a real threat to the ongoing success of Guillermo’s Furniture and Manufacturing Company, producing like quality furniture for a fraction of the cost. What is more, the competitors were producing these pieces at an alarming rate, and using high-tech equipment and absolutely no labor costs. Over the years, Navallez noticed that his profit margins shirked as prices decreased and costs increased. Navallez decided to do his own research on some of his competitors and discovered that to keep up, many of the local competitors was either consolidating by merger or acquisition. Navallez, being proud of his accomplishments did not want to industrialize his company and contacted Wells Accounting firm to help him with alternatives to match the competitors. Wells Accounting Firm plan of action is to assist Navallez by helping him understand the difference between the various capital budget techniques, and then providing Navallez a recommendation on the best-fit project to bring Guillermo’s Furniture and Manufacturing Company back to excellent financial health.
Capital Budget Recommendation: Guillermo Furniture
Wells accounting firm was contacted by Guillermo Navallez, business owner after realizing that his company faced considerable profit loss with the onset of competitors producing like quality pieces for a fraction of the cost. Wells accounting firm was challenged to help Guillermo Navallez understand the various capital budgeting techniques and to present a recommendation to restore Guillermo’s Furniture and Manufacturing Company to...