Bodie Industrial Supply

Topics: Generally Accepted Accounting Principles, Financial ratios, Accounts receivable Pages: 3 (1011 words) Published: April 24, 2013
Last four digits of student ID#:4981
Name of the business: Bodie Industrial Supply, Inc
Nature of the business: Retailer of equipment for the construction, utility and farming markets.

Marketing Analysis:

Bodie Industrial Supply, Inc is a full service distributor of top line, brand name, new and used certified machine tools, maintenance parts and related equipments for the construction, utility and farming markets. The demand for equipment is relatively cyclical, with Bodies having a slight increase in sales to farming markets in the summer. Bodie’s has seen a huge sales growth increase in 2003-2004 of 72% and 29% in 2004-2005. This is mostly due to an increase in net sales and keeping a constant level of costs of goods sold. Bodie’s is differentiated by offering personalized service and exclusive rights from manufacturers to distribute top of the line products to their customers. Even with the arrival of new competition in 2005, Bodie’s still managed to increase their net profit margin from -1.2% in 2005 to 2.8% in 2006 so the competition hasn’t been much of a factor. With an increasing amount of customers purchasing supplies online, it’s doubtful to expect for Bodie Industries to continue to grow at this rate.

Operational Analysis:

Bodie’s has exclusive rights from manufacturers to offer their products to the customers. The company became highly asset intensive in 2006 at 1.9 compared to 2.6 in 2005; this can be attributed with the purchase of land, building and equipment instead of renting. The company has been managing their inventory fairly well. Inv Days had a 10 day increase from 2005 to 2006 but net income was consistent with the market. There has been an increase in average collections period from 46 in 2005 to 60 in 2006 due in large to an increase in accounts receivables. The increase in accounts receivable has made Bodie’s average collection period more than the industry average of 52 days. With the purchase of land, building and...
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