Track Software Essays

Track Software Essays Track Software Essay Track Software Essay Track Software, Inc. is a company created and built by Mr. Stanley Booker, CPA who spent nights and weekends in developing a sophisticated cost-accounting software program that became the company’s initial product. As the firm grows, Stanley planned to develop and expand the software product, which will streamline the accounting processes of medium to large sized manufacturers. In the first 2 years of operation, some financial problems occur, so he sold 60% of the stock to a group of investors to obtain needed funds. Although he is quite pleased to have achieved record earnings in 2003, but he is concerned about the firm’s cash flows. He is finding it more and more difficult to pay the bills in a timely manner and generate cash flows to investors – both creditors and owners. Stanley is further frustrated by the firm’s inability to hire a software developer to complete the development of the product. He is reluctant to fill its position for it certainly will affect the firm’s earnings. But if the project will fully developed the firm’s cash flow and earnings will significantly rise. With all this concerns in his minds, Stanley set out to review the various data to develop strategies that would help to ensure the bright future for Track Software, Inc. IICASE VIEWPOINT Mr Stanley is focusing on maximizing the company’s profits shown by the increase in net profits over a period from 1997 to 2003. His dilemma about adding a new software developer, which would depress the company’s earnings for the near term, also demonstrates his emphasis on this goal. He need to find strategies to acquire cash for the project and for the company’s success. IIISTATEMENT OF THE PROBLEM How to maximize the profit of the company to pay its expenses timely and sustain the operation. The firm’s inability of hiring a software developer to finish the project IVSTATEMENT OF THE OBJECTIVES To make some strategies to maximize its profit To hire a software developer to finish the project VSTATEMENT OF AREAS OF CONSIDERATION The additional expense of hiring a new software developer The income of the company to cover up all expenses Ratio analysis of firm’s 2003 results 1. Liquidity Track Software’s liquidity as reflected by the quick ratio, net working capital, and acid-test ratio has improved slightly or remained stable, but overall is significantly below the industry average. 2. Activity Inventory turnover has deteriorated considerably and is much worse than the industry average. The average collection period has also deteriorated and is also substantially worse than the industry average. Total asset turnover improved slightly but is still well below the industry norm. 3. Debt The firm’s debt ratio improved slightly from 2002 but is higher than the industry averages. The times interest earned ratio is stable and, although it provides a reasonable cushion for the company, is below the industry average. 4. Profitability The firm’s gross, operating, and net profit margins have improved slightly in 2003 but remain low compared to the industry. Return on total assets has improved slightly but is about half the industry average. Return on equity declined slightly and is now below the industry average. VISTATEMENT OF ALTERNATIVE COURSES OF ACTION 1. TO HIRE A SOFTWARE DEVELOPER Advantages To develop, finish and expand the product software offering. It’s a blockbuster sale potential. If the money were to spend in hiring a software developer, the firm’s sales and earnings would significantly rise within 2 to 3 years development, production and marketing process was completed. Disadvantages It could certainly lower the firm’s earnings over the next couple of years. No guaranty that the project will succeed. MR. STANLEY BOOKER WI LL FINISH THE PROJECT Advantages No additional expense will be incurred in terms of hiring another software developer. Mr. Stanley can devote more of his time in managing the firm. Disadvantages Mr. Stanley devotion in doing administrative duties will be divided or may be his second priority only since he will more focused to finish the project VIISTATEMENT OF CONCLUSION I conclude that, Mr. Stanley will make every effort or strategy to acquire cash in order for him to hire a new software developer. Since the major goal is profit maximization, the ability to add a new product would increase sales and lead to greater profits for Track software. If this will succeed, the firm’s sales and earnings would significantly rise and the firm may have the ability to pay all its financial problems an can sustain the company’s operation. VIISTATEMENT OF RECOMMENDATION Mr. Stanley should hire a very qualified and competent software developer that will really fit the position and must consider the applicants ability to perform the job in a short span of time. The following should be followed to attain the goal: Step 1Recruitment and Selection of a new software developer. Step 2Introduce the project to the newly hired software developer. Step 3Start the development of the project. Step 4Finish the project within 3months Step 5Sot launching of the project after 3 months Step 6 Full implementation, production and market the project.