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Quality Metal

In: Business and Management

Submitted By arielis
Words 279
Pages 2
Quality Metal Service Center

Prob
What action are needed to make in the control systems of Quality in order to achieve higher levels of sales and profits? The group is taking the point of view of Edward Brown, president and chief executive officer of Quality Metal Service Center

Analysis
ROA is the indicator that the company is profitable or the company’s assets generates revenue. The Economic Value Added is a good measure for evaluation of the performance of investment centers,
The current compensation system of district managers is affected by his or her region’s performance, 75% was based on district performance and 25% was based on his or her region’s performance.
The investment in machine of $540,000, 10 years cash inflow of $286,000 yields PV of cash inflow of $39,182 and a payback period of 4.5 years. Ken Richards proposal can make a lot of profit for the company
The bonus of the district managers should be solely based on his district’s performance so that they will not be affected by the poor performance of others or motivation not to perform well because they will still have good bonus if the region performs well while his or her district is not.

Reco
Accept the capital investment proposal to Quality because the payback period of 4.5 years is lower than the standard of 10 years and QMSC will have positive cash flow.
Ken Richards should send the proposal to the home office for approval because this will increase the market share and a lot of profits for the company.
EVA will resolve the issue of Columbus District Manager and proposed project will be…...

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