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Essay / Research Paper Abstract
A 3 page paper assessing the cash position of an outsourcing firm, Perform, Inc. Perform has grown at impressive rates in the past several years, but its free-spending ways and poor debt management have reduced its profit margin from 15 to 1 percent. The paper concludes that Perform does have a cash flow problem, but that sound management and attention to costs can positively affect its cash position. Bibliography lists 1 source.
Page Count:
3 pages (~225 words per page)
File: CC6_KSacctCashFlowPerf.rtf
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Unformatted sample text from the term paper:
(PI) is a management services company that experienced dramatic growth of more than 100 percent annually between 1992 and 1996, growing revenues from $2.1 million in 1992 to $18 million
in 1996. At lower revenues, PIs profit margin was 15 percent. At $18 million, profit margin had dropped to only one percent (Flagg and Glover, 1998). The
decline in margin was backed with good reasons - marketing; adding client server networks and an Intranet; and the costs of reorganization - but it undertook those activities in ways
it could not afford. It also failed to strike out in the direction it did without giving enough attention to keeping costs to minimal levels. PI increased its
general and administrative expenses to more than 12 percent of revenue (Flagg and Glover, 1998). Dwindling Profitability PI also spends with great enthusiasm
to pursue contracts for its services. There is no question that working with potential client companies in the hope of securing a long-term contract is expensive, but PI has
taken that fact to new heights. Spending $100,000 to gain $2 million is not excessive for those organizations that can afford it, but PI cannot afford it at all.
It needs to learn to produce results while using far less financial resources in the process. The case makes no mention of PIs win percentage. Spending $100,000
for a contract award of $2 million can be acceptable. Spending $100,000 five times to win a single $2 million contract is not.
Additionally, carrying so much debt in short-term form is unconscionable. It is admirable that PI finally restructured its debt so that it could gain a $600,000 annual breather
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