Ohio Southern Packing

There are two aspects of entering in any business i.e. the person entering in the field of business must have entrepreneurial skills as well as, he must have analytical skills to measure the future scope of the business. The financial projections and the current financial situation of the Ohio Southern Packing show a considerable picture. The company is earning profits, whereas if we analyze the sales projections for the upcoming years, it shows that the sales revenues are on an increasing trend. Mr. Oglefordn is not a business man therefore, he didn't know much about business but he has the courage as well as passion to make the most from it. There are some of the factors which needs to be addressed in order to make a decision to accept the proposal or reject it

Major objectives behind purchase of the business

Earn and maximize profits

Lower down the variable costs.

Increase the business through proper utilization of available resources.

Financial Factors

Sales Revenue is increasing

Business shows an increasing trend.

Currently the business is earning considerable profits.

Currently the sales revenues for 2011 to 2012 is $8,500,000 and according is projected to increase in the normal conditions i.e. in 2016 the sales revenue almost become double $ 1,65,00,00. On the other hand, the gross profit at the yearend reflects a good picture and shows a profit after tax of $582 m. The main objective of the Mr. Augsberg (the current owner of the property) is sale the plant as soon as possible because of the reason that the next season would be started in a few days. On the other hand, Mr. Oglefordn is also on the opinion that the business has much more potential but due to some limitations Mr. Augsberg is not able to groom it.

Cost Factors

Marketing

Increasing Variable costs

For example: a business needs affective marketing strategy to groom its business and name in the market. But because Augsberg is now more than 55 years therefore, it becomes difficult for him to capitalize every opportunity. According to Mr. Oglefordn, the aggressive marketing can be a source with the help of which we can grow as well as, expand the business arenas, which means the business has great potential.

Financial &Funding Factors

Without any such conditions Mr. Oglefordn friend agrees to invest with him if the business would show some feasible outcome. Therefore, it is a benefit for him that he only needs to pay profit rather than making him partner as a seed capitalist.

After the complete analysis of the business and its financial aspects, there is no point of rejection of the offer. There are certain factors upon which the decision should be made, either to buy to reject the offer:

Nature of business

Scope and future of the business

Financial strength of the business

risks and reward related to the business

Cost and capacity utilization of business.

Payback of the investment

According the Brigham and Ehrhardt, prior to make an investment decision a complete financial analysis of the project is required. Therefore

Factors

Nature of business

Food and Manufacturing

Scope and future of ...