...Case for critical analysis: Pinnacle Machine Tool Co. Introduction Pinnacle Machine Tool Co., it is a small, publicly held Indiana-based machine tool Company, it was founded in 1976. This company specializes in manufacturing all kind of machine centres. They too have excellent experiences in Technology, Quality and Service (Pinnacle Machine Tool Co. Ltd.). Problem Statement How is Pinnacle going to avoid its company to fall off the market? Is entering a new market the only solution to defend itself from rival companies to take over the market or company? Don Anglos mentions in the case that the current situation of the Pinnacle shows that it is facing an increasing amount of rivalry with foreign manufacturers. Anglos managed to slightly increase Pinnacle’s revenue growth and market share however it came with a price which is a drop in profitability. This issue can lead to the loss of the business, this is causing Anglos to make a change as there is a credible rumour of Pinnacle’s chief competitor’s plan to take over the company Porter’s Five Forces Analysis: Economies of Scale Brand Identity Proprietary Product Access to Distribution Economies of Scale Brand Identity Proprietary Product Access to Distribution Diversity of competitors Industry Growth Brand Identity Product & service Differences Exit Barriers Diversity of competitors Industry Growth Brand Identity Product & service Differences Exit Barriers Buyers might tend to...
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...AUDIT MISSION ANALYSIS PROJECT Integrated Case Application- Pinnacle Manufacturing Table of contents Organizational History INTEGRATED CASE APPLICATION — PINNACLE MANUFACTURING: PART II a. Identification of specific considerations from Parts I and II b. Assessment of acceptable audit risk c. Identification inherent risks INTEGRATED CASE APPLICATION — PINNACLE MANUFACTURING: PART III (1) Controls (2) Deficiencies (3) Control risk Assessment Integrated Case Application- Pinnacle Manufacturing I. Organizational History Pinnacle was set up in 1996 in Pithampur, near city of Indore in Madhya Pradesh (INDIA). Over the last several years the company has continuously invested in and expanded its technology partnerships, manufacturing systems, product range and clientele to emerge as India’s largest commercial vehicle, bus seating and Interiors Company. [pic] INTEGRATED CASE APPLICATION — PINNACLE MANUFACTURING: PART II a. Identify specific considerations from Parts I and II of the case that affect your assessments of engagement risk and acceptable audit risk. Use each of the three factors in the text to...
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...2013 about $4,422,308. The reason why the number is extremely high for 2013 could be because Pinnacle just recently acquired the second division, which is Solar-Electro, and the third division Machine-Tech is only operated for two years. Since those two divisions only operated for a short period of time, company might have promotion for existed customers to be able to be their loyal supplier. They also could have programs for new customers to purchase their engine equipment with long-term installment payments. Inventory: * 2011: 25,271,503 * 2012: 25,537,198 * 2013: 32,236,021 From 2012 to 2013, Pinnacle’s inventory is slightly increased for $265,695. However, more than $6,698,823 inventory they have on hand from 2012 to 2013. Once again, they want to maximize productivity of two new divisions and keeping up with the existed Welburn division to be able to meet their customers’ orders. They needed to have more variety of their inventories so they can have it ready to ship. Short/current long-term debt: * 2011: 9,672,670 * 2012: 10,298,668 * 2013: 15,375,819 Short/current long-term debt is increased over 3 years period. In 2012, their debt is $625,998 more than 2011. It could be explained as company decided to open Machine-Tech division to expand their wide variety of machine services and repaid operations to be able to compete with other engine-tech companies. When they decided to acquire their 2nd division that is Solar-Elector. Solar-powered engines...
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...Pinnacle Machine Tool Company Don Anglos had to decide whether to trust his gut or his head, and he had to make that decision by next week’s board meeting. Either way, he knew he was bound to make at least a member or two of his senior management team unhappy. The question at hand was whether Pinnacle Company, the small, publicly held Indiana-based machine tool company he led as CEO, should attempt to acquire Hoilman Inc. Hoilman was a company known for the cutting-edge sensor technology and communications software it had developed to monitor robotics equipment. Anglos had just heard a credible rumor that one of Pinnacle’s chief competitors was planning a hostile takeover of the company. Coincidentally, Don Anglos knew Hoilman well because he had recently held exploratory talks about the possibility of a joint venture designed to develop similar technology capable of monitoring a broad range of manufacturing equipment. The joint venture did not work out. But now, by acquiring Hoilman, Pinnacle could develop software that transmitted real-time information on its customers’ equipment, enabling it to set itself apart by providing top-notch service far more sophisticated than its current standard maintenance and service contracts. Don, a hard-working 48-year-old, firmly believed that bigger was better. It was a premise that had served his Greek immigrant father well as he built a multimillion-dollar business from nothing by acquiring one commercial laundry after another. The CEO...
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...Don Anglos had to decide whether to trust his gut or his head, and he had to make that decision by next week’s board meeting. Either way, he knew he was bound to make at least a member or two of his senior management team unhappy. • The question at hand was whether Pinnacle Co., the small, publicly held Indiana-based machine tool company he led as CEO, should attempt to acquire Hoilman Inc. Hoilman was a company known for the cutting-edge sensor technology and communications software it had developed to monitor robotics equipment. Anglos had just heard a credible rumour that one of Pinnacle’s chief competitors was planning a hostile takeover of the company. Coincidentally, Don Anglos knew Hoilman well because he had recently held exploratory talks about the possibility of a joint venture designed to develop similar technology capable of monitoring a broad range of manufacturing equipment. The joint venture did not work out. But now, by acquiring Hoilman, Pinnacle could develop software that transmitted real-time information on its customers’ equipment, enabling it to set itself apart by providing top-notch service far more sophisticated than its current standard maintenance and service contracts. • Don, a hard-charging 48-year-old, firmly believed that bigger was better. It was a premise that had served his Greek immigrant father well as he built a multi-million-dollar business from nothing by acquiring one commercial laundry after another. The CEO had to admit...
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...Pinnacle Manufacturing Analysis Course Project Part 1 By: Hope Cole, Theresa Black, Andrea Ross, Samuel Han, Kathryn Ottesen, Amanda Allen | | | | | | | | | | | | Trend Analysis of Pinnacle Manufacturing Account Balance | % Change 2010 - 2011 | % Change 2009 – 2010 | Net Sales | 1.45% change | 2.70% change | Gross Profit | (2.07)% change | (.86)% change | Income from Operations | 1.87% change | (23.10)% change | Net Income | 16.50% change | (39.54)% change | Total Assets | 11.79% change | 3.6% change | ANALYTICAL PROCEDURES—RATIO ANALYSIS CLIENT NAME: | Pinnacle Manufacturing | DATE OF FINANCIAL STATEMENTS: | 2011, 2010, 2009 | LIQUIDITY RATIOS 2011 | 2010 | 2009 | | 1. Current ratio = | | | | | Current Assets | | | | | Current Liabilities | 1.75 | 1.93 | 2.19 | | Comments: There is a low risk that the company will fail financially over the next year. Thou the current ratio is showing a decline it is not surprising under the current economic state. There is not enough cause to have a significant concern. 2011 | 2010 | 2009 | | 2. Quick or acid test ratio = | | | | | Current Assets - Inventory | | | | | Current Liabilities | 0.69 | 0.75 | 0.85 | | Comments: There seems to be a decrease in the company’s asset...
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...a. Identify specific considerations from Parts I and II of the case that affect your assessments of engagement risk and acceptable audit risk. Use each of the three factors in the text to categorize your conclusions: External users’ reliance on financial statements After analyzing Pinnacle’s Income statements and other supporting documentation we concluded that the company has a low risk for failure in the next 12 months. Due to Pinnacle’s size and the field on which it performs (technology and manufacturing ), external users will rely significantly on the financial statements to gain assurance of the company’s current state and its future prospects. In addition, the amount of liabilities documented on Pinnacle’s financials make it more likely for investors and parties of interest to leverage the company’s income statements and balance sheets to help them decide on future investment option. Likelihood of financial difficulties Once the audit is completed and the audit is reported is issued , there is a significant risk for Pinnacle to experience financial difficulties included but not limited to bankruptcy. Based on this assumption, the engagement risk level should be increased and the acceptable audit risk should be issued. Management integrity Pinnacle’s Management Team has not demonstrated consistent ethical judgment in many of their choices. They have, to a certain extent. In addition, the organization’s lack of a clear stance regarding...
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...Pinnacle Manufacturing: Part VII a) Relationships The relationship of current accounts payable amounts and previous accounts payable should be reviewed. The relationship of what is included in the accounts payable balance should be reviewed as well. Ratios The following ratios use the accounts payable balance: * Gross profit ratio * Accounts payable versus purchases * Overhead versus materials Trends Auditors should look for trends in accounts payable such as the following: * Recurring expenses that are on the income statement every month. For example, rent could be a recurring monthly expense. * The amount of purchases made each month or during a particular month. For example, a company could have a large amount of purchases the beginning of every November for the Holiday season. b) Audit Program for Accounts Payable 1. Review accounts payable trial balance for large and unusual accounts payables 2. Follow up on any significant changes from prior years 3. Review the accounts payable listed on the aged payable for notes and related party payables. 4. Trace 50 accounts from the trial balance to the accounts payable master file for aging and the balance. 5. Foot two pages of the trial balance for the aging columns and balance and total all pages and cross-foot the aging. 6. Trace the balance to the general ledger 7. Confirm accounts payable using positive confirmations. 8. Confirm all amounts over $50,000...
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...Finding Great Companied to Invest In Warren Buffet, Chairman of Berkshire Hathaway says, “It is best to invest in great companies at a fair price than a fair company at a great price.” That’s a pinnacle statement about Buffet’s investment style. So, to invest like Buffet, you need to know what features denote a great company. Please read and reread the following carefully. A great company has a competitive advantage. It has a consumer monopoly, and like a great fortress, has a moat preventing others from capitalizing on it. A competitive advantage is created by producing a unique product or service over a long period of time and being perceived as the leader in the field. Buffett refers to this as a “durable competitive advantage.” Many of these great companies have been around for a hundred or more years. Coca Cola, one of his favorites, exemplifies this concept, as do several others. American Express and Wells Fargo have also been around for a century. (Interesting, the latter two were founded by the same people.) So, on the flip side, let’s look at the stocks Buffett avoids. He really hates companies that are involved in something that is price sensitive. Automobile manufactures are a prime example. Most people don’t care if they have a Ford, GM, or Chrysler. They want a great deal, instead. Because these companies must constantly fight to get a customer, they must constantly upgrade and improve their product by investing lots of money in new automobiles and their...
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... The process of making a three-dimensional solid object of virtually any shape from a digital model is 3D printing. It is also known as Additive manufacturing. Using an additive process successive layers of material are laid down in different shapes. 3D printing is different from traditional machining techniques, which mostly rely on the removal of material by methods such as cutting or drilling (subtractive processes). A materials printer usually performs 3D printing processes using digital technology. 3D Printers have evolved to make a variety of objects using a laser or extruder (the material output part of the printer, best described as a futuristic hot glue gun) that move along an X, Y and Z axis to build an object in three dimensions, layer by layer, sometimes only microns thick at a time, depending on the desired resolution of the object. History of 3D Printing This technology was called Rapid Manufacturing; a term coined by inventor S. Scott Crump who founded Stratasys in the late 1980′s. During the same time the similar technology was called additive manufacturing or stereolithography and was created by 3D Systems founder Charles ‘Chuck’ Hull. While these two companies are market leaders, the entire publicly traded market cap for 3D printing companies is comparatively small, roughly 2 Billion USD. Many companies that work in this space are still privately held. 3D Printing and...
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...Harley-Davidson maintains a large margin in its dominance in the U.S. Heavyweight Motorcycle market as compared to its major competitors. While the United States is HOG's most important market, the company sells motorcycles in many other markets worldwide. Harley-Davidson owns one of the strongest brands in the world, which helps it attract and retain a loyal customer base. The company established a strong brand image with its motorcycles achieving iconic status and being ranked among the world’s most valuable brands. Harley-Davidson’s motorcycles are known for their traditional styling, design simplicity, durability and quality which are why customers deem HD’s premium price to be “acceptable or reasonable”. The Harley-Davidson brand has significantly contributed to the success of the company by building strong market recognition and a loyal customer base. * Long Term Risk Overall Harley Davidson is a strong company with excellent margins and constantly growing revenues. The main concern for Harley is whether or not they can sustain their growth in the face of improvements in their competitors’ products and a maturing market. One major trend facing Harley Davidson is that average age of a Harley Davidson is getting higher, meaning the company is not as successful now as it has been in the past at attracting new and younger riders. This is also evidenced by the slightly weaker sales in less powerful entry level bikes. Many of HD’s competitors are more diversified...
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...work, divided into four group are cost, quality, time and flexibility. (Lee and Larry, 1999). However, not all the situation that the firm can apply the change in all competitive priorities simultaneously: therefore, in the case of Toyota. Toyota considered competitive priorities because of its new brand campaign “Ideas for Good” (Pressroom, 2010) a unique initiative to focus on what companies are there for many years – advance automotive technology. Campaign builds on Toyota’s DNA – that is the possibility of the company such as quality, durability and reliability as well as its commitment to innovation, by exchanging ideas with customers to improve the quality of life beyond the automotive world. As the result, we are focusing more on the quality and cost. First of all, when the people talk about cost, they always want to minimize it: therefore, the term low-cost operations exist. While having the low-cost strategy, the company can increase their demand for the products, but it also reduces the profits if products cannot be produced at lower cost. In order to compete based on costs, the company have to design a system that can reduces the cost per unit products. For Toyota, they have their secret weapon when they created the low cost car factories. According to the Toyota’s photogenic Executive Vice President Atsushi Niimi said “60 percent of the cost of the car is the investment into the plant, 20 percent is the parts that go in the car”. (Bertel Schmitt,...
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...-GREENMANTRA TECHNOLOGIES It has always been globally debated, the issues caused by plastic to the environment and human beings. A complete solution that can harness both issues was not tracked down.The breakthrough invention was on 2010 when Greenmantra an Ontario-based company came up with a solution to this global issue. A process which uses relatively low- cost to convert plastics into high-value refined products such as wax, greases, and lubricating oils. Its technology has awarded them Canada’s most Innovative Company of 2010 in the clean tech sector. It is the first company to synthesize waxes from recycled plastics. According to the CEO of Greenmantra technologies Mr. Pushkar Kumar, his early environment and the technological advance led him to this innovation and break through recycling process. He said, “I grew up in India, where I witnessed a world with almost no recycling or waste utilization. It seemed as if plastics were piling up everywhere, but nobody could find a use for them. Knowing that plastics contain hydrocarbons, I wanted to find a way to recover the energy within them, but to do so in an environmentally friendly way. After years of experimentation and development, Greenmantra’s innovative depolymerization process can finally put to good use the millions and millions of tons of disposed plastics found around the world”.(Stoneburgh,2013) Mr. Kumar is a metallurgical, chemical engineer and a MBA holder who is been working on this plastic conversion process...
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...Outsourcing : Outsourcing is the process of contracting with another company or person to do a particular service/job. Compared to 1998, in 2005 manufacturing employment was 19 percent lower in The United States, even though manufacturing output was 10 percent higher . The drop in manufacturing employment coincided with an increase in outsourcing to domestic contractors, including staffing services and an increase in outsourcing of materials and services inputs to foreign companies or affiliates which is also known as offshoring. A number of companies had recently signed or were expected to sign billion-dollar outsourcing deals. Topping the list were Xerox Corp. with a $4 billion plus outsourcing deal, and McDonnell Douglas and General Dynamics,with $3 billion deals. Advantage of Outsourcing to Other Countries : China Over the years China has become the choice of destination for manufacturing and supply chain outsourcing and material supply for many organization in America, Europe and Asia. Companies continue to receive several key benefits when outsourcing current business processes to China, such as: Gowth in Economy - China is the fastest-growing major economy in the world, and has had the fastest growing major economy for the past 30 years with an average annual GDP growth rate over 10%. Cost: The main reason U.S. businesses give for outsourcing is to remain competitive by cutting costs, especially wages. With China’s population well over one billion, the...
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...voluntary association of two or more persons to carry on a business for profit as co-owners The governing body for corporate activity An organization in which each owner has limited personal liability 2. (TCO D) The financial forecasting process used to project financial statements consists of which of the following processes? (Points : 5) Project sustainable growth rate Project balance sheet Forecast sales Forecast consumer demand and interest rates on borrowing Project Income Statement Page 2 1. (TCO C) What is meant by the terms depreciation and accumulated depreciation? In which financial statement does each of these items appear? What is accrual accounting and how does it influence financial statement presentation? (Points : 30) 2. (TCO B) Six months ago, you invested $350,000 to become a partner in a medical practice in which you have a 50% ownership interest. Today, your partner defaulted on the payments for a $2 million Open MRI system that is used by the partnership. What is the dollar amount of your personal liability exposure if you are a) the general partner, and b) if you are a limited partner? Discuss the characteristics of general and limited partners, and how these influence the liability amounts. (Points : 30) 3. (TCO C) ServerSolutions’ management has asked you to help the firm identify its EBDAT breakeven level. The company has only one product, the Pinnacle Server, a blazing fast...
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