Case History: Fiscal Planning, Controls and Management
Generic drug firm with a strong line of prescription type products and good basic facilities.
Six month decline in profits, serious cash flow problems developing and resulting inability to gear up for added products.
A careful analysis of the situation was made covering all aspects of fiscal controls, liquidity of assets and internal procedures. This initial assessment revealed that...
- Combination of heavy R & D expenses, softening prices on certain products and accelerating interest rates created the problem
- Existing management was not prepared to cope with the problem and did little to correct it
- The situation had to be reversed quickly if the company was to avoid market share loss
An intensive fiscal management system was installed which included...
- Rigid cash planning and control technique - Major changes in production scheduling for 50% reduction of throughput time
- Highly disciplined control and reduction of expenditures
- Arrangements to reduce outstanding trade creditors balances over an extended time period while maintaining current terms on new purchases
In approximately 120 days...
- Cash flow positive and operations profitable
- Overhead cost reduced permanently by 20%
- Inventory turns improved significantly
- Suppliers fully cooperative
Pace assisted in a sale of the business on very favorable terms in the following year.
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