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Strong Tie

In: Business and Management

Submitted By ylrios01
Words 518
Pages 3
Strong Tie Ltd. This case is about the decision to hire a consultant to provide an analysis of the company’s performance and to provide suggestions on future actions. Strong Tie Ltd., located in Winnipeg Manitoba, manufactured connectors to be used to reinforce wood joints. Bill Johnstone created this company to capitalize on the high demand for the housing market. After his death, the family owned business was passed on to his son, who ran the business along with his daughters. Strong Tie Ltd. made investments in automation, which affected their numbers from 2006 to 2008. As a result, they have higher margins and can sell their connectors at a lower price. From 2006 to 2008 there has been changes in the Income Statement and Balance Sheets of Strong Tie Ltd. There statement of cash flow shows that the outflow of money was greater what they actually had on hand. In earlier years, they had a higher net income and fewer expenses, which was in their favor. Strong Tie Ltd pursued the opportunity to increase competitiveness, by becoming an automated factory where they were able to reduce labor costs and speed up design. With these investments however, most of the ratios had an either slightly decreased or had no change.
The liquidity ratios that were used in this case displayed that Strong Tie Ltd, had strong financial conditions throughout the three years. The current ration remained well above two over time and the industry average in comparison to the strong tie average were very close. The average return on assets is below the industry average. Compared to the previous two years, year 2008 had a drastic drop. ROA is an indicator of how profitable a company is relative to its total assets. In 2006 and 2007, the companies management were efficiently using it assets to generate earnings and in 2008 that was not the case. Return on equity average was also

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