BOTTOM-LINE BENEFITS: THE A-SHARP PRINTING
To demonstrate how Tradebank improves the overall financial performance of its member companies, let’s examine the financial planning activity of A-Sharp Printing, Inc. Bob Jones is the president and owner of A-Sharp, which provides copying and graphic design services. Like other owners of most businesses, Bob is constantly looking for ways to improve his company’s cash flow.
Using the company’s historical financial and operating performance, Bob prepares financial projections for A-Sharp.
- Sales for the year are forecast at $1,000,000.
- Cost of Goods Sold (primarily paper, ink, and other materials) are equal to 50% of sales, delivering a gross margin of 50%.
- Fixed Expenses consisting of rent, utilities, leases and maintenance agreements for printing equipment will total $250,000.
- Variable Expenses such as advertising, travel, and other sales and marketing activities will amount to $200,000.
Having joined the Tradebank Network, Bob assesses how A-Sharp could benefit from Tradebank.
As a Tradebank member, Bob figures that he could increase his profits by 40% with only a 5% increase in sales. He also assumes that he can use his T$ balance to pay for variable expenses such as advertising, supplies, and travel.
NET EFFECT OF TRADE:
- The business obtained $50,000 more sales (5% increase)
- Cash flow improved by using the 50,000 T$ in new sales to pay for operating expenses – primary variable expenses.
- The business reduced its cash expenses and increased its net profit by more than 40% by trading within the Tradebank Network.
- A 5% increase in sales generated a 40% improvement in profits.