Guillermo Furniture Store

Guillermo Furniture Store

Maria Esther Masson

ACC/561

April 19th, 2010

Susan Hurley

Guillermo Furniture Store.

Guillermo Furniture Store is located Sonora, Mexico. Two events, the moving of a large furniture manufacturer from overseas to the area, and the increase in business and population in Sonora, posed a threat to Guillermo's store. Foreign competition, the introduction of high-tech products and rapid development causes labor cost to rise and Guillermo has to consider possible options to stay in business.

Guillermo has several alternatives available (1) Merging with another company, (2) Purchasing high-tech equipment, (3) Continue making handcrafted furniture, or (4) Becoming a distributor. Alternatives pose risk to him with no guarantee to succeed. In addition, Guillermo does not want to face the management responsibilities that bring the acquisition of a new company. He enjoys spending quality time with his family.

Guillermo could make an informed decision of the best alternative available based on the information on his company's financial statements. These reports are formal records of the furniture store financial activity, and will provide him with a summary of the business profits, and of the short and long term company's financial status. He will also have to provide his financial institution, either a bank or a lending company with these reports if he decides to apply for a business loan to expand his business. Financial institutions use them to decide whether to grant money or approve long term loans to fund business expansion or projects.

The financial statements include: (1)The Balance Sheet, (2)The Income Statement, (3)The Cash Flow Statement, and (4)The Owner's Equity...