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hand to meet local sales peaks when they came. Failure to supply this demand
when it materialized most often resulted in a lost sale to a competitor, although
sometimes a customer simply postponed-buying. Because of their small size
and often weak working capital position, most of Scotts dealers could not
realistically be expected to increase their inventory investment in Scott
products. This meant that any desired buildup in dealer inventory would have
to be financed by Scott itself. In the past, the company extended generous
seasonal datings to its dealers, as was industry practice. Normal patterns is
winter and early spring shipments became due at the end of April or May,
depending on the geographical area. Shipments during the summer months
were due in October or November. These seasonal datings were made to
enable and encourage as many dealers as possible to be well stocked the
goods in advance of seasonal sales peaks. Anticipation at the rate of 0.6% a
month was offered on payments made in advance of these seasonal dates.
There is a problem rise in the Scott company :
Dealers using the trust receipt charged an extra 3% on the cost of purchases
from Scott. They also had to place all purchase orders directly through Scotts
field salespeople, in as much as these account executives were held
responsible by the company for controlling dealer inventories in connection
with the trust receipt plan. This last role of Scotts sales force was absolutely
central to the proper functioning of the trust receipt plan. Apart from
simplifying policing the level and character of dealer inventories, the account
executives also periodically inventoried the trust receipt dealers so that Scott
could bill the dealers for merchandise sold.
Balance Sheet
Balance Sheet
Cash
Account Receivable
Inventories
Total current assets
Total assets
Accounts payables
Notes payable, bank
Accrued taxes, interest and other
1960
1961
2328.
7
15749
.7
3914.
3
21992
.7
1454.
3
21500
.5
5590.
5
28545
.3
8003.
4
1687.
1
6316.
3
8370.
2
2247.
1
6123.
1
462
1132
133.6
937.8
29903
35739
.8
2791
6292.
2
1941.
1207.
expenses
Current sinking fund
requirements
Total current liabilities
Long-term debt:
of parent company
of subsidiary
Total liabilities
Preferred stock
Common stock and surplus
Total liabilities and net worth
382.5
5114.
7
512.5
7959.
4
9000
4649.
5
18764
.2
12000
4170.
4
24182
.8
2347.
5
8791.
3
2254.
3
9355.
7
35792
.8
29903
Income Statement
Net sales
Cost of sales and operating expenses
Cost of products sold including processing,
warehousing, delivery, and merchandising (including
lease rentals of $872,557)
General and administrative research and
development expenses
Depreciation and amortization
Interest charges
1961
38396
.4
43140
.1
30416
.8
34331
.7
2853.
6
584.2
3850.
7
589.6
1131.
5
39903
.5
3236.
6
1665.
9
1570.
7
881.6
34736
.2
3660.
2
1875.
2
Ratio :
change in current
assets
change in current
liabilities
1960
1785
1960
0.7354
68
0.1710
43
1961
0.7986
98
0.2241
87
increa
se
increa
se
profit
decrea
se
increa
se
risk
decrea
se
increa
se