January 10th, 2018
Internal Analysis of Abacus
With increasing competition in the restaurant industry, and challenges such as the global economic crisis that reduce the number of restaurant patrons, restaurants have been necessitated to adopt measures to better services while keeping costs minimal. One of such measures has been the adoption of point of sale (POS) systems, which have been argued to enhance accuracy and efficiency of order processing, while reducing costs (Liddle 34; Tompson 3). In Florida, one of the entities, a value-added reseller (VAR), offering POS systems for restaurants is the Abacus Business Solutions (ABS). ABS offers a comprehensive POS system package that involves the training, installation and evaluation of the functioning of the Aloha system, an NCR POS system, for its clients within Florida. ABS is the licensed Aloha reseller for west and central Florida, excluding the excluding Miami, Jacksonville and the Panhandle regions (Tompson 3). Subsequently, this paper presents a financial strategic analysis for ABS as presented in the case.
ABS sound financial position is firstly evident from its improving liquidity as evident from the liquidity ratios. For instance, the entity’s current ratio in 2012 improved to 1.12 from 0.77 recorded in 2011 (Tompson 4). Such an improvement indicates that the entity’s ability to service current liabilities from its current assets had improved during that period. Even when the stock that the entity held during the respective years is eliminated from the assessment of the liquidity position, as depicted by the quick ratio, ABS’s liquidity had increased in 2012 as compared to 2011 (Tompson 4). Further, even when only cash and cash equivalents are considered, as depicted by the entity’s cash ratio, ABS’s ability to meet its current liabilities is shown to have improved during the period from 2011 to 2012 (Tompson 4). Taken together, such measures of liquidity indicate that ABS has improved its capacity to meet short-term expenditure demands and thus may not face cash shortages that may curtail its operations. Go to part two here.