Engineering Management - Assignment EM1 Research Paper

Engineering Management - Assignment EM1 - Research Paper Example A low ratio in comparison with industry averages indicates an inefficient use of business assets. The Return on Assets Ratio is calculated as follows: Return on Assets = Net Profit Before tax / Total Assets = 1M / (1.2M + 0.7M -0.5M) = 1M / 1.4M = 0.714 Return on Investment (ROI) Ratio Return on Investment Ratio is the ratio of percentage of return on funds invested by the owners. The ROI is perhaps the most important ratio of all. The ROI should be high enough for an investor to invest in risk taking business proposition. The ROI is calculated as follows: Return on Investment = Net Profit before Tax / Net worth. (Word Count = 497) 1. (b) Do you think the above structure is satisfactory How would you change the structure and why would you change it To find answer to the above question first we have to look at what is an Organisation Structure I will just quote one, which I feel gives the essence of organization structure. 'The structure of an organization [is] the sum total of the ways in which it divides its labor into distinct tasks and then achieves co-ordination among them' (Mintzberg, 1989).' In analyzing the organization structure of Tees Valley Doors (TVD), I find that the organization structure is lacking some vital points. 1. This is a top-heavy organization structure. The total no. of employees are 70. For which there are 3 whole time Directors, 6 managers. 2. The allocation of jobs to the Directors are also not proper e.g. the Distribution Manger is having 4 assistants under him and the Warehouse manager is having 5 operators under him. I feel the posts of Managers here are superficial. It should be the job...It is calculated before income tax because tax rates and tax liabilities vary from company to company for a wide variety of reasons, making comparisons after taxes much more difficult. The Net Profit Margin Ratio is calculated as follows: This ratio reveals how well inventory is being managed. It is important because the more times inventory can be turned in a given operating cycle, the greater the profit. It is stated that inventory turn over is three times a year. This measures how efficiently profits are being generated from the assets employed in the business when compared with the ratios of firms in a similar business. A low ratio in comparison with industry averages indicates an inefficient use of business assets. The Return on Assets Ratio is calculated as follows: Return on Investment Ratio is the ratio of percentage of return on funds invested by the owners. The ROI is perhaps the most important ratio of all. The ROI should be high enough for an investor to invest in risk taking business proposition. The ROI is calculated as follows: 2. The allocation of jobs to the Directors are also not proper e.g. the Distribution Manger is having 4 assistants under him and the Warehouse manager is having 5 operators under him. I feel the posts of Managers here are superficial. It should be the job of supervisors to handle operators and assistants.