AMT Computers
Company Summary
AMT is a computer reseller based in the Uptown area. It was founded as a consulting-oriented VAR, became a reseller to fill the market need for personal computers, and is emphasizing service and support to differentiate itself from more price oriented national chains.
2.1 Company History
AMT has been caught in the vise grip of margin squeezes that have affected computer resellers worldwide. Although the chart titled Past Financial Performance shows that we have had healthy growth in sales, it also shows declining gross margin and declining profits.
The more detailed numbers in the Past Performance table include other indicators of some concern:
The gross margin % has been declining steadily, as we see in the chart.
Both collection days and inventory turnover are getting steadily worse.
All of these concerns are part of the general trend affecting computer resellers. The margin squeeze is happening throughout the computer industry worldwide.
| Past Performance | |||
| 1993 | 1994 | 1995 | |
| Sales | $3,773,889 | $4,661,902 | $5,301,059 |
| Gross Margin | $1,189,495 | $1,269,261 | $1,127,568 |
| Gross Margin % | 31.52% | 27.23% | 21.27% |
| Operating Expenses | $752,083 | $902,500 | $1,052,917 |
| Collection Period (days) | 39 | 35 | 39 |
| Inventory Turnover | 6.22 | 6.19 | 5.96 |
| Balance Sheet | |||
| 1993 | 1994 | 1995 | |
| Current Assets | |||
| Cash | $43,023 | $47,650 | $55,432 |
| Accounts Receivable | $281,282 | $347,468 | $395,107 |
| Inventory | $573,159 | $708,026 | $805,098 |
| Other Current Assets | $15,000 | $20,000 | $25,000 |
| Total Current Assets | $912,464 | $1,123,144 | $1,280,637 |
| Long-term Assets | |||
| Long-term Assets | $250,000 | $300,000 | $350,000 |
| Accumulated Depreciation | $5,000 | $20,000 | $50,000 |
| Total Long-term Assets | $245,000 | $280,000 | $300,000 |
| Total Assets | $1,157,464 | $1,403,144 | $1,580,637 |
| Current Liabilities | |||
| Accounts Payable | $159,395 | $196,901 | $223,897 |
| Current Borrowing | $64,072 | $79,149 | $90,000 |
| Other Current Liabilities (interest free) | $10,679 | $13,191 | $15,000 |
| Total Current Liabilities | $234,146 | $289,241 | $328,897 |
| Long-term Liabilities | $202,797 | $250,516 | $284,862 |
| Total Liabilities | $436,943 | $539,757 | $613,759 |
| Paid-in Capital | $250,000 | $350,000 | $500,000 |
| Retained Earnings | $186,203 | $274,992 | $418,355 |
| Earnings | $284,318 | $238,395 | $48,523 |
| Total Capital | $720,521 | $863,387 | $966,878 |
| Total Capital and Liabilities | $1,157,464 | $1,403,144 | $1,580,637 |
| Other Inputs | |||
| Payment Days | 30 | 30 | 30 |
| Sales on Credit | $2,641,722 | $3,263,331 | $3,445,688 |
| Receivables Turnover | 9.39 | 9.39 | 8.72 |
2.2 Company Ownership
AMT is a privately-held C corporation owned in majority by its founder and president, Ralph Jones. There are six part owners, including four investors and two past employees. The largest of these (in percent of ownership) are Frank Dudley, our attorney, and Paul Karots, our public relations consultant. Neither owns more than 15%, but both are active participants in management decisions.
2.3 Company Locations and Facilities
We have one location–a 7,000 square foot store in a suburban shopping center located conveniently close to the downtown area. It includes a training area, service department, offices, and showroom area.
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