SOUTH PHILIPPINES ADVENTIST COLLEGE

POSITIVE PRINTERS

SERVICE CASE STUDY

FINANCIAL MANAGEMENT

AE 315

Submitted by:  

Torres, Arly Kurt

Besana, Keyla Mae

Submitted to: 
Teves, Mark Jason B. 
 July 1, 2021

Point of view:

Positive printer, Positive Printer’s General Manager

Statement of the problem:

Which press should the company purchase that has a low payback period and can maximize the
utilization of their funds?

Statement of Objectives:

1. Assess which press would be last long and provide quality runs.

2. Take good of the economic use of the finance that the company has available to it.

3. Evaluate benefit of purchasing new press for production.

Areas of Consideration:

 STRENGTH
 Company offering advertising specialties wide range of promotional items; well known
locally and to other neighboring state
 Leading printing business such as brochures, postcards, presentation folder, letterheads,
booklets and other direct mail pieces.
 WEAKNESS
 Limited Production.
 Technical reason that is causing cost efficiency and quality requirement problem.
 OPPORTUNITY
 To be able to purchase a new press that reduces laboring cost and eventually prices to
clients.
 THREAT
 There is a possibility that their customers won't come back to them even though they
already acquire a new set of printers because the other company is giving them a good
quality of service.
 ALTERNATIVE COURSE OF ACTION

ACAs PROS CONS

ACA NO. 1 (No purchases to be
made)
ACA NO.2 ( Purchase Auto Press)
ACA NO.3 ( Purchase Regular
Press)
 No fund needed for new
printing press
 Income tax increases
 able to produce quality
outcome in the long run
 Lesser fund is needed
 Shorter payback period
 Unable to produce
quality production due
to inefficient press.
 Technical issues will
arise
 Longer payback period
 Slow production

ACA NO.4 (Purchase both  High payback returns  Limited fund

Regular and Auto press)  Makes production faster
and efficient
Recommendation

Based on the information provided and analyzed financial computation and theoretical
consideration, it is recommended that the Positive press will purchase Regular Press. Because it has a
shorter payback period and has a high net present value compared to Auto-press. This recommendation
is influenced by the following factors.

 ACA No.1 is not recommended. Not purchasing a new press will only cause inefficient
production and failure of service of the company.

 ACA No. 2 is also not recommended. Aside for the reason that it requires a higher amount of
fund it also has a longer payback period than the Regular press. And by using the profitability
index, regular press has a higher net present value than Auto Press

 ACA NO.4 could only be a good option if the company has sufficient fund to purchase the both
Auto and Regular press.
Comparing the computed Payback) Period, NPV and IRR of both press machines, the following
data would be shown below.
Auto Press Regular
Press
Initial Net Investment 796,000 406,000
Operating Cash Inflows
Year 1 273,800 237,400
Year 2 287,800 237,400
Year 3 308,800 237,400
Year 4 329,800 237,400
Year 5 375,800 237,400
Payback Period 3 1.71
NPV at 14%
IRR

Tabulating the Profitability Index of both machines would be shown below.

Auto Press Regular

Press
Profitability Index 1.18 2