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Project Proposal for the Establishment of JointOrtho Company in Delaware

ProjectProposal for the Establishment of JointOrtho Company in Delaware

Throughoutthe world, the medical industry manufactures various devices that canbe used in monitoring and reconstructive purposes. Examples of thesedevices include the cardiac, diabetic care and hip and kneereplacements. JointsOrtho is one of the companies that manufacturefull hip and knee replacements devices and has been doing this formore than 80 years (Stephen, 2016). The company specializes invarious areas, but the major ones include general, and advancedtrauma surgery, foot and ankle surgery, reconstructive surgery,spinal surgery, sports surgery and orthopedic oncology .The Companywishes to expand by constructing another firm in Delaware that willbe manufacturing Full Hip Replacements. This document proposes areview of manufacturing Full Hip Replacements which can help toimprove the health of people. The proposed review will discuss theprinciples behind these monitoring and reconstructive devices and howimportant they are to human health.

PurposeStatement:

Everyday 10,000 Americans are turning age 65, and the population of agedpeople is expected to be 89 million by the year 2050. The eighty-ninemillion figure is more than double the number of older adults in theUnited States as experienced in 2010. In order minimize the number ofaged in the USA there’s need for more creation of OrthopedicsMedical Devices. Orthopedic Medical Devices is one of the fastestgrowing areas in medical devices (Moira, 2016). These services arebeing offered in a place like Delaware, whose population in the year2015 was estimated to be 945,479 (Melisa, 2015). The inhabitants ofDelaware will, therefore, have a chance to get Full Hip Replacementsreducing the high number of aged people in the area. The Joints Orthoor JO, which manufactures full hip and knee replacements, is mostefficient and effective in offering these services and there is aneed for it to be established in Delaware.

Objectives

Theaim of the study is to review the available literature on how themanufacturing of the Orthopedics Medical Devices can be used inimproving the health of the old people and make them look young(Yi-Ming, 2016). In this review, the aim of this study is to achievethe following objectives

1.Explain the cost implications of the newly proposed firm inDelaware.

2.Explain the benefits of JointsOrtho Company expanding andconstructing another branch in Delaware.

3.Examine the feelings and reaction of the Delaware people about thenew branch that will be constructed in their area.

4.Discuss the benefits of the Orthopedics Medical Devices that willbe manufactured by the people and the nation at large.

Accordingto the health departments, the JointOrtho Company should consider andmeet several criteria including safety, location, and economicgrowth. Safety does not only mean the people but also the environmentthat it will be operating. The wastes from the firm should not beconsidered harmful to the environment but work to improve both thecondition of the inhabitants and the environment in general.JointOrtho Company should also consider both groups of people (Brock,2015). It should not be viewed that its main objective is to help theold only but also try to help the young population of Delaware.

Managementplans

Effectiveand good management are the desires for any growing company in theworld. Therefore JointOrtho should ensure that it lays gooddevelopment strategies by hiring qualified management staff in theirnew proposed branch. Also, transfer of labor from the mother companyto the branch will be more effective in that many workers have therequired qualities and experience having run the previous company.This section presents the schedule costs and qualifications forcompleting the proposed company. JointOrtho should start by preparingthe financial statement to determine the decision and the move itwill take next.

Financialstatement

ForJointOrtho Company to progress and keep good track records, it shouldprepare well updated financial statement. Financial statements willhelp the company to keep good progress records and easily makecomparisons with the previous years. Therefore the JointOrtho Companyought to prepare the income statements, balance sheet, and the incomeoutflows statements. The financial statement will help JointorthoCompany to evaluate itself effectively. The records will determinethe fate of the company in that it can easily tell whether thebusiness is profitable or not.

IncomeStatement

TheJointOrtho Company should prepare the income statement to helpdetermine the profit margin of the company over a specified period ofthe time. It should primarily focus on the actual operationalefficiency. To prepare the income statement, we will have todetermine the total manufacturing cost of orthopedic medical devices.These will be achieved through preparing the manufacturing coststatement as follows:

J.ORTHO

MANUCTURINGCOST STATETMENT

FORTHE YEAR ENDING DEC 2016

000

000

Beginning raw material

Purchases of raw material

$4000

Raw materials available for use

$4000

Less raw materials ending inventory

Total direct materials

$ 4000

Direct labor

1392

Factory Overhead

Depreciation

900

Repairs

400

1300

Total manufacturing costs

6692

JOINTORTHO

INCOMESTATEMENT

FORTHE YEAR ENDING DEC, 2016

‘000’

Sales

529200

Less cost of sales(manufacturing cost)

6692

Gross profit

522508

Operating Expenses

Research and development

200

Selling general and administrative expenses

100.8

Operating Income

EBIT

522207.2

Interest expense

600

Tax

270

Net income

521337.2

Notes:Net sales = Gross sales – Returns and Allowances = ($529200)

Costof goods sold = manufacturing cost = ($6692).

Bypreparing the income statement, it will help to determine whether thebusiness will be profitable or not and this will enable theJointOrtho Company to decide whether to go ahead and establish thenewly proposed branch in Delaware or not. Through this, it will helpto match the company’s revenues with its expenses over a period.

Thebalance sheet

JointOrthoneeds to prepare a balance sheet that will enable the company todetermine its financial position of the business. In this case, thecompany is required to compare the value of assets it owns to thetotal liabilities and the owners’ equity. The JointOrtho Company’sbalance sheet is as shown below

JOINTORTHO

BALANCESHEET

FORTHE YEAR ENDING DEC 2016

‘000’

Asset

Liabilities and capital

Fixed Assets

Current liabilities

Buildings $5400

Vehicles $200

Account payable(creditors) $1,500

Land $280,000

Accrued expenses $3,000

Machines and equipment$ 2700

Furniture $100,000

Total fixed assets$ 408100

Non-current liabilities

Mortgage $ 6,600

Current assets

Total liabilities $11,100

Cash and cash equivalent$ 80,000

Capital

Investments $50,000

Capital = assets – liabilities

Account receivable $ 45,000

608,100 – 11,100

Prepaid expenses and other assets $25,000

=$597,000

Total current assets $200,000

Total asset $608,100

Total liabilities + capital $597,000

Cashflows

Preparingcash flow statement will help JointOrtho company to determine bothcash inflow and cash outflow this will help determine cash flow fromoperating activities, cash flow from investing activities and lastlycash flow from financing activities. The JointOrtho Company’s cashflow will as shown below

JOINTORTHOCOMPANY

CASHFLOW STATEMENT

FORTHE YEAR ENDING DEC 2016

CASHFLOWS FROM OPERATING ACTIVITIES

CashInflows:

Cashfrom sales $529200

Loanfrom bank $6,000

Order $1200

Receivablepayment $200

Totalcash inflows $536,657

CashOutflows:

Purchaseof a vehicle$200

Purchaseof land $280,000

Purchaseof raw materials $1,000

Orderfor machinery $,3000

Paymentfor salaries$100.8

Totalcash outflows$284300.8

NetCash in Flow$252356.2

Analysis

Fromthe analysis of the financial statement prepared it shows thatJointOrtho Company is profitable in that it makes a profit of$521337.2 per year. The result means that in ten years or less thenewly proposed project would have met the costs it incurred inputting up the firm in Delaware. Therefore the idea of supporting theconstruction of the newly proposed firm should be taken seriouslysince it is profitable to the firm and the public at large.

Alsofrom analysis, the JointOrtho need to do a lot to improve andmaintain the high standards as required. The company will achievethis by ensuring that the modern technology is employed, both skilledand semi-skilled labor is available. Besides, it must ensure thatthere is enough land that is approximated to cost around $280,000. Itshould also check the amount of waste that will be disposed to theenvironment. JointOrtho Company should treat all its wastes beforereleasing it to the atmosphere. The treatment will ensure that theenvironment is safe to uphold the high standards as per the WorldEnvironmental Organization.

Thefinancial records clearly show that JointOrtho Company has asuccessive plan. All factors kept constant the profit margin islikely to increase more than what is expected if they go on with theproject. Also from the balance sheet prepared by the proposed firm itclearly indicates that the company assets are equal to the totalamount of capital invested and the liabilities. The outcome gives thefinancial position of the new proposed firm which can be said to bedefinite and for an upcoming firm. Also from the cash flow statementsprepared they also show that the cash inflows is more than the cashoutflows (Reuters, 2012). The result clearly shows that the companywill have a strong foundation. Therefore I support the notion thatthe JointOrtho Company should go ahead and establish its newlyproposed firm in Delaware.

Conclusion

Fromthe prepared financial statements, it can be concluded thatJointOrtho Company will be successive. It should embrace the idea andgo ahead to construct the newly proposed project in Delaware. Theprofit margin compared to others is huge, and this may make thecompany more productive and soon start spreading its branches allover the world. Therefore JointOrtho company should act very first tostart providing its services in Delaware.

References

Brock, G. (2015, February 20). Medline. The Occasional Posterior HIP Dislocation Reduction, pp. 65-70.

Melisa, N. (2015, March 10). Delaware. Delaware a Small Wonder no More, pp. 4-9.

Moira, D. (2016, February 25). Medscape. Reduction of Posterior Hip Dislocation, pp. 31-40.

Olcay, G. (2016, November 15). orthopaedic surgery and research. A retrospective Analysis on the Correlation Between Hip Pain, Physical Examination Findings and Alpha Angle on MR images, pp. 30-82.

Reuters. (2012, May 07). Financial Statements. Ralcorp to Amend Financial Statement to Incur Additional Charges, pp. 51-111.

Stephen, M. (2016, April 11). Medscape. Hip Dislocation in Emergency Medicine, pp. 5-15.

Yi-Ming, R. (2016, November 14). Orthopaedic Surgery and Research. Efficacy and Safety of Tension Band Wiring Versus Plate Fixation in Olecranon Fractures, pp. 24-45.