The 33% increase showed the strength of the company, but the huge drop in sales demonstrated how Competition Bikes, Inc. (CB) struggled to attain a surge in its revenue which is the result of the 15% decline in sales caused by economic situations. The rise of cost of goods sold (COGS) by almost 32% contributed to the rise in net sales for Years 6 and 7. During Year 7 and 8, CB had an almost 15% drop in COGS which resulted in a bad year for the company. However, COGS remained less than the company’s net sales which is always a financial plus. Overall, a rise in revenue and reduction in cost adds to CB’s profitability in Years 6 and 7.
In 2006 the fixed cost was at its highest due to a new rent that was larger and more employees. The margin of safety, which is in exhibit 4, was already extremely low in 2003 at 15%. Then it was 6% in 2004 and 7% in 2006. It has decreased and obviously other things in the business need to change like sales per unit to increase it. The next question was if they decreased price by 105 and increased sale tickets to 14,000, if there income would increase.
For example, now we deal with a crisis period and large companies like Sainsbury suffer a lot. The economic growth also has some employment effects. We can see a rise in the number of people employed by Sainsbury and this affects the United Kingdom economy. Now in 2011 we deal with a crisis period and appear some changes in population income. The number of companies that went in a bankrupt or are nearly to bankrupt has been increased and this results a large number of unemployed people, which means a decrease in sales.
The Home Depot Company wants to expand their business in a global arrange. Actually, this situation is not able to happening every year; therefore, I considered it as a extraordinary item. 2. As we know from the fiscal 2007, the value of treasury stock was negative $16,383 million, but when it comes in the fiscal the value of treasury stock was negative $314 million, which means The Home Depot Company may sell their treasury stock for some money, the factor is that the sales of Home Depot Company decreased $13,488 million, therefore, they need money to run the company, so they sell some of the treasury stock for some money. This is the second extraordinary item.
Most of these economic factors change depending on the country as the each country’s economic activities throughout the country such as the Increase or decrease in inflation (the rate at which prices are going up), recession - a significant decline in activity across the economy, lasting longer than a few months, GDP (Gross domestic product), interest rates - high interest rates are good for people saving but bad for people taking out and paying back loans such as mortgages as it costs more but it has not changed for 3 years and taxes such as corporate, income etc. All these individual factors influence any decision a business makes (Tesco). For example a
This combined with the inadequate amount of working capital added to their woes. How did they respond? Coleco was borrowing as much as they could but at a 9.5% interest rate. This was only compounded by the multiple million dollar credit agreements that were set to expire in the first half of the year in 1988. This led to Coleco shareholders increasing the number of authorized preferred shares from 300,000 to 12 million.
Wilkerson Company HBS Case Analysis I. Competitive Situation of the Wilkerson Company’s Product Lines The Wilkerson Company is experiencing a gloomy financial performance as indicated by the recent dip in the corporation’s overall profits. The company primarily produces valves, pumps, and flow controllers. Each of the three products are encountering varying competitive situations, however, the pumps are weathering the most dire situation in terms of financial performance and has been attributed as the main cause of the decline in company profits. Wilkerson had been forced to slash prices on their highly recognized and high-volume commodity product line, the pumps, in efforts to maintain their competitive ranking as a major pump supplier and in response to the reduction of pump prices by competitors in the marketplace.
Additionally, even if a good potential target was identified, the change in federal regulations had made obtaining the necessary leverage a challenging task, forcing LBO firms to put up over 30% of the buyout in equity, thereby reducing the possible returns. Although the banking market had tightened regulation and made debt harder to come by, equity from investors was pouring in. 2004 had been a record-breaking year in terms of dollars invested as well as transactions completed, and 2005 was on track to continue increasing those figures. Purchase price for companies were hovering at about 7x EBITDA, the highest since 1999. Some of the reasons for this increase in deal size include: • Firms were able to raise a lot of money and felt the need to put that money to work • Firms were becoming industry-focused, developing operational expertise to help their targets after the buyout process • Firms were diversifying into other markets such as Europe, Asia and India, where LBOs still presented attractive returns such as the ones seen in the US circa 1980’s • U.S. private equity firms were establishing international offices to deploy this excess of funds, sometimes “bidding up” or overpaying just to ensure capital deployment 2.
The company has an increase in inventory and other total assets proving that products aren’t moving through the operating cycle as they should explaining the cash flow decrease and liabilities are increasing. The debt structure of Lucent Technologies was a slight decrease of $940 from 2003 to 2004. Accounts payable has a decrease from 6.7% to 5.1%. Payroll and benefit related liabilities increased from 6.8% to 7.3%. Total current liabilities significantly decreased from 31% to 26.3%.
Most credit cards charge an interest of 79.9 percent which is paying more than double the actual cost for the items bought (creditcard.com). By having penalty fees adding up to about $20.5 billion in 2009 which is far too high, and gives a pause when hearing these numbers. In a survey respondents reported that they have paid a late fee and 15 percent have paid and over the limit fee. These are very high numbers and can put people so far in debt that they can’t pay it all off in one lifetime. If someone has bad credit before trying to receive a credit card, it can negatively affect the already high interest rates drastically.