When the sales are increased for his division, bonuses could be paid to the managers. Frank Campbell reviewed the purchase orders received from November and December. He wanted to determine if any shipments to the customers before December 31 may increase their sales. The alternative way to report sales was to increase sales by sending out two shipments to customers. Although the customers only needed the shipment the following year, this would be a way to exceed the targeted budget.
Table of Contents Executive Summary 3 Introduction 4 Analysis of Alternatives 5 Alternative 1: Introduce a new product 5 Alternative 2: Increase promotion 6 Alternative 3: Raise prices and cut costs 7 Recommendations 7 Appendix: Budgeted Income Statements & the Rate of Growth in Profits 9 Executive Summary Shepard Poles is a manufacturing company that has been providing specialized poles in the market for over ten years. Shepard Poles has about three different product lines: hiking poles, downhill ski poles, and cross-country ski poles. According to the calculation on current operating data, the company has incurred a operating loss of $ 165,000 this year. If any new strategic initiatives are not implemented next year, the unit sales and all costs are expected to rise about 7 percent and 2 percent respectively. However, this situation would make the company incur more loss next year, which is about negative $ 293,586.
* Of the $18400 Rhodes made in mortgage payments last year, $8000 was interest. The income statement lists 2008 interest paid as $32000, which means that there are other debts that required payments of $24000. If possible, accelerating payback on these loans can be very beneficial in the long run. * At industry average levels, wages of a similar business would be approximately $79000, or $11000 lower. * Wages, advertising and rent total %23.1 of sales in the average business, leaving %1.9 of sales for property taxes, interest, utilities, depreciation and other expenses.
Overhead decreased as a result of outsourcing but not as substantially as direct costs, thus causing the overhead allocation rate to increase significantly between 1988 and 1989. Question 2: Consider two products in the same product line: Expected Selling Price $62 $54 Standard Material Cost 16 27 Standard Labor Cost 6 3 Calculate the expected gross margins as a percentage of selling price on each product based on the 1988 and 1990 model year budgets, assuming selling price and material and labor cost do not change from standard. Product 1 1988: Gross margin = 62 - 16 - 6 – (6 * 434%) = 13.96 13.96 / 62 = 22.5% Product 2 1988: Gross margin = 54 - 27 - 3 – (3 * 434%) = 10.98 10.98 / 54 = 20.3% Product 1 1990: Gross margin = 62 - 16 - 6 – (6 * 563%) = 6.22 6.22 / 62 = 10.0% Product 2 1990: Gross margin = 54 - 27 - 3 – (3 * 563%)
By looking at the trading, profit & loss forecast for the year, you can see that things look like they will go reasonably well over the year as it shows a net profit of £15808. You may need to consider the possibility of a rise in fuel prices or the possibility of a fuel shortage in the current climate. This could affect your business by raising the cost of sales. You should look at increasing your revenue figure in order to counteract this. Look at your pricing policy and make changes appropriately.
The first thing an analyst may look at is Kodak’s sales and operating costs. Kodak income statement shows an increase in sales since 2002 and its operating costs show about a 15 percent increase between 2002 and 2003. Looking at this point of Kodak’s income statement an analyst may consider Kodak to be somewhat profitable but because of Kodak’s increase in operating cost an analyst would dig deeper as to what was the cause of Kodak’s operating cost increase. The increase in operating cost between 2002 and 2003 seems rather large considering Kodak only increased its sales by almost 3 percent. Taking a further look, an analyst might have some concerns when looking over Kodak’s account payables and liabilities.
No, many “real world” stocks do not satisfy the constant growth hypothesis because the real world circumstances can be unpredictable and harder to forecast so being able to continually grow your business at a specific rate each year is difficult. 2. The Wall Street Journal lists the current price of James River Current stock at $27. Based on this information, and the Value Line expected dividend, and the annual rate of dividend change for the growth estimate, what is the company’s return on common stock using the constant growth model? What is the expected dividend yield and the expected capital gains yield?
Case 1.5 The Leslie Fay Companies February 10, 2014 1. After reviewing Leslie Fay’s financial statements, BDO Seidman should have taken a particular interest in several of the company’s financial statement items and associated ratios. Specific items of interest likely would have included net sales and other income statement accounts with large increases over the five-year period. Net sales displayed a dramatic 44 percent increase over the five-year period, even as Leslie Fay’s industry competitors were experiencing a declining sales trend during the late 1980’s and early 1990’s. In addition to the industry’s struggles, these changes should have been of significant interest to the auditors given Donald Kenia’s tendency to “pre-record” orders from customers.
2. Why does a business that has a profit of $30,000 per year need a bank loan? They have a shortage of cash since they are usually taking advantage of the trade discounts. They also have a lot of money tied up in inventory and they are collecting their accounts receivable much later (about 43 days) then they are paying their accounts payable (about 10 days). – ratios in excel spreadsheet 3.
What are the issues for people living in richer parts of the world? 1: housing Population has grown by 7% since 1971 and it will continue to grow. The number of households since 1971 had grown by 30%; this is mostly because people live alone. More people are demanding houses being built because people leave home earlier, marry later divorce and live later. The government want to build 240,000 houses every year until 2016 so that prices do not spiral out of control.