(b) (1) LIFO will yield the lowest gross profit because this method will yield the highest cost of goods sold figure in the situation presented. The company has experienced rising purchase prices for its inventory acquisitions. In a period of rising prices, LIFO will yield the highest cost of goods sold because the most recent purchase prices (which are the higher prices in this case) are used to price cost of goods sold while the older (and lower) purchase prices are used to cost the ending inventory. (2) LIFO will yield
For an article, material, or supply to be considered domestic it must be an unmanufactured end product mined or produced in the United States; or the end product is manufactured in the United States. The purpose of this Act is to discourage businesses to sell to the government foreign products. When the government is only buying American made products it is encouraging the American business to produce a product that meets the government needs with pricing and quality. Some of the problems also with purchasing material from overseas vendors is that the required items might contain chemicals that do not meet American standards such as we have seen in some of China’s material containing lead. Now there are some exceptions to the Buy American Act which include if the items are being used outside the United States; domestic items that are unreasonably priced; information technology that is a commercial item; when compliance to the Act would not be in the best interest of the government; and item purchased only for the commissary resale.
The report concludes with a critical assessment of Buffet’s investment philosophies, looking at the impact it has on Berkshire Hathaway and why it is difficult for other investors to replicate Buffet’s strategy and be as successful. The findings indicate that the market reacted positively to the deal, especially for Berkshire Hathaway, beating the average response to an acquisition being announced by over 4%. The increase in Berkshire’s value represents the stock markets opinion on how much they underpaid. Using the enterprise value multiples method, the report finds that the book value of Pacificorp to be $9.2bn, $200m less than the offer value. This implies there is significant intrinsic value when combined with MidAmerican, the new customer base and economies of scale being the 2 most important factors.
Even though the acid-test ratio is less than 1 which rates in the lower third quartile in the industry of 1.6, 0.9 to 0.6, it indicates a concern with repaying current liabilities. This could be due to quick expansion of inventory with the intention of increasing sales. While this is currently considered a weakness and is concerning, a rise in the ratio should be seen by 2013 due to the increase of suggested sales. 3. I calculated an “inventory turnover ratio” which measures the number of times a company sells its inventory during a year.
If Ms.Wang uses credit sales, she may not be able to pay bills as credit sales take longer to go into the account, this is a disadvantage. The difference of revised figures and original s an increase of cash flow forecast but the purchases increase which is taken out of the profit. The purchases have gone up is because of the retail price index (RPI). In inflation there is something called ‘anticipation inflation’, this is a type of inflation which is described when the economy is doing well, the economy is usually at it’s boom peak. The demand for a product/service goes up so the price of the service goes up.
* Why do you think Valmont’s stock has “fallen out of favor” with Wall Street analysts? Do you think EVA can solve Valmont’s stock price problem? The fall in stock price is due to the recession in the US, the end of the drought, and the Gulf War. The $15 million restructuring charge could be to blame as well. EVA can possibly solve the problem because EVA focuses on maximizing shareholder value, which in effect can improve stock prices.
How has Aurora Textile performed over the past four years? Be prepared to provide financial ratios that present a clear picture of Aurora’s financial condition. Exhibit 1 shows Income statement of Aurora Textile Company for the fiscal years 1999-2000. As mentioned in the introduction, Aurora had remained main efficient plants by reducing inefficient operations, but its sales show downward trend and in 2002, it decreased about 40% to compare performance in 1999. Due to the fact that Asian and other foreign textile manufacturers have been exported aggressively and consumer preferences are requiring higher-quality products with minimum defects, like other firms, Aurora tends to produce small amount of yarns produced with minimal period and provide to customized markets.
Considering that the net cash from operating activities is reduced 18% in 2011, which can affect their aims to expand. Despite Sainsbury’s have demonstrate increase their store; they are near three times behind their main competitor Tesco how have 2715 stores in the UK (Tesco, 2011). Considering that accessibility is an important value for customers Sainsbury have a disadvantage in this aspect. Furthermore, Sainsbury’s is limited to the UK which is another disadvantage in front of Tesco how have operation in Europe, Asia and USA creating and important economy of scale which make able to reduce cost easily. In terms of Human resources management, J Sainsbury affirm, supporting the development of their employees recognizes the importance of its people in providing a foundation for delivering business excellence, with the intention to make it “a great place to work.” Sainsbury's provides employees with a stimulating and well equipped working environment, training and develop employees, Also s Even though Sainsbury’s sticks to a top-down management approach they have struggled to maintain continuity throughout all of their stores so that their management style is consistent, each outlet is workforce orientated as they embrace the ‘team’ approach and that if they can develop
There is a noticeable reduction in the receivables line and increase in cash. This indicates that the company is not extending as many dollars of purchases on credit or that the turnover for payment is faster from the customers. The total liability has increased but is a less of a percent total than in 1996. The largest increase in liabilities is in long-term debt. This debt would be long-terms loans that Coke has taken for operating and expansion expenses.
Exhibit 7: By a raising current ratio, we can see that Krispy Kreme is much more able to pay debt within the next year. This is good because even though there are a lot of equity issues going on in the business, they are not going to go bankrupt. Exhibit 9: One thing that really stands out in this exhibit is the miniscule amount of debt Krispy Kreme uses. I think they should leverage themselves to somewhat close to the industry average (around 35% current debt, and 42% long-term debt) to build some organic growth and get away from the business model that is bound to slow down. Financial ratios are a good indicator of a company’s health because they compare certain numbers to other related numbers.