Elite Running Essay

955 Words4 Pages
Case Study 06-6 Elite Running Inc. 1. b) The decrease in sales of 24% has not carried into accounts receivable. A/R is only down 10%. While speaking with the A/R manager, we walked through the aged balances and noticed an “other” section, which overstates A/R by $9,000,000. If taken into consideration and not actually booked, A/R more closely resembles the expected decrease of 24%. Continue to look into the “Andy Defresne” marketing program responsible for the variation. e) Per the Inventory Manger, the increase in inventory is due to a combination of happenings throughout the year. $5,000,000 of the increase is attributable to a decrease in sales and a higher turnover rate. $11,000,000 of the increase in inventory is due to the purchase of materials from suppliers to receive a cheaper rate for the long haul. $3,000,000 of the inventory happened secondary to a reversal of a previous write down, which was incurred in 2002. There may be questionable tactics involved and the account warrants further analysis. k) The overall decrease in sales and gross profit was due to a new player entering the market. With the entrance of “Stampy”, Elite had to cut their prices, in order to maintain their current market share. This would explain the difference in gross profit and sales revenue. 2. The economy seems to be a concern as; people are not flocking to the best of the best any longer and may be searching for alternative products. In tough times even a strong market share can erode with the search for comparable products at a lessor price. It appears that this very issue may be vexing Elite. The admission by one of Elite’s own employees, that Stampy offers a “similar, if not better” product at a lessor price is troubling. The entrance of Stampy may pose a long term problem. If Stampy is able to continuously drive down pricing, it may create a

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