The company is over-liquid and has no debt, from which the shareholders are suffering because all acquisitions and investments are with high costs and low risks. BKI needs to create leverage by borrowing more, thus increase its ROI and ROE of its acquisitions and investments. At the moment Blain shows the lowest ROE in its sector (by far) while increasing its cost of capital, in other words the cash held remains unutilized and thus reduces the value of the company. Companies with low ROE are less attractive to investors. On the other hand, debt has a much lower cost of capita and provides a good opportunity to take on more
Sadly, this company had a lot of factors working against them when the quarter came to an end. The reason that companies budget is to help ensure that money is being spent properly and to help track where future profits and losses may occur. The unexpected decrease in revenue can be factored into many different areas. One main factor of loss is due to the internet being down for 7 days causing the company to potentially have lost 7.7 percent of it’s customers and an estimated $10,00 in profit for this quarter. Factor number two is the company offering free shipping to orders over $100.
This affects the GDP, real income, wholesale-retail sales, employment, and industrial production. So, to relate this to Rob Lowe’s situation, we can see that because people are making less money and unemployment is high, the likeliness of people going to high end restaurants where luxury salmon is sold, decreases. Luxury salmon is what, economically, would be called an elastic good. The elasticity of demand for a good explains the changes in a demand for a certain good in relation to the changes in income depending on whether the good is elastic, inelastic, or unitary. In other words, the demand for luxury salmon during a recession would dramatically drop.
Hypothesize the basic short-run and long-run behaviors of the model in the industry you have chosen in a “market economy.” Some short-run behaviors include not too much demand because of the launch of new products leading to not as many sales. Another short term behavior can be if a popular item is launched, then it will be sold out in a couple of days because of its popularity. The opposite can be said for long-term behaviors. If something is not in demand, then the product can sit in stands for a long period of time and the company would incur a loss in that product. Another long run behavior is the value of high valued items.
Target Analysis Summary We carefully reviewed Target’s 10 K report and found that Target’s auditor Ernst& Young LLP, expressed unqualified opinions on both Target’s consolidated financial statements and internal controls. Based on that, we reviewed the notes to Target’s financial statement and concluded summary in the following. According to independent auditor’s report, financial statements of Target Corporation and its subsidiaries comply with US GAAP, and Target doesn’t have significant accounting policy changes for the past year. No major development beyond the end of accounting period was found in the notes. Also, based on Target’s income statements, Target doesn’t have any revenues or expenses non-recurring in nature.
1. What micro environmental factors have affected Target’s performance over the past few years? Target’s performance has been affected by a range of micro environmental factors. The major micro environmental factor was the drop in sales revenues and the dwindling profits. Wal-Mart’s sales were growing, and that meant that Target’s sales would go down since consumers preferred Wal-Mart for Target.
Market failure can be caused by a.|foreign competition.| b.|externalities.| c.|low consumer demand.| d.|scarcity.| ____ 3. Externalities cause markets to a.|fail to allocate resources efficiently.| b.|cause price to be different than the equilibrium price.| c.|benefit producers at the expense of consumers.| d.|cause markets to operate more equitably.| ____ 4. When externalities are present in a market a.|the established equilibrium maximizes the total benefit to society as a whole.| b.|market participants lose some market benefits to bystanders.| c.|both equity and efficiency are maximized.| d.|the market fails to allocate resources efficiently.| ____ 5. A negative externality a.|is an adverse impact on a bystander.| b.|causes the product in a market to be under-produced.| c.|is an adverse impact on market participants.| d.|is present in markets in which the good or service is undesirable for society.| ____ 6. When negative externalities are present in a market a.|producers will be affected, but not consumers.| b.|overproduction will occur.| c.|demand will be too high.| d.|the market will still maximize total benefits.| ____ 7.
According to our calculation, the probability that the market share leader is also the profitability leader declined from 34% in 1950 to just 7% in 2007. And it has become virtually impossible for some ex- ecutives even to clearly identify in what industry and with which companies they’re competing. All this uncertainty poses a tremendous challenge for strategy making. That’s because traditional approaches to strategy—though often seen as the answer to change and uncertainty—actually assume a relatively stable and predictable world. Think about it.
Economic recession has some impact on the drop in sales. With less disposable money, the consumers not only tend to spend less money in purchasing goods, but also become more economical in using cleaning products, replenishing those products at a slower rate than they did before the recession. Besides the economic downturn, the competitive environment provides another impact on the sales. Since more and more private-label products are penetrating the cleaning market with a lower price, the branded products are losing their market share. What’s more, even among the branded products, CleanSpitze has a relatively high price, which makes situation worse.
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.