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.
As a consequence, the over commitment problem would eventually increase default risks of LPs. Factors Need To Be Considered: If ASIB accept the offer, it would save 8 percent of the capital investment, which could be reinvested to achieve a higher return. Moreover, as a LP, ASIB could decrease the default risk on Permira IV. If ASIB refuse the offer, the board had to loss 1.35 percent of the entire initial capital investment to pay for a so-called “management fee”. Plus, ASIB would only receive 75 percent of the distributions, and the other LPs would get the rest of the 25 percent for the forfeited distributions.
$30,000 of depreciation on the equipment used to manufacture the parts. c. The supervisor's salary of $25,000, which would be avoided if the part is purchased from an outside supplier. d. $15,000 in rent from leasing the production space to another company if the part is purchased from an outside supplier. status: correct (1.0) correct: b your answer: b feedback: Correct. ________________________________________ 2 The following information pertains to the Norfolk Company's three products: Product B's production is increased to 700 units per year but B's selling price on all units of B is reduced to $8.00.
The estimated sales and production of 10,000 pairs of skis as the expected volume, the accounting department has developed the following cost per pair: Direct Labor $35.00 Direct Material $30.00 Total Overhead $15.00 Total Cost $80.00 Under this scenario the company will have no profit, but no loss. In order to continue production during the off season, keeping employees working this scenario of breakeven will provide the company with the ability to continue production. Ski Pro has obtained a purchase price from a subcontractor for the bindings. The accounting department provided a predicted savings of 10% for direct labor and variable overhead cost with a 20% savings on the direct material cost. Under this scenario, as you seen on the spreadsheet provided, the company will make a profit of $.50 per ski.
Average collection period = ( 365 * AR ) / Credit Sale Expected Sale Year 2009 = 2,900,000 Account Receivable (Year 2009) = 32* 2,900,000 / 365 = 254,246 Account Receivable (Year 2008) = 388,000 Additional internal fund = 388,000 – 254,246 = 133,754 Sunspot Skis also holds too much inventory ( $826,200) that leads to low Inventory utilization ration 3.5, whereas the industry average is 7. The firm could generate internal fund by liquidated its inventory You
In FBN’s case, their long-term debt ratios alone are 55.7% and 81.5% in years 12 and 13, respectively (and they’ve incurred interest rate increases); and ROCE in the same two years is 15.6% and 6.4%. Just observing these ratios, managers should have been able to see that the increase in borrowing (faster than sales profits) would greatly decrease the shareholders’ earnings. The Risk Analysis also shows that FBN’s current and quick ratios declined, meaning that they do not have enough resources to pay their debts over the next 12 months.
1. Problem Statement & Objective The Great Atlantic & Pacific Tea Company, Inc. (A&P) suffered from continued loss on the net income from 2000 to 2003, which caused a general concern on its high risk of bankruptcy. However, conflicting with analysts’ estimation, the company’s third-quarter financial results surprisingly exceeded their expectation, and stock price rose 23% to $9.28 per share on six times average daily trading volume. Our objective is to dig out more information from A&P’s financial reports and make suitable recommendations to investors/analyst/debt holder through further analyzing its business strategy and financial ratios by the end of 2003. 2.
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.
In 2008 when the economy started to take a downward turn, businesses began to cut back on employee travel, consumers were being more conscious about their spending. Airlines had to come up with a strategy by charging consumers for check bags, headphones pillow and blankets to increase revenues to offset high fuel prices. The Airport Transport Association determined that each cent increase in the price of a gallon of jet fuel cost the industry an additional $190 million to $200 million a year (Thompson, Strickland, & Gamble, 2009). New competition included Virgin America which is a low-fare carrier with a hub in San Francisco and administrative offices in New York City. It serviced flights between San Francisco and New York.
â€¢ By removing the finished goods network the company would save $137 million in cost of goods sold because the bottling companies take on most of these costs. Cadbury would possibly lose $49 million in case sales and $39 million in Gross contribution after marketing. This also only allows the product to be sold in the soft drink isle moving it away from the juice isle where 56.7% of Hawaiian Punch volume is sold. Decreases Cadburys control on product sizes. â€¢ By removing the direct-store delivery networks the company is potentially losing $27 million in gross contributions after marketing.