While this is a bit aggressive, we feel that as expansion wanes same store sales will increase marginally from the projected 3.5% growth primarily due to the strength of the brand. As the new store openings will begin to wind down, 2006’s projected ROIC of 25% is expected to decline steadily until reaching approximately 16% by 2011. We also assumed that the WACC would be stable at 10% since we did not foresee any material changes in the capital structure. We also believe the explicit period should be longer than 5 years, but due to the lack of concrete information, we decided not to forecast past 5 years. This assumption has most likely reduced our estimated valuation by neglecting some years with potential growth rates of more than 5%.
Lucent Technologies Kristin Barker ACC 230 March 12, 2013 Lucent Technologies financial report is for September 2003 and September of 2004. The report shows that the assets are in an upward trend. This shows a good trend for the company as they are building assets and not losing them over a year’s time. The goal for any company is to create a profit and gain assets for their company to help raise their profit. Total current liabilities have decreased within the year.
If Tyrene Products wants to maintain the same CM ratio as last year, what selling price per skateboard must it charge next year to cover the increased labor costs? * 5. Refer to the original data. The company is considering the construction of a new, automated plant. The new plant would slash variable costs by 40%, but it would cause fixed costs to increase by 90%.
Whilst this is good for the company these figures are only predictions and may not happen in real time. Without the injection of £22,000 at the beginning of the year the business wouldn’t have seen profits of £9,560 in December. This could lead to future problems in the business as profits may decrease and capital expenditures may rise plus the payment of interest from the loan. Over a time period of 2 to 3 years the company could see a significant fall in profits without the aid of external sources of income such as another loan. •
B120 TMA03 Part I Question 1 a) The income statement's purpose is to show the financial position of a business by assessing its incomings and outgoings over a given period of time. The problem that arises from this statement in relation to Designer Labels is that this business has to purchase its merchandise well in advance of each season. This means that there will always be a significant amount held in assets. b) I note that although sales were down in 2012, the figure in comparison isn't such a large drop and the gross profit remains at a similar level to the previous year. I am concerned by the large leap in total expenses for the year 2012 and I see that although the majority of these totals have dropped, the ones that have increased have been by large amounts in the areas of wages and salary, maintenance and depreciation.
The next question was if they decreased price by 105 and increased sale tickets to 14,000, if there income would increase. After solving this, in exhibit 5, I found that this would not of helped in 2006. They would be in more debt if they had done this, they would have lost $379,197. With the price reduced the break-even points for units and for dollars would have increased due to the contribution margin per unit changing. Next they wanted to see what would happen if they took away sales commission
Along with provided data the company has its financial statements for the years range from 2006 to 2008. Evaluation of this data will help to highlight budgetary items that raise concern in the budget planning. Sales budget The company plans to realize 3510 units in 2009, which is 110 units more considering realized units in 2008. In its statement, the company noted that the current economic situation and declining sponsorships are the reason for the decrease in sales and it is expectation of the further decline for the three following years. However, the company doesn’t provide strategy to support its plan to realize more units.
An integral part in performing a horizontal analysis is the ability to see the variation from one period to the next which are called trends (Horizontal analysis, n.d.). . Within the income statement, net sales increased by 33.3%, $150k, from Year 6 to Year 7. Then, a drastic decrease of 15% which is roughly $900k, took place from Year 7 to Year 8. The 33% increase showed the strength of the company, but the huge drop in sales demonstrated how Competition Bikes, Inc. (CB) struggled to attain a surge in its revenue which is the result of the 15% decline in sales caused by economic situations.
CCompany Financial Analysis In doing the company financials a couple of key things become apparent. One of the biggest factors in the financials is the consistency in Costco’s growth over the past four years. The four profit margins (Total Revenues, operating income, net profit margin, and Diluted net income per share) have for the most part been rising for the last four years. Costco may look like it’s not growing but having these constant margins along with the growth in revenues means that the profit (bottom line) for Costco is increasing. Costco is doing great job in making sure that revenues constantly grow as shown below while maintaining a proportional amount of expenses to keep the profits the same or a little high from the previous year.
During the intermeeting period the financial markets were able to stay the same. In a statement from the FOMC “Growth in household spending picked up late last year, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software is rising, while investment in nonresidential structures is still weak. Employers remain reluctant to add to payrolls” (Board of Governors Federal Reserve System, 2011).” In November, the committee decides to continue increasing its holdings of securities to promote a stronger pace of economic recovery. They also made this decision to help ensure that inflation is a consistent level with its mandate.