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.
Increase taxes over the wealthiest and reduced the taxes over the less wealthy individuals trying to get a more progressive model. These measures would affect in the short-run the aggregate demand for good and services, stimulating consumer spending, earnings and profit rise. This effect will depend on the multiplier effect and the crowding-out 3. What economic policies should the US Federal Government pursue over the next decade? We would consider the following fiscal policies: * Reduction of defense expenditure.
I don’t think Immelt’s past pay packages constructed to truly pay for performance. From Exhibit 2, we can find that the stock price of GE fluctuated and experienced a downward trend since 2007. In the first quarter of 2009, the stock price fell below 10 dollar. Despite such a loss in value, Immelt has been paid about $90 million in salary, cash and pension benefits. This amount does not include the $5.8 million cash bonus he was “awarded” in 2009, or the bonus he skipped in 2008.
In May of 2011 The SEC filed suit alleging massive fraud against Brooke Corporation’s senior management. The SEC suit alleges that during the fiscal year of 2007 and the first and second quarters of 2008 senior management at Brooke Capital misrepresented the health of their business and its subsidiaries. Brooke Corporation’s business growth strategy relied heavily on its finance subsidiary and franchise fees. The average franchise fee was $165,000 which would have been financed through Brooke Credit Corporation; in the first quarter of 2007 a third of Brooke Corp’s operating revenue was from interest and franchise fees (Phillips, 2007). The same store sales for the first quarter of 2007 were down 3% from the previous year and in the fourth quarter of that year the recession officially started.
I calculated an “inventory turnover ratio” which measures the number of times a company sells its inventory during a year. A high rate of turnover indicates easiness in selling inventory; a low rate indicates difficulty. In 2011, the inventory turnover was 6.1. By 2012 the ratio decreased to 5.2. The decrease may be due to a slow ability to turn around merchandise in sales and potentially due to paying a higher cost for goods.
During 2004, the situation got worse and the assets had gone down to 48.5%. Lucent’s cash and cash equivalents went down from 24% of their entire assets in 2003 to almost 20% in 2004. Lucent’s inventories, however, came up from 4.0% in 2003 to 4.8% in 2004, this is about a 20 percent increase in the total inventory. Lucent Technologies had a quite significant drop of their debt structure between the years of 2003 and 2004. While the current liability dropped from 25.6% in 2003 to 24.3% in 2004, it is apparent that this company has allocated for this as a long-term debt since it rose from 23% of total liabilities in 2003 to 26.4% in 2004.
Executive Summary The recommendation for Teletech Corporation is to change from a constant hurdle rate to the use of two risk-adjusted hurdle rates, one for each segment. Teletech’s performance is evaluated upon economic profit calculations. Through this performance measure, the risk-adjusted hurdle rates return a higher amount of profit in comparison to a single corporate hurdle rate: Currently, the firm has been using the constant hurdle rate of 9.30%, and as a result the firm’s share prices are stagnant. In comparison, the market and industry indexes such as telecommunications and telecommunication equipment have outperformed Teletech. Their price-to-earnings ratio is also below investor’s expectation in comparison to the company’s risk.
government began a series of wars and terrorism programs in addition to George Bush cut taxes, this caused it to increase the deficit prosecutor. The Federal Reserve also made its task by maintaining interest rates at very low levels for quite some time doing that speculators / investors / investment banks seek ways to create better returns and the result was the invention of financial engineering. This generated a large body of new financial instruments such as MBSs (Mortgage Backed Securities), CDOs (Collateralized Debt Obligations). Banks, insurance companies, hedge funds began to acquire such tools to generate better returns but when one of the main underlying this type of instrument, i.e. housing prices began to
Regarding operating gains and losses, in 2005 Tiffany realized gains of 33.8 million versus 150.7 million in losses in 2004. However, more importantly, Tiffany & Co. decreased inventories in fiscal 2005 from 175.4 million to 43.6 million. This significant reduction in inventory expense within its cash flow operations aided in Tiffany’s substantial increase in cash reserves for fiscal 2005. Increased Inventories and Operating Losses in 2006 In comparison, Tiffany’s net cash reserves in 2006 decreased to 176.5 million from 393.6 in the prior year. The company’s net cash from operations also decreased from 262.69 million to 233.58 million in 2005, a difference of 29.1 million.
Save for emergency funds: cover unexpected expenses such as a. sudden job or income loss b. medical emergency c. financial crisis d. You all know that the main cause of the 2008 financial crisis was the increase in the default of loan mortgages made to borrowers with poor credit ratings, but according to a study followed by The University of Harvard, called The State of the Nation’s Housing, “if there would have been a bigger saving money culture and usage, the crisis could have been two times smaller.” 2. Save for retirement: put money to work for you, whenever you retire, you will have funds to cover your expenses. 3 Save for sinking funds: money set aside for a. future repairs b. Improvements on your possessions 4. Save for education: a. to earn your masters