Preview

Managing Growth Assignment

Good Essays
Open Document
Open Document
654 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Managing Growth Assignment
Managing Growth Assignment
FIN/571
Kent Kelly
February 16, 2015
Suzanne Elliot

During the past six weeks, this class has provided tools to help analyze financial statements for Sunflower Nutraceuticals with accuracy in order to make a precise educated decision in the working capital simulation. The following decisions were made as each phase and how they influenced the final outcome and the impact on SNC’s working capital and access to financing. Sunflower Nutraceuticals (SNC) is private owned company that distributes all of the vital supplements such as minerals for consumers but mainly women and herb’s for a women to retailers. Founded in 2006, SNC expanded its operations to various outside outlets becoming successful in producing their own brands of vitamins for teenagers, brands of sports drinks, metabolism- boosting powders and other products to enhance the metabolism in humans. SNC has the potential to becoming a nutraceutical distributor but has struggled as late forcing the company to exceed its credit line to $300,000. With only 12% used to evaluate and reinvest into new opportunities they may result in a good return.
There are five principals used in capital investment on how to invest in the cash flows and growth of a business. These principles are cash flows dependent on opportunity cost, post-tax analysis, when to inject cash flows, cash flow results and project return rate.
These are the principals there were used when working the capital simulation task and in making decisions. During the first phase which was from 2013-2015, I chose the acquisition of a new customer such as Atlantic Wellness. This has led to an increase in sales during that period which also resulted in higher inventory balances and account receivables. This decision was made to bring in a new customer to add to the cash flow of the company which is a key principal when it comes to capital investment.
The second decision was to leverage supplier discount, translated



References: Cole S (2015), ‘Fixing Market Failures or Fixing Elections? Elections, Banks and Agricultural Lending in India’, American Economic Journals, Applied Economics Ross S, Westerfield R, and Jordan B, (2015) ‘Fundamentals of Corporate Finance’, The McGraw-Hill/Irwin Series.

You May Also Find These Documents Helpful

  • Better Essays

    During the first phase of the simulations, SNC was presented with four opportunities that could help their company maximize their growth potential. The first opportunity was to acquire a new customer. The company is considering adding Atlantic Wellness, a successful health food chain. By taking on this new customer, SNC will increase sales by $4 million per year and EBIT by $260,000. However, the profit margins and net working capital terms would remain the same. The second…

    • 1339 Words
    • 4 Pages
    Better Essays
  • Powerful Essays

    Stephen A. Ross, Randolph W. Westfield, Bradford D. Jordan, Corporate Finance, 7th edition, 2006, McGraw-Hill & China Machine Press.…

    • 6111 Words
    • 25 Pages
    Powerful Essays
  • Satisfactory Essays

    Simulation Finance

    • 749 Words
    • 4 Pages

    Selling its herbal nutraceutical line to Nutrilife enabled meaningful top-line growth. While this growth increased both the accounts receivable and inventory balances, the drain on cash flow was partially offset by increased EBIT due to the favorable contract negotiated with Ayurveda Naturals.…

    • 749 Words
    • 4 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Objective: Analysis of financial statements to assess cash needs, the amount of financing needed, and to consider tradeoffs in growth versus operating decisions.…

    • 398 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    BUSI 530 DB2 2 reply

    • 192 Words
    • 1 Page

    Brealey, R. A., Myers, S. C., & Marcus, A. J. (2012). Fundamentals of Corporate Finance. New York: McGraw-HIll/Irwin.…

    • 192 Words
    • 1 Page
    Satisfactory Essays
  • Best Essays

    Financial Faith Integration

    • 3501 Words
    • 15 Pages

    Brealey, R., Myers, S., & Marcus, A. (2012). Fundamentals of corporate finance. (7 ed.). New York, NY: McGraw-Hill Irwin.…

    • 3501 Words
    • 15 Pages
    Best Essays
  • Good Essays

    Learning Team Reflection

    • 663 Words
    • 2 Pages

    Parrino, R., Kidwell, D., Bates, T. (2012) Fundamentals of Corporate Finance, (2nd Ed) John Wiley & Sons Inc.…

    • 663 Words
    • 2 Pages
    Good Essays
  • Powerful Essays

    Brealey, R.A., Myers, S.C., & Allen, F. (2011). Principles of Corporate Finance (2nd ed., concise). New York: McGraw-Hill.…

    • 5361 Words
    • 22 Pages
    Powerful Essays
  • Powerful Essays

    The purpose of this report is to evaluate the findings of an analysis conducted on JB Hi-Fi (JBH). This evaluation will be assessed to present a recommendation to acquire shares to add to an investment portfolio. This report will assess JBH relative to profitability, asset efficiency, liquidity, capital structure and market performance, before conducting a forecast and risk analysis. Annual reports from the past three years and analysts published views were used as the basis for the final recommendation. These evaluations will show JB Hi-Fi to be a strong investment opportunity.…

    • 2108 Words
    • 9 Pages
    Powerful Essays
  • Powerful Essays

    Work capital simulation

    • 1130 Words
    • 5 Pages

    Acting as the CEO of a small company called Sunflower Nutraceuticals (SNC), students choose to invest in growth and cash-flow improvement opportunities in three phases over 10 simulated years. Each opportunity has a unique financial profile and students must analyze effects on working capital. Examples of opportunities include taking on new customers, capitalizing on supplier discounts, and reducing inventory. Students must understand how the income statement, balance sheet, and statement of cash flows are interconnected and consider the possible effects of each opportunity on the firm's financial position. The company operates on thin margins with a constrained cash position and limited available credit. Students must optimize use of "internal" and external credit as they balance the desire for growth with the need for maintaining liquidity.…

    • 1130 Words
    • 5 Pages
    Powerful Essays
  • Satisfactory Essays

    Managing Growth

    • 588 Words
    • 3 Pages

    Sunflower Nutraceuticals (SNC) operates on a very tight cash flow. The past has not been had resources to stay above the water. SNC has been looking at some new projects and for the past nine years the projects and their impact on SNC’s financial impact has been tracked. In the first phase of these new projects two were applied to SNC.…

    • 588 Words
    • 3 Pages
    Satisfactory Essays
  • Best Essays

    Capital Budgeting Essay

    • 1405 Words
    • 6 Pages

    Brealey, R. A., Myers, S. C., & Allen, F. (2008). Principles of Corporate Finance. New York, NY, USA: McGraw-Hill Companies Inc.…

    • 1405 Words
    • 6 Pages
    Best Essays
  • Better Essays

    Portfolio Investment

    • 1520 Words
    • 6 Pages

    Hillier, D., Clacher, I., Ross, S., Westerfield, R., and Jordan, B., 2011. Fundamentals of corporate finance. European Edition. Berkshire: McGraw-Hill Higher Education.…

    • 1520 Words
    • 6 Pages
    Better Essays
  • Good Essays

    Business Structure

    • 1150 Words
    • 4 Pages

    The purpose of this paper is to study Sunflower Nutraceuticals (SNC) and how the decision the company makes can help their working capital and increase growth. The paper will also take a look at each phase from SNC’s simulation and how it affects their working capital.…

    • 1150 Words
    • 4 Pages
    Good Essays
  • Satisfactory Essays

    Simulation Report

    • 1501 Words
    • 5 Pages

    Sunflower Nutraceuticals (SNC), is a privately held nutraceuticals – a wide distributor which provides all the vital dietary supplements such as herbs for women’s, vitamins, and minerals for all the consumers (mainly women’s), distributors and retailers. They are struggling to break even, with relatively flat annual sales growth and thin margins. SNC generates $ 10 million in revenues and holds a large selection of SKU’s of around 50 third party brands. They held cash reserves of $ 300,000 at all times to meet its operational needs. They have a credit line facility with a limit of $ 3,200,000 with 8% interest rate. The cost of capital for SNC is 12%.…

    • 1501 Words
    • 5 Pages
    Satisfactory Essays