Team 5: Giulia Beltrame
Antonio Silvio Buonamano
3. What assumption did you make to complete your analyses? How critical are these assumption to your conclusions? What other information would you ask to improve the quality of the analysis?
* among the assets, in the balance sheet, we consider cash as operating cash on hand that doesn’t produce interests and all operations are carried out through the credit line; * constant stock inventory;
* initial finished good inventory of 174000 kg, zero at the end of the year; * 90 days is the medium time to collect cash from private brand customers, but for premium coffee is 30 days; * assets are at the same level of the previous year (as long ago as 2000, the cost of 6 billions of additional capacity was capitalized); * in the depreciation fund there are also 400 millions depreciation of investment of capacity expansion (6billions/15 years); * 30days of debt terms;
* unchanged credit line (25 billions) with the assumption of 11% debt rate and 3% credit rate; * no repayments of long term debt; interests on long term debt estimated at 4%; * fiscal debt due by 2002;
* no variations in capital stock inside shareholders’ equity and retained earnings; * positive cash flows (earnings) are generated from private brand sales of the last 3 months and from last month premium coffee sales; * same % of taxation as 2000 (40%);
* quarterly interest capitalization;
* valuation of profit-sharing and profit plan settlement through the cash wheel.
Assumptions for private brand:
* 6 million kg of sales;
* 5826000 kg of production;
* 174000 kg of stock utilization;
* no marketing expenses;
* savings of 65% on sellings costs, 75% on R&D costs and 50% on administrative costs; * fixed costs decreased of 780 million liras than in 2000; * purchases evaluated at 6655,93₤ (from...