Worldwide Paper Case Study
Incorporated in 2001, Worldwide Paper Company (WPC) is a corporation which is always focus on providing finest paper products to its clients and stakeholders. Headquartered in UAE, WPC’s most sales are distributed from the regions of Middle East, Asia, Africa and Levant. As a global company nowadays, the area of operation of WPC includes paper trading-commodity and conventional grads, indenting and custom order-commodity and conventional grades, merchanting and stock and sale, art paper& board-matt and gloss, food board and folding box board, LWC, wood-free, uncoated and coated fine papers and boards, recycles, FSC, carbon neutral and eco-friendly papers, and technical papers. As the controller, Bob Prescott faced the problem that whether an additional new on-site longwood woodyard was worth investing. The primary benefits this investment would bring is the elimination of the purchase of shortwood from an outside supplier and the creation of opportunity to sell shortwood in the open market. The new woodyard made the new technology available that it will be able to produce longwood while the old technology can only provide shortwood. Because the shortwood WPC needed was from Shenandoah Mill, a corporate owned by a competitor, the construction of new woodyard will benefit WPC much. However, because of 18 million dollar’s investment, Prescott still need to consider whether the profit of this new woodyard is greater than its cost to make a decision. Analysis process
In this case, 2008 is the first operating year, for 2008, the company expected to have revenues of approximately ＄4 million, the sales are expected to reach ＄10 million in 2009 and continue at the ＄10 million level through 2013. The cost of goods sold would be 75% of revenues and SG&A (Selling, General and Administrative Expenses) would be 5% of revenues, the working capital in this case would equal 10% of incremental sales for the year, the incremental...
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